Bill Text: AZ HB2264 | 2012 | Fiftieth Legislature 2nd Regular | Chaptered
Bill Title: ASRS; employee; employer contributions; rate
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2012-05-07 - Governor Signed [HB2264 Detail]
Download: Arizona-2012-HB2264-Chaptered.html
|
House Engrossed |
|
State of Arizona House of Representatives Fiftieth Legislature Second Regular Session 2012
|
|
CHAPTER 304
|
|
HOUSE BILL 2264 |
|
|
AN ACT
amending sections 38‑736, 38‑737, 38‑797.05 and 38‑797.06, Arizona Revised Statutes; making appropriations; relating to the Arizona State Retirement System.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 38-736, Arizona Revised Statutes, is amended to read:
38-736. Member contributions
A. Member contributions are required as a condition of employment and shall be made by payroll deductions. Member contributions shall begin simultaneously with membership in ASRS. Beginning July 1, 2011, member contributions are a percentage of a member's compensation equal to fifty‑three per cent of the total contributions, as determined the employer contribution required pursuant to section 38‑737. Amounts so deducted by employers shall be deposited in the ASRS depository.
B. The employer shall pay the member contributions required of members on account of compensation earned. The paid contributions shall be treated as employer contributions for the purpose of determining tax treatment under the internal revenue code. The effective date of the employer payment shall not be before the date ASRS has received notification from the United States internal revenue service that pursuant to section 414(h) of the internal revenue code the member contributions paid will not be included in gross income for income tax purposes until the paid contributions are distributed by refund or retirement benefit payments. The employer shall pay the member contributions from monies that are established and available in the retirement deduction account and that would otherwise have been designated as member contributions and paid to ASRS. Member contributions paid pursuant to this subsection shall be treated for all other purposes, in the same manner and to the same extent, as member contributions made before the approval of the United States internal revenue service pursuant to this section.
Sec. 2. Section 38-737, Arizona Revised Statutes, is amended to read:
38-737. Employer contributions
A. Employer contributions shall be a percentage of compensation of all employees of the employers, excluding the compensation of those employees who are members of the defined contribution program administered by ASRS, as determined by the ASRS actuary pursuant to this section for June 30 of the fiscal year immediately preceding the preceding fiscal year, except that beginning with fiscal year 2001‑2002 the contribution rate shall not be less than two per cent of compensation of all employees of the employers. Beginning July 1, 2011, the total employer contribution shall be forty-seven per cent of the total contributions. The total contributions shall be determined on the projected unit credit method. The total employer contributions shall be equal to the employer normal cost plus the amount required to amortize the past service funding requirement over a rolling thirty‑year period.
B. All contributions made by the employer and allocated to the fund established by section 38‑712 are irrevocable and shall be used as benefits under this article or to pay expenses of ASRS.
C. The required total employer contributions shall be determined on an annual basis by an actuary who is selected by the board and who is a fellow of the society of actuaries. ASRS shall provide a preliminary report by November 1 and a final report by December 15 of each fiscal year to the governor, the speaker of the house of representatives and the president of the senate on the contribution rate for the ensuing fiscal year.
Sec. 3. Section 38-797.05, Arizona Revised Statutes, is amended to read:
38-797.05. Employer and member contributions
A. Beginning July 1, 2011, employers shall contribute the percentage of the compensation of all of the members under their employment so that the total employer contributions equals the amount that the board determines is necessary to pay forty-seven per cent one‑half of all benefits under and costs of administering the LTD program.
B. Beginning July 1, 2011, a member shall contribute a percentage of the member's compensation equal to the remainder necessary to pay for all benefits under and costs of administering the LTD program after the employer contribution for the member required pursuant to subsection A of this section is paid.
C. The employer shall pay the member contributions required of members on account of compensation earned. All employer and member contributions shall be paid to the board. The board shall allocate the contributions to the LTD trust fund and shall place the contributions in the LTD program's depository.
D. Each employer shall certify on each payroll the amount to be contributed to the LTD program and shall remit that amount to the board. The contributions are irrevocable.
E. Payments due pursuant to this article by employers become delinquent after the due date prescribed in the board's rules and thereafter shall be increased by interest from and after that date until payment is received by the board. The board shall charge interest on the delinquent payments at an annual rate equal to the interest rate assumption approved by the board for actuarial equivalency pursuant to article 2 of this chapter. Delinquent payments due under this subsection, together with interest charges as provided in this subsection, may be recovered by an action in a court of competent jurisdiction against an employer liable for payments or, at the request of the director, may be deducted from any monies, including excise revenue taxes, payable to the employer by any department or agency of this state.
F. If more than the correct amount of contributions required is paid by an employer, proper adjustment shall be made in connection with subsequent payments. The board shall return excess contributions to the employer if the employer requests return of the contributions within one year after the date of overpayment.
