ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
ASRS; contribution prepayment
Purpose
Modifies the Arizona State Retirement System's (ASRS's) Contribution Prepayment Program.
Background
Laws 2022, Chapter 324 allows an ASRS employer to prepay the employer's required pension contributions directly to ASRS according to a written agreement between ASRS and the employer (prepayment agreement). Statute prescribes requirements for the prepayment agreement and requires prepaid pension contributions and accrued earnings to be managed at the discretion of ASRS. Prepaid contributions may be deposited in the ASRS Trust Fund or a section 115 trust managed by ASRS. A participating employer may not prepay contributions in an amount greater than the employer's net pension liability.
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Subjects any prepayment agreement between ASRS and the state or any state agency to the following requirements:
a) any prepayment amounts deposited with ASRS must be from an appropriation specifically for that purpose that is passed by the Legislature and signed by the Governor; and
b) any prepayment amounts or accrued earnings used to reduce the employers pension contributions must be authorized for a specific fiscal year by legislation that is passed by the Legislature and signed by the Governor.
2. Removes the requirement for an employer that has entered into a prepayment agreement to begin amortizing prepaid contributions when the employer's net pension liability becomes zero or less.
3. Allows an employer that has entered into a prepayment agreement to elect an actual rate of return of a short-term investment through ASRS.
4. Makes conforming changes.
5. Becomes effective on the general effective date.
House Action
WM 1/18/23 DP 10-0-0-0
3rd Read 2/21/23 57-3-0
Prepared by Senate Research
March 2, 2023
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