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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
AMENDED
PSPRS; contribution rates
Purpose
An emergency measure that aligns, retroactive to July 1, 2023, the employee contribution rate for Tier 1 gap and Tier 2 members of the Public Safety Personnel Retirement System (PSPRS) with the employee contribution rate for Tier 1 PSPRS members.
Background
Established in 1968, PSPRS provides a uniform, consistent and equitable statewide retirement program for public safety personnel who are regularly assigned hazardous duties in the employ of the State of Arizona or a political subdivision. PSPRS is funded through employee and employer contributions.
Membership in PSPRS is designated as Tier 1, 2 or 3 based on the member's participation date. Most Tier 1 members pay an employee contribution rate of 7.65 percent of compensation. A member whose membership date is between July 20, 2011, and December 31, 2011, is referred to as a Tier 1 gap member. A member whose membership date is between January 1, 2012, and June 30, 2017, is referred to as a Tier 2 member. Tier 1 gap and Tier 2 members pay employee contributions at a variable rate of between 7.65 and 11.65 percent of the member's compensation, depending on the employer's funding level. The amount of employee contributions that exceed 7.65 percent of a member's compensation may not be used to reduce the employer's contribution rate until the employer's funded ratio is 100 percent or more (A.R.S. §§ 38-841 and 38-843).
The Joint Legislative Budget Committee estimates that H.B. 2028 would have a minimal fiscal impact to both state and local governments (JLBC fiscal note).
Provisions
1. Replaces, for fiscal years beginning FY 2024, the variable employee contribution rate for Tier 1 gap and Tier 2 members with a set contribution rate of 7.65 percent of the member's compensation.
2. Allows, beginning July 1, 2023, the amount of employee contributions that exceed 7.65 percent of a member's compensation that was accumulated between July 1, 2011, and June 30, 2023, to be used in calculating the employer's contribution rate.
3. Makes technical and conforming changes.
4. Becomes effective on signature of the Governor, retroactive to July 1, 2023.
Amendment Adopted by Committee
· Adds an emergency clause.
House Action Senate Action
WM 2/15/23 DP 10-0-0-0 FIN 3/13/23 DPA 5-0-2
3rd 2/28/23 31-28-1
Prepared by Senate Research
March 14, 2023
MG/sr