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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
REVISED
ASRS eligibility; waiting period
Purpose
Reduces the length of time before a state employee initially hired on or after October 1, 2020, must become a member of the Arizona State Retirement System (ASRS).
Background
A state employee initially hired on or after July 20, 2011, is not eligible to become a member of ASRS before the 27th week of employment. A state employee who meets statutory state retirement system criteria must become a member of ASRS.
A state employee is a person who is employed by an agency, department, board or commission, a university under the jurisdiction of the Arizona Board of Regents, the judicial branch if paid by the Arizona Department of Administration, the Arizona Corporation Commission or the Legislature (A.R.S. § 38-671).
The Joint Legislative Budget Committee fiscal note indicates that S.B. 1125 would increase state General Fund costs by an estimated $2.3 million in FY 2021 and $3.5 million annually thereafter as the state makes additional ASRS contributions for new hires. In addition, S.B. 1125 would slightly reduce the ASRS contribution rate. However, ASRS does not have an actuarial estimate for the lower contribution rate. When this 6-month policy was originally enacted in FY 2012, ASRS estimated it would increase the contribution rate by 0.13 percent. If the ASRS contribution rate follows the same percent change, accounting for the change in contributions from six months to five months (0.11 percent), then there would be partially offsetting state General Fund savings of $(633,000). In total, the net impact of S.B. 1125 would be an annual state General Fund cost increase of $1.7 million in FY 2021 and $2.8 million annually thereafter (JLBC fiscal note).
Provisions
1. Requires a state employee initially hired on or after October 1, 2020, to become a member of ASRS on the 31st day of employment, if membership criteria are met under the state retirement system statutes.
2. Makes technical changes.
3. Becomes effective on the general effective date.
Revisions
· Updates the fiscal impact statement.
Senate Action
FIN 1/22/20 DPA 10-0-0
3rd Read 1/30/20 29-1-0
Prepared by Senate Research
January 31, 2020
MG/gs