Final report on the study of the Arizona State Retirement System (DRAFT)

              FINAL R€ P@ RT ON THE STUDY (> P M E
Prepared far
Prepared DY
KAUFMKNN AND GOBLE ASSOCIATES
in association with
CYBERSERV INTERNATIONAL CO.
April 1990
Ilene L. Abraham
Kenneth M. de Cesare
Ronald A. Goble
Sidney T. Kaufmann
Paul J. Pratico
[: I F! H F T Kaufrnann and Goble
Associates
ACTUARIES AND CONSULTANTS
April 30, 1990
Representative Jane Dee Hull
Co- c hairman
and
Senator Doug Todd
Co- c hairman
Legislative Council Study Committee
on the Arizona State Retirement System
Capitol Building, House Wing
Phoenix, AZ 85001
Dear Representative Hull and Senator Todd:
Kauhann and Goble Associates, in association with Cybersem International Co., is
pleased to present this T& al Repart on the Study c a f t i z eS~ ta~ te Retframant Systam
Our work was conducted in conjunction with the work of the Legislative Council Study
Committee as set forth in Items 1, 4, 5, 6, 1 and 9 of Senate Bill 1129. Our T& al Reparf:
Describes our Data Coilection, htemewing, and Data Analysis Processes.
Presents comprehensive Displays, Bdzibitr and Smanes of the data we cdllected.
Presents a review and discussion of the fidings associated with each
Recommendation.
Simply stated, we have made a number of important recommendations. These
mcomrnendations ue intended to achieve the f- strategic objeclhs:
To incorporate into State Statutes, a definition of the Primary htent of the Arizona
State Retirement System.
10 ALMADEN BOULEVAR DF: AFT TEL E) . P. H( ONE 2.8- 1170 .
To incorporate into State Statutes, a definition of the Primary Fmding Objectives of
the Arizona State Retirement System.
I To incorporate into State Statutes, a Protective Mechanism that will provide for the
maximum feasible security for the Arizona State Retirement System's assets; and to
shield the assets from both wide swings in the investment marketplace, and from
capricious reductions in the statutorily required and actuarily determined contribution
rate.
I To incorporate into State Statutes, the Post- Retirement Benefit Enhancement Trust
Fmd concept to provide a self- perpetuating and self- funding mechanism to provide
reasonable and affordable post- retirement benefit enhancements without the
requirements of continually increasing contribution rates and placing the burden of
payment of current unfunded benefit enhancements upon future employees.
I To incorporate into State Statutes, an On- going Mechanism that will provide for
sufficient dialogue between the Legislature and the members of the Retirement Board;
and that will provide for a better and continuing understanding of the intricacies of
the Legislative process and the complexities of the administration of the Retirement
Statutes.
To bring about a greater awareness among employees, retirees, employers and
Legislato =... of the excellence of the Arizona State Retirement System and its
outstanding retirement benefits as compared to other public pension plans and the
private sector.
To foster, in the administration and legislation of the Arizona State Retirement System,
consideration of the concepts of Moral Obligation to the members, Equity in
awarding of Post- Retirement Benefit Enhancements, and the short- and long- range
al3ordabiity to members and employers of all retirement plan and benefits
enhancements.
I To foster, in the administration and legislation of the Arizona State Retirement System,
consideration of the concept of market demand in evaluating the need for benefit
plan enhancements, and consideration of the concept of employing alternative fonns
of employee benefit programs which would reduce the ultimate burden to the
taxpayer.
We prepared a " rank scoring" analysis of the Arizona State Retirement System's overall
retirement benefits, as compared to those of 68 other public employees retirement
systems. The Mona State RetCrement System ranks number 1.
We derived this composite ranking by using a " rank scoring" technique. We ranked each
surveyed retirement system's various retirement benefits factors in relation to those of all
the other surveyed retirement systems.
The retirement benaflts facto
Member contribution rate.
Employer contribution rate.
Integration with Social Security.
An automatic COLA
The retirement formula percentage multiplier.
Benefit amount at 30 years of service with a salary in the final year of
$ 15,000, with the final average salary being actuarily graded up to that
amount.
Benefit amount at 30 years of service with a salary in the final year of
$ 30,000, with the final average salary being actuarily graded up to that
amount.
It should be recognized that, no matter how substantial or how adequate a public
employees retirement system's benefits, employees and retirees will always seek even
greater benefits. This is an inevitable phenomenon. In its evaluation of future requests
for post- retirement benefit enhancements, the Legislature should contemplate the
recommended statutory statements of the Primary htent and the Trust Fmd Nature of
the Arizona State Retirement System. Then, grant the reguests when appropriate, but
have the courage to say " nou, when the requests an, too costly or un- ted.
We will be pleased to answer any questions which may arise regarding the contents of
this Report.
Sincerely yours,
KAuFlMNN AND GOBLE ASSOCIATES
Sidney T. Kaufmann, F. SA
President
CYBERSEHV INTERNATIONAL CO.
Corydon D. Hurtado, Ph. D.
President
SECTlON
NUMBER
PAGE
NO.
Transmittal LetterIManagement Summary
I. ltem I : Examine the Current Benefit Structure of the System and
Compare It to Those Benefits Provided by Other State Retirement
Systems and Private Pension Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . I
2. ltem 4: Examine the Composition. Function and Effectiveness of
the Arizona State Retirement System Board and the lnvestment
Advisory Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Item 5: Examine the Policies Re- g arding Post- Retirement Benefit
Increases for Retired Persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0
4. Item 6: Examine the Policies Reeardinn Early Retirement Incentives
with a Particular Examination on the Feasibility of Implementinq
a Corres~ ondin- nA ctuarial Reduction In Benefits. . . . . . . . . . . . . . . . . . . . 16
5. ltem 7: Determine Whether the Present Fundine of the Arizona State
Retirement System Adeauately Ensures That Advanced Funding of the
System is Provided on a Sound Actuarial Basis. . . . . . . . . . . . . . . . . . . . . . 19
6. ltem 9: Examine the Present Investment Guidelines of the System
With a Policy Goal of Providing for Allowable Investments in
Order to Provide Timely Payment to the System's Beneficiaries
in Their Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7. Summary of the Data Collection and Analysis Process
7.1 External Data Collection and Analysis . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Internal Data Collection and Analysis . . . . . . . . . . . . . . . . . . . . . . . 30
SECTlON
NUMBER
CONTENTS OF SECTlON PAGE
NO.
LIST OF TABLES:
I Summary of Average Salary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2 Comparison of Early Retirement Factors . . . . . . . . . . . . . . . . . . . . . . . . 17
LIST OF FIGURES ( found fdlowing Section 7):
I Arizona State Retirement System Statement of Primary Intent . . . . . . . . . F- l
2 Arizona State Retirement System Primary Funding Objectives . . . . . . . . . F- 2
3 Definition of the Trust Fund Nature of the Arizona State
Retirement System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F- 3
4 Projected Retirement Benefits Payments for the Next 25 Years . . . . . . . . F- 4
5 Sample Benefits Using the Actual Ad- Hoc COLA Amounts Granted ( I of 2) F- 5
5 Sample Benefits Using the Actual Ad- Hoc COLA Amounts Granted ( 2 of 2) F- 6
6 Post- Retirement Benefit Enhancement Dedicated Trust Fund Income
Distribution Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F- 7
APPENDICES:
I List of Other Survey Data Sources . . . . . . . . . . . . . . . . . . . . . . . . . . A I - I
2 Public Employees Retirement System Survey Data . . . . . . . . . . . . . . . A 2- 1
3 Private Pension Systems Survey Data . . . . . . . . . . . . . . . . . . . . . . . . . A 3- 1
4 Public Employees Retirement Systems Benefits Rankings and Analysis . . A 4- 1
5 Actuarial Valuation Rankings and Analysis . . . . . . . . . . . . . . . . . . . . . . A 5- 1
6 Administrative Costs Rankings and Analysis . . . . . . . . . . . . . . . . . . . . . A 6- 1
7 Retirement Board Composition Data . . . . . . . . . . . . . . . . . . . . . . . . . A 7- 1
8 List of Interviewed Employee and Employer Advocacy Groups and
Other State Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A 8- 1
9 Post- Retirement Benefit Enhancement Dedicated Trust Fund Concept . A 9- 1
10 Actuarially Oriented Analysis of the Current Arizona State
Retirement System Retirees' Benefits . . . . . . . . . . . . . . . . . . . . . . . . . A 1 0- 1
SECTION 1. ITE BENEFIT
STRUCTURE OF THE SYSTEM AND COMPARE IT TO
THOSE BENEFITS PROVIDED BY OTHER STATE
RETlREMENT SYSTEMS AND PRIVATE PENSION SYSTEMS
1 . I
-- 1--_." _ -
I. The Arizona State Retirement System Statement of Primary Intent
presented in Figure 1 should be incorporated into State
Statutes.
2. The definition of the Trust Fund Nature of the Arkona State
Retirement System presented in Figure 3 should be incorporated
into State Statutes.
3. Future enhancements to the Arizona State Retirement System's
basic benefit plan and structure should be consistent with the
statutory Statement of Primary Intent ( reference Figure 1).
4. Amend the Arizona State Retirement System's present joint and
survivor annurty option to eliminate the option to revoke the
election under certain circumstances, and replace this
feature with a one- time election at retirement to take a
actuarially reduced benefit in favor of a '' pop- up" option to
provide for the circumstance of the survivor annuitant dying
before the beneficiary.
5. Major benefit enhancements should not be made to the Arizona
State Retirement System's present benefit p Ian and structure.
Arizona State retirement System should regularly and
" . x-=-" freqoenttjr inform active members about the availability of the
supplemental, optional employee paid benefits programs
available through their employers.
he Retirement Board should institute an aggressive public
formationlrelations program designed to bring about a
greater awareness among employees, retirees, employers and
Legislators ... of the excellence of the Arizona State
Retirement System and its outstanding retirement benefits as
compared to other public pension plans and the private sector.
We prepared a " rank scoring" analysis of the Arizona State Retirement
System's overall retirement benefits, as compared to those of 68 other
public employees retirement systems ( reference Appendix 4, pages 4- 2 and
4- 3). The Arizona State Retirement System ranks number 1 in werall
retirement benefits.
We derived this composite ranking by using a " rank scoring" technique. We
ranked each surveyed retirement system's various retirement benefits factors
in relation to all the other surveyed retirement systems.
The retirement benefits factors we ' rank scoredu for this analysis are:
Member contribution rate.
Employer contribution rate.
Integration with Social Security.
An automatic COLA.
The retirement formula percentage multiplier.
Benefit amount at 30 years of service with a salary in the final year of $ 1 5,000, with
the final average salary being actuarially graded up to that amount.
Benefit amount at 30 years of service with a salary in the final year of $ 30,000, with
the final average salary being actuarially graded up to that amount.
The retirement benefit amount provided by the Arizona State Retirement
System equals or exceeds about 73% of the surveyed public employees
retirement systems, and compares favorably with another 20%. Details of
this survey are presented in Appendix 2. The benefit amounts ranking data
is presented in Appendix 4, pages 4- 4 and 4- 5.
The Arizona State Retirement System's employer contribution rate is less
than about 95% of the surveyed public employees retirement systems, and
is more than only two of the surveyed retirement systems. The Arizona
State Retirement System's member contribution rate is less than about 73%
of the surveyed public employees retirement systems. This analysis is found
in Appendix 4, pages 4- 6 and 4- 7.
The Arizona State Retirement System's retirement formula percentage
multiplier equals or exceeds about 77% of the surveyed public employees
retirement systems. Further this percentage multiplier is about 11 % more
than the overall average for the surveyed retirement systems, but is about
25% less than the L: lF! fiFT mum per entage multip ler. This analysis is found in -
Appendix 4, page 4- 8.
In order to examine the ucost/ benefV of the retirement benm amount
provided by the Arizona State Retirement System, we calculated the dollars
per member and employer contribution rate for the surveyed public
employees retirement systems. This " cost/ benefi" calculation provides a
measure of the value of the retirement benefit in terms of its cost to the
members and employers. The Arizona State Retirement System's dollars
per mem ber contribution rate exceeds about 80% of the surveyed retirement
systems; and the dollars per employer contribution rate exceeds about 97%
of the surveyed retirement systems. This analysis is found in Appendix 4,
pages 4- 9 and 4- 1 0.
In addition to the number one ranking of overall retirement benefits, an
analysis of salary averages indicates that the Arizona State Retirement
System's Active Member salaries are generally comparable to, and
somewhat greater than, the salaries of other Arizona public and p r i i e
employees'wages. This analysis is presented in the following Table 1 which
summarizes data presented in Appendix 2, page 2- 1 2:
TABLE 1 : SUMMARY OF AVERAGE SALARY DATA
SALARY POPULATION DATA AVERAGE
SALARY
Private Employers ' $ 26,892
Public Employers ' 26,448
ASRS Active Members' Salary in 1989 ' 24,057
State of Arizona- State Agencies ' 23,544
Arizona Industry, State & Local Government 22,022
Arizona Industry ( without government) 21,946
Retail and Wholesale Trade 14,239
Overall Average Annual Salary S 22,735
Footnotes:
1. Arizona Joint Governmental Salary and Benefits Survey 1989.
2. Valley National Bank- Statistical Review 1989
3. Arizona Department of Economic Security- Annual Planning Information 1989-
4. The Wyatt Company's 1989 Actuarial Valuation Report
On average, annual retirement benefit amount ( i. e., $ 1 3,260) for new Arizona
State Retirement System retirees in 1989 were approximately 58% of the
OverallAverage AnnualSalary reflected in Table 1. Further, these average
L1F: tjF- T benefit amounts ar proximately . times more than the United States
poverty level for a family of two, and are approximately 2.3 times more than
the poverty level for a family of one ( reference Appendix 2, page 2- 1 2).
Because the responses to the Private Pension Systems Survey did not yield
sufficient resutts from which to form statistically reliable conclusions, we did
not employ this data in our analysis. However, it is interesting to note that
none of the five who responded provide any form of COLA, which is broadly
representative of this aspect of the majority of private sector pension plans.
We believe that incorporating the Arizona State Retirement System
Statement of Primary Intent presented in Figure 1, and the definition of the
Trust Fund Nature of the Arizona State Retirement System presented in
Figure 3 into State Statutes will provide the essential structure from which
future emp loyee benefit p Ian enhancement decisions can be properly made.
Based upon our findings and our analyses, we believe that major benefit
enhancements do not need to be made to the Ariiona State Retirement
System's present benefit plan and structure. However, we do believe that
the Arizona State retirement System should regularly and frequently inform
active members about the availability of the supplemental, optional employee
paid benefits programs available through their employers. Employees
should be encouraged to enhance their overall retirement program through
these and other types of supplemental retirement options.
We believe employees, retirees, employers and Legislators need to have a
greater awareness of the excellence of the Arizona State Retirement System
and its outstanding retirement ben- as compared to other public pension
plans and the private sector. In our experience, when these facts become
known, the employee and employer advocacy groups will place less
pressure upon the Legislature and the Retirement Board to increase benefits
when such increases are not truly needed or justifiable. It should be noted
that the 1 990 legislature passed HB 2632 which requires the Arizona State
Retirement System to establish an outreach educational program. This
should provide an appropriate mechanism for providing the recommended
communication about the availability of optional, employer provided
retirement benefit programs.
Implementation of any of these recommendations should take the issue of
impairment of contract into consideration. This is particularly the case with
any statutory changes made to the joint and survivor annuity option.
SECTION 2. 1
i FUNCTION AND EFFECTIVENESS OF THE ARIZONA STATE
RETIREMENT SYSTEM BOARD AND THE INVESTMENT
I ADVISORY COUNCIL
- *-.---. -",
I 1. 4- statutbiirmit should be placed upon the amount of time allowed for
--** --*?'.
, flimllinegst - ma'e. nVta Acdanvicsyo ryo nC obuontchil . the Retirement System Board and the
2. Consideration should be given to increasing the term of the Investment
Advisory Council members to three, three- year terms.
3. The statutory experience qualifications for the members of the lnvestment
Advisory Council should be increased so that all members are required
to have at least ten years' experience as professionals in the investment
management field.
4. Consideration should be given to providing representation on the
Retirement Board that would bring Legislative perspectives to the overall
administration of the Arizona State Retirement System ( e. g., this
Legislative perspective might be provided by designating chairman of the
House Government Operations Committee, and the chairman of the
Senate Finance Committee, and their successor committees' chairmen,
as advisory members).
5. Consideration should be given to establishing a permanent, on- going
Public Employees Retirement System Sub- comm ittee to oversee all
Arizona public employees retirement systems, which could function as
part of both the House Government Operations Committee, and the
Senate Finance Committee, and their successor committees. a 6. In keeping with the definition of the Trust Fund Nature of the Arizona
State Retirement System as presented in Figure 3, the Arizona State
I Retirement System should have greater flexibility over its annual budget
determination and expenditures ( e. g., exemption from the traditional
budgetary review and approval, and procurement authorities similar to I that of the Arizona Public Safety Personnel Retirement System; or
optionally allowing full discretionary expenditure up to some limitation
If such as a fractional percentage of total market value of assets).
