ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature

First Regular Session

HB 2028: PSPRS; contribution rates

Sponsor: Representative Livingston, LD 28

Committee on Ways & Means

Overview

Sets PSPRS employee contributions to 7.65% of their compensation effective beginning FY 2024. Additionally, beginning FY 2024, PSPRS will include the excess contribution rates collected into consideration when determining the employer contribution rates.

History

Current statute requires employers to make contributions sufficient to meet both the normal cost for members hired before July 1, 2017, plus the determined amount required to amortize the unfunded accrued liability for all employees of the employer who are members of the system.

For members hired prior to hired prior to July 20, 2011, the employee contribution rate was set at a fixed rate of 7.65%. SB1609 in the 2011 legislative session attempted to increase that set rate to a variable rate that was capped at 11.65% for all employees. However, the Supreme Court ruled that unconstitutional in 2016 for existing members and only applied it to members hired after the general effective date.

The Legislature passed SB1468 in 2016 that dictated that for members hired on or after July 1, 2017, the member and employer contributions are determined in two categories. There are employers and members who are in the public safety risk pool, and those not in the public safety risk pool. For members and employers in the public safety risk pool, each employer must pay 50% of both the normal cost plus the determined amount required to amortize the total unfunded accrued liability within the risk pool. The remaining 50% is divided by the total number in the risk pool. For those not in the public safety risk pool, each employer must pay 50% of both the normal cost plus the determined amount required to amortize the total unfunded accrued liability for each employer attributable only to member's hired on or before July 1, 2017. The remaining 50% will be divided by the total number of the employers' members who were hired on or after July 1, 2017. (A.R.S. § 38-843)

Provisions

1. Designates that for FY 2024 and each year thereafter, the employee's contribution rate will be 7.65% of their compensation for members hired prior to July 1, 2017. (Sec. 1)

2. Strikes statute which states that member's contributions above 7.65% must accumulate and cannot be used to reduce the employer's contribution rate until the employer becomes 100% funded. (Sec. 1)

3. Adds that from and after June 30, 2023, member's contribution that exceeds 7.65% and that was collected from July 1, 2011 through June 30, 2023 may be used when calculating employer contribution rates. (Sec. 1)

4. Makes technical and conforming changes. (Sec. 1)

5. Contains a retroactive provision. (Sec. 2)

8. ---------- DOCUMENT FOOTER ---------

9. HB 2028

10. Initials VP/AA Page 0 Ways & Means

11.

12. ---------- DOCUMENT FOOTER ---------