State SealARIZONA HOUSE OF REPRESENTATIVES

 

HB 2357: EORP; employer contributions

PRIME SPONSOR: Representative Livingston, LD 22

BILL STATUS: Banking & Insurance

 

Legend: ASRS – Arizona State Retirement System EODCRS – Elected Officials’ Defined Contribution Retirement System EORP – Elected Official’s Retirement Plan Amendments – BOLD and Stricken (Committee)

Abstract

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☒ Emergency (40 votes) ☐ Fiscal NoteRelating to EORP employer contributions.

Provisions

1.       Requires, beginning July 1, 2018, each EORP employer to make contributions sufficient under the actuarial valuation to meet both the normal cost plus the actuarially determined amount required to amortize the unfunded accrued liability over a closed period of at least 20 years, but not more than 30 years. (Sec. 1)

2.       Asserts an employer's contribution to EORP in combination with member contributions may not be less than the actuarially determined normal cost for that Fiscal Year. (Sec. 1)

3.       Removes language regarding employer contribution rates beginning FY44. (Sec. 1)

Current Law

Established in 1985, EORP is a cost sharing multiple-employer public retirement plan established by Title 38, Chapter 5, Article 3 to provide benefits for elected officials and judges of certain state, county and local governments. The PSPRS Board of Trustees administers EORP.

Each member is required to contribute 13% of compensation to EORP. Beginning January 1, 2014 and continuing for 30 years, employer contributions equal 23.5% of aggregate payroll. Aggregate payroll is on behalf of active members in EORP and active members in EODCRS, and active members in ASRS who opt-out of EODCRS because they had money on account with ASRS.

The employer contributions are used to pay for: 1) EORP Defined Benefits = Employer Normal Cost plus an amount to amortize the unfunded accrued liability; 2) EODCRS Defined Contribution = 6% of pay for those electing EODCRS; and 3) ASRS Defined Benefits = Employer’s contribution amount.

Additionally, from FY14 through FY43, the sum of $5,000,000 is appropriated in each fiscal year from the state general fund to EORP to supplement the normal cost plus an amount to amortize the unfunded accrued liability (A.R.S. § 38-810).

In 2013, the Legislature closed EORP to new members and created EODCRS. EODCRS members contribute 8% of compensation to an annuity account annually (A.R.S. § 38-833).

According to PSPRS's Actuarial Valuation (June 2017) EORP is currently 30.7% funded.

 

 

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Fifty-third Legislature                  HB 2357

Second Regular Session                               Version 1: Banking & Insurance

 

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