Public Pensions and Arizona Counties: What Lawmakers Need to Know

2 days ago
3 min read

$1.2 BILLION

Additional County Pension Debt Contributions

Securing benefits at lower taxpayer cost

33,000+

Dedicated County Employees

Each of those employees holds constitutionally protected benefits that counties must fund.

$1.0 BILLION

Outstanding Public Safety Pension Debt

Through POBs and public safety unfunded liabilities

Public pensions are one of the most consequential — and least flexible — areas of state and local government finance. For Arizona's counties, understanding the structure of the public retirement system isn't just a budget exercise; it's essential to making sound policy decisions that protect both employees and taxpayers for decades to come.

State-level policy sets the cost, but the funding for our public servants comes from the local taxpayer.

Counties participate in all four statewide retirement plans, including ASRS, PSPRS, CORP, and EORP, and these systems cover nearly all county employees in one form or another.
State law or the pension boards of trustees establishes benefit levels, funding policies, membership and contribution requirements – and counties are required to fund those benefits.

Public retirement benefits consume a substantial portion of local budgets and resources.

Counties are in the business of providing services to Arizonans, and personnel costs make up the largest share of most county budgets. That includes retirement contributions.
During the Great Recession, counties saw more and more of their budgets consumed by obligations to legacy pension systems that were underfunded and structurally unsustainable.
As those costs grew, counties had fewer resources available for the local services residents depend on every day and a lesser ability to invest in the other needs of our workforce.

Public Pension Unfunded Liability vs. County GF Revenues

Retirement benefits are constitutionally protected – there is no “undo” button.

Public pension benefits in Arizona are constitutionally protected and cannot be reduced or diminished once enacted.
That is an important protection for public employees, but it also means counties must manage a budget structure in which pension obligations cannot be adjusted retroactively.
Pension reform in the 2010s addressed many of the structural issues with Arizona’s pension systems, providing a more sustainable path moving forward.
However, the billions in unfunded liability from the legacy pension systems is still owed to members.
Given the substantial impact these systems have on county finances, county supervisors remain committed to working with policymakers to ensure any public retirement changes are informed by high quality analysis and make sense for both employees and taxpayers.

Counties have been proactive in managing their pension debt post-pension reform – saving taxpayer resources and securing benefits for employees.

Like the state, counties have taken substantial steps to stabilize public safety pension systems.
In total, counties have deposited almost $1.2 billion into public safety pension systems to help secure benefits for vital public safety employees at a lower taxpayer cost.
Even so, counties still carry more than $1 billion in public safety pension debt through pension obligation bonds or remaining unfunded liabilities in PSPRS-managed systems.

Counties remain committed to serving as a resource as policymakers and local governments work together on solutions that support employees, protect taxpayers, and strengthen the long-term stability of Arizona's retirement systems.

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