CIF'RFT 7. The Retirement rd shot in ti ute a formal, on- going professional
development and education program for all members of the Retirement
Board, particularly in subjects on public employees retirement systems
administration, benefit planning and design, actuarial valuation theory,
investment management theory, the Arizona Legislative process, and
other appropriate subjects; and funds should be appropriated for this
purpose to be paid from the Administration Account of the Arizona State
Retirement System.
8. The Retirement Board, and the Director of the Arizona State Retirement
System, should institute a formal, on- going program for active
participation by all Retirement Board members and the Director in the
various professional and trade organizations which are relevant to the
activities of a public employees retirement system; and funds should be
appropriated for this purpose to be paid from the Administration Account
of the Arizona State Retirement System.
2.2 Findinas
No particular needs or problems were indicated with the makeup of the
Investment Advisory Council. However, some mention was made of the
possible desirability of increasing the investment management experience
requirements for future lnvestment Advisory Council members, and
lengthening their term of office. Consequently, we believe the term of the
lnvestment Advisory Council members should be increased from the present
three two- year terms to three, three- year terms. We also believe the
statutory experience qualifications for the members of the lnvestment
Advisory Council should be increased so that all members are required to
have at least ten years' experience as professionals in the investment
management field ... and not just have "... experience in making investments."
The members of the lnvestment Advisory Council are non- paid, appointed
volunteers who are usually retired or employed in other full- time
occupations. However, the present Chairman of the Investment Advisory
Council is a retired person who, for the past year, has been performing the
functions of a full- time executive secretary. This Council member's term of
office will soon end, and the functions being performed will most likely not
be able to be performed by any other Council member. Consequently, we
believe that a need exists for these functions to be formally included as part
of the Arizona State Retirement System's Assistant Director for Investments
position.
LE;' jjFT No major needs or le s b re i d cated wrth the overall functional'i af
the Retirement Board. During the interview process, the general opinion
was that the Retirement Board was performing in an acceptable manner.
Further, the overall performance of the Director of the Arizona State
Retirement System was rated highly.
\
We did obse~ e, however, that there is no onqoing professional
development and education program for the members of the Retirement
Board. We believe it is important that all members of the Retirement Board
have an understanding of the state- of- the- art in the field of public employees
retirement systems administration ... p articularly in the subjects on public
employees retirement systems administration, benefit planning and design,
actuarial valuation theory, investment management theory, the Arizona
Legislative process, and other appropriate subjects. It is also important for
the Retirement Board, and the Director of the Arizona State Retirement
System, to actively participate in the various professional and trade
organizations which are relevant to the activities of a public employees
retirement system.
Generalty, communications between the Legislature and the Retirement
Board have not been as effective as necessary given the complexities of the
Ariiona State Retirement System's Retirement Plan and overall functions.
One excellent way to mitigate this problem would be to provide the
suggested Legislative representation on the Retirement Board. It should be
noted that increasing the size of the Retirement Board to nine members
would not create a retirement board that deviates at all from the average
size of the retirement boards af the su~ eyeds tate employees retirement
systems ( reference Appendix 7). Another way to improve communications
and understanding would be to establish less formal, but on- going,
orientation programs for selected key Legislators and their staff in the
" workings" of the Arizona State Retirement System.
One key advantage of Legislative representation on the Retirement Board
is its contribution toward p roviding an ongoing mechanism that will provide
for sufficient dialogue between the Legislature and the members of the
Retirement Board; and that will provide for a better and continuing
understanding of the htricacies of the Legislative process and the
complexities of the administration of the Retirement Statutes.
The Arizona State Retirement System's Retirement Board roles and
responsibilities are typical of the retirement boards for the majority of other
public employees retirement systems. However, there are other approaches
in use such as that of the Washington Department of Retirement Systems.
In Washington, their retirement boards have no administrative or policy
setting responsibilities. The Director of the Department is appointed by the
c'abinet ... and has complete
responsibility for all administrative and policy setting activities. The ~ ri- zona
State Legislature may want to examine this and other types of retirement
board approaches when considering our other recommendations.
We believe it is necessary to establish a permanent, on- going Public
Employees Retirement System Sub- committee function ( i. e., as part of both
the House Government Operations Committee, and the Senate Finance
Committee, and their successor committees). This Su b- comm ittee function
would oversee all Arizona public employees retirement systems. This will
also provide for a better and continuing understanding of the complexities
of the administration of the Retirement Statutes, and help to maintain a
continuity of understanding within the Legislature.
A recent, extended vacancy on the Retirement Board did cause some
operational and voting difficulties. This was particularly problematic because
of the length of time this position went unfilled.
We analyzed the administrative costs of the surveyed public employees
retirement systems from several perspectives. This analysis is found in
Appendix 6. We found that the Arizona State Retirement System's
administrative cost per member is less than about 75% of the surveyed
retirement systems ( reference Appendix 6, page 6- 2).
Also, it should be noted that the Arizona State Retirement System's budget
per stafF position is less than about 70% of the surveyed public employees
retirement systems ( reference Appendix 6, page 6- 3). In our opinion, this
is not necessarily a favorable finding but, instead, can be viewed as a
confirmation of the Retirement Board's stated needs to increase its budget
to meet the unmet demands being placed upon the Arizona State
Retirement System for improved member services and modernized
computer systems.
Another possible confirming indicator of the above noted need for the
Retirement Board to increase its budget can be found in our analysis of the
administrative costs as a percent of the surveyed retirement systems' total
market value of assets ( reference Appendix 6, page H). The Arizona State
Retirement System's administrative cost as a percent of market value of
assets is less than about 88% of the surveyed retirement systems.
The issue of budgetary process exemption and control by the retirement
system is a classical issue confronted by all public employees retirement
systems. As in the case of the Arizona Public Safety Personnel Retirement
System and some other public retirement systems, this issue has been
effectively and successfully resolved. Traditional budgetary restrictions over
a trust fund orienteL cIt~ Foni' na'pHpropriaFtely coTnstric ts the fiduciary role of
the trustees. This, in turn, generally resutts in less than optimum
performance and, in the case of a public employees retirement system, can
impact its capacity to meet its full responsibility to its beneficiaries.
Consequently, we believe the Ariiona State Retirement System should have
greater flexibility over its annual budget determination and expenditures.
There are a number of alternative ways this flexibility could be provided. For
example, an exemption from the traditional budgetary review and approval,
and procurement authorities similar to that of the Arizona Public Safety
Personnel Retirement System could be provided. Another way would be to
allow full discretionary expenditure up to some limitation such as a fractional
percentage of total market value of assets.
SECTION 3. ITEM REGARDING
POST- RETIREMENT BENEFIT INCREASES FOR REIRED
PERSONS
3.1 Recommendations
1. Future Post- Retirement Benefit Enhancements should be granted only if
they are consistent with the statutory Arizona State Retirement System
Statement of Primary Intent ( reference Figure 1).
2. The Post- Retirement Benefif Enhancement Dedicated Trust Fund concept
described in Appendix 9 should be statutorily implemented, with the first
annual distribution being made on July first of the first full year following
enactment.
3. Statutorily require that future Post- Retirement Benefit Enhancements be
granted only if they can be funded via the Post- Retirement Benefit
Enhancement Dedicated Trust Fund ( reference Ap p end ix 9) ; and that
Post- Retirement Benefit Enhancements can not be funded from
increases in the contribution rate or from the primary Public Employees
Retirement Trust Fund.
4. Consideration should be given to using part of the initial funding capacity
of the Post- Retirement Benefit Enhancement Dedicated Trust Fund to
bring the old 1.2% and 1.5% formula retirees' benefits up to a benefit
based upon the present 2.0% formula. .. if such calculation would result
in a benefit which exceeds the present benefit.
5. Statutorily provide for future Post- Retirement Benefit Enhancements
being granted only to those retirees who have reached age 65 and who
have been retired for three or more years.
6. Statutorily prohibit future Post- Retirement Benefit Enhancements from
being provided on an equal, across the board, lump sum dollar amount
basis; and require that such Post- Retirement Benefit Enhancements be
based upon a percentage of retirement benefit amount, or reflect years
of service credit such as providing a fiied dollar amount per year of
service.
7. Statutorily provide that future Post- Retirement Benefit Enhancements be
granted only as a percentage of the retirement benefit, and not as a fiied
dollar amount ... and granted only within the funding availability constraints
of the Post- Retirement Benefit Enhancement Dedicated Trust Fund.
The preference for adding an automatic Cost of Living Adjustment ( COLA)
provision was the single highest priority item discussed among all employee
groups and the Retirement Board. However, there was simultaneous
recognition that implementation of such a provision using traditional funding
mechanisms was more costly than most groups felt was realistically
affordable. Further, under Arizona case law, implementation of a statutory,
automatic COLA would establish a contractual liability that might be difficult
to fulfill in future " lean" years and could place the funding integrity of the
Arizona State Retirement System at great risk.
In our opinion, the fully retroactive 3% Cost of Living Adjustment ( COLA)
plan as outlined in the Wyatt Company's December 1 5,1989 " Arizona State
Retiment System Attmatives tbr Actuarial Value of Assets and the Cast
of an Aufomatk COW is neither justifiable or affordable. It is also
questionable if a COLA is required in terms of the need to enhance the
market demand of the Arizona State Retirement System. As indicated in the
above I!... Cost of an Automatic COLA" Wyatt Company report, this COLA
would increase the present employer and employee contribution rates to
between 7.24% and 7.41 %... and would have the immediate effect of creating
an Unfunded Accrued Actuarial Liability of between $ 700 and $ 761 million.
In our opinion, this approximate 90% contribution rate increase, and the
immediate elimination of the present " overfunding" position raises a major
issue af affordability.
This COLA affordability issue we raise does not mean that some form of
what we refer to as a Post- Retirement Beneiit Enhancement mechanism is
unwarranted. We believe that the Arizona State Retirement System's
outstanding retirement benefits, as compared to other public pension plans
and the private sector, are not fully comprehended by the employers . and
employees. With this recognition placed into context, the concept of
providing some affordable Post- Retirement Benefit Enhancement mechanism
can be more readily understood.
The recommended Post- Retimeni Benefit Enhancement Dedicated Tmsf
Fundconcept could provide a self- perpetuating and self- funding mechanism
to provide reasonable and affordable Post- Retirement Benefit Enhancements
without the requirements of continually increasing contribution rates and
placing the burden of payment for current unfunded benefit enhancements
upon future employees and employers ( reference Appendix 9). In
developing this concept, we did consider other optional approaches. We
considered the establishment of a new retirement plan, containing a COLA
feature, for all new employees that would generate the approximate
employing the concept of using realized net income above the actuarially
assumed investment return rate to fund Post- Retirement Benefit
Enhancements. These various alternatives were discarded because we
believe our recommended Post- Retirement BenM Enhancement Dedicated
Trust Fund concept to be a substantially superior solution to the specific
issues confronting the Arizona State Retirement System.
The $ 400 million endowment for the Post- Retirement Benefif Enhancement
Dedicated Trust Fund would rep resents a nominal loss of income for the
general Public Employees' Retirement Trust Fund. However, the effect upon
the contribution rate would be to increase it by about only 6% ( i. e., 6110' s
of 1 %). Amortized over 30 years at 8%' the $ 400 million endowment is
equivalent to an annuity of $ 35.5 million. Of course, implementing the
Post- Retirem ent Benefit Enhancement Dedicated Trust Fund concept wou Id
mean that the general Public Employees' Retiment Tnrst Fund would no
longer fund Post- Retirement Benefit Enhancements. The effect should be
to make more certain the financial position of retirees and to resolve the
question of ad hoc Post- Retirement Benefit Enhancements ... without
continued Legislative intervention. By continually projecting the funding
capacity of the fund, the issue of affordability can be addressed on an on-going
basis and the amount of each Post- Retirement Benefit Enhancement
can be adjusted accordingly.
A major advantage of the Post- Retirement Beneiit Enhanmevtt Dedkated
Tnrst Fund is its robustness in the face of uncertain inflation and investment
return. If inflation is high, interest will also tend to be high. But in any event,
the awarding of Post- Retirement Benefit Enhancements are conditioned on,
and limited by, return on investment of the Trust Fund. By adhering to the
concept of the Trust Fund, the Legislature would not be creating retiree
benefit payment obligations that might not be fulfilled in later years.
We believe that incorporating the Arizona State Retirement System
Statement of Primary Intent presented in Figure 1, and the definition of the
Trust Fund Natum of fhe Arizona State Retiimmt Systm presented in
Figure 3, into State Statutes will provide the essential structure from which
future Post- Retirement Benefit Enhancement decisions can be made. By
following these foundation principles, the Legislature will have a baseline
from which they can make better legislative decisions, and can respond
more appropriately to the pressures placed upon them by the various
employee and employer advocacy groups.
In wr opinion, the administration and legislation associated with the Arizona
State Retirement System, should give consideration to the concepts of moral
Lip' tjF oblgath to the m e anB equ n awar ing Post- Retirement Benefit
En hancernents.
Consideration of these concepts would then give rise to discussion of the
following types of conceptual issues:
Should the 1.2% and 1.5% percentage muttiplier factor retirees' retirement benefits
be upgraded to the current 2%?
Should any Post- Retirement Benefit Enhancement be awarded based primarily
upon need, equity and/ or service credit?
Should Post- Retirement Benefit Enhancements be paid for by assessing present
and future employees and employers through an increase in contribution rates?
Should retirement benefits be fully, or partially, protected from " inflation" ( e. g.,
wage, price, or some hybrid " inflation" index)?
Does the Arizona State Retirement System have the same obligation to provide a
fully protected retirement benefit to a member who retires with only ten years of
service, as to a member who is a full career service employee with thirty years of
service?
Should the effect upon taxpayers be considered when evaluating various Post-
Retirement Benefii Enhancements?
The question of the actual loss in purchasing power under the present ad-hoc
COLA method was mentioned. Figure 5 presents an analysis of the
effects upon two retirement benefits from the actual ad- hoc COLA amounts
granted versus what would have been granted had there been an automatic
3% COLA. It is quite interesting to note that the actual ad- hoc COLA
process resutts in an increased retirement benefit that is about 21% to 34%
more than what the automatic 3% COLA would have provided. This finding
certainly raises the question of the necessity for an automatic, across the
board COLA. In our opinion, the immediate need in most cases is not
significant. We believe the recommended Post- Retirement Benefit
Enhancement Dedicated Trust Fund is a better intermediate and long- term
solution; and it does not commit the State and other employers to a specific,
contractually obligated COLA benefit that might be difficutt to fund in later
years.
About 49% of the surveyed state public employees retirement systems have
an automatic COLA ( reference Appendix 2, pages 2- 3, 2- 4 and 2- 5).
However, about 45% have an ad- hoc COLA and about 6% have some form
of investment return related COLA. We do not have historic data, so we can
not determine if the trend among other state retirement systems is toward,
or away from, automatic COLAS. However, we do not believe that the
Arizona State Retirement System should base its retirement benefit planning
decisions entirely u state retirement systems.
While these trends are important indicators of the overall employee benefits
p lanning environment, they do not necessarily reflect the Market Demand
conditions within the State of Arizona.
We have calculated the estimated cost to bring the old 1.2% and 1.5%
formula retirees' benefits up to a benefit based upon the present 2.0%
formula On average, the effect of this Post- Retirement Benefit Enhancement
would be an increase in the overall average benefit amount for all retirees
from $ 534 per month to $ 567 per month. However, the estimated initial
increase in the retiree payroll would be about $ 948,000 per month ( i. e., an
increase of about 3.8%). We believe consideration should be given to using
part of the initial funding capacity of the Post- Retirement Benefit
Enhancement Dedicated Trust Fund to implement some, or all, of this
estimated adjustment.
Figure 4 presents the projected retirement benefits payments as discussed
in The Wyatt Company's ' Msset/ Liability Modeling StudyUand as adjusted for
deleting the automatic 3.5% COLA in two out of three years. The projected
9% annual growth rate for retirement benefits has been reduced by
eliminating the estimated effect of the 3.5% COLA in two out of three of the
projected future years ( i. e., ( 1.035)* x ( 1.000)' = ( 1 + i) 3 thus i= 2.32%
lesslyear). As reflected in Figure 4, the COLA's effect upon increasing the
projected total retirement benefits payments is significant. The total
payments by the year 2013 with the COLA would be about $ 2.4 billion, but
without the COLA the total payments in 201 3 would be only $ 1.4 billion ( i. e.,
41 % less). The Figure 4 anatysis highlights the substantial liability to which
the State, other employers, and the taxpayers, would be exposed should a
statutory, automatic COLA be implemented.
We have developed four alternative projected estimates for how many years
the Past- Retiment Banelit Enhanment Dedicated Tiust Fund's inaii $ 400
million principal contribution might last. These projections include the
factoring in of our recommended 65 and 3 rule ( i. e., a retiree must reach the
age of 65 and have been retired for at least 3 years before receiving any
Post- Retirement Benefit Enhancement). This 65 and 3 rule data is found in
Appendix 10, pages 10- 1 2 and 10- 1 3. Using the recommended concept for
distributing the income of the Trust Fund. .. using only the initial $ 400 million
as the baseline principal ( reference Appendix 10, pages 10- 1 5 through 10-
22), the following results could be realized:
The $ 400 million would last until about the year 2028 if a 1% Post- Retirement
Benefit Enhancement were provided.
- OR-
C: i 6' fj , F-" T- The $ 400 millio oul lasf u ti1 a out the year 2007 if a 2% Post- Retirement
Benefit Enhancement were provided.
