ARIZONA HOUSE OF REPRESENTATIVES Fifty-fifth Legislature First Regular Session
	Senate: FIN DP 8-0-2-0 | 3^rd Read 28-0-2-0 House: GE DP 13-0-0-0

---

SB 1649: PSPRS; investment reporting

Sponsor:  Senator Livingston, LD 22

House Engrossed

Overview

Modifies statute relating to the reporting requirements of the Board of Trustees (Board) and local boards of the Public Safety Personnel Retirement System (PSPRS).

History

The administration of and responsibility for making the provisions of PSPRS effective for each employer are vested in a local board.  Current statute outlines the various departments and state agencies that must have a local board and the membership of such boards.  A local board must have the powers as necessary to fulfill certain duties.  The duties of a local board include the following:

1) To decide all questions of eligibility for membership, service credits and benefits and the amount, manner and time of payment of benefits;

2) To prescribe procedures that must be followed by claimants in filing benefits applications;

3) To make a determination on the right of any claimant to a benefit and to allow the claimant or Board, or both, a right to a hearing on the original determination; and

4) To request and receive information from employers and members that is necessary for the proper administration of the system (A.R.S. §§ 38-847, 38-893).

Provisions

1. Removes a plan member from the list of whom the independent legal counsel may not be. (Sec. 1, 5)

2. Prohibits the independent legal counsel of a local board from representing a member of the plan before any local board or any judicial appeal of a local board decision. (Sec. 1, 5)

3. Includes other alternative investments and carried interest in what must be included in the comprehensive annual financial report of the Board. (Sec. 2)

4. Requires the Board to issue a request for proposals for an external auditor every five years.

a) Specifies that the Board is not required to change its auditor after issuing the request for proposals. (Sec. 2)

5. Directs the Board to develop a policy regarding routine stress testing of the plans and retirement systems administered by the Board at the system level and employer level. (Sec. 2)

6. Mandates that the stress test use industry standards such as population growth, employer contributions, the inclusion of assumptions regarding investment returns, inflation and payroll growth. (Sec. 2)

7. Asserts that the President of the Senate and the Speaker of the House of Representatives must each appoint one member to the PSPRS advisory committee who is either a legislator or a legislative staff member.

a) Specifies that the remaining members of the PSPRS advisory committee are appointed by the chairperson of the Board. (Sec. 2)

8. Instructs the governing body of an employer to also transmit the pension funding policy to the Board. (Sec. 3)

9. Stipulates that the Board must annually review and adopt a pension funding policy for each defined benefit retirement plan and system administered by the Board that:

a) Reviews and analyzes the methods to ensure systematic funding of all retirement benefit payments for members of the defined benefit retirement plan and system; and

b) Outlines the strategy to achieve financial solvency of each plan and system. (Sec. 4)

10. Requires the Board to annually consolidate the pension funding policies of employers and post that document on the system's public website. (Sec. 4)

11. Directs the Board, on or before June 30 of each year, to submit a popular annual financial report to the Governor, the President of the Senate and the Speaker of the House of Representatives. (Sec. 4)

12. Specifies that the popular annual financial report must be posted to the system's public website and include the following:

a) For each retirement plan and system that is administered by the Board:

i. Demographic updates;

ii. Funding status; and

iii. Aggregate contribution rates;

b) For the aggregate of the plans and systems administered by the Board:

i. Major policy and governance changes;

ii. An analysis of the system's aggregate experience over the previous year;

iii. Future trends and objectives; and

iv. Investment returns. (Sec. 4)

13. Defines stress test. (Sec. 2)

14. Makes technical and conforming changes. (Sec. 2, 3)

15. Conditions the enactment of this legislation relating to local boards and the Board on House Bill 2381 becoming law. (Sec. 6)

16.

17.

18. ---------- DOCUMENT FOOTER ---------

19.                   SB 1649

20. Initials SJ  Page 0 House Engrossed

21.

22. ---------- DOCUMENT FOOTER ---------