Pension Crisis

Arizona Voters Approve Public Employee Pension Reforms

Changes-which the Reason Foundation helped facilitate-will help keep system financially viable.


Arizona state flag
Arizona state flag

It's official! Arizona voters have approved reforms that will make the retirement system for government employees more fiscally responsible and will shift new hires away from traditional pension plans (that put taxpayers on the hook for investment outcomes) to other systems.

Arizona held a special election yesterday and Proposition 124, which amends Arizona's constitution to implement pension changes, is winning 70 percent to 30 percent. That's a pretty healthy margin.

The Reason Foundation (the nonprofit that publishes this site and Reason magazine) played a major role in hammering out the deal earlier in the year. Foundation experts in pension reform worked with all parties to put together a proposal everybody could support. And that's likely what made it more successful than what we've seen in states like California and Illinois: Public employee union interests were on board and not as resistant to reforms as we've seen in other states. The governor approved the changes in February, but because part of the plan changed existing pension plans, the public gets the final say. And they've said yes.

Here's what the changes do:

  • Cost of living increases (COLA) will be based on the consumer price index for Phoenix and capped at 2 percent and will be pre-funded (which is currently not happening).
  • New hires will be able to choose between defined contribution plan (like a 401(k)-style savings plan) or a hybrid defined benefit plan rather than the traditional pension system.
  • New hires will have the salary cap for pension calculations reduced from $265,000 to 110,000 per year, seriously limiting incentives for finding ways to "spike" pensions with bonuses or unused vacation time to jack up what retiring employees will be receiving.
  • The eligibility age for new hires will be increased from 52.5 to 55.
  • New employees will have to pay 50 percent of plan costs if the plan doesn't meet return assumptions.
  • Employers (that is to say, the government) will be forbidden from having "pension holidays," where they stop paying into pension funds when they are overperforming (which then turns into a crisis when pensions later underperform).

The Reason Foundation calculates savings of $1.5 billion over 30 years and a reduction of retirement costs for new employees by 20 to 43 percent. Financial risks borne by the taxpayers should be cut in half, and the accrual of new debt for pension liabilities should be reduced by a third.

For a look at the process through which the Reason Foundation helped make this all happen, read the details directly from the folks involved here.

NEXT: The Yard Goats are a Farm Team Without a Farm

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Arizona Voters Approve Public Employee Pension Reforms

    Does that mean McCain got the boot? He’s been sent out to pasture?

    1. no. rats.

      1. Kelli Ward’s working on it. Not too confident it will happen because of ignorant and stupid voters, but she’s got my support.

  2. with the exception of COLA, all the reforms impact new hires. still, job well done.

    1. If challenged, and not in conformance with the conditions set when the current hires were admitted to the plan, it will be overturned.
      The conditions of a pension at hiring have consistently been considered by the courts as a contract. No matter what the voters say, the U.S. Constitution forbids states from passing any “Law impairing the Obligation of Contracts”. It is only if it is something that is negotiable, and both sides agree, that a contract can be altered – definitely not by a third party (voters).

      1. RE: “The conditions of a pension at hiring have consistently been considered by the courts as a contract.”

        I wholly agree. Despite that too often is not a contract. Thank corrupt judges for that.

        RE: “the U.S. Constitution forbids states from passing any “Law impairing the Obligation of Contracts”.

        Yes it does. But since when has that ever stopped the SCOTUS and lower courts doing so?

        People so often deride lawyers for defending criminals and suing anyone and everyone for anything they can. While it is in fact their job to both zealously defend and prosecute criminals, it is in the latter case when they intentionally attempt to subvert law in order to win, and without regard to the principles of law, that they truly deserve our worst scorn.

        The problem is that people seem to overlook a particular group of lawyers that are far worse than the others, and have become the greatest threat to our constitution and the common good. They are called judges.

        Regular lawyers, politicians, corporate scum, guano bankers and others, cannot get away with anything unless judges let them. However, judges cannot get away with anything unless our legislators let them. So until our legislators, who are afflicted by self-induced impotence, actually take seriously their responsibility to remove poorly performing and criminal judges, the judicial branch will continue to be the most corrupt and dangerous threat to our freedoms.

        1. I couldn’t agree more.
          IMHO, no one, who has ever worked in the “legal” profession, especially lawyers, should be made judges.
          Laws should be written and judicial procedure set so that any competent, literate individual should be able to render a fair judgement, without having to know the arcane rules that the “legal” system has set up. This would also eliminate a judge having a kinship with the ones they should be keeping in check – the lawyers.

  3. A step in the right direction I guess. But the ultimate solution is to just rid the state of pension obligations altogether. Now that public workers make as much or more than their private sector counterparts (and still enjoy much greater job security and benefits) there’s no longer any reasonable justification for compensation beyond annual salary.