- 0R-The
$ 400 million would last until about the year 2001 if a 3% Post- Retirement
Benefit Enhancement were provided.
- 0R-The
$ 400 million would last until about the year 1999 if a 4% Post- Retirement
Benefit Enhancement were provided.
Obviously, if a favorable investment return continues into the future, and the
Actuarial Value Funding Ratio grows in excess of the recommended 1.05
minimum funding level, then the amount of income available for distribution
would increase. It is clear from this analysis, that the issue of affordabillty
which we raise, is of substantial importance when considering granting Post-
Retirement Benefit Enhancements.
Should any future Post- Retirement Benefit Enhancement be provided as a
fixed dollar amount, and not as a percentage of the retirement benefit, it
should be granted on the basis of a retiree's years of service credit as a
percentage of the defiied full service career of 30 years, and it shou Id not
exceed 100% of said Post- Retirement Benefit Enhancement.
SECTION 4. ITE REGARDING
EARLY RETIREMENT INCENTIVES WITH A PARTICULAR
EXAMINATION ON THE FEASIBILITY OF IMPLEMENING
A CORRESPONDING ACTUARIAL REDUCTION IN
BENEFITS
4.1 Recommendations
1. Early retirement incentives, such as the recent 2.2% retirement incentive
window, should be statutorily prohibited ... unless it can be predetermined
that the anticipated quantified savings will be greater than the incentives'
costs to the Arizona State Retirement System and, ultimately, to the
employers and employees.
2. The early retirement adjustment factors should be corrected to more
closely reflect the actuarial equivalent benefit.
About 84% of the surveyed state public employees retirement systems do
not have an early retirement incentive ( reference Appendix 2, page 2- 3).
However, including the Arizona State Retirement System, about 87% allow
early retirement with some form of retirement benefit reduction. We do not
have historic data, so we can not determine if the trend among other state
retirement systems is toward, or away from, providing early retirement
incentives.
In our opinion, early retirement incentives are counter to the recommended
Arizona State Retirement System Sfatment of Prhary Intent as presented
in Figure 1. Early retirement incentives are most often used in the private
sector as a mechanism to reduce the work force and reduce salary costs.
W i the possible exception of limited employee groups, an early retirement
incentnthin a gmrnmental setting does not result in reductions in salary
costs in excess of the cost to provide the early retirement incentive. Further,
since the early retirement incentive is not a pre- funded feature of the Arizona
State Retirement System, the effect is to actuarially defer the cost to
employers and employees through increases in the contribution rate.
The current early retirement factors subsidize early retirement at the expense
of the Arizona State Retirement System, its active members and the
participating employers. This raises issues of equity, personnel policy, and
actuarial valuation. more than normal
retirement. In as much as early retirement is equally available, the system
can be said to be fair. However, since normal retirement is effectively
penalized, the question arises whether policy is to encourage retention and
continued employment or work force turnover. Of course, the availability of
early retirement can be a positive recruiting factor.
Consequently, we believe the early retirement adjustment factors should be
corrected to more closely reflect the actuarial equivalent benefit. The
following Table 2 compares Arizona State statutory reductions for early
retirement, with early retirement factors which produce benefits actuarially
equ'rvalent to normal retirement:
TABLE 2: COMPARISON OF EARLY RETIREMENT FACTORS
Using Table 2, for example, a 64- year- old normally retiring at 65 may now
retire at a 97% pension. The factor which would truly provide benefits of the
same present value is 89%. These figures assume the 1979- 80 US Life
Table and 8% interest. Higher mortalrty or higher interest would provide
larger reductions. ~ I E ~ F i PO actuarial T valuations reflect realistic
ear& retirement reduction- factors since the present value of benefits
depends heavily on when early retirement is exercised. Calculation of
required contribution rates, of course, will be influenced by early retirement.
The recommended Arizona State Retirement System Statement of Primary
Intent as presented in Figure 1 also encourages extended employment.
Because the present retirement formula does not limit the number of years
of service, there is a built in form of extended employment motivation. What
is needed is to eliminate early retirement incentives which negate the effect
of this feature.
Implementation of any of these recommendations should take the issue of
impairment of contract into consideration. This is particularly the case with
any statutory changes made to the early retirement adjustment factors.
SECTION 5. LI M F' 7:' b nh T MINE - 6; HEWER THE
PRESENT FUNDING OF THE ARIZONA STATE
RETIREMENT SYSTEM ADEQUATELY ENSURES THAT
ADVANCED FUNDING OF THE SYSTEM IS PROVIDED ON
A SOUND ACTUARIAL BASIS
5.1 Recommendations
1. The Arizona State Retirement System Primary Funding Objectives
presented in Figure 2 should be incorporated into State Statutes.
2. Statutorily establish the objective of maintaining the Arizona State
Retirement System's Actuarial Value Funding Ratio at a minimum funding
level of 1.05 to provide a reserve for contingencies and losses from
unanticipated market and investment volatility.
3. The statutory, actuarially determined contribution rate should be
constitutionally shielded from legislated reductions.
4. Statutorily provide that any actuarially determined overfunding in excess
of the Actuarial Value Fundjng Ratio's 1.05 funding level be annually
transferred from the primary Retirement Fund's assets into the Post-
Retirement Benefif Enhancement Dedicated Trust Fund.
5. Statutorily require that the Retirement Board contract for an investigation
of the mortality, disability, service and other experiences of the members
and employers participating in the Arizona State Retirement System as
of the year ended June 30, 1991 ; and that such experience investigation
be conducted at least every four years thereafter; and funds should be
appropriated for this purpose to be paid from the Administration Account
of the Arizona State Retirement System.
6. Statutorily require that when the effect of a change in the actuarial
assumptions used for the annual actuarial valuation of the Arizona State
Retirement System causes the contribution rate to change by more than
- c 30% of itself, that the Legislature, in cooperation with the Retirement
Board, commission an independent actuarial review of the most recent
experience study and actuarial valuation with the objective of validating
the changes in the actuarial assumptions; and funds should be
appropriated for this purpose to be paid from the Administration Account
of the Arizona State Retirement System.
assumptions used for the annual actuarial valuation of the Arizona State
Retirement System causes the actuarial accrued liability to change by
more than A 20% of itself, that the Legislature, in cooperation with the
Retirement Board, commission an independent actuarial review of the
most recent experience study and actuarial valuation with the objective
of validating the changes in the actuarial assumptions; and funds should
be appropriated for this purpose to be paid from the Administration
Account of the Arizona State Retirement System.
8. Consider conducting an actuarial study to determine the feasibility and
cost- effectiveness of either fully or partially experience rating the
contribution rates of the employers participating in the Arizona State
Retirement System; and funds should be appropriated for this purpose
to be paid from the Administration Account of the Arizona State
Retirement System.
9. Consider conducting an actuarial study to determine the feasibilrty and
cost- effectiveness of 100% employer funding of the Arizona State
Retirement System, with the initial cost to convert to this funding
approach being paid via eliminating one, or more, of the next employee
pay raises; and funds should be appropriated for this purpose to be
paid from the Administration Account of the Arizona State Retirement
System.
5.2 Findinas
In general, we concluded that the present funding of the Arizona State
Retirement System adequately ensures that advanced funding uf the system
is provided on a sound actuarial basis. However, this situation wiU be
placed at material risk if the statutory, actuarially determined contribution
rate continues to be legislatively reduced.
We believe it is of vital importance to constitutionally provide a Profective
Mechanism that will provide for the maximum feasible security of the Arizona
State Retirement System's assets; and to shield the assets from both wide
swings in the investment marketplace, and from capricious reductions in the
statutorily required and actuarially determined contribution rate.
The future cost for repayment of arbitrary reductions in the statutory,
actuarially determined contribution rate will only defer a greater cost into
future years. In other words, it will cost more in the long run than the short
term reduction in contribution expenses. Such actions also impact the
6;: 1FiI; 1FT intermediate secur' nd intebri o t e fund~ ng status of the Retirement
Fund. The liability for deferred contributions grows like compound interest.
For example, at 8% interest, liability will double in 9 years. That is, a $ 1
contribution deferred for 9 years would require a $ 2 current contribution.
We identified 19 of the surveyed state retirement systems with an Assets
Market Value/ Liabilrty Funding Ratio in excess of 1.0 ( reference Appendix 5,
page 5- 2). However, it is interesting to note that this Ratio is greater than
.9 for 26 of the surveyed state retirement systems.
In contrast, only 9 of the surveyed state retirement systems had a Actuarial
Value Funding Ratio in excess of 1 . O, while this Ratio is greater than .9 for
23 of the surveyed state retirement systems ( reference Appendix 5, page 5-
3).
The Arizona State Retirement System's Assets Market Va/ ue/ LiabilIfy Fundhg
Ratio ranked fifth among the surveyed state retirement systems, and their
ActuarM Value Funding Ratb ranked fourth. Essentially, Arizona ranked
higher than 90% of the surveyed state retirement systems who provided this
data for both of these ratios ( reference Appendix 5).
It is difficult to assess the appropriateness of the actuarial assumptions in
the absence of an experience study. However, an examination of the
investment return interest rate assumptions and the salary increase
percentage rate assumptions of the surveyed state retirement systems
indicates that the Arizona State Retirement System's rates are well within the
average ( reference Appendix 2, pages 2- 7 and 2- 8). Also, the assumed
rates used by the Arizona State Retirement System appear to be reasonable
and reflect conservative, but sound and prudent, actuarial principles.
When considering the Entry Age Normal ( EAN) versus the Projected . Unit
Credit ( PUC) actuarial valuation methodologies, from the layman's
perspective, it is important to understand that the EAN method is designed
to produce a constant, level contribution rate, whereas the PUC method can
produce an ever slightiy increasing contribution rate. The PUC method will
result in an initially lower contribution rate than the EAN method. So long
as the population of the subject retirement system membership is ever
increasing, the contribution rate under the PUC method will most likely not
materially increase. However, should the subject retirement system
membership population age and decline, the contribution rate under the
PUC method will eventually exceed the contribution rate determined under
the EAN method.
It is difficult to compare the effects upon the overall funding of the Arizona
State Retirement System which result from the change from the Entry Age
C: 1JCi F T Normal to the Proje d nit Cr dit actuarial valuation method. However,
as noted to us by the Wyatt Company, the contribution rate for 1990- 91 ( i. e.,
3.82%) would have been "... no less than 5.49%.." had the Entry Age Normal
actuarial valuation method been employed instead of the Proiected Unit
Credit method. Further, the Wyatt Company noted that this 5.49%
contribution rate was estimated based upon stretching the current 13 year
funding period to 45 years. Further, the Wyatt Company indicates "... that
the actual Entry Age Normal contribution rate would be slightly above 5.49%
since the impact of the contribution cutback for 1989/ 90 is likely to have a
larger impact under EAN than under PUC."
It is also interesting to nute that 75% of the sunreyed state retirement
systems who provided actuarial valuation method data employ the Entry
Age Normal Method, and only 20% employ the Projected Unit Credit
method. Five percent indicate the use of some other actuarial valuation
method. This information is found in Appendix 2, page 2- 7. We do not have
historic data, so we can not determine if the trend among other state
retirement systems is toward, or away from, the Projected Unit Credit
method.
An inspection of the Mercer Meidinger " lnvestment Performance Evaluation
Report for Periods Ending September 30, 1989 indicates that the total fund
performance for the last ten years was " near the median of the universe,
below the index, and ahead of the median Public Fund." However, this
Evaluation Report notes that total fund performance during the last three
years has not been as favorable as compared to the benchmark groups.
It should be noted that the overall investment income has been in excess of
1 1 % and the overall ten- year investment income is close to 14% per annum.
In our opinion, investments should not be made which yield below normal
market returns, or which are made in the name of any other interest except
that of the beneficiaries of the Arizona State Retirement System. The use of
the investment trust for economic development may well be in keeping with
its nature and purpose. Retirement trusts are encouraged by government
as a source of savings for investment, Investment within Arizona generates
income and tax revenues for the state and job security for Arizona
employees. It is common for pension funds for the building trades to be
invested in building projects. The funds help maintain the building market
and generally receive a favorable rate of return. Regulations allow private
pension plans to invest a percentage in venture capital funds. The effect is
to produce a good rate of return and at the same time foster a dynamic
business environment. In general it would seem reasonable to allow for
similar opportunities to the Arizona State Retirement System, provided
similar limits are placed on the percentage that can be committed and the
rate of return that will be received.
BE'fiFT Actuarial valuations st e ci e as estimates and projections whose
ultimate reliability will vary depending upon the actual events of the future.
These valuations should not be viewed as absolute.
As for the question uf whether or not the Aluona State Retirement System
is overfunded or not, the answer is that it is overfunded. Because, as we
noted previously, actuarial valuations are estimates, the only question is
" how much is it overfunded." Based upon the two most recent, different
actuarial valuations the amount of the actuarially defined overfunding ranges
from $ 323.2 million to $ 509.7 million ( i. e., respectively per the ' Hsset and
Benefit Valuation of the Arizona State Retirement Plan" prepared by
Professors James R. Booth, Ph. D. and Richard L. Smith, Ph. D.; and the
Wyatt Company's " Actuarial Valuation as of June 30, 1989' 3. However, these
two reports' projected overfunding based upon the market value of the
Retirement System's assets ranges from $ 956.9 million to $ 1 . I 33 billion. The
substantially lower projected actuarial overfunding reflects the conservative
and prudent assumptions and methodology used in calculating the actuarial
value of the Retirement System's assets.
Another important question related to the issue of overfunding is ' who owns
fhe overfunding." First, as provided for in the definition of the Trust Fund
Nature of the Arizona State Retirement System, these assets are held in trust
for the member employees ( reference Figure 3). Second, it can be argued
that the majority of the present overfunding is " owned" by the present
retirees and long- time active members ... all of whose contributions have
materially contributed to the present overfunded condition. If this concept
is accepted, then our recommended approach for funding the Post-
Rstriment Ben& Enhancement Dedicated Trust Fund concept can be
more readily understood and accepted. The concept that the assets of the
Arizona State Retirement System and/ or its overfunding are " owned" by the
State or any contributing employers conflicts directly with the trust fund
nature of the Arizona State Retirement System.
Mr. Rollin Pelton, Chairman of the Investment Advisory Council, has raised
the issue of volatility. The concept of volatility is of substantial magnitude
when considered in light of the issue of " overfunding." Using the market
crash of October 19, 1987 as an example, Mr. Petton wisely notes that the
value of the Arizona State Retirement System's total fund declined by about
6% which equated to about $ 400 million. During this same period, the Dow
Jones Industrial Average dropped by more than 30%.
The reason the Arizona State Retirement System's tutai fund declined onty
$ 400 million was because it was invested only about 38% in common stocks
in October 1987. Mr. Petton suggests that one standard deviation of risk,
if experienced, could cost the Arizona State Retirement System as much as
L: lFiHFT $ 1.8 billion dollars i arket v'alue ( i. e., a loss of about 25%). A decline in
the value of the retirement System's assets in excess of 15% could be
classified as catastrophic. This concept of volatility is the most important
reason why we believe that the Arizona State Retirement System's ActuafH
Value Funding Rafb should be maintained at a minimum funding level of
1.05 to provide a reserve for contingencies and losses from unanticipated
market and investment volatility.
Perhaps the most intriguing information relating to the ensuring of advanced
funding of the Arizona State Retirement System is found in the March 1989
' Asset/ Liability Modeling Studyup repared by the Wyatt Company. Page 63
of this Study states '... we project a 25% probability that portfolio D will bring
ASRS to full funding ( no contribution) in 2006." The fact that a zero
contribution rate even falls within the realm of statistical probability is
astonishing. If this condition is practically achievable, then it should become
a major objective for the Legislature, the Retirement Board and the
Investment Advisory Council to achieve. This projection, however, would
most likely not be achieved if this Report's recommended Post- Retirement
Benefif Enhancement Dedicated Trust Fund concept is implemented.
Although we are recommending conducting an actuarial study to determine
the feasibility and cost- effectiveness of either fully or partially experience
rating the contribution rates of the employers participating in the Arizona
State Retirement System ... and an actuarial study to determine the feasibility
and cost- effectiveness of 100% employer funding of the Arizona State
Retirement System ... we are not proponents of either of these funding
approaches. We are recommending that these studies be made in
response to questions and issues which were mentioned during our Study
work.
SECTION 6. QF'aF& 9 MINE E PRESENT
INVESTMENT GUIDELINES OF THE SYSTEM WITH A
POLICY GOAL OF PROVIDING FOR ALLOWABLE
INVESTMENTS IN ORDER TO PROVIDE TIMELY PAYMENT
TO THE SYSTEM'S BENEFICIARIES IN THEIR RETIREMENT
6.1 Recommendations
1. Consideration should be given to increasing the limit on foreign
investments to 25% of the Arizona State Retirement System's assets,
instead of entirely removing this restriction.
2. Concurrent with the statutory implementation of this Report's
recommendations, consideration should be given to complete
recodification and simplification of the present retirement statutes.
Throughout the interview process, no one indicated any particularly major
problems or concerns regarding the statutory investment guidelines. The
only exception relates to the issue of the 10% limit on foreign investments.
