Looking forward: Prop. 123, the ASRS, and Our Membership
Ten years ago I took on the task at AEA-Retired of monitoring the Arizona State Retirement System for our members. As part of that job I find myself at ASRS Board meetings and at the capitol deal-ing with legislators and lobbyists. I have traveled around the state talking to retired and soon-to-be retired educators. I remind them how fortunate we are to have a defined benefit plan and that ASRS is one of the top funds in the country. However, ASRS was not immune to the economic crisis and the ASRS plan is currently 77.53% funded. Besides lower market returns, state tax cuts and budget cuts have caused ASRS employers to either freeze or cut back on hiring new employees. Added to that was the inability to increase salaries for existing employees over the last several years. Both factors reduced the amount of contributions coming into the ASRS plan.
Usually educators can retire with the confidence that their defined benefit plan will help contribute to a lifetime of retirement security. But the failure of the legislature to honor voter mandated inflation funding has hurt both recent and future retirees. Many educators have not seen a real salary increase in several years. Educators close to retirement know that their retirement benefit will be determined by a formula, averaging their salary over a 3 to 5 year period in the last 10 years of employment. Years of stagnant salaries translate into tens of thousands of dollars in lost retirement benefits. After retirement, the ASRS plan does not provide a real Cost Of Living Adjustment (COLA) other than the Permanent Benefit Increase, which has not been paid since 2005. Inflation can quickly eat away at our fixed re-tirement benefit.
Now that Prop. 123 has passed and the lawsuit is settled, funds will be distributed immediately to the public schools and ASRS will begin to see the results of putting more dollars into the pockets of our educators. Prop. 123 can strengthen ASRS with new employees, bigger salaries and increased contributions. That new money, in turn, can help lower ASRS contribution rates for both employees and employers. That means more money goes home in educators’ paychecks and more money stays in school district budgets. Most importantly, any educator within a few years of retirement should not only see significant salary increases but will hopefully see their retirement benefit made whole again.
I was pleased to see the increased amount of political engagement that our members and other education supporters have demonstrated over the last three months. Please don’t let that support evaporate as we head into the all-important Primary Election in August and the General Election in November. Prop. 123 doesn’t fix years of underfunding of our public schools. We will all need to join together to make changes to the legislature and the political climate in Arizona, to protect our public schools and our pensions. It will not be easy.
You can help to increase our power by reaching out to others and asking them to become AEA Retired members. You can find us online at: http://www.azedretired.com/ or call Julie Horwin at 602-320-3093 for information and membership options. You can also use the membership form found on this website.