Three unions have filed suit challenging the decision by lawmakers to force more than 210,000 public employees to pay a bigger share of their pension costs.
A provision in the budget adopted for the new fiscal year that begins July 1 requires employees of the state, public schools, counties, some cities, community colleges and universities to pay 53 percent of the annual cost of keeping the Arizona State Retirement System solvent. That is the first time since the system was formed four decades ago that there has not been an equal match.
Legal papers filed in Maricopa County Superior Court contend that the shift violates a provision in the Arizona Constitution which says that membership in a public retirement system is contractual relationship and "benefits shall not be diminished or impaired."
"When you alter the contribution and suddenly you're paying more as opposed to the employer, what was the matching 50-50 is now 53-47, what you're really doing is reducing the benefit," said Andrew Morrill, president of the Arizona Education Association. "You're having to pay more to get the same benefit. You're reducing the net benefit that participant is going to get."
The lawsuit asks a Maricopa County Superior Court judge to declare the change illegal.
Sheri Van Horsen, president of Local 3111 of the American Federation of State, County and Municipal Employees, said the state could have avoided the lawsuit had it applied the change only to workers hired after July 20, the effective date of the new law. But that would not have generated anywhere near the same amount of money.
Daniel Scarpinato, spokesman for House Speaker Andy Tobin, defended the move which is designed to generate $41.3 million this current budget year for the state. That includes not only the direct savings to state government by reducing its obligations but also a requirement for schools and colleges to pass on the amount they would save to the state.
"The Legislature has had to make some very difficult decisions given the seriousness of our budget crisis," he said. "This was one of those. And we're confident it will be upheld in the context of what the state has had to face."
David Cannella, spokesman for the retirement plan, said the average active worker participating in the system earns $44,115 a year. Using that figure, the legislatively mandated change will reduce paychecks by about $282 a year.
Cannella said the change affects all of the more than 210,000 active workers in the system. The legislation, however, does not require counties and cities whose workers are in ASRS to send their savings to the state, allowing them to pocket the difference instead.
But Todd Madeksza, lobbyist for the County Supervisors Association of Arizona, said supervisors in several counties are working on computing the savings to find a way to pass that back to the workers, making the shift "revenue neutral."
"They do not believe their employees should have to shoulder the additional burden," he said.
The third union which is suing is the American Federation of Teachers.