After discussions with the members of the Retirement Board, and the
Chairman and Vice- Chairman of the Investment Advisory Board, we believe
that increasing the 10% foreign investment restriction to 25% would provide
a reasonable and prudent solution to the constraints presently being fett.
Further, it is reasonable to expect that the investment policy of the
Investment Advisory Council would most likely not resutt in foreign
investments exceeding the recommended 25% threshold.
During 1989, the lnvestment Advisory Council has reduced investment costs
by approximately $ 4.5 million. This rep resents a reduction of about 30% in
the total investment costs. These savings were realized from: 1) manager
fee reductions; 2) reductions in custodial fees; and 3) reduced transaction
costs resulting from anticipated lower portfolio turnover and lower trading
costs.
The present retirement statutes have evolved over many years. These
statutes have become lengthy and overly complex. We believe that the
statutory implementation of this Report's recommendations will further
complicate these statutes. Consequently, we believe now is the time to
L: lpfiFT consider complete ec difyin and simplifying the present retirement
statutes.
LlpMT SECTlON7: S M R? F EDA ACOLLECTlON
AND ANALYSIS PROCESS
7.1 External Data Collection and Anabsis
Data was used and/ or collected from three primary sources which are
external to the Arizona State Retirement System and the State of Arizona:
- Several previous studies and other data ( reference Appendix 1).
- Our Public Employees Retirement System Data Collection Survey Process
( reference Appendix 2).
- Our Private Pension Systems Survey Data Collection Survey Process ( reference
Appendix 3).
The Public Employees Retirement System Data Collection Sutvey produced
outstanding resutts. The Data Collection Survey was sent to 69 state public
employees retirement systems which were included in the analytical process.
Completed responses were received from 48 of the 69 suweyed, although
one response was received too late to be included in the analysis. This 70%
return rate is an excellent response rate. As a result, we obtained 100% of
the benefits evaluation data we were seeking for 64 of the 69 sunmyed state
public employees retirement systems ( i. e., 93%). We obtained 1 00% of all
of the evaluation data we were seeking for 59 of the 69 surveyed ( i. e., 85%).
For the remaining 10 surveyed we obtained varying types of data.
The Survey data, combined with the data collected from the other sources,
was compiled into several analytical formats. These analyses focused upon
five primary functional areas:
- Retirement system benefits.
- Actuarial valuation components.
- Investment components.
- Administrative costs.
- Retirement board composition.
The surveyed state public employees retirement systemss banefts data was
also used to prepare a CovnpcmM RankAg of the overall retirement benefits.
retirement system benefits factors:
-
- Member contribution rate.
- Employer contribution rate.
- Retirement benefit amount at 30 years' service for two levels of final average salary
actuarially increased to $ 1 5,000 and $ 30,000 final year's salary.
- The presence of an automatic cost of living adjustment ( COLA).
- Integration with Social Security.
- The percentage multiplier factor used to calculate benefits.
We also prepared a comparative analysis and ranking of the DolAars of
Ben& Per Percent of Member CCKIfrbution Rate, and the DoIAars of
Bmef% Per Perclent of Empbyer Cuntributh Rate for the surveyed state
public employees retirement systems.
The detailed Cmposite Rankhg and the associated retirement benefits
rankings for the surveyed state public employees retirement systems are
found in Appendix 4.
We examined the surveyed state retirement systems' actuarial valuation and
investment components. This data is included with the survey data found
in Appendix 2. We conducted an analysis of the funding statusIrati0 of the
surveyed state retirement systems from two perspectives:
- We examined and ranked the surveyed retirement systems on the basis of. their
individual Actuarial Value Funding Ratio.
- We examined and ranked the surveyed retirement systems on the basis of their
individual Assets Market Value/ Liability Funding Ratio.
We believe a more relative, comparative measure of funding status is
achieved by our Asssls Market V'ue/ Ln'abiIiry Fundlg Ratb analysis ( i. a,
defined as the Market Value of Assets +- the Actuarial Accrued Liability). This
is especially true when comparing the funding status of different retirement
systems because they all use varying actuarial valuation, investment and
funding assumptions. These rankings and related analyses are found in
Appendix 5.
We calculated the adfii fir istr ive costs T for the surveyed retirement
systems per member and per staff position ... and we dculated the
administrative costs as a percent of the assets' market value. The detailed
administrative costs data compilation is included with the survey data found
in Appendix 2. The administrative costs rankings and analysis are
presented in Appendix 6.
We summarized the sutveyed retirement systems' retirement board
composition data by board member category. This data is presented in
Appendix 7.
We collected data relating to several other states' approach to organizing
and staffing their respective investment management functions. These
contacts were made by telephone and were much less formal and
structured than our other data collection processes. We found four states
who have an investment management function that is separated from their
state retirement systems' boards of trustees. These states are Illinois,
Wisconsin, Oregon and Washington. Howmr, we found no state where,
as in Ariiona, the separate investment management function is dedicated
entirely to the management of their retirement system's funds. On the other
hand, all four of these other states have a full- time, executive director and
support staff who report directly to their respective investment management
boards.
The Private Pension Systems Survey Data Collection Survey Process yielded
unsatisfactory resub. The Private Pension Systems Survey was sent to 32
of the largest companies in Arizona. We also contacted each company by
telephone to request a response to the survey. In spite of this, we recejved
only five completed surveys. While this data is useful and is generally
indicative of the private sector pension plan environment, it is not sufficient
to form conclusive findings. Consequently, we have supplemented this
survey data with summary data obtained from the Arizona State Personnel
Division's " Joint Governmental Salary and Benefits Survey." These findings
resulted from information provided to the Arizona State Personnel Division
by 195 private sector companies. To the extent possible, we have
extrapolated these data to allow for a composite analysis which included the
data from the Private Pension Systems Survey we conducted.
L: IF'HFT 7.2 Internal Data COII Ion and Anass
Data was used and/ or collected from the following primary sources which
are internally oriented with the Arizona State Retirement System and the
State of Arizona:
- The computerized database of more than 33,000 retirement benefits recipients as
of November 1988 ( reference Appendix 10).
- Studies, data and other information relating to the Arizona State Retirement System
( reference Appendix 1).
- Structured interviews with each member of the Retirement Board and the Director
of the Arizona State Retirement System ( reference Appendix 8).
- Structured interviews with representatives of several employee and employer
advocacy groups ( reference Appendix 8).
The actuarially oriented analysis of the computerized retirement benefits
database was used primarily to develop our recommended Past- Refiment
Benefif Enhancement Dedicated Tmst Fund concept ( reference Appendix
9). This analysis summarized totals of retirees' benefits by several different
age, years of service and other related categories.
The Appendix 10 Tables were prepared using a tape containing the retiree
database as of November 1988 provided by the Arizona State Retirement
System. Data from the tape was transferred to a computer disc file. A
computer program was written to sort and tabulate the data by criteria such
as date of retirement and final average salary. Calculations such as final
average salary required, for example, reversing COLA's to find the original
benefit, reversing the effect of retirement options such as joint- and- survivor
and early retirement, and then dividing by the benefit percentage yielded
from service and date of retirement.
The four Table 11 spread sheets were developed to illustrate the expected
life of the Postffeiimmt BmBfit Enhancement Whir& TNst Fund. The
major complication arose from the assumption that when a Post- Retirement
Benefif Enhancement is given a liability results for the life of the recipient
retirees. This actuarial liability reduces the balance that can be used for new
Post- Retirement Benefil Enhancements. To calculate this liability a standard
1979- 80 US Life Table was used and a rate of total increase in retiree
benefits was derived from the Wyatt & Company asset valuation. The Table
1 1 spread sheets dispense new Post- Retirement Benefil Enhancement until
the actuarial surplus is expended. After that, no new Post- Retirement Benefit
Enhancement are LFfiFT Ithob h p ents ontinue on Post- Retirement
Benef7t ~ nhancemenat lready granted.
Among the studies relating specifically to the Arizona State Retirement
System we reviewed, and which are listed in Appendix 1 , we particularly
analyzed the following:
- Arizona State Retirement Plan - Actuarial Valuation as of June 30, 1989.
- AssetJLiability Modeling Study for the Arizona State Retirement System March
1989.
- Arizona State Retirement System Alternatives for Actuarial Value of Assets and the
Cost of an Automatic COLA, December 15, 1989.
- Arizona State Retirement System Spendable Income Analysis.
- Arizona State Retirement System Investment Performance Evaluation Report for
Periods Ending September 30, 1989.
- Asset and Benefit Valuation of the Arizona State Retirement Plan for The Arizona
Legislative Council, May 8, 1989.
Further, the Wyatt Company was helpful in providing answers to some of the
information requests we made of them.
ARIZONA STATE RETIREMENT SYSTEM
STATEMENT OF PRIMARY INTENT
1. I t is tlie oricy oftlie ArizonaState Lgishture tfiat tliepnfmmy
Inh? rt o P the Arizaa State Retiremat System is to:
JZ nnuismrdntnincmpr; lya ofdie fii#& pdE qdty.
/. 6. contribute tmard providing a totdc~ np- pa@ e
tfiat isgewmflj rqui~& to c~ npara6eim pGyment in
& r pdric and private organizatiar in die State of
Arizona.
c. prmidi a ntinmart system a d mociatuC ntinmtnt
benefits which wig& egoztem? nentemp~~ ve
to qd+ d empGnjees Md which wig momye tfke
qbya to mMtr in oztem? nent smriu for such periods
oftime ns to providi dPdlem pGyerfig6emfit o f die
training and ehperience g a i d 6y these empGyees.
d praridi an orhrGj metfiod o pmwtiy a
f i y hel of smriu to f pu6aC drag.. an equita6h
separation procedure which is availb6h to empGyees at
retirement or upon 6ecomiq3 disa6U
e. provia2 a ntlmnmt benejtj as ofJanuuryyfirst 1993 for aiT
retirees who have met other retirement tenure and
eligi6ifity nrlk, tfiat sfid6e no liss thm the
p- equivahnt of an unreduced rwmudretire
epdta a h@ WddbIli# mMLnt in 1993 db& pcr
~ ~ ~ y c a r o f ~
2. Genera4 it is die intent oftlie Arizaa State Retirement % stern
to en3c0- yurr s" e d u c" mur, tor & omgye ear& e z - ve- empm
ttie Arizaa State Ketirement System is
a medefs p& n# mnart income
requirements.
FIGURE 2
ARIZONA STATE RETIREMENT SYSTEM
PRIMARY FUNDING OBJECTIVES
1. Keep emplbyer and emplbyee eartrl6utiar nttzs at the h e s t
p d E h e 6 whiL simul~ ous4pr oviding for the nqjmun
p d b ntum on and maintaining an in~ restmat
p* GO of the ~ ~&. p ~ b
2. Maintuin the ActmddWbe Fhihg Ratio at 1.05 or-and;
ythejhding ratio hfim to ikc than 1.05, to providk for
its reding 1.05 in not k than 10 yearsfran the & it fig
G e h 1.05.
3 . ~ & + ~ W W , S ofthe arizona~ tate
Retirement System thriyh invatment nctivity which is
conrLnmt widi ijie prurLnt tnun nrli and which m& ts other
requirements of Arizona State lhur and the investment .
mumgewnt policiec of the Ynvatment ~ v i s o Cyo uncil
Figure - 2
FIGURE 3
DEFINITION OF THE TRUST FUND NATURE OF THE
ARIZONA STATE RETlREMENT SYSTEM
1 . 2 t ir ttie pohy of ttie ArizonaState ~ g i s h rteha t ttie Arizona
State Retirement System 3 Mdc 23phy& !& timum T i
Fundis a tmstfMdesta6CisMto wan dptLrumr dipw of
sau& j to ttie mender emphjees of ttie State and its political
sddivisions. ? lie m i e s and otlier assets of ttie Arizona State
Retirement System 3 Mlic Emp4eesJ T iFun d
s h d not 6e used or appropriated for any purpae whidi ir
incmpatibh with ttie Arkona SF
s- ofzntart.
2. On ttie libte that this poliicy is imphmen~ tl ie & tirement
Boardslid&& nllnroniLc and& amtts ofttie ~ rizona
State Retirement System into the Arizona State qetirement
System's Mk EmpGyees' T iFw d
3. AKfLndF received 6y the Arizona State qetirement System as
q I ; ? I ~ d a ? p G y e e c m W h h s s h d 6 e dqMsituCimD ttk
% im~~ StatRee tirementSystem's Emphy&-
T iF d
Figure - 3
/ FIGURE 4
PROJECTED RETlREMENT BENEFITS PAYMENTS
FOR THE NEXT 25 YEARS
NOTE: 1. The source for this data is the Wyatt Company's " Asset/ Liabilify
Modeling Study for the Arkona State Retirement System" dated
March 1989.
2. The projected retirement benefits have been reduced by
eliminating the effect of the 3.5% COLA in b o out of three of the
projected future years.
FIGURE 5
SAMPLE BENEFITS USING THE ACTUAL AD- HOC COLA
AMOUNTS GRANTED ( Page 1 of 2)
Case One: - The member retired effective 1/ 1/ 1974.
- The member had 30 years of senrice.
- The member's final average salary equalled $ 1,000 per month.
- The initial benefrt equals $ 45o/ month (- 01 5 x 30 x $ 1,000)
NOTE: The actual increases are about 21% more than the increases would
have been with an automatic COLA ( i. e., $ 760.18 versus $ 628.85).
Figure - 5
BENEFIT
AMOUNT
IF 3%
CAPPED
COLA
$ 450.00
450.00
463.50
477.4 1
488.87
503.53
51 8.64
534.20
550.23
566.74
577.79
588.77
600.54
61 1.95
615.32
628.85
YEAR
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1 985
1986
1987
1988
AD- HOC COLA LEGISLATION
Initial Benefit ( 1 / I 174)
5% to all retirees
No increase
10% if benefit under $ 500
No increase
No increase- benefit over $ 500
No increase
5% to all retirees
Scale- years retired ( 8%)
Scale- years retired ( 6.75%)
No increase
$ 40/ month- all retirees
$ 40/ month- all retirees
Wlmo. for yrs, retd.+ yrs. svc.
W/ mo. for yrs. retd.+ yrs. svc.
No increase
ACTUAL
BENEFIT
AMOUNT
$ 450.00
472 50
472.50
51 9.75
51 9.75
51 9.75
51 9.75
545.74
589.40
629.1 8
629.1 8
669.1 8
709.1 8
734.38
760.1 8
760.1 8
CPllN
PRIOR
YEAR
6.2%
11.0%
7.0%
4.8%
6.8%
9.0%
13.3%
124%
8.9%
3.9%
3.8%
4.0%
3.8%
1.1%
4.4%
' h OF
CPI
UPTO
3%
NIA
3.0%
3.0%
2.4%
3.0%
3.0%
3.0%
3.0%
3.0%
1.95%
1.9%
20%
1.9%
55%
2.2%
FIGURE 5
SAMPLE BENEFITS USING THE ACTUAL AD- HOC COLA
AMOUNTS GRANTED ( Page 2 of 2)
Case Two: - The member retired Bffectii 111 11 975
( the percentage muttiplier factor now equals 2.0%). - The mem ber had only 1 0 years of senrice.
- The member's final average salary equalled $ 1,250 per month. - The initial benefit equals $ 25O/ month (. 02 x 10 x $ 1,250)
NOTE: The actual increases are about 34% more than the increases would
have been with an automatic COLA ( i. e., $ 452.96 versus $ 339.1 8).
Figure - 6
CPl IN
PRIOR
YEAR
11.0%
7.0%
4.8%
6.8%
9.0%
13.3%
1 2.4%
8.9%
3.9%
3.8%
4.0%
3.8%
1.1%
4.4%
ACTUAL
BENEFIT
AMOUNT
$ 250.00
250.00
275.00
275.00
291.50
291.50
306.08
327.51
347.1 6
347.1 6
387.1 6
427.1 6
439.76
45296
452.96
YEAR
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1 985
1986
1987
1988
AD- HOC COLA LEGISLATION
Initial Benefit ( 1 11 175)
No increase
10% if benefit under $ 500
No increase
Scale- 6% increase
No increase
5% to all retirees
Scale- years retired ( 7%)
Scale- years retired ( 6%)
No increase
$ 40/ month- all retirees
$ 40/ month- all retirees
6O$/ mo. for yrs. retd.+ yrs. svc.
Wlmo. for yrs. retd.+ yrs. svc.
No increase
'/ 2 OF
CPI
UPTO
3%
N/ A
3.0%
2.4%
3.0%
3.0%
3.0%
3.0%
3.0%
1.95%
1.9%
2.0%
1.9%
55%
2.2%
BENEFIT
AMOUNT
IF 3%
CAPPED
COLA
$ 250.00
250.00
257.50
263.68
271.59
279.74
288.1 3
296.77
305.68
31 1.64
31 7.56
323.91
330.06
331.88
339.1 8
FIGURE 6
POST- RETIREMENT BENEFIT ENHANCEMENT DEDICATED
TRUST FUND INCOME DlSTRlBUTlON CONCEPT
/ ACTUAL INCOME DISTRIBUTION
OX I
I I I I I
1 9 9 0 1 1 9 9 2 1 1 9 9 4 1 1 9 9 6 I 1 9 9 8 I 2 0 0 0 1 2 0 0 2 1 2 0 0 4 1 2 0 0 6 1 2 0 0 8 1 2 0 1 0 1 2 0 1 2 1 I I I I I I I
1 9 9 1 1 9 9 3 1 9 9 5 1 9 9 7 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3
YEAR
Figure - 7
APPENDIX 1
LIST OF OTHER SURVEY DATA SOURCES
RESOURCE - GENERAL: SOURCE:
NASRAJNCTR Survey of Systems: 1989 NASRA - Bert D. Hunsaker
P. O. Box 2875
Salt Lake City, UT 841 10- 2875
NCTR - Bruce Hineman
P. O. Box 1882
Austin, TX 78767- 1 882
1988 Pension Commission Clearinghouse Foster Higgins & Co., Inc.
Report on State Pension Commissions Pension Commission Clearinghouse
125 Broad Street
New York, NY 10004
Joyce Gaul
Retirement Provisions Survey: 1985- 86
Comparative Statistics of Major
State Retirement Systems, 1984- 1 988
Legislative Finance Papers
National Education Assoc.
