San Bernardino and the California Public Employees' Retirement System will ask a judge today to decide the legality of the city's decision to defer about $13 million in pension payments for policemen, firefighters and street cleaners.

Lawmakers should consider creating an optional 401(k)-style retirement plan and raising the retirement age for future public employees if Arizona is interested in changing its financially ailing public-pension system, according to a 13-member pension-study committee led by state Treasurer Doug Ducey.

Lawmakers and Gov. Mary Fallin will have $214.6 million more to spend in crafting the fiscal year 2014 budget, Secretary of Finance Preston Doerflinger.

Public pension funds must invest wisely, pay promised benefits and operate transparently. That often smacks squarely into how their business partners operate.

Workers also would agree to increase contributions; Quinn is noncommittal.

The General Assembly moved quickly Wednesday night to wipe most of the remaining red ink out of the current state budget, relying largely on cuts to social services, but also reducing a wide array of education and tourism initiatives.

Medicaid is operated by the 50 states with partial reimbursements from the federal government and it can take up to a third of a state's budget. In fiscal 2012, it consumed 24 percent of total state spending.

Superior Court Judge Sarah Taft-Carter ordered both sides into mediation to reach an agreement regarding the lawsuit filed by several labor unions that seeks to overturn the state's landmark pension reform law.

Gov. Gregoire offered her blueprint for state spending during the next two years. It would provide money for public education by gradually increasing wholesale gas and diesel taxes.

The governor is requesting $6.1 billion for fiscal year 2014 and $6.3 billion for fiscal year 2015, making a total of $12.4 requested in general funds for 2013-2015.