G. Member contributions are not refundable and are not included in the calculation of survivor benefits pursuant to section 38‑762.
Sec. 4. Section 38-797.06, Arizona Revised Statutes, is amended to read:
38-797.06. Contribution rate; annual report
A. The board shall select an actuary to determine required employer contributions on an annual basis. The actuary shall be a fellow of the society of actuaries.
B. employer contributions shall be a percentage of compensation of all employees of the employers, as the ASRS actuary determines pursuant to this section. The actuary shall make this determination in an annual valuation performed as of June 30. The valuation as of June 30 of a calendar year shall determine the percentage to be applied to compensation for the fiscal year beginning July 1 of the following calendar year. The actuary shall determine the total contributions employer CONTRIBUTION using an actuarial cost method consistent with generally accepted actuarial standards. The total employer contributions shall be equal to the employer normal cost plus the amount required to amortize the past service funding requirement over a period consistent with generally accepted actuarial standards.
C. All contributions made by the employer and allocated to the LTD trust fund established by section 38‑797.02 are irrevocable and shall be used as benefits under this article or to pay expenses of the LTD program.
D. ASRS shall provide a preliminary report on or before November 30 of the valuation year and a final report on or before January 15 of the following year to the governor, the speaker of the house of representatives and the president of the senate on the contribution rate for the ensuing fiscal year.
Sec. 5. Return of contributions; retroactivity
A. Each employer who is subject to the Arizona state retirement system shall:
1. On or before September 30, 2012, return employee contributions to employees who during fiscal year 2011‑2012 or 2012‑2013 had made employee contributions in excess of the employer contributions required pursuant to sections 38‑737 and 38‑797.05, Arizona Revised Statutes, that were in effect as of July 1, 2011, except that a return of contributions is not required to an employee who has forfeited or extinguished their right to benefits under title 38, chapter 5, article 2 or has otherwise received the value of the excess contributions as a distribution from the Arizona state retirement system pursuant to title 38, chapter 5, article 2 or 2.1. The return of excess employee contributions under title 38, chapter 5, article 2, Arizona Revised Statutes, shall be treated as taxable wages in calendar year 2012 and the return of excess employee contributions under title 38, chapter 5, article 2.1, Arizona Revised Statutes, shall be treated as a payment by the employer of previously taxed wages. The return of any excess employee contributions shall not be treated as salary, wages or compensation as defined in section 38‑711, Arizona Revised Statutes. The Arizona state retirement system is not under any duty to monitor, arbitrate, manage or otherwise control the return of any excess employee contributions by employers to employees.
2. Adjust transactions reported to the Arizona state retirement system in a manner instructed by the Arizona state retirement system on or before June 30, 2012.
B. Notwithstanding any other law, the Arizona state retirement system may adjust or rebalance a member's account to take into consideration the modification to the contribution rate provided in this act.
C. Sections 38‑736, 38‑737, 38‑797.05 and 38‑797.06, as amended by this act, apply retroactively to from and after June 30, 2011.
Sec. 6. Retirement rate shift; 2011-2012 employee refund; exemption; appropriations
A. In addition to any other appropriation made in fiscal year 2011‑2012, the sum of $6,602,900 from the state general fund and $1,454,200 from other appropriated funds is appropriated to state agency units for a retirement contribution rate increase due to changes in the proportion of the retirement rate paid by the employer in the Arizona state retirement system from forty-seven per cent to fifty per cent, and to reimburse employees for retirement contributions made in excess of fifty per cent of the total retirement contribution in fiscal year 2011-2012. The joint legislative budget committee staff shall determine and the department of administration shall allocate to each agency or department an amount for the contribution adjustment. The joint legislative budget committee staff shall also determine and the department of administration shall allocate adjustments, as necessary, in expenditure authority to allow the implementation of retirement rate adjustments.
B. In addition to any other appropriations made in fiscal year 2011‑2012 to the department of education, the sum of $32,714,800 is appropriated from the state general fund in fiscal year 2011-2012 to the department of education for basic state aid associated with a retirement contribution rate increase due to changes in the proportion of the retirement rate paid by the employer in the Arizona state retirement system from forty‑seven per cent to fifty per cent and to reimburse employees for retirement contributions made in excess of fifty per cent of the total retirement contribution in fiscal year 2011-2012.
C. Before June 30, 2012, $1,949,200 shall be transferred from the state general fund to other state funds for transfers made under Laws 2011, chapter 26, section 8. The joint legislative budget committee staff shall determine and the department of administration shall allocate to each fund an amount for the transfer.
D. The appropriations made in this section are exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations, except that any monies remaining unspent on December 31, 2012 shall revert to the fund from which the monies were appropriated.
Sec. 7. Emergency
This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.
APPROVED BY THE GOVERNOR MAY 7, 2012.
FILED IN THE OFFICE OF THE SECRETARY OF STATE MAY 8, 2012.