1201 16th St., N. W.
Washington, D. C. 20036- 3290
Margaret " Peg" Jones, Director
Fiscal Affairs Program
National Conference of State
Legislatures
1050 17th St., Suite 21 00
Denver, CO 80265
Ronald K. Snell
1987 Survey of Actuarial Assumptions The Wyatt Company
and Funding
( plans with 1,000 or more active members)
On Target, 90% - Public Pension Funds 1988 Greenwich Associates
Office Park Eight
Greenwich, CT 06830
Rick Green
The Business Journal, 1989 Book of Lists The Business Journal
Used: - The top 25 Arizona- based 3737 N. Seventh Street, Suite 200
public companies. Phoenix, AZ 85014
- 25 of the largest Maricopa County employers
RESOURCE - GENERAL:
Arizona Statistical Review
45th Annual Edition: December 1989
Arizona Labor Market lnformation
Annual Planning lnformation
1989- 90
Joint Governmental Salary and
Benefits Study: 1989
SOURCE:
Valley National Bank of Ariz.
Economic Planning Division
P. O. Box 71
Phoenix, AZ 85014
Arizona Department of Economic
Security
Research Administration
P. O. Box 6123, Phoenix
Arizona Dept. of Administration
Personnel Division
Compensation Section
1831 W. Jefferson
Phoenix, AZ 85007
RESOURCE - ARIZONA RETIREMENT: SOURCE:
Arizona Revised Statutes
Title 38, Chapter 5
October, 1989
Arizona State Retirement System
Edwin C. Gallison, Director
Arizona State Retirement Plan The Wyatt Company
Actuarial Valuation as of June 30, 1989
November 17, 1989
Arizona State Retirement Plan The Wyatt Company
Actuarial Valuation as of June 30, 1988
December 16, 1988
AssetILiability Modeling Study The Wyatt Company
for the Arizona State Retirement System
March 1989
Arizona State Retirement System The Wyatt Company
Alternatives for Actuarial Value of Assets
and the Cost of an Automatic COLA
December 15, 1989
Arizona State Retirement System
Spendable Income Analysis
The Wyatt Company
Arizona State Retirement Plan The Wyatt Company
Introduction to the Projected Unit Credit
Actuarial Valuation Method
October 14, 1988
Arizona State Retirement System William M. Mercer Meidinger
Investment Performance Evaluation Report Hansen Asset Planning, Inc.
for Periods Ending September 30, 1989 3303 Wilshire Boulevard
November 1 989 Los Angeles, CA 9001 0
RESOURCE - ARIZONA RETIREMENT: SOURCE:
Asset and Benefit Valuation of the
Arizona State Retirement Plan
for The Arizona Legislative Council
May 8, 1989
James R. Booth, Ph. D.
Richard L. Smith, Ph. D.
Professors of Finance
Arizona State University
Arizona State Retirement System Arizona State Retirement System
35th Comprehensive Annual Financial Report Edwin C. Gallison, Director
for the Year Ended June 30, 1988
Arizona State Retirement System Board Touche Ross
Component Unit Financial Statements
and Additional Information and
Independent Auditor's Report
Years Ended June 30, 1989 and 1988
Report of the Legislative Council
Study Commission on the
Arizona State Retirement System
January 1, 1983
Arizona Legislative Council
Minutes of the Arizona State Retirement System Arizona State Retirement System
Retirement Board Meetings: 1989- 90 Edwin C. Gallison, Director
APPENDIX 2
PUBLIC EMPLOYEES RETIREMENT SYSTEM SURVEY DATA
CONTENTS:
rn Sample Survey Letter
w Retirement Plan Features Data and Administrative Cost Data
Actuarial Valuation Data - Funding lnformation
Actuarial Valuation Data - Valuation Assumptions lnformation
rn Statewide Salary Comparison Data
rn Comparison of Various Salary and Retirement Benefits Data
January 25, 1990
Mr. Harry M. Descoteau
Executive Secretary
New Hampshire Retirement System
169 Manchester Street, Building 3
Concord, NH 03301
Dear Mr. Descoteau:
This letter is written to request your assistance.
We have been retained by the Arizona Legislative Council Joint Study
Committee, co- chaired by Speaker Jane Hull and Senator Doug Todd, to
conduct an evaluation of the Arizona State Retirement System. This
Study Project will include examining certain aspects of the Retirement
System in comparison to private pension systems and other public
retirement systems.
The enclosed spreadsheet shows four sets of data for your retirement
system which we have compiled from various sources including the
NASRA/ NCTR Survev of Svstems 1989. So that our project data may be
as complete and accurate as possible, we ask that you supply
information for your retirement system in the highlighted blank
sections. Further, should you wish to provide more current
information for any section other than that shown, please feel free
to do.
We ask that you complete the enclosed survey form and, if possible,
return it by February 9 to our associates at:
Cyberserv International Co. for
Kaufmann and Goble Associates
1091 West California Avenue
Mi11 Valley, CA 94941
Thank you for your assistance with this important work for the Arizona
State Legislature.
Sincerely,
KAUFMANN AND GOBLE ASSOCIATES
8URW OF WBtlC8K; fORR
( Page 1
. N : COm- NRAE : "... BP( EmAWUKT ..... : " ...... ..." '. ' "...'.... EARLY RmREUPCT"""". : COORD. WITH
: O : : SOYRBOF8ERVICE : Iwat. NO- : 80C. SEC. :
R E m E E M S Y m : T : Y u n b r GwqaI: R e n m A d : i r a m m O p t b n O p t b n :
Bht. P E R 8 T - : E : U Y : ClS, OaYAm S30, OaYh : ~ u m - Hoo : Y a No Ym No Y r NO : Yew No :
: 8 :
Ahbun. 1 : : 5.000 7.570 : U), S32 617.264: 1 : 1 1 1 1 : - 1 : : 7.530 9.140 : 8,578 17.156 : 1 : 1 1 1 : 1 :
A h t . 1 : : 6. gY) 9.230 : 9.- 19.301 : 1 1 : 1 I 1 : 1 :
* RIZONA 1 : : 3. a L a : 8.578 17.1% : 1 : 1 1 1 : 1
AI- 1 : : 6.000 12000 : 7.875 15.570 : 1 1 1 1 : 1 .
Arksme 1 : : 0 . w 5 . w : 6.751 13.502: 1 1 : 1 1 1 ' 1
C. lllor& 1 . : 6.000 13.200 : 9.210 19.581: 1 1 1 : 1 1 1 : 1 . .
Color.& I : : 8.000 8.500 : 8.936 17.871: 1 1 : 1 1 1 : I :
C o m l M 1 : ' : 6.000 25. W : 8.578 17.156: 1 1 : 1 1 : 1 :
C 0 r n l l c U 1 . .
5.704 11.409 : 1 1 1 1 : 1 .. Dakwue 1 : : 5.000 9.000 : 6.792 13.583 : I : 1 1 1 : 1
F b r l h 1 : : 0.000 13. W : 6,874 13,747: 1 1 1 1 : 1
( i. orph 1 : : 6.000 13.830 : 8.786 17.571 : 1 1 1 1 : 1 :
amrgh 1 : : 0.250 17.110 : 6.750 13.500 : 1 1 1 1 1
HawaIi 1 : ' : 7.800 15.000 : 8.578 17.156: 1 1 : 1
Id. ho 1 : : 5.430 8.000 : 7.501 15. m : 1 1 1 1 1 :
Illlmlw 1 : : 8.000 9.510 : 8.505 17.010: 1 1 1 1 1 :
IWmb 1 : : 4. WO 5.117 : 5,100 10.200: 1 1 : 1 1 1
iRd* Tp 1 : : 3.000 8.000 : 4,501 9,001 : 1 : 1 1 1 : 1 :
I r d h ~ 1 : : 3.000 8.000 : 4.501 9,001 : 1 : 1 1 1 : 1 :
low. 1 .. * .. 7.1B 1 4 . 3 2 :
Kuuaa 1 . : 4.000 3.070 : 5.864 11.720 : 1 : 1 1 1 1 : . .
b* uc* l 1 : ' : 9.855 13.105 : 9,436 18.975: 1 1 : 1 1 1 :
Kentucky 1 : : 5.000 7.450 : 7.569 15,138: 1 1 1 1 : 1
LouWur 1 : : 7.000 10.300 : 10,723 21,445 :
b u l w h n 1 : : 7.300 12000: 11,023 21,745 : 1 : 1 1 1 : 1 :
Wn 1 : : 6 . W 17.030 : 5.878 17156: 1 1 1 1 1 :
WrYM 1 . . 3.050 l 6 . W : 3.431 9.591 : 1 1 1 1 1 : . . .
Uuuchuuttw 1 : : 5. WO 16.200 : 10.723 21,446 : 1 : 1 1 1 : 1 :
U.... shuuIl. 1 : : 7.000 10.723 21,445:
~ 1cNg. n 1 : : 0.000 8.040 : ( 1.750 1 3 , W : 1 1 1 1 : 1 .
M- la 1 : : 4 . m OO. OB: Q 5.455 IO. QIO:
M- 1 : : 3.730 3.900 : 5.455 10,910: 1 1 1 1 1 :
M*.*. ppl 1 : : 6 . m 9.750 : 8.438 16,873: 1 1 1 : 1 1 : 1 :
Mbau~ L 1 : : 9.200 9.200 : 8.5D2 17.1W : 1 : 1 1 1 : 1 :
M ~ W i 1 : : 0.000 9 . W : 5,704 11,409: 1 1 1 1 . 1 :
M o M n 1 : : 7 . W 7.460 : 7,120 14.240: 1 : 1 1 1 1 :
M o n h 1 : : 6. W 6.417 : 7.120 14,240 : 1 : 1 1 1 : 1 :
N. nd. 1 : : 9.125 9.125 : 10,723 21.445 : 1 1 1 1 : 1 :
New hmphlre 1 : . : 5 . W 3.500 : 7.120 14,240: 1 : 1 1 1 : 1 .
Nsw Juwey 1 : : 2.709 14.370 : : 1 1 1 1 : 1
NewJerwey 1 .. * .. 2.950 6.970 : 7.120 14.240: 1 1 1 1 1 :
Nmw M u k a 1 : : 7.000 7.600 : 9, CJS 19.350 1 1 : 1 1 : 1 :
New York 1 : ' : 3.000 16.700 : 8.578 17,156:
No. CaroUn 1 : : 6.000 9.350 : 6,618 1 3 . a : 1 : 1 1 1 : 1
NO. D. l; ot. 1 : : L7W 6.750 : 5.736 11.472 : 1 : 1 1 1 : 1
No. Dabla 1 : : 4.000 5.120 : 6,137 12274 : 1 : 1 1 1 : 1 :
OW 1 : : 8.770 14.000 : 9.450 18, WO : 1 1 1 : 1 1 1 : 1 :
ON0 1 : : 9.504 13.710 : 9.007 18.014 : 1 1 : 1 1 1 : 1 :
Okhhanu 1 : : 1.500 13.200 : 8.578 17,156: 1 : 1 1 1 1 :
Okhhanu 1 : : 2.- 8.000 : . 8.578 17.156 : 1 : 1 1 ! : 1 :
Or+ 1 : : 6.000 11.300 : 7.163 14,326: 1 1 : 1 1 1 1 :
P~ Myhnnb 1 : : 6.000 15. pQ : 8.578 17.156 : 1 : 1 1 1 : 1 :
Rhod. Iehnd 1 : : 7.800 12.100 : 9.191) 18.872 : 1 1 1 1 : 1 :
So. cuo( ln 1 .. ... 8.000 7.660 : 8,810 16.380 : 1 1 : 1 1 1 : 1 :
So. Daknh 1 : : 1.000 5.000 : 5.625 11. a50: 1 1 1 1 :
So. DaknWOpt. 1 : : 8.000 8 . W : 8,578 17.156: 1 1 1 1 : 1 :
T u n u w 1 : . : 0.000 6.050 : 6.137 7.896 : 1 1 1 1 : 1
TQu 1 : : 6 . W 8,000 : 8,578 17.168 : 1 : 1 1 : 1 :
UbMordrb. 1 : : 6. W 6.330 : 8,578 17.1W: 1 1 1 : 1
UUh- NMOOn 1 : : 0 . w 9.860 : 6, US 13.050 : 1 1 1 1 : 1
VASw~ brntL 1 :. : 5.000 8.550 : 6.483 13, EdO : 1 1 1 1 1 :
Vumont 1 : . : 6.890 7,844 : : 1 1 1 1 : 1 :
Vermont 1 : : 0 . S 10.740 : 5,623 11,250: 1 1 1 1 : 1 :
W8wh! ix# ofl- I 1 : : 6.000 11.800: 8.183 16,386: 1 : 1 1 1 : 1 :
WuNngton- l 1 : : 6.000 6.260 : 8.103 16.365: 1 : 1 1 1 : 1 :
WcU Vlrpini. 1 : : 6.000 6.000 : 8.103 16,365:
w m n h 1 : : 0.000 6 . W : 6.843 13.725: 1 1 1 1 : 1 :
WYmho - 1 - . : .: - 5.570 -. 5 . m : 8.578 17.156 : 1 1 : 1 1 1 : 1 : , . , - - . . - - - . . - - -- - - : - - :
TOTAL 47 22 : : 67 6 6 : 67
. 6 7 : 39 6 : 5 58 09 2 17 4 5 : 13 5 0 :
wrn8URVCrrO . . : 48. W 6.3% 45. W: 7 . M 02.1% 06.8% 3.2% 27.4% 72.6%: 20.6% 79.4%:
WNWY : : 0 . W 3.070 : $ 3,131 S7, BW :
W U Y : : 9.856 25.- : 111.023 $ 21.7* 8 :
AMRAOE : : 5.195 9.702: $ 7.607 $ 15,430 :
: N : RmRED
: 0: YDlsERB
RmRDlDlTSYSrPI : T : ( IncSuv.
8u1. PER8 T o h r : E : Brrt.)
: s :
ALb. rn* 1 : : 26* 119
**. lu 1 : : 2.098
ALuh 1 : : 4.633
ARPONA 1 : : 31.390
Arumma 1 : : 11,707
A r k a m 1 : : 9.155
CaUfomnh 1 : ' : 230.640
Cobrado 1 : : 30.649
Connrtkul 1 : * : 13,660
Connrtkut 1 . . . : 21,137
Dahwar* 1 : * : 9.7W
F b t a 1 : : 102.315
Gmrgia 1 : : 26.562
amrgh 1 : : 13.095
Hawall 1 .. ... 20.000
k h o 1 : : 16.344
IUlnok 1 : : 43.385
IUim* 1 : : 32.870
I d a l u 1 : . 25.849
Indkru 1 : : 31,917
bn 1 .. . ..
K. mu 1 :. : 36,171
Kenluliy 1 : ' : 18.599
Kentwky 1 : : 24.327
L0ubhrm 1 : :
LoubivP 1 : : 23,952
Main 1 : : 21.985
MaNknd 1 .. ... 46. w
MUUG~ U.~ 1 : : 23,653
MUI. chU. tU 1 .. ...
Mkhen 1 : : 21.873
MlnnuW 1 : :
Minro(. 1 : : 12.341
M*.*. py 1 : : 30.028
UWWl 1 : :
M* rourl 1 : : 10.9BI)
Montur 1 : : 6,276
MOfhN 1 : : 9,219
N4v. d. 1 : : 10.2PS
New HampNr. 1 .. ... 8.305
New Jsruy 1 : : 31.442
New Jeruy 1 . . : 57,109
New Maim 1 : : 11,280
New York 1 .. . .. 221,594
No. Carolh 1 : : 61.219
No. Dabla 1 : : 3.892
No. DabU 1 : : 170.974
Ohlo 1 : : 64,463
OW 1 : : 103.549
0khta. n. 1 : : 23,780
O W . ~ O ~ * 1 : : 13. u
O r e n 1 : : 50. m
P. Myh* Mh 1 : : ' 72.374
Rha* Iahnd 1 : : 10,476
So. Caroh 1 : : 38.024
80. Dabla 1 : : 9,852
8o.~ abwop1. 1 : : 9 . m
T e n n o r 1 : : 49.508
Texu 1 : : 108. Y5
Ut. h- Contrb. 1 : : 13, W
Ulah- Nomn 1 : :. 4,042
VAB\ gpkmU 1 : . : 52.971
vurnont 1 : 2. 039
Varmonl 1 . .. 2,433
WUhingLoC- l 1 : : 22,640
WuNngton- l 1 : : , 47.571
W r t WpW. 1 : :
W* onin 1 : : 70.017
w o m b 1 : : 8.800
- - : :-
TOT& 47 P : : 55,162
YTTLSURVF( E0 : : 10012a
MINIMUM .. ., 2.098
YAXlMUU : : 230,640
A- E : : 37.241
GVRW OF PUBW , COST DATA WATA- COLWURPUB1- WKl
NOTES - Member Contribution Rate:
CaWornh PERS: 5. OWmo. wer C513
CoMeticUl PERS: Twc- thr yaum- Tbr I. Phn 8- 24( w to 6cc. 5. s. mu.. 5% an u h r y b e6cc .5. s.: Phn C- 596 on aU eamlnp.; Tbr Il- m- drbutory.
