PHOENIX (AP) — Three unions have challenged an Arizona budget provision that requires many government workers to make bigger contributions to their retirement benefits while providing employers with corresponding savings.
The lawsuit filed Thursday says the changes to the Arizona State Retirement System violate state constitutional protections for contracts. The filing seeks to retain commitments that it contends were made to individual state and local government employees when they joined the retirement system.
The benefits are not negotiated labor agreements. Arizona does not have collective bargaining for state workers.
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The changes to the retirement system are similar to those approved by several other states.
The Arizona lawsuit is backed by the American Federation of State, County and Municipal Employees and two unions representing school employees— the Arizona Education Association and the American Federation of Teachers.
"We are asking the state to honor its contract with its employees and provide a fair level of security and independence after finishing a career of educating Arizona's students," said Andrew Morrill, president of the education association.
Under the challenged budget provision, more than 200,000 workers will pay 53 percent of the total contributions to the Arizona State Retirement System and decrease the amount paid by their employers to 47 percent. The split previously was 50-50.
Arizona lawmakers included the contribution changes in a budget-balancing plan approved in April by the Legislature and Gov. Jan Brewer to close a projected $1.1 billion shortfall for the fiscal year that began July 1.
The contribution changes will save the state government approximately $40 million in the current fiscal year, according to the legislative budget staff. That figure includes savings the state gets for contributions for its workers and for those of K-12 school districts, but it doesn't include savings for local governments such as municipalities and counties.
Senate Majority Leader Andy Biggs, a Gilbert Republican who also is chairman of the Senate Appropriations Committee, said the provision reflected both a desire for short-term savings to help balance the current budget and a long-term desire to make public employee benefits less generous so they are more affordable for taxpayers.
Biggs declined to comment on the lawsuit's legal argument and other legislative leaders' past statements that changes to retirement systems' terms could legally be made in order to satisfy the state's constitutional duty to maintain the retirement systems.
However, Biggs said, "as long as you aren't willing to touch a system like this, maybe what you're doing is setting it up for a long-term failure," he said.
Biggs also said lawmakers "did make some consultations and felt comfortable that we were within the bounds of the Constitution."
The National Conference of State Legislatures said in a June 30 report that 15 states increased employee contribution requirements in 2011, at least partly offsetting reductions in employer contributions, up from 11 states in 2010.
Of the 15 states that increased contributions in 2011, a dozen increased contribution requirements for at least some current employees.
The changes, the report said, are part of a trend "toward equalization of employee and employer retirement contributions and testimony to continuing pressure on state budgets."
The lawsuit was filed in Maricopa County Superior Court on behalf of six school district employees, a Northern Arizona University employee and a worker for the state's Medicaid program.
The AEA said the contribution for a teacher with the average starting salary of $28,915 increases by $442.40 to $3,218.84 annually and by $656.45 to 4,118.88 annually for a teacher with the average salary of $42,905.
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