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ARIZONA HOUSE OF REPRESENTATIVESFifty-seventh Legislature First Regular Session |
House: WM DP 8-0-0-1 |
HB 2015: EORP; CORP; funded ratio
Sponsor: Representative Livingston, LD 28
Caucus & COW
Overview
Modifies the Elected Officials Retirement Plan (EORP) and the Corrections Officer Retirement Plan (CORP) requirements for employer and member contributions. Requires the board of trustees (board) for EORP and CORP to account for excess valuation assets up to 100% of present value of all future benefits, changes how excess member compensation can be used, sets requirements the board must follow to suspend contributions to EORP and modifies the requirements to suspend contributions to CORP, and allows a CORP employer to request the transfer of assets of an employer.
History
The EORP employer level percent compensation contribution that is paid, less the amount contributed by the employer and eligible members, must not be used to pay for an increase in benefits that is otherwise payable to members and instead be used to meet the normal cost plus an amount to amortize the unfunded liability. After the close of any fiscal year, if a plan's actuary determines that the actuarial valuation of the fund contains excess assets and is more than 100% funded, the board must account for 50% of the excess valuation assets in a stabilization reserve account. From fiscal year 2011-2012 and each fiscal year after employers are prevented from using the amount of a member's contribution exceeding 7% to reduce the employer's contributions (A.R.S. § 38-810).
The minimum CORP employer contribution that is paid and is in excess of the normal cost plus the actuarially determined amount required to amortize the unfunded accrued liability must be used to reduce future employer contribution increases and not be used to pay for an increase in benefits that are otherwise payable to members. After the close of any fiscal year, if a plan's actuary determines that the actuarial valuation of the fund contains excess assets and is more than 100% funded, the board must account for 50% of the excess valuation assets in a stabilization reserve account. From fiscal year 2011-2012 and each fiscal year after employers are prevented from using the amount of a member's contribution exceeding 8.41% or 7.96% to reduce the employer's contributions to the CORP. In any fiscal year the employer contributions in combination with member contributions may not be less than the actuarially determined normal cost for that fiscal year. The board is prohibited from suspending contributions to the plan unless both the plan's actuary determines that continuing to accrue excess earnings could result in disqualification of the plan's tax-exempt status and the board determines that suspending the normal cost of contributions would not conflict with its fiduciary responsibility (A.R.S. § 38-891).
Provisions
Elected Officials Retirement Plan
1. Allows the board to account for excess valuation assets up to 100% of present value of all future benefits of the employer in a stabilization reserve fund instead of 50%. (Sec. 1 and 2)
2. Removes For fiscal year 2011-2012 and each fiscal year thereafter. (Sec. 1)
3. Mandates that member contributions exceeding 7% will not be used to reduce employer contributions until the employer's funded ratio is at or above 100%. (Sec. 1)
4. States that if an employer's funded ratio falls below 100%, the member's contributions above 7% cannot be used until the employer's funded ratio returns to 100%. (Sec. 1)
5. States that an employer's contribution to the plan in combination with member contributions may not be less than the actuarially determined cost for that fiscal year. (Sec. 1)
6. Stipulates that the board cannot suspend contributions to a plan unless the plan actuary determines the stabilization reserve of an employer's account is funded to 100% of present value of all future benefits of the employer and if the board determines that suspending the normal cost contributions would not conflict with its fiduciary responsibility. (Sec. 1)
Corrections Officer Retirement Plan
7. Removes the limit on employer contribution being less than 6% of salary and the requirement for employers who actual contribution rate is below 6% must be at least 5%. (Sec. 2)
8. Removes For fiscal year 2011-2012 and each fiscal year thereafter. (Sec. 2)
9. Mandates that member contributions exceeding 8.41% for members other than a full-time dispatcher or 7.96% for members that are full-time dispatchers cannot be used to reduce employer contributions until the employer's funded ratio is at or above 100%.
10. States that if the employer's funded ratio fall below 100%, the member contributions exceeding 8.41% or 7.96% cannot be used to reduce the employer's contribution rate until the employer funded ratio returns to 100%. (Sec. 2)
11. Maintains that the board may not suspend contributions to the Public Safety Personnel Retirement System (system) unless both:
a) The plan actuary, based on the annual valuation, determines the stabilization reserve of an employer's account is funded to 100% of present value of all future benefits of the employer.
b) The board determines that suspending the normal cost contributions would not conflict with its fiduciary responsibility. (Sec. 2)
12. Allows employers to request the board to transfer excess assets of an employer's account with no liabilities or beneficiaries to another account of the employer that is managed by the board if all apply:
a) All liabilities have been reconciled and there are no remaining or potential liabilities or beneficiaries of the employer's account which is verified by the board.
b) The board and the system bear no liability that the proposed transfer with any restrictions on the use or transfer of the assets of the proposed transfer.
c) The transfer does not violate the Internal Revenue Code (IRC) or will impair the systems status as a qualified plan under the IRC. (Sec. 2)
13. Stipulates that to request a transfer of assets an employer must:
a) The governing body of the employer must adopt a resolution requesting the transfer of assets in a public section available for public comment.
b) The employer must submit a written request to the administrator of the board for the transfer of assets along with the adopted resolution. (Sec. 2)
14. Allows the Joint Legislative Budget Committee (JLBC) to request conformation from the administrator of the board that a state employer meets the requirements for the transfer of assets.
15. Instructs the legislature to pass a bill directing the transfer of assets from the eligible state employer account to another account of the employer. (Sec. 2)
16. Directs the JLBC to confirm that the assets are eligible for transfer with the administrator of the board and to discuss the matter in a public meeting before the bill is passed. (Sec. 2)
17. Specifies that the system refers to the Public Safety Personnel Retirement. (Sec. 2)
18. Makes conforming changes. (Sec. 1 and 2)
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22. HB 2015
23. Initials VP/DD Page 0 Caucus & COW
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