0ehw. r. St. Emp.: 3.04) war m. 000 lo OASOHI; mu. plum 596 war
Qeorgi. PERS: old pkn- WI; new phn- 0.2596
lown PEUS: 3.7% 01 mu. 140,000
Maryhrd St. Pen.: mmonlr. LO S. S. w 8tm~ w: 5.796 on hhw
N. Uamp. Rst. Sye.: 4.6% ( o OA2OHl h; 9.2 % on balsnu
New Jermy PERS: 5.03% lo 8.73% by aw
S. Carolb R. 1.: 4.0% to Y. 800; 8.04) onuma
V- rmonl Tnclnn: 0- 6.596 on grow.
NOTES - Employer Contribution Rate:
Connuflcut PERS: Rate acturhbf required
COM. Tnclnre: Rate requked
Qwrgh PERS: old phn- 12. W new phrrl7.1196
UawaU PERS: Rate 1~ tuarhlhrl. qUired
Iowa PERS: 5.7% 01 mu. 140,000
K s w PERS: Rate requ1r. d
Ky. Tuchbra: Rate raquked
Lluyhnd Psn. Sya: Rat* required
Mauachuutu Rst.: Rau required
N. H. mp. Rat. 3ya.: Rate requbd
New Jeruy PERS: Rate requkd
New York ReL. 9ya.: R. ta r w u l r d
Te~. Conol. Ret.: Ralb requkd
VAS~+ wl. Ret. Sya.: Rat* required Ivarhbh)
SURVEY US PUBLIC SE L& xUfx m. mN WAT&, LE- Nm--
: VALUATlON : BEN- : K3UMlM : YARKET : YIRKET : * CTUARUL : UNFUNDED :
: DATE : OBU( UTK) N : VALUE : VALUE : VALUE : VALUE : STAN8
RmREuENT8YsrEu . FUNDED : FUNDED :
8t. 1. PERS T- : : RAno : RAm :
~ h b ~ u 1 : ~ 8 : 8 U. MI. OOQ. W: O $ 4 . 7 1 6 , 0 ~ .:~ $ 4.716.000.000 : 1 0 2 . m : 1 m . m : ( SII~. WO. OWI :
A*. h 1 : W 8 7 : 1,210.009. WO : l, Z25.000.000 : 1.2d7.159.000 : 104.72% : 101.24% : 115,000,000) :
A*. h 1 : WW87 : 1.005. Wl. 000 : l. WE. 437. WO : 1.739.843.000 : 91.33% : 99.6e4 : 6,564,000 :
ARllOHA 1 : OllYYBO : 6.176. Ui0.310 : 6. EB6.2l7.534 : 7.314.715. a : 1 l e . W : 1- : W. 748.224) :
Arhmu 1 : W W W : 2214.% 6.000 : 2.023.507.000 : 2.062.084.000 : ' 23.10% : 91.36% : lM. 871.000 :
Arhmu 1 : W W W : S20.746.000 : 1,210,201,000 : 1,169,442,000 : 125.784) : 130.1696 : 1ZM. 465.000) :
CaUornla 1 : WW87 : 41,337,318,261 : 33,709,517.6W : 42,204,316,158 : 102.10% : 1 : 7,627.800,5& 3 :
Cobrado 1 : 12131187 : 7.210.454.000 : 7,019,255,000 : 6.997.824.000 : 9705% : 97.- : lQl, lOO. 000 :
Connrtku1 1 : W W W : 7. OW, l75.000 : 3,600,763,000 : 4,136,564,000 : 58. UU : 50.7% : 3.4W, 412.000 :
Conrrclievt 1 : W W W : 5.071.519. Y8 : : 2.798,932. E58 : 55.16% : : 2.460,021.007 :
Delaware 1 : W W W : 1,455.388, UX) : 1,404.722.000 : 1,571,605,824 : 107.99% . 98.5296 : 50. Md. 400 :
Fbrid. 1 : 071--/ a : 27,370,000,000 : 17,559.000.000 : 17.663.000, WO : 64.53% : 64.15% : 9.811.000.000 :
Omrgm 1 : W W W : 8,653,433,000 : 6,771,403,000 : 7.485. Y) B. WO : 88.27% : 78.25% ' 1.882.024.000 :
amrgla 1 : W W W : 2,7%?, U7,000 : 1,921,175,000 : 2.734.& 36.000 : 99.36% : 6 9 . m : 63l. cd2, Mx) :
Hanil 1
ldnho 1 : 07/ 011W : 1,798,000,000 : 1,364,400,000 : 1,560,024,024 : 88.76% : 75.- : 433.600.000 :
IUinoh 1 : W W W : lO, PP. 000,000 : 6.889.5W. 000 : 7.055.000.000 : 64.5% : 62.901) : 4,062. SW. 000 :
IIUmh 1 : W W W : 3.7J2.134.283 : 2,580,198,840 : 2,8Yi, M1,98( 1 : 76.14% : € 0.7796 : 1,171,935,437 :
lnjluu 1 : W W W : 4,837,288,858 : 1,401,629,135 : 1,4W. 551.% 7 : 29.12% : 2 8 . W : 3.435.@ S9.723 :
In& m 1 : 06130188 : 2,621,018,241 : 2, K12,428.755 : 2.( L93.011.018 : 100.92% : 99.26% : 18,589,486 :
Iowa 1
kmu 1 : 011011W : 2,727,447,500 : 2.542.089.100 : 3.164.818.389 : 116.77% : 83.20% : 186. W. 200 :
KbntucQ 1 : W 8 7 : 3.700.2W. 000 : 2. Ed2.340,000 : 2.674.437.000 : 703% : 67.44% : 1.236. PY).~ :
kntucky 1 : W W W : 2.257.% 3.497 : 2.386.( 135,647 : 2540.05Q. 616 : 112.53% : 105.70% : ( 128,870,550) :
LoU* hrU 1 :
Louhhm 1 : W W W : 3,786,236,700 : 2,019,631,530 : : 53.35% : 1,766,404,170 :
~ a i n 1 : www : 2 . n 6 . 6 7 0 . ~:~ ~ 798.758.288 : 870.57s. m : 31.35% : 28.77% : i . o n , o i a . ~ i i :
w h n d 1 : W W W : 14,142,676,353 : 9.060.590.586 : 8.889.4W. 647 : 6 2 . M : 69.78% : 4.273. SES. 767 :
Muuchuult. 1 : 011011W : 6,331.000.000 : 2,670,000,000 : 2,670.000.000 : 42.17% : 42.17% : 3,661,000,000 :
M ~ a h u ~ l t . 1 . .
MlsNg. n 1 : O$ IWW : ~ . 3 8 6 . 8 0 0 , ~: 3 . 6 6 3 , ~ o . m: S. YI. WO. WO : 104.55~ : 1ffl. 1696 : ( 276,200,000) :
MInrmoU 1 :
ULNI. roU 1 : - 87 : 1.588. SC5.000 : 1,518,489,000 : 1,631,367,000 : 1 W . M : 95.53% : 71. WZZ. 000 :
M*.*. ppl 1 : - 89 : 5,324,667,000 : 3.608.293.000 : 4,2CB., 666,000 : 79.04% : 67.784) : 1.715.364.000 :
M*. OWl 1 :
M*. Owl 1 : 07101188 : 1.%. 733.000 : 1,179,828,000 : 1,230,510,335 : 97.14% : ' 23.14% : Y. Oa6.000 :
Monhm 1 : 07101188 : 099,351,743 : : 1.349. W) : 620,814,560 : 62.1% : 58.17% : * 38,001,779 :
Monhm 1 : 071011~ : ~ 5 . 7 3 0 . 2 2:~ 692,744,348 : ~ 5 8 . 4 %: ~ ~ 8 0. m : 73.25% : m. rn1.880 :
Nwa& 1 : W W : 3.% 36.6# 1.700 : 2.637.335.600 : 2,637.335.800 : ES. 9911 : 66.0011 : 1,299. J50,100 :
New Hunprhire 1 : W 8 7 : 798,307,186: 792,615,988: 1,047,992,635: 131.284L: 9 9 . W : 5,891,197 :
New Jsrwy 1 : OW31187 : 10.522.530.000 : 7,144,925,671 : 9,135,299,635 : 86.82% : 67.901) : 3.377. EC6,329 :
Now Jeruy 1 : W31187 : 6,094.020.000 : 5,023.476.3M : 7,656,019,275 : 125.651 : 95.56% : 270.543. ECd :
New Mexioo 1 : W W W : 2,258,242,000 : 1,661. D55.000 : 1,743,263,912 : 7 7 . W : 74.25% : 576,287,000 '
New York 1 : 03/ 31/ 88 : 34.469.000.000 : 38.50B. 000.000 : : 111.7' 2% : ( 4.039.000.000) :
No. C u o h 1 : 12/ 31/ 87 ; 10,478,234,000 : 10.199.1W, 916 : 10,199,1M. 916 : 97.34% : 97.34% : 279.127.084 :
No. Dabh 1 : 07101188 : 525,957,000 : 3B5.840. lW : 412. EW. 100 : 78.45% : 73.36% : 140.1ffl. WO :
No. Debt. 1 : W W W : 273,281,800 : 314,700,100 : 347.455. M : 127.14% : 115.1% : ( 41.408.5W) :
ON0 1 : 07101189 : 21,978,477,000 : 16.057.321.000 : 17.507.301.000 : 7 O . m : 73.06% : 5.921,15( 1.000 :
O M 1 : 12131188 : 15.867, WO. 000 : 13,2W. WO. 000 : 13.728.700.000 : 87.68% : 84.884) : 2,367, WO. 000 :
OWhoma 1 : 07101189 : 4,108,264,000 : 1,795,276,134 : 1,813. M7.997 : 44.1% : 43.70% : 2313.007.866 :
Okhhoma 1 : W130188 : 1 1: 1.32 5.531,03E : 1.325.531. wB : 80.23% : 8023% : 3Z8.638.6W :
Orwn 1 : 12/ 31/ 87 : 8.325.000.000 : 7,6%, SW, 000 : 8,388.2( 30.000 : 1W. 7W : 92.45% : . ~, K10.000 :
Pe~ ytuurnh 1 : 12131187 : 7,364,307,000 : 6716,513000 : 7,376.577.000 : 99.00% : W. WU : 667,791,000 :
Rhod. bland 1 : - 87 : 2,327,225,300 : 1,264.000.800 : l. SE4,723.000 : 8 6 . M : 54.- : l. W. 324,700 :
So. Carolin 1 : - 87 : 6.447.639.000 : 4.805.381.000 : 4,938,382,000 : 76.5C- 96 : 74.5% : 1.642.158.000 :
So. Dabh 1 : W 8 9 : 1,181,000,000 : 1.164.878.327 : 1.3o, W5.800 : 116.42% : 98. m : 16,121, m :
So. DabWOpt 1 : OWWEB : 1,181,000,000 : 1,164,878,327 : 1,3o. O85,6QO : 115.42% : 08.- : 16.121.~ 73 :
To- 1 : WW89 : 7,107,200,000 : 7,078,000,000 : 7.710,800.000 : 108.40% : 99.59JI : 29,200,000 :
T u u 1 :
Uhh- conrb. 1 : 1.191,713.000: 94O. OW. 000: 992,630,000: B 3 . W : 78.- : 251 .( L23.000 :
Uhh- Nomon 1 : 1.519.649.000 : 1.503. OW. 000 : 1.587.115.000 : 104.44% : OB. 91U : 16. s59.000 :
VAL) whmrY. 1 : ' W W W : 11.770. SW. 000 : 6.280.800,000 : 7.157.100.000 : 0.7696 : 53.32% : 5,497,700.000 :
Vermont 1 : WM188 : W. T20.4&: 274,702,764: 274.702.764: 8 2 0 7 % : 92.07%: W. 017,701 :
Vermont 1 : . 07l01188 : 319,612,600 : 240,249.700 : 2d1.9( td. 900 : 81. WU : 75.17% : 79,362,300 :
W U M ~ M 1 : OLWW : s. in. iw. ow : ~. o38. oo0. ooo : ~, w~. 8oo, oo0 : 5 8 . 1 0 ~ : 58.70% : ~. 1~. 1oo. ooo :
Wuhbgton- l 1 : 12131188 : 5,648,800,000 : 3,861,110,000 : 3.848.1W, 000 : ( 8.82% : 66.04% : l, SE5,4W, WO :
Wut Wglnh 1 :
WLrorvln 1 : 121311W : 14. W. 000.000 : 15.039. WO. 000 : 16.613.800, WO : 1 1: 1 : ( 145.900.000) :
W Y O ~ ~ W 1 : OllOll68 : 1,048,776,000 : : 1.141.592.000 : 10O. OWI : - - . : - _ : - .
TOTAL 47 22 :
WIUUY : 5273.291.00 : $ 240,249,700 : S261. QE6.500 : 28.12% : 28.77% : ($ 4,03o, 000, WO) .
UAXUlUU : $ 41.337.318.261 : S3E, 50B. 000.000 : S42.204.316.15B : 1 3 1 . m : 130.1696 : C0.811.000.000 :
A- E : @. 228.478,212: SS, 076,989.751: U, 870,( U3.427: 8 7 . m : 00.82% : S1.278.098.551 :
SURVEY OF PUBLIC SECTOR Rt3I
( Page I of 3)
. ..
.. .. : ' EW~ YPI: Y )~ MW .-----.- : VIUYITY) NYEIHODOLOQY : ""- a*. ICTUARUL~"""" :
RmRPlDlTWSrEU : : FOWUA AM. m : M R . L 5. L h. : VMUATY) NOFMSETS : E i AQ
8pL. E R S T - : : Y Y R B : M U WJ Y. n : Ca( W;. L O W : PUC Nand O W :
.. .. (. - NC4- D) :
.. ..
Abkama 1 : : 2013 3.0 : 8.25 . 1 1 : Qw. 8. Bus* Con. Crlur*.
ht. 1 : : 2000 3.0 : 9.00 - 1 : 1 : Wm. M. M a r c o r - W i r - H u r o n : - 1 . . 2.143 3.0 : 9.00 . 1 : 1 . .. : Wm. u. uer- r- MeUnw3c. mn :
* RIZONA 1 : : 2000 LO : am 5.50 : I : 1 : R~ WY~ SCO.
* r- I : : 1.750 2d. o: 7.50 7. w : 1 1 : Q. brb4, $ 3- 1, SmYh A Co.
Arkmuu 1 . . 1.8% 5.0 : 7.00 ' : 1 : QsbrkL Rad. r. SmW ACo. . .
CWorn* 1 : : 2.418 3.0 : 8.50 7.00 : 1 : Coalr. Harlurth A Eng* nj
C o b r h 1 .. ... 1.667 3.0 : 7.50 5.50 : 1 1 : Q. brbl, W r . Smlh & Ca.
CoMs( lsa 1 : : 2000 3.0 : 8.50 - 12.00 : 1 1 : T h Wy. U Co.. SUmlwd. CT
Comdlcul 1 . . 1.530 5.0 : 8.50 - 1 : 1 : M h m A Robut. on. Ins. . ..
Oebwu* 1 : : 1 5.0 : 8.00 5. m : 1 : 1 : Martln € 8.0. ICo.
F b r b 1 .. .. 1.680 5.0 : 8.00 7.50 : 1 : 1 : MUllman A Rc40rt. M. Ins.
Qmrgm 1 : : 2.000 20 : 7.00 : 1 1 : BuckComuhnt.
~ w r g b 1 : : 1 . m 7.00 5.20 : 1 : 1 : B u c k C o r u u ~
Haw all 1 : : 2.000 20 : 8.00 6.50 : 1 1 : Martin€ 5.0.1Co.
I& 1 : : 1 5.0 : 7.95 : 1 1 : MWhan A Robrmn. Ins.
IWmb 1 : 1.890 26.9: 8.00 4.00 : 1 1 : 1 : Qw. 0. BuckCon. Aclwr*.
IWmb 1 : : 1.145 8.00 6 : 1 : 1 : Th. WyaUCo.
Indium 1 : : 1.100 8.0 : 7.50 5.50 : 1 1 : Qlbrbl. R d r . Smlh A Co.