    Taxpayers should be demanding that public sector payrolls are fixed annual outlays, that when you hire someone it’s not salary plus benefits plus some varying obligation 30 years from now. Future taxpayers should not be burdened by personnel costs of the present, and there’s absolutely nothing wrong or immoral about public workers planning for their own retirement like everyone else.

    1. Good luck filling those jobs after you do that.
      The pension is a major incentive for attracting job seekers – public sector jobs aren’t such great shakes, without these benefits.

      1. Bullshit on incentives needed to find public hires, it’s well known government jobs
        are a gravy train (particularly including bloated pensions).

        Oh, btw, piss off with the dead thread-fucking, makes you look like Tony and looking like Tony makes you look


        1. Please excuse me for having a life.

      2. RE: “The pension is a major incentive for attracting job seekers”

        Very true! That’s one of the lesser reasons why I left Honeywell Defense and Space and joined Social Security. Job security was number one.

        RE: “public sector jobs aren’t such great shakes, without these benefits”

        That’s a union myth. The union is still repeating the same ol’ lies today including: “We are underpaid.” “We get paid less for our jobs than the private sector.” Yada, yada, yada. Pure nonsense!

        Not only are we overpaid (generally speaking), but we ourselves unintentionally admit it by remaining with government for most of our careers. The attrition rate for federal employees is between 1/3 to 1/4 that of the private sector. This means that when we put our money where our mouth is, we state quite loudly that our pay and benefits are way better than the private sector.

        The public sector is the one area of employment in which unions have actually succeeded, in FACT, to gain it’s members more pay and benefits. It did so by the age old corporate practice of buying and corrupting politicians in which it was then able to force itself into government and then was able to force employees to become union members.

      3. Can’t disagree more. Most government jobs just like most union jobs are filled with people who are too lazy or too stupid to get a better job outside of a union or outside of government. Unionized government workers are the worst. Firefighters are a good example. Ditto for postal workers.

        1. RE: “Most government jobs just like most union jobs are filled with people who are too lazy or too stupid to get a better job outside”

          Any evidence or reasoning to back that up or just sophomoric name calling?

    2. I wholly agree with you. That is exactly what we should be doing. Let the free market reign.

  4. Is anyone here aware of a database listing private companies that receive federal or state subsidies and the amountz of those subsidies?

    1. This might help. It’s not complete, and you’ll have to check their financials to find the amounts, sorry.

  5. That looks like a commie flag to me.

    1. Yours is an old observation. I grew up in AZ during the Vietnam War and at least 2-3 times a year a letter would be published in the paper about North Vietnam’s flag flying everywhere.

  6. I’ve never understood why public employees are not expected to take Social Security and maybe a 401k match of a few percent just like the rest of us. Working for the government shouldn’t entitle you to a guaranteed lavish retirement that is not available to comparable private sector workers. And with the salary most public employees make (which even if it isn’t huge is still usually pretty good by national standards), that should be more than enough to have at least a decent, comfortable retirement as long as you don’t invest in a really stupid manner.

    1. When I first moved to Maryland, I heard for the first time in my life, a lot of people I met who worked in the private sector say they wanted to get a government job before retiring so they could get a lifetime pension. None of them saw anything wrong with that idea. I guess I’ve only heard this around here because there are so many government jobs in this area.

      I suspect that most people just do what’s good for themselves and never consider the morality of it. Progressives completely ignore this aspect of human nature.

      I hear more and more Bernie voters saying they will not vote for Hillary in the general because they hate her. The funny thing is, they don’t seem to hate her because she’s so corrupt and phony and involved in criminal conspiracies, investigations, etc. They hate her because she’s not fully enough embracing the free shit train to nowhere.

      1. A lot of the people you’re likely to know in Maryland are likely to be on Federal pensions, which aren’t nearly as fucked as some of the state pensions systems. CA and Il come to mind.

        I know A LOT of people on lifetime pensions in excess of 100k a year, even some that are over 200k.

        1. No surprise there.

        2. We had a Chinese woman CoP while Newsom was mayor. Outside of the obvious token check-offs, her main accomplishment was never getting between the mayor and any camera.
          She was ‘retired’ after a relatively short stay (but not short enough): “Heather Fong’s Pension: $277,656 Per Year”

          1. There’s a bus driver and a gardner on that chart too.

            Is anyone even pretending it’s not scam anymore?

            1. Hey, they spent the best years of their lives goofing off on the taxpayer dime! The DESERVE it!

            2. And:
              “Is anyone even pretending it’s not scam anymore?”
              Talk to moonbeam and ask him about that ‘balanced budget’ and the Dill Act. I’m sure he’ll have reason to ‘take a call’ just about then.

