 |
ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
EORP; appropriations; repayment
Purpose
An emergency measure that appropriates $609,054,500 from the state General Fund (state GF) in FY 2023 to the Elected Official Retirement Plan (EORP) Fund to pay EORP unfunded accrued liability. Establishes a repayment schedule that requires each county and specified cities and towns to repay the local governments' share of the unfunded accrued liability paid by the state.
Background
Established in 1985, EORP provides retirement benefits for state-elected
and
county-elected officials and judges. The Public Safety Personnel Retirement
System Board of Trustees (PSPRS Board) administers EORP and provides oversight
for investments. EORP is funded by employer and employee contributions.
Contribution rates are actuarily determined to meet both the normal cost plus
the actuarially determined amount required to amortize the unfunded accrued
liability over a specified period (A.R.S.
§ 38-810).
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 functions as either a defined benefit plan or defined contribution plan (A.R.S. § 38-841).
For FYs 2014 through 2043, $5,000,000 is annually appropriated from the state GF to the EORP Fund to supplement the normal cost and amortized unfunded accrued liability of EORP (A.R.S. § 38-804). In 2022, the Legislature appropriated $60,000,000 from the state GF in FY 2023 to EORP to pay unfunded accrued liability. In FY 2023, EORP's funded status is 36.2 percent (JLBC; Laws 2022, Chapter 323-E).
The courts collect administrative fees, including fees for various
filings, petitions, appeals and clerical services provided by the courts. A
percentage of the fees collected by the Supreme Court, the court of appeals,
the superior court and the justices of the peace are deposited in the EORP Fund
to supplement the contributions required of all employers under EORP (A.R.S.
§§ 12-119.01;
12-120.31;
12-284.03;
22-281;
and 38-810).
The State Treasurer collects fees relating to notary bonds in the following amounts: 1) $18 for filing the oath and bond of a notary public; and 2) $18 for issuing a certificate as to official capacity of a notary public and affixing a seal to the certificate (A.R.S. § 41-126). Of these collected fees, the State Treasurer deposits 23.79 percent in the EORP Fund to supplement the contributions required of all employers under EORP (A.R.S. §§ 38-810 and 41-178).
The Joint Legislative Budget Committee fiscal note estimates that H.B. 2430 would increase state GF spending by $609,054,500 in FY 2023 and, beginning in FY 2024, the appropriation would result in annual state GF savings of $59,433,600 (JLBC fiscal note).
Provisions
1. Appropriates $609,054,500 from the state GF in FY 2023 to the EORP Fund to pay EORP's unfunded accrued liability.
2. Requires the PSPRS Board to account for the appropriation:
a) in the FY 2023 actuarial valuation of EORP; and
b) when calculating the employee and employer contribution rates for FY 2024.
3. Redirects, to PSPRS, the court and notary bond fee revenues that the courts and State Treasurer must transmit to EORP, and requires the PSPRS Board, beginning in FY 2024, to annually distribute the collected court and notary bond fee revenues in an amount determined by the PSPRS Board to the qualified governmental excess benefit arrangement and transfer remaining monies to the state GF by June 30.
4. Terminates, beginning in FY 2024, the $5,000,000 annual appropriation from the state GF to the EORP Fund to supplement the normal cost and amortized unfunded accrued liability of EORP.
5. Establishes a repayment schedule, from July 1, 2023, until June 30, 2033, for each county and specified cities and towns to annually repay the state for amounts paid in FY 2023 on the local governments' behalf to EORP for unfunded accrued liability as follows:
a) $138,000 from Apache County;
b) $464,500 from Cochise County;
c) $456,000 from Coconino County;
d) $134,900 from Gila County;
e) $113,100 from Graham County;
f) $49,300 from Greenlee County;
g) $61,500 from La Paz County;
h) $11,995,200 from Maricopa County;
i) $1,187,200 from Mohave County;
j) $616,600 from Navajo County;
k) $4,052,900 from Pima County;
l) $1,828,200 from Pinal County;
m) $122,200 from Santa Cruz County;
n) $727,200 from Yavapai County;
o) $786,200 from Yuma County;
p) $151,700 from the City of Tucson;
q) $41,800 from the City of Safford;
r) $95,100 from the Town of Marana;
s) $133,300 from the Town of Gilbert;
t) $38,200 from the Town of Sahuarita;
u) $455,100 from the City of Phoenix;
v) $159,800 from the City of Surprise;
w) $74,800 from the City of San Luis;
x) $137,100 from the City of Scottsdale;
y) $139,700 from the City of Flagstaff;
z) $14,800 from City of South Tucson;
aa) $196,600 from the City of Tempe;
bb) $248,700 from the City of Mesa;
cc) $188,600 from the City of Glendale;
dd) $59,700 from the City of Avondale;
ee) $59,500 from the City of Apache Junction;
ff) $131,400 from the City of Peoria;
gg) $86,800 from the City of Tolleson;
hh) $26,300 from the City of Globe;
ii) $196,900 from the City of Chandler;
jj) $220,900 from the City of Yuma; and
kk) $26,000 from the Town of Thatcher.
6. Requires the State Treasurer to annually bill each city, town and county by January 15 and include in each billing statement the city's, town's or county's remaining payment schedule.
7. Allows each city, town or county to pay more than the amount billed, which will be credited against the last scheduled remaining payment due for that city, town or county.
8. Requires, if a city, town or county fails to fully pay the annual repayment amount by March 15, the State Treasurer to withhold the amount owed from the city's, town's or county's share of state-shared revenues until the entire amount of the annual repayment has been satisfied.
9. Requires all monies paid to or withheld by the State Treasurer to be deposited in the state GF.
10. Reduces, by $3,000,000, appropriations made from the state GF in FY 2024 to the Arizona Department of Administration for distributions to counties for required employer contributions to EORP.
11. Reduces, by $9,488,300, appropriations made from the state GF in FY 2024 relating to the judiciary-superior court judges' compensation.
12. Reduces appropriations made from the state GF in FY 2024 to the judiciary-court of appeals by:
a) $2,114,400 from Division One; and
b) $1,001,500 from Division Two.
13. Reduces FY 2024 operating lump sum appropriations for the following state agencies in the following amounts:
a) for the Attorney General, $52,700;
b) for the Corporation Commission, $232,800;
c) for the Superintendent of Public Instruction, $49,800;
d) for the Office of the Governor, $55,600;
e) for the judiciary-Supreme Court, $844,600;
f) for the Legislature-Senate, $421,700;
g) for the Legislature-House of Representatives, $843,400;
h) for the State Mine Inspector, $29,300;
i) for the Department of State-Secretary of State, $41,000; and
j) for the State Treasurer, $41,000.
14. Repeals the city, town and county repayment schedule for EORP unfunded accrued liability on July 1, 2034.
15. Makes technical and conforming changes.
16. Becomes effective on signature of the Governor, if the emergency clause is enacted.
House Action
WM 2/1/23 DP 9-0-1-0
APPROP 2/8/23 DPA 12-1-2-0
3rd Read 2/22/23 53-7-0
Prepared by Senate Research
March 3, 2023
LMM/GHR/sr