Indhn 1 : : 1.100 5.0 : 7.50 6.50 : 1 : : Wm. M. Uuur- t4. Lding. r- Hmn :
lo*. 1 : : 1.670 3.0 :
K. mu 1 : : 1.4M 4.0: 8.00 6.50 : 1 : Maluntl% CalC0.
ha'-@ 1 : : 2W 5.0 : 7.5Q 5.00 : 1 : 1 : G o . 8. Buckcon. Actur*.
h*'-@ 1 . . 1. lW 5.0 : 8.00 7.50 : 1 1 . . : Wm. M. Mmrcu- M. idhg. 1- Hanun :
Lou** n 1 : : 2. W 3.0 :
~ ouwn 1 .. . 2.- 3.0 : 7.50 - I : : H ~ AYclm rhl m h t a
Milo 1 . . 2.000 3.0 : 8.50 . : M U h u n 6 R c k a m I m . . .
mm 1 . . 1.150 3.0 : 7.50 . : 1 : MUhun 6 Robflwn, Ins. . ..
~ uushusm 1 : : 3.0 : 8.00 6.00 : 1 : A Fo. 1. r Hblm Co.. Im.
Mu88chuulm 1 ., .. 2. W 3.0 :
Michigan 1 .. .. 1. W 5.0 : 8.00 ' 5.00 : 1 : : Glbrbl, W r , S mYh AC0.
MLMaU 1 : : 1.250 5.0 :
Minnroh 1 .. .. . 1.250 5.0 : 8.00 6.50 : 1 : : Th. Wy. UCo.
MU. Ppl 1 . . 1.758 4.0 : 0.00 . . .. : 1 : BuckComubntn, Ins.
M*. curl 1 : : 2100 5.0 : 8.00 5. W : 1 : W. Wrad Hayr. St. Lou*
M h w l 1 . . 1.530 3.0 : 8.00 I 5 0 : 1 . . : Qabrkl. Roubr, SmYh A Cwnp. ny :
MonUn 1 : : 1 7 3.0: 8.00 6.50 : 1 1 : : H* ndrkluon, MWer A Aua.
Montw, 1 : : 1.660 3.0: 8.00 6.50 : 1 : H. ndr** Lon, MWuAA.. oc.
News& 1 : : PWJ 3.0 : 8.00 6.50 : 1 : WIlklE Seg. 1compay
NbwHMp. hlr* 1 : : 1.840 3.0: 8.00 6.00 : 1 : 1 : BuckComuUnW. Ins.
New Jarny 1 : : 6. m 5.00 : 1 : Buck Corn-. Ins.
N* wJuu/ 1 : : 1.840 3.0: 6.50 5.00 : 1 : Bus* CO, uunMb. Ins.
New Uuka 1 : 2.150 5.0: 7.00 5.00 : 1 1 : Th8Wy. U Co.
New York 1 : : 2.000 3.0 : 8.00 7.30 : 1 : : ' NA'
No. C a r o h 1 .. .. l. W 4.0 : 7.50 7.50 : 1 1 : Bus* C0MUhlh. IK.
No. Ddnu 1 : : 1. pO 3.0: 7.50 6.00 : 1 : 1 : MuUnE. ~ I C o m p u r y
No. OabU 1 . . 1.- 3.0 : 8.00 a 1 : 1 . . : Martin € S. 0. I C o r n y
OW 1 : : 2100 3.0: 7.75 5. M : 1 : 1 1 : BuskComu* uu. Ins.
ON0 1 .. .. Z1W 3.0 : 7.75 5.50 : 1 1 : QlbrW. Rodu. SmW A Co- :
Okhhoma 1 : : 2000 3.0 : 7.50 6.00 : 1 1 : 1 : Th. WyaUCo. .
0w. hoOu 1 : : 2.000 3.0 : 7.50 6.00 : 1 : wm. u. uucar-* l.~- H~ nn :
01- 1 : : 1.670 3.0 : 7.50 6.00 : 1 : 1 : MUmmLRob. flwn, Ins.
h ~ y k u \ * 1 : : 2000 3.0 : 7.75 4.25 : 1 1 : H. ylHu( l0ln Comp. r
W* M 1 .. ... 2.300 LO : 7.50 - 4.00 : 1 1 : 1 : YuUnE.& omlCompYy
&. CUollru 1 .. a.. 1.820 3.0 : 7.00 11.00 : 1 : 1 : BwkConu) u* l. lm.
&. D- 1. 1 : : 1 3.0: 7.00 . 1 : 1 : Wm. M. Mut. r- Mebnngwr- H~ n :
So. DdnWop~ 1 : : 2.000 3.0 : 7.00 1 : Wm. M. U. rcu- u* mr-- n :
T* M.. Y 1 . . 1 . m 5.0 : 8.50 0.00 : 1 : 1 .. : Bym. P. nd* LoRS* IWUsW* ler :
Texu 1 : : 2000 3.0 : 8.00 6.00 : 1 : : ThWy. UC0.
u 1 . h - c ~ ~ . 1 : : 2.000 3.0. : 7.50 5.76 : : CABCornuilIwQroup
UUh- Nonson 1 .. .. 7.50 5. m : : C A B C ~ Q I O ~ ~
VASawbmnI 1 : : 1 . 0 3.0.: 6.50 5.25 : 1 1 : BuckConu) u* l
V~ rmonl 1 : : 8.50 7.50 : 1 : B ~ C ~
Varmonl 1 : : 1.250 8.00 . 1 : : MaNnESeg. 1Ca
Wuhlwlon- l 1 : : 2000 2.0 : 8.20 5.25 : 1 1 : onk4 of th. Slam MUIy
WuN* pon- l 1 : : 2. M 2.0 : 7.00 6.50 : 1 1 : O f l * . o f t h S h t . & I ~
WWt VtOW. 1 : : 2.000 5.0 :
W* cor* ln 1 : : l. W 5.0: 7.50 5 . : 1 1 : Q. br* I. m8def. Sm* h ACO.
W O m h 1 : : 2000 3.0 : 8.00 6.00 : 1 1 : uuthE& omlCo.
: : --. . - - : - - - . . - - - :
TOTM 47 2 2 : : : 27 14 2 3 : 0 34 2 :
Y OF TOTM . . . : 42.2% 21.0% 35.0%: 20.0% 75.6% 4.4%:
UJNUIUU : : 1.100 2.0: 6.50 4.00 :
YA~ YUY : : 2. m 26.9 : O. M IZW :
AVFRACiE .. .. 1.790 4.2 : 7.76 6.21 :
NOTES - Formula %:
ALUb PERS:
C o b r a PERS:
CoMpctrut PERS:
Illimb Teachers:
Maryhnd Penwn:
Minnaota PER*
Mmn. Tufhr.:
M*. hwi PERS:
Rhod. Ishnd PERS:
Sc. Carollm Rat.:
Ten- Conwl.:
2. W lor 1st 10 yrs.: 2.25% for 2nd 10 yr8.; 2.53% war 20 yr.
2.5% x yurs rg to X); 1.25% lor yurs war 20.
1.33% 01 llnl aversg. u h r y p l u 0 .546 h e$ 14 ,300
1.67% llr8t lOyrs.; l. W4( nxtlOyrs.: 2.100knut lOyr8.: 2.30% nxllOyr..
0.8% w to SSIL: 1.5% war SSlL
1.0% lorIstlOyrs.; 1.5% byondIatlOyr8.
1.0% lor 1st 10 yrs.: l. S% byond 1.1 10yrs.
1- 71094 lor 1st 30 yrs.; 2.0% in uuu 01 30 yrs.
1.7% lor 1st 10 yrsl: 1.9% lor 2nd 10 yrs.: 3.0% lor 21- 34 yrs.; 2.0% over 35 yrs.
1.25% w to H, BM): 1.6S% mar
1.5% to SSIL: ,2596 in ex- 01 SSU.
NOTES - Salary increamlaasumptions:
AIPb. ma Teacher.:
Nub PERS:
ALUk. a Teacher.:
Arbnu PERS:
Cobra& PERS:
C O ~ i uPaER S:
COM. Teachers:
Qwrgh T.. oh. n:
Idaho PERS:
LOUnhN Rat.:
Mains Ret.:
Muyhnd st. Rat.:
M b w i PERS:
No. Dsbta Rat.:
Ohb Tuchrs:
RhDds Ishnd Rat.:
Vermont PERS:
8% at ag. 20 to 5.75% at 00. 65.
0 . W u r for first 5 yrs. of employment; 5. Wy- r t h r u l l e r .
6 . W u r lor 1lr. t 5 yrs. 01 amploymon4; 5 . W y u r therea1t. r.
5% lor Inlhtbn: 0- 3. W lor mar$.
5.5% lor inlhtbn; 7.4% Stab and Mun.. 5% S c k l and Jcd. lor merit.
Lg X)- 10.296, no. 25- Q. i3& 80.30- 8.1%; 80. $ 5- 7.1%; age 40- 8 5% 45 q- 6.0%.
12.00 to 15 yurs of wrvm: 7.5% th. rufier.
4- 114% to 7% lor c n m b l d Inlhtbn 8nd merit
6% Wlatbn; varbu ( bud on a Ubbl lor merit.
3.5% lor infhbon: p18dsd 7.5% - OM lor merit.
4. W lor inlhtbn; merit b a % rangw from 6.0% to 10.0% bued on age 65 - 20.
5.69) wmpcurded annually lor inlhtbn; mid by aw 6.94% to 11.8WC lor merit.
5% to 0.3Wyur gr8dut. d by a@ lor u h r y Imr.~.; 5% lor lnthtbn, remalder to merlt.
5% lor Mhtbn: 4.5% - 8.5% lor morlt.
From 10.50ok at SO. 20 to 4 . m at ap. 6S.
4% lor inthtbn; 0% - 1. B5W for merit. F u W ratb b 60.5% lor Slaw. 49.55% lor Teachera.
5% lor inlhtbn; 04% lor merk dgnding on 80..
SURVEY OF Pume SECTOR ~ m
( Page 3 of 3) & s ~ & A T ~ f A - c n ~ i s u R - w . * , w ~
II SERVICE RETIREMENT
MLrourl 1
Monlan 1
Montana 1
Nevada 1
New Hamphlre 1
New Jsruy 1
New Mexico 1
New York 1 1
No. CuoUnn 1 1
No. DaLot. 1
NO. Dam. 1
Ohb 1
O M 1
Okhh0m8 1
OklahDrm 1
0r- n 1
Panwyh8nh 1
Vermont 1
Vermont 1
VA Srppbmnt 1
Washington 1
w u t vlrglnh 1
W* conh 1
2% x fkst l o yum x AMS'; + 2.25%~ usond 10 yurs x AMS; + 2.546 x remainiw years x W S
' 2% x Yur. of wrvm x MS.
( 2.5% x yr8.1- 20) +( 1 .25 xym. wer 20)) x avg. 0( 3 Nph. 1 ym. uhry ~ 11% llrnhtbn In Inc. or dec.
* Q W20 yrm. Connwn.; m y yrm.( mln. 25 yrs. h Conn.); 2% x yrs. wn. x N p h t Jyr. avg. ubrt.
llsOth0f fhlavp. mo. wmpnrtbnx yr8. of c r e d . ~ ~ m. : 0 . W wfi yW. WN.;. QO W W/ 15yrS. Ol WN.
Reg. Chsm: 1.546 x yrS. UN. x AFC ( h b b t 5 yrs). 1 6% gr. dlncrauea after ap. 62 or 30 yro. sen. l.
Ekctad st. Off. CL...: 3% ( 3.346 for judpu) x yrm. UN. x AFC.
Spshl RhC 2% x yrs. WN. x AFC ( 2% factor uhd to Inc. lo 3% by 1llIW).
Sr. Mpmt. Sekct Chsm: 2% x yr8. WN. x AFC.
After 711182- 1 .% x hbh. 1 0 al. qtrs. avg. ul x cred. wN.
Before 711182- Iwmuh ul. ku $ 140 x Lmm. 1orm. x cred. mN. uw reductbn.
Formuh: 2% x men. ( rp to 40 yrs.) x avp. uL lor 2 h! gh. l w m u t h e years.
AM9 x 1- 2/ 3% x MS d l v W by 12 x 2% ( Chsm 2): M S - h b k t 60 wnec. mM.; MS - mM. of WN.
BASIC, cmrd. wl5os. Sc. l- 1Oyrs.- l. W; wt10yrs.- 1.1%; nsxt 10 yr8.- 1.3%: over 30yrs.- 1.5%.
mn- mord. 1IlOyrs.- 1.6746; nut 10yr8.- 1.946: nut 10yrs.- 2.1% over30yr..- 2.3%.
Varhtbn for D. pt of Corrutbn and Pollu and Ah Plbts.
1.67%~ 1s t 10yrs; 1.94) x2ndlOyn.; 21. kx3rd 10yr8.; 2.3% xuurover30
x . v g . w L ( ~ l 4 Wnuc. W/ l l u t 10 yrs) - 8nnual imnefl
,011 x yurs nnbm crodk x 5 hiqM y u r uhry.
Yrs. of WN. X ( 5 Nphnt u h r k dk. by 5) x 1 .1% x ap. reductbn 01 lllW per mo. mgu M- 65
snd Y12% p r mo. agu M plus annuity aocnt. whbh may be mnnultn. d or taken h lump sum.
Prbr WN~ U 1 % l~ h l avo. nhrj x y18. p. rtkip. Ung - 1 .=. I.+%, or 1. %, dwmndlng onyeam.
Yrm. 01 un. x fmlor x FAS. FAS- Avaol 5 NgM. 1 fbcal yr8. ol whry.
Faclor.- l . W w. g. nl.; 1 . Dl% 8t. g. nl.: 12.41% wt. p( iu; 2.494) polUlke ( st.); 2.546 W f k * ( W. 1
Yrs. x 2% x FA3 for un. lo 1/ 84; yrs. x 2.5% x FAS for u n . s i n u 1/ 84: yrs. x 2% x FA8 for untu. membors w1S. S.
2- 112 x yrs. 01 sen. x avp. amp. (+ WX for pwrwn who h m e members prbr lo 7111W).
Tuch. m. Slate A wme kul dkU.- 1/ 50 x yrs. of c r d u n . x avg. of highest 3 yrs. urnlngs.
Some h ldIs L.. ( KO) hvo 1180 x yrm. of c r d u n. x 3 hbhesl yrm. aring. 8vg.
Yr8. of 5. n. W. by 55 x avg. fhI uL( AFS)- max. mnnten,( LUB) pn. ay8. 4% 01 AFS lo S. S. lnugntbn Lwel
ISSIL) + 1.59) 01 AFS 01 SSILx Yr8. 01 8uv. - MAE
Ag. fador x yr. of c r d u n . x 8vg. uLbr 3 higkml wnnc. yrs. - 8nn. ret. aUoW. qtbn A
1% p r yr. lor 1.1 10 yrs. of un.; 1- 1mb p r yr. t h r u t u r x Wh 5 FAS.
Yrs. w to and Incl. 30 yr8. x 1- 34s mnd% for eryr. In uuru of 30 yrm. x avp. 0( 4 highest wnec. yrs.' uhry.
reduced 3% for M. yr. under 30 yrs. WN. or aw 65 whkber h the briar It ap. 60 or older;
reduced bU3C U under ap. W A hvo 2C30 yrS. WN. No reductbn U 30yr8.01 WN. or 80. a.
SenbrlIylmsrlt var*. lrom 19%.
Yrs. 01 sen. time 1100 limu the mvg. 01 th. hlgh. t 36 wnus. mM. uhy.
Equal to 1100 01 the avp. f l n l wmpnulbn for uch y u r of unlu.
Sen. cred. x 2- 112% x mvg. wmp. for hgMwwec. 3s mw. of empky. - unmodtlw retirement phn.
Yurtf bemfit ap. 80 thru 64 - 1/ 60 x AFC x crndhbb wnbm; 65 and after - t i a x AFC x credit. b& unlu.
Ororp II ( pouultk.) - 2- 11% x AFC x udlub* rn.( no( lo excud 40 yrr.). AFC h avg ot 3 Nph. 1 arm u t Wyr* .
FA8 x unbm x ,0215. FA8 I mvg. d b l 5 yurm urnhQ or any wnwc. 5, whklwsr h grutar
Avg. lhl compnuw 1hbhe. t 48 m ~ In . a r ow W WQ 4) x ,0180 x yrs. 01 creditable sen.
Yrs. 01 unb x 1. 5% x IM w gu hry ( 8ve hbhest wnwc. u h r kin 5 of th. l u t 10 ym. workad).
FAS . avg. hlgh 3 uhr*. x 1.22% x y u n ol wnbm.
2% mt 30 yrs. or 81 80.65; raduslbn lor u r t f rstlr8ment; f h l avg. uhry- 3 hbhgt yrs.; wl mln. m o w p u r c h benefit u a floor.
Avp. ann. ulPry ( hlgh 3 ol b. 15) x 2 % t~ ota l yrs. of crei WN. dhldad Q 12 - max. mo. Lmmlit.
Yr8. cred. WN. xavg. u h r y x .02dk. Q12. ( rvp. uhy- Nph3oIlulSyn. of WN.. 8Uajtom. r. cnnL uhy levelm- 225.000or W. OM)).
FA3 x wnbm x 1.67%. F+ - - 1 3 u L yrs. In c u r r or hat 36 mtw. of warage.
236% F AS ( f Mm vg. u w ) fo r u c hy u r 0 1 un. FAS b u do n h b M3 ym. Opl.. ddl. Lmmlkm 2% x mvg. of urnlng. In praos of FICA
stbsaqrwnt to 12/ 31/ 56. Thk opllon cbnd 31/ 74 to n w msmborm Q Legkhturs.
