PSPRS Pension Contributions Force Budget Cuts

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Pension funds in Arizona facing bleak future

by Craig Harris – Jun. 23,  2012 10:27 PM  – The Republic |

Taxpayers next week will start paying more to prop up four of Arizona’s  ailing public retirement plans, which continue to suffer such heavy market  losses that their values are far below what they owe pensioners over the long  term.

The pension system for Arizona’s police officers and firefighters is in the  worst shape and has little hope for a quick turnaround, its top administrator  says.

“The picture is not good,” said Jim Hacking of the Public Safety Personnel  Retirement System. “And there is not much of anything we can do about it. We can  only hope the financial markets start improving.”

State pension administrators had forecast an increase in contributions by  public employers to their trust funds during the coming fiscal year because of  stock-market declines dating to 2008. But an overall market decline in the  current fiscal year, which ends June 30, means even more money than anticipated  likely will be needed over the next few years to help stabilize the  public-safety-personnel fund as well as the Elected Officials’ Retirement Plan,  the Corrections Officer Retirement Plan and the Arizona State Retirement System,  officials say.

The bleak outlook comes as the Pew Center on the States, a national  organization that seeks ways to make government more effective, last week  released a study saying Arizona’s state pension systems remain underfunded.  Arizona is among 34 states facing that problem.

But the Pew Center said Arizona’s management of its long-term liabilities for  public pensions was cause for “serious concern.” The Pew Center said Arizona’s  four statewide systems as of fiscal 2010 faced a $12 billion funding gap. The  funding gap is the difference between assets on hand and the amount needed to  pay for retirement obligations of those enrolled in the system.

As funding levels drop, additional contributions are needed from public  employers and employees to keep the gap from widening. The increase in  public-employer contributions forces governments to cut elsewhere or raise  taxes.

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