          2. Many progressives would be shocked to know retired public servants make up the 1%.

            1. Shocked? Do you dialogue with progressives very much?

              The first thing you will hear out of a “true” progressives mouth is that “They deserve it.” Then they will go all self-righteous redistribution on you.

          3. At age 55, she was entitled to 3% for each year she was employed by the SFPD, to a maximum of 90%, of the highest of her last three year’s pay, with no overtime included.
            This pension system was approved by the voters of SF. They’re the ones who pay for it.
            It is supposed to be paid for through the length of the career of the employee – by adding a certain amount with each paycheck to the pension fund, which is quite healthy, plus what each employee must contribute.
            Unless you live in SF and the proper contributions were not made, it is not costing anyone a dime more than what was paid out, throughout her entire, relatively useless, career.
            But, hey, we need wymenz in the PD.

      2. What morality of it? Gov’t is hiring somebody, why shouldn’t it be you? It’s not like you’re selling them on a job they wouldn’t be having done otherwise.

        Pension reform’s a good thing, of course, but it’d be more important to reduce the # of employees, & amount of employment, in gov’t, also of course. That takes policy changes. Privatiz’n’s a good thing, but not as good as cutting out the jobs that if gov’t weren’t doing them wouldn’t get done?because they don’t accomplish anything of positive value, & may even produce negative value. War on Drugs, War on Sex, War on Business, etc.

        1. RE: “What morality of it? Gov’t is hiring somebody, why shouldn’t it be you?”

          Wholly agree.

          That is exactly my reasoning. I went from Honeywell to Social Security. Reason 1 was job security; 2nd was job/benefits portability, 3rd was going from 70 hours per week to 45. Took a pay cut, but it was well worth it.

          I am utterly against Social Security as it is contrary to the U.S. Constitution, and for reasons which should now be obvious to even progressives, except they are not.

          Despite my vehement opposition to Social Security, it literally never crossed my mind that it would prevent me from working for SS. If stupid taxpayers are going to overpay their employees, I will be happy to be one of them and reclaim at least a small portion of my wasted earnings. I would have been ecstatic to have been forced to find a new job if it was because our IOU for benefits was transferred to the private sector. At least then my benefits would be contractual.

    2. A lot of public employees are exempt from Social Security, the benefits of which cannot be overstated.

      The average worker today will get back 10 cents for every dollar he puts in, so not having to pay into Social Security is a big fucking deal.

      1. Government is just another word for the poverty we create together.

        1. I just want my dime back. Er…. by the time I get it, it’ll be a nickel.

          Did you ever email Sugarfree for the…. naked pictures?

          1. Yes, and for the last six days there’s been this black helicopter hovering over my neighborhood. I’m scared.

            1. People are also talking about you behind your back.

              1. Yes, but that’s not new.

                1. New people, same complaints.

                  1. Snubby McSnubface.

        2. Government is just another word for the thieving we do together to each other.

      2. On Facebook, i have had teachers bitch about not being able to get the social security “they earned.”

        1. It’s not just on Facebook. Go to and you’ll catch a few of them now and then crying over their champagne depending on the topic.

      3. Where did you get that figure?
        Current benefits go through the amount contributed in about three years.
        In other words, if you live more than that, past being able to collect SS, you are taking more than you gave.

        1. You flunked math in junior high, I gather, because you certainly don’t have a clue about high school math.

        2. retiredfire – “If we collect more than 3 years of benefits, we get more than we paid in?”

          Not sure where he got his figure or in what context he meant it (0.10 on the dollar), but where did you get your figures? I don’t even have to look at my earnings statements to know that statement is way off the map, and that’s even before considering that “normal” retirement investments actually pay compound interest.

          If I go back and take all my FICA deductions (including the 7.5% that my employer paid on my behalf), and then project their value based on as if I had invested in the S&P 500 the whole time, I would be looking at a way greater return at age 67 than what Uncle Sam is now “promising”, which is different than what I was originally “promised” at age 65, but which I will now not likely get even at age 67. At the very least, my benefits in the stock market would have been contractual and not subject to the whims of politicians as my benefits are in SS.

          1. You are exactly correct that if the money contributed by you and your employer was invested it would be worth many multiples of what would be drawn, at today’s benefit rate.
            The problem is: FEDGOV DOESN’T DO THAT.
            What you see on your statement is all there is. The money doesn’t get invested, it goes down the rat-hole that is government spending. Thus the 15% of your pay – which, on average is about $900,000 over the almost fifty years of the average work-life – by both you and your employer is about $45,000, which at the current benefit level of, roughly $1,300, per month, comes to 34 months of payments.
            They don’t operate SS like a regular retirement account and use current workers’ payments to make up for the excess they pay out to current retirees.
            Charles Ponzi would be so proud.

            1. .15 X $900,000 = $135,000
              $135,000 / $1,300 = 8.6 Years.
              You’re still right about the rest, but the period to get a dollar for dollar return is much longer, which doesn’t take inflated dollars into account either.

