May 252011

By Tammy Gray-Searles–

Local governments have been trying to avoid layoffs due to budget cuts and increased staffing costs, but rapidly increasing retirement system contributions have not helped the effort.

While employee contributions have generally remained steady, required employer contributions have skyrocketed, some by as much as 8.22 percent in six years.

The public safety retirement plan has seen the largest required contribution increase. Employee contribution rates have stayed the same, at 7.65 percent, since fiscal year 2006-07, but employer contributions rates have soared. In fiscal year 2006-07, the employer rate was 16.28 percent, in fiscal year 2007-08 it increased to 17.64 percent, in fiscal year 2008-09 it jumped again to 23.62 percent. In fiscal year 2009-10 and fiscal year 2010-11 there was a little relief as it dropped back to 21.1 percent and 21.93 percent, respectively. In the coming fiscal year it is expected to rise again, however, to 24.5 percent, a full 8.22 percent higher than in fiscal year 2006-07.

Elected official retirement contribution rates have also increased significantly. Like public safety, the employee contribution rate has stayed the same over the years, at seven percent. The required employer contribution has jumped by 6.96 percent since fiscal year 2006-07, when it was 11 percent. In fiscal year 2007-08, it increased to 12.84 percent. In fiscal year 2008-09 there was a mid-year increase, and by the end of the fiscal year the rate was 17.63 percent. It dropped to 17.42 percent in fiscal year 2010-11, and will be 17.96 in fiscal year 2011-12.

Contribution rate increases to the Arizona State and corrections officer retirement plans has been less dramatic, with some of the increases shifted to employees.

Arizona State Retirement System contribution rates for employees have increased by 1.9 percent since fiscal year 2006-07, the same rate it increased for employers. For both employees and employers, the contribution rate in fiscal year 2006-07 was 8.6 percent. In fiscal year 2007-08 it was 9.1 percent, but then dropped in fiscal year 2008-09 to 8.95 percent, and in fiscal year 2009-10 went to an even nine percent. In fiscal year 2010-11 it increased to 9.6 percent and in fiscal year 2011-12 it will be 10.5 percent.

Corrections officers retirement plan contributions for employers increased by 1.28 percent over the last six years, but dropped for employees by .09 percent. For employees, the rate was 8.5 percent in fiscal year 2006-07, 7.96 percent in fiscal year 2007-08 and fiscal year 2008-09, and then went to 8.41 percent in fiscal year 2009-10, where it remained in fiscal year 2010-11 and is expected to stay at that rate through fiscal year 2011-12. Employers paid five percent in fiscal year 2006-07 and fiscal year 2007-08. In fiscal year 2008-09 it increased to 6.12 percent, and then hit a high of 6.96 percent in fiscal year 2009-10, before dropping to 6.02 percent in fiscal year 2010-11. It is expected to be 6.28 percent in fiscal year 2011-12.