1.7% 01 FAS lor 1.1 10 yrs; 1.0% lor n r t 10 yrs.. 3 . M for nrl 14 yrs.; 2% for 35th yr. Mu. b. n- 80% FA9 w135 yrS. seN. 3 hbh wm. yr.. uhry ~ p.- FAS.
1.7% x AFC ( 3s month.) x yurs 01 mbm.
Chsm A! 1) Flnl 8vg. u h r y ( FAS) x 1.2% x yrm. 01 un.; 21 FAS x wnba x 2% * u 811 otkr pubuc benelk
C h u S: FAS x nnlu x 2%. Judbhk FAS x wnbm x 3.33% ( rp lo 16 ym) + FASx ndnhg un. x 2%.
[ 1.5% x 5 yr. AFC x c r d b b h w n l + [. ZSbx ( 5 yr. AFC exuding SSL) x c r d b b b an.] - [ anmml bewfkl.
( 2% x y n of crndhbb WN.) x ( wp. ol h b h t 3 annual u h r i u ) - mnml standud annuity.
1, Yrs. 01 WN. prbr lo 7 - l a x 1.1OPlx FAS; 2. Ym of wnlce 7- 1- 87 1 o ~ S1. xZII Lx FM;
3. yrs. of un. aa~ 7- 1- 76 x 2% x FAS. Phn 1 dbw - TOW dl, 2. 3. FAS - highest 5yr8. u~ nlngs. o mmted to a mo. wg.
AFC x 1.25% x yurs of wnbm.
Urger 01 1.5% 01 avg. fM wmp.( hbh 36anwc. m~.) or 1. OAFC kuS1.200 for . ryr. of cred. wrv. 11.200 adjwledanntf. for members wl8U un. 8Rer UlIW.
Ganl. Emp.: 3 h b b t yrs. am. uhry x .016 x yrs. 01 crediubk UN. ProtrUvu wlSS and Ekted: 3 h b k t yrm. x .02x y u n un.
STATE OF ARIZONA
: ALL EMPLOYERS : PUBLIC EMPLOYERS : PRIVATE EMPLOYERS : STATE OF ARIZONA
: Wghtd. Wghtd. Wghtd. : Wghtd. Wghtd.
POSITION: : Avg. Min. Max. : Avg. Min.
Accountant : $ 2,325 $ 2.082 $ 2.700 : $ 2.231 $ 2.002
Accountant Supv : 3.295 3,045 3,626 : 3,421 3,069
Accounting Clerk : 1,442 1,266 1,894 : 1,389 1.232
Attorney : 3,549 3,133 4,593 : 3,494 3,087
Auditor : 2,614 2,455 2,818 : 2.623 2,422
Auto. Mechanic : 2,117 1,923 2.320 : 2,097 1.870
Auto. Sew. Worke : 1,738 1,615 1,863 : 1.649 1.511
Auto. Syst. Traine : 2,120 1,976 2.337 : 2,185 2,052
Biomed. Elec. Tec : 2,137 1,927 2,385 :
Bldg. Maint. Supv: 2,487 2,268 2,711 : 2,403 2,090
BudgetAnalyst : 2,806 2,050 3.232 : 2,795 2,526
Buyer : 2,271 2,070 2,577 : 2,228 2.011
Carpenter ( maint : 2,256 1,897 2,470 : 2,258 1,900
CashierlOffice : 1,277 1,114 1.654 : 1,375 1.257
Civil Engr.( reg.) : 3,594 3,029 4,270 : 3.516 3,050
Clerical Supvr. : 1,831 1,626 2,266 : 1,766 1,567
Clerk Typist : 1,202 1,085 1.510 : 1,172 1,001
Cornm. Techn. : 2,046 2,326 2,919 : 2,598 2.323
Compt. Oper.( lea : 1,911 1,725 2,187 : 1,886 1,679
Comp. Opers. Mg : 3,985 3,795 4,105 : 3,825 3,668
Comp. Prograrnm : 2,361 2,159 2,762 : 2,293 2,170
Cook : 1,380 1,222 1,562 : 1.552 1,351
Custodial Supwr : 1,704 1,527 1,896 : 1,726 1,534
Custodial Worke : 1.220 1,049 1.446 : 1,382 1.159
Data Comm. Tec : 2,256 2,334 2.884 : 2,592 2.343
Data Entry Oper. : 1,311 1.168 1,557 : 1.276 1,152
DataEntrySupvr: 2,103 2.027 2,168 : 2.239 2,126
Drafting Tech. : 2.201 1,778 2,518 : 2.074 1.801
Driver : 1,492 1,308 1,651 : 1,604 1,401
EDP Director : 4,985 4,982 4,988 : 5,120 5,120
EDP Prog./ Analy : 2.855 2,524 3,346 : 2,720 2,445
EDP Syst. Analyst : 2,958 2,655 3,412 : 2.972 2.750
EDP Sys1Prog. M : 4,335 4,133 4,547 : 4,238 3,983
Electrlc. ( maint) : 2,673 2,512 2.793 : 2.475 2.078
Electronic Tech. : 1,949 1,042 2,412 : 2,183 1,892
Equipment Oper. : 1,895 1,034 2,084 : 1,906 1,593
Equip. Shop Sup : 3,089 2,908 3,224 : 2.871 2,525
Food Sew. Supv : 1,720 1.616 1,879 : 1,688 1.620
Food Sew. Work : 994 831 1,215 : 1,042 841
Graphic Artist : 1,883 1,865 2,000 : 1,885 1,729
Groundskeeper : 1,413 1,255 1,608 : 1.476 1,301
Heat/ Refrig. Mec : 2,402 2,171 2.575 : 2,324 2.078
Heavy Equip. 0~ : 2,347 2,032 2,510 : 2,170 1,885
Hvy. Equip. Mech.: 2,509 2,259 2,668 : 2.470 2,116
Laborer : 1,507 1,394 l, W1 : 1.411 1,270
Lab. Technician : 1,538 1,368 1,782 : 1,583 1,392
Wghtd. : Wghtd. Wghtd. Wghtd. : Wghtd. Wghtd. Wghtd.
Max. : Avg. Min. Max. : Avg. Min. Max.
AJA- 7- QLlSALARY-$. WKl
STATE OF ARIZONA
: ALL EMPLOYERS
: Wghtd. Wghtd. Wghtd.
POSITION: : Avg. Min. Max.
Legal Secretary : $ 1,726
Librarian : 2.630
Library Assistant : 1,598
Lic. Prac. Nurse : 1,641
Mail Clerk : 1,174
Medical Tech. : 2,218
Micra- System :
Prog./ Analyb: : 2,380
Nursing Asst. : 1.1 16
Offset Press Ope : 1,814
Painter ( maint) : 2,235
Personnel Anaiy : 2.487
Personnel Asst. : 1,608
Pharmacist : 3,393
Physical Theraps : 2,649
Phys. Plant Dir. : 3,718
Plumber ( maint.) : 2.281
Program Planner : 2,432
Pub. lnfo. Officer : 2.491
Purchasing Dir. : 3,843
Radiological Tec : 1,848
Registered Nurs : 2,348
Respiratory Ther : 1,803
Safety Officer : 2.978
Secretary : 1.473
Secur. Offlunarm : 1,300
Secy. lnon- dict. : 1.497
Social Worker : 1,975
Stationary Engr. : 1,922
Stock Clerk : 1,394
Stores Suprvr. : 2,509
Switchboard Op : 1,191
Training Coord. :
( in- service) : 2,578
Welder : 2,533
WP Equip. Oper. : 1.377
: PUBLIC EMPLOYERS
: Wghtd. Wghtd. Wghtd.
: Avg. Min. Max.
: PRIVATE EMPLOYERS : STATE OF ARIZONA
: Wghtd. Wghtd. Wghtd. : Wghtd. Wghtd. Wghtd.
: Avg. Min. Max. : Avg. Min. Max.
: $ 1,853 $ 1,573 $ 1,726 : $ 1,598 $ 1,480 $ 2,184
: 2.061 2,061 2,061 : 1.989 1.853 2.804
: 1,744 1,712 i, m : 1,544 1,416 2,039
: 1,655 1.361 1,955 : 1,356 1,155 1,663
: 1,126 1,024 2,359 : 1,079 1.020 1,399
: 2,224 1,863 2.670 : 1,740 1.586 2,401
' - - - . - . - ' - - -
AVERAGE :$ 2.108 51.955 52.414 : 52.123 51,936 52,444 : $ 2,160 51.993 52.434 :$ 1.882 51.615 52.332
Source: Joint Governmental Salary and Benefits Survey/ Arizona 1989
COM
N
0
T
9* URY WPUATION E AVERME - -
Sht. ol Arkore- SL. b & ancba 1 $ 23 544
Arkon lndutw- St. t. 4 L w l Qwarnmant 2 $ 22. M2
MRS- Aslive Member8 Avera0. Wary- 1989 4 $ 24 057
PLblb Emplqer8 1 F26- 448
Priv. 1. Employers 1 S26.692
& horn IndW- Wlthoul S u b 4 L- l Gwarnment 2 $ 21 946
RbWI and Wholsu'a T r h 3 $ 14.239 -
Avbrap OvenU Compnvtbn $ 22.735
U S Poverty InaomcF. mlly of 1 3 55 770
U S Poverty InccmcFamltj 01 2 3 $ 7 730
U S Poverty InaomcFamUy of 3 3 fO. 6W
U S Pwarty IrurmcFamitf 01 4 3 $ 11.650
ASRS- Retiromenl Bemftt8 In F o r d u t y 1.1989 4 $ 7236
( lor aU relireas)
ASRS- Retlremant Benflla in Foru- Jutf 1, 1089 4 18.690
( age 81 and we0
MRS- Retlremenl 8snlks in F o r d u t y 1, lSE9 4 112.228
(. p. 0 and under)
MRS- New Retirement BenflU- 1- 4 113,260
NOTES
1 Arbon Joint Governmental Salary and BewfRa SUNW 1fW
2 VaUsy Natbrd aank a Ashom SL. tIC. 1 Rw'aw Dwnrnber lSE9
3 Arkom D. p. nmant of Esommk Wrrty- Annwl PI.* Inlonnatbn IQEQ- 1DW
4 Th. Wyatt Compnny' 8 lOW AstwrhIVatwtbn Report
APPENDIX 3
PRIVATE PENSION SYSTEMS SURVEY DATA
CONTENTS:
Sample Su wey Letter
Summary of Su wey Data
January 10, 1990
Mr. Karl Eller
CEO
The Circle K Corporation
1601 N. Seventh Street
Phoenix, AZ 85007
Dear Mr. Eller:
We have been retained by the Arizona Legislative Council Joint
Retirement System Study Committee, co- chaired by Speaker of
the House, Jane Hull and Senator Doug Todd, to conduct an
evaluation of the Arizona State Retirement System. This Study
will include examining certain aspects of the State Retirement
System in comparison to private pension systems and other
public retirement systems.
This letter is written to request your assistance in compiling
current data for the Study. To that end, we ask that you
complete the enclosed Survev Form and return it by January
20th to us and our associates at:
Kaufmann and Goble Associates and Cyberserv International Co.
1091 West California Avenue
Mill Valley, CA 94941
ATTENTION: ASRS Survey
Please also enclose a copy of your Summarv Plan Description
with the completed survey. All information will, of course,
be kept confidential and used only for the Arizona State
Retirement System Study.
Should you wish to receive a copy of the Survey results,
please check the box at the top of the survey form.
Thank you for your assistance with this important work for the
Arizona State Legislature.
Sincerely,
KAUFMANN AND GOBLE ASSOCIATES
1 i j 8 $ 8 1 35. rif i
d 2 B a g . 1
s l j i jjz
k 3
f
s i j H H # g $
I d * l i n i - l a
d 8
fig8 sg gs 5e" j , g
E - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
/ i i $ == ag1i r9i
L CIhF s:.=. SS
8. 4 8. S 8.
E D $ l E P Y E
@ D
$ [ E
if sf; ff; ! f;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
~ s a i O a q - I il l ] ] g 3y. s 1 t -
f
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i d a d - 1 - N - -
I 8 '
s I ' - I - f U) - - N P If I
1; 2
a - - - - - Y) 3
1 5 I z0 E l
ul - - l N ?
? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iE. il . . " " z
f H . B
d . : [ I %
8 $ [ g $
SURVEY OF PRNATE SECTOR RETIREMENT PUNS \ DATA- COLSUR- PVTPVTWKI
(. P a- a e 2 of 3)
, . " ADMINI-- Corn.. :. .. ""'- y RmREYEHT'.."..
: RENIDIEICT : : WumnYsmod * A r d Whmmed: Rudant haLRe& rtuon : : I- D l m r r p . O@ m
COMPANY NAME : WUYlTTEE : : m- ,-,, : - ~ l l a ? ( s~ m( appsa) : T& ~ T I L ~ r : Y- NO YN m YN m
: y r m : ~ - ottm, ~ . a o ~ r + ~ . t . I-: YN m ~ nsr. L ~ N O . C & : w y r . ~ . r ( . yrkr: ( seam( apq. w
1st Intern. Bnl: of U
h e r . C0ntkmt. l Cow.
h e r . SW Mtg. I-.
h e r . W r t UUnn
AT41
U PlWis SON. co.
Burr- Brown Corp.
ckcb K corp.
Emerald Hmw L. P.
~ osnenBu Yden
Honal* sfl Bull Inc.
Intel Corp.
1" Ier- Tel lnc.
McDwnell DowhU8
MiiroAae Ins.
Phe4m D d P cop.
Ram& Inc.
S. mar*. n Hakh 8 . N .
( n.~ aeph's~ d ~ Cter d
Sun 8Ule Sbl Auoc.
T8W IndW*.
1- n E W r k Power
UDC- un( rsrwJ D w l .
U. S. WNI. Inc.
v a ~~ ya t lC. op.
Wdern SLL A.. os.
W. A)( lug. r Co.
CyC8re system#. Inc.'
Del E. W. bb Cow.
Qrqhaund COW.
Motoroh Im.
Pht78Cb WNt c8P cow
I
F PRIVATE SECTOR RmRaAENT PLANS \ DATA- COLWR- PVT. WK1
( Page 3 of 3)
lNvEsmEMPOUClEa
Qreyhound Corp. Due to present economic mnditions, do not invest in real estate.
Motorola More alternatives have beon offered in the k tse veral yem.
RETIRBIpTTcouum
CyCare Systems, tnc. CyCare.
Qreyhound Corp. Appointed by CEO
Motorola, Inc. Pension Plan Comm. - Chairman, Chief Flnancial Officer. VP- Tress.; VP- Dlr. of Bene.; Fietired CFO.
Profit Shnrlng Comm. - Chairman, Chief Financial Offioer. Retired CFO, 2 members elected by employees.
Plnnacle West Csp. Corp. CEO, CFO, VP of H u m Resources, VP of Corporate Planning. BenefiIa Mminknator.
E4fxYFlEnRENENrFVInmEs
Greyhound Corp. Normal Retirement Pension reduced - Retirement on or after age 62 but before age 65:
Reduced by .25% for each month that Early Retirement
date precedes Normal Retirement Date.
Retirement on or after age 55 but before age 62:
Reduced by 9% plus .4167% for each month that Edy
Retirement Date precedes the first day of the month
of 62nd birthday.
Motorola. Inc. Any time after age 55 if you have at least 5 years of service, or at age 60 regardless of service.
Early Retirement benefits based on percentage according to age: 65= 100%; 6443.3%; 83= 86.7%;
62= 80.0%; 61~ 73.3% 6' 0~ 66.7% 6; 9 = 6.3.%' 5840.0%; 67'= 56.7%; 66~ 53.5% 5; 5= 50.0%.
Pinnacle West Cap. C With 20 years of service, pension reduced 3% for each year benefit payments begin prior
to the earlier of ( 1) age 65, or ( 2) date on which age 80 would be attained and be credited
with 33- 3/ 3 years of service.
O'IHER INFORMATION:
* The CyCare plan was instituted in 1989.
APPENDIX 4
PUBLIC EMPLOYEES RETIREMENT SYSTEMS BENEFITS
RANKINGS AND ANALYSIS
CONTENTS:
w Rank Scoring Data - Summary of Retirement Systems' Composite Ranking
w Rank Scoring Data - Overall Ranking of Retirement Benefits Factors
w Rank Scoring Data - 30 Year, $ 1 5,000 FYS Benefi Amount Ranking
w Rank Scoring Data - 30 Year, $ 30,000 FYS Benefit Amount Ranking
w Rank Scoring Data - Employer Contribution Rate Ranking
w Rank Scoring Data - Member Contribution Rate Ranking
w Rank Scoring Data - Retirement Formula Percentage Multiplier Ranking
Rank Scoring Data - Benefit Dollars Per % of Member Contribution
w Rank Scoring Data - Benefit Dollars Per % of Employer Contribution
. . . .
. . . , - 8UMMARY OF UEIIR
.. . : : RmRDIENTSYSEM SORTED BY RANK R : : NUYBERIY : :
A : : OF STATES : :
: : I. N : : OVWUNDW : :
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: : 59 T u u 1 15 : : 17 .. . .. .. 42 New J e r y 1 18 : : 18 .. .
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