    3. Government pensions go back to the days when government workers were paid substantially less in the private sector, and when you took a public sector job with the understanding that government could not match private sector salaries. The pensions, like the generous health insurance and paid time off benefits, were intended to offset the lower salaries.

      Of course, when the public-sector unions got involved and demanded huge salary increases to “catch up” to the private sector, because it was “grossly unfair” that government workers got paid less for doing the same work, the same unions refused any changes to the pension and other benefits they were already receiving. So pension benefits that were originally based on low salaries are now being applied to salaries much higher than the original drafters ever anticipated.

      1. Those pensions can be changed at any time – but only for new hires, that the unions have no ability to object about. Unions have no say in what happens to people they don’t represent.
        Don’t put it all on the unions, the politicians have their reasons for keeping generous pensions there for government employees.

      2. Excellent point!

        Not only do unions now help them buy a small block of active voters, but they get significant reelection “contributions” as well.

  7. We’ll see what the judge says.


    1. Starts drinking heavily.
      /another IL resident.

      1. Unfortunately, the IL shit is actually built into our constitution.

        /yet another Illinois prisoner

        1. Oh, and I suppose if the constitution told you to jump in the lake you’d do that, too??


          If Illinois had a civil war, I’d bet on the confederates.

    2. “Judge, we need you to make a ruling on your own pension. Good luck and godspeed!”

      1. I always thought I would stay here until I was wheeled up the ramp to the old folks home….now, the minute I can, I am out of IL.

  8. Is it my imagination, or did another article just disappear, right above this one? I guess it suffered PM Links disappearance syndrome. (PMLDS).

    1. (PMLDS)

      Mormons of the night?

  9. Media Ignoring Major Part of Facebook Scandal

    “I’m about as politically incorrect as you can get. I’m wearing an NRA ball cap, eating a Chick-fil-A sandwich, reading a Paula Deen cookbook and sipping a 20-ounce sweet tea while sitting in my Cracker Barrel rocking chair with the Gaither Vocal Band singing ‘Jesus Saves’ on the stereo and a Gideon’s Bible in my pocket. Yes sir, I’m politically incorrect and happy as a June bug.”

    Mr. Starnes says he received a message from the Facebook police that said:

    “We removed this from Facebook because it violates our Community Standards,” Facebook wrote me. “So you’re temporarily blocked from using this feature.”

  10. It appears the main rationale for publicly funded pensions is to defer major portions of compensation to when it will be the problem of the next generation of taxpayers to fund it. If they paid the present value of that compensation today for employees to privately invest, then politicians would actually have to exert some fiscal discipline today.

  11. $89 an hour! Seriously I don’t know why more people haven’t tried this, I work two shifts, 2 hours in the day and 2 in the evening?And i get surly a chek of $1260……0 whats awesome is Im working from home so I get more time with my kids.
    Here is what i did…


    1. Got a government job?

  12. My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can’t believe how easy it was once I tried it out.

    This is what I do??????

  13. Though there was hardly any opposition in the voting pamphlet, I was still very doubtful it would pass. Amazing! Phase-I is a success.

    Now for Phase-II, the lawsuits. I am hopeful, but I doubt it. Judges are crap shoot and there aren’t many Borks or Scalias these days. Not in AZ or anywhere else.

  14. Most of us want to have good income but don’t know how to do thaat on Internet there are a lot of methods to earn money at home, so I thought to share with you a genuine and guaranteed method for free to earn huge sum of money at home anyone of you interested should visit the site. More than sure that you will get best result.OI3..


  15. I am making $89/hour working from home. I never thought that it was legitimate but my best friend is earning $10 thousand a month by working online, that was really surprising for me, she recommended me to try it. just try it out on the following website.

  16. My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can’t believe how easy it was once I tried it out.

    This is what I do ??????

  17. I looked at the bank draft which had said $7437 , I be certain …that…my friend could realie earning money in their spare time on-line. . there neighbor has done this for less than twelve months and resently paid the morgage on their mini mansion and got a great new Lancia . have a peek here….

    Simply tap On This sort of Link –


  18. Start making cash right now… Get more time with your family by doing jobs that only require for you to have a computer and an internet access and you can have that at your home. Start bringing up to $8012 a month. I’ve started this job and I’ve never been happier and now I am sharing it with you, so you can try it too. You can check it out here…————————-

  19. Now, coming to the Showbox app, this is another superb app developed for movie lovers who want to get a better experience of watching movies and tv show on a bigger screen with more detailings.

  20. And one of those applications is Showbox apk app. It is one of the best online streaming application for watching Movies and TV Shows. In the starting, this application has been released for only a few of the mobiles and allows users to watch shows online.

Please to post comments

Comments are closed.