ARIZONA HOUSE OF REPRESENTATIVES

SB 1054: ASRS; nonparticipating employers

PRIME SPONSOR: Senator Fann, LD 1

BILL STATUS: Banking & Insurance

Abstract

Relating to ASRS nonparticipating employer liabilities.

Provisions

1. Requires ASRS to establish a separate fund for an employer, other than a charter school, that is either:

a. No longer participating as a result of specified conditions; or

b. Based on the number of contributing employees, considered to employ a minimum of 50 employees as of 1 year preceding the nonparticipation date and is no longer participating as a result of a reduction in the number of contributing employees under specified circumstances, unless the employee is participating in EORP, PSPRS, CORP, or an optional retirement plan as established by a community college board.

i. Specifies the provision regarding contributing employees applies to the state if the reduction is the result of hiring one or more leased employees. (Sec. 1)

2. Directs ASRS to allocate an actuarial accrued liability and a designated asset amount to the nonparticipating employer's separate fund as of the nonparticipation date.

a. Outlines the method for calculating the liability and asset amount. (Sec. 1)

3. Specifies all monies and securities transferred to an employer's separate fund must be credited to that fund.

a. Requires a record of the market value and the cost value of the transferred contributions to be maintained. (Sec. 1)

4. Asserts ASRS has the authority to make all decisions regarding a separate fund. (Sec. 1)

5. Requires the separate fund to be adjusted for:

a. All contributions made by the employee or employer;

b. Any benefits paid to a nonparticipating employer's members and survivors;

c. Investment gains or losses; and

d. Administration expenses. (Sec. 1)

6. Specifies a nonparticipating employer and the employees who are enrolled in ASRS have contribution requirements.

a. Outlines the method for calculating the contributions.

b. Directs the ASRS actuary to determine the actuarial assumptions used for the calculations.

c. Prohibits the contributions from being determined as a percentage of compensation. (Sec. 1)

7. Requires a nonparticipating employer to certify on each payroll the amount to be contributed and remit such amount to ASRS.

a. Amounts not remitted are invoiced to the employer and must be paid within the same Fiscal Year as invoiced. (Sec. 1)

8. Specifies how certain employees are to be considered for the purposes of calculating liability. (Sec. 1)

9. Prohibits an employer from participating in ASRS after the employer's nonparticipation date. (Sec. 1)

10. Exempts an employer whose existence, prior to January 1, 2013, was terminated by legislative action or who became a nonparticipating employer from the nonparticipating employer contribution requirements. (Sec. 1)

11. Modifies certain definitions. (Sec. 1)

Current Law

Pursuant to A.R.S. § 38-751, ASRS allocates liability to an employer that becomes a nonparticipating employer if nonparticipation is based on specified conditions.  ASRS must determine the schedule and method of payment for the liability.  Statute defines the liability allocated to an employer as the sum of the following:

1. The plan employer actuarial accrued liability multiplied by the plan total deficit percentage.

2. The LTD program employer actuarial accrued liability multiplied by the LTD program total deficit percentage.

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Fifty-third Legislature                  SB 1054

Second Regular Session                               Version 1: Banking & Insurance

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