First Regular Session H.B. 2608
COMMITTEE ON FINANCE
SENATE AMENDMENTS TO H.B. 2608
(Reference to House engrossed bill)
Page 4, strike lines 16 through 44
Strike page 5
Page 6, strike lines 1 through 32
Renumber to conform
Page 7, line 5, strike "July 1, 2013" insert "January 1, 2014"
Page 8, line 6, strike "July 1, 2013" insert "January 1, 2014"
Page 11, strike lines 14 through 44
Strike pages 12, 13 and 14
Page 15, strike lines 1 through 35
Renumber to conform
Page 17, lines 20, 22, 32 and 38, strike "June 30, 2013" insert "December 31, 2013"
Page 19, line 39, strike "June 30, 2013" insert "December 31, 2013"
Page 21, line 16, strike "July 1, 2013" insert "January 1, 2014"
Line 29, strike "July 1, 2013" insert "January 1, 2014"; strike "June 30, 2013" insert "December 31, 2013"
Page 22, line 18, strike "July 1, 2013 through June 30, 2043" insert "January 1, 2014 through June 30, 2044"
Line 25, strike "section 38‑797.05" insert "article 3.2 of this chapter"
Line 33, strike "2043" insert "2044"
Page 25, line 32, strike "article" insert "articles"; after "3.1" insert "and 3.2"
Strike line 41
Renumber to conform
Line 42, after "means" strike remainder of line insert "the board of trustees of the public safety personnel retirement system established by section 38‑848."
Page 26, line 3, strike "July 1, 2013" insert "January 1, 2014"; strike "June 30" insert "December 31"
Page 26, line 6, strike "July 1, 2013" insert "January 1, 2014"
Line 7, strike "June 30" insert "December 31"
Line 9, strike "July 1, 2013" insert "January 1, 2014"; strike "June 30" insert "December 31"
Line 11, strike "July 1, 2013" insert "January 1, 2014"; strike "June 30" insert "December 31"
Line 13, strike "July 1, 2013" insert "January 1, 2014"; strike "June 30" insert "December 31"
Line 17, strike "July 1, 2013" insert "January 1, 2014"
Line 18, strike "June 30" insert "December 31"
Line 21, strike "July 1, 2013" insert "January 1, 2014"
Line 22, strike "June 30" insert "December 31"
Line 33, after "system" insert "; annual report; quarterly statements"
Line 42, after the period insert "On or before December 31, 2013, the board shall submit to the internal revenue service the proper paperwork for notification that all member contributions that are picked up by the employer as provided in section 38‑833 shall be treated as employer contributions pursuant to section 414(h) of the internal revenue code.
C. The third‑party administrator contracted pursuant to section 38‑952 shall provide annual updates to the board on the status of the defined contribution system. On or before December 31 of each year, the board shall report the status of the defined contribution system to the governor, the president of the senate, the speaker of the house of representatives and the joint legislative budget committee. The third‑party administrator shall provide quarterly statements to each member."
Line 44, strike "July 1, 2013" insert "January 1, 2014"
Page 27, line 1, strike "ASRS" insert "the board"
Line 6, strike "long‑term" insert "elected officials' defined contribution retirement system"
Line 7, strike "2.1" insert "3.2"
Line 12, strike "long‑term" insert "elected officials' defined contribution retirement system"; strike "2.1" insert "3.2"
Line 16, strike "2.1" insert "3.2"; strike ", but is"
Page 27, line 17, strike "not eligible for any disability pension benefits under section 38‑806"
Between lines 17 and 18, insert:
"ARTICLE 3.2. ELECTED OFFICIALS' DEFINED CONTRIBUTION
RETIREMENT SYSTEM DISABILITY PROGRAM
38-840. Definitions
In this article, unless the context otherwise requires:
1. "Assets" means the accumulated resources of the EODC disability program.
2. "Board" means the board of trustees established pursuant to section 38‑848.
3. "Depository" means a bank in which the monies of the EODC disability program are deposited and collateralized as provided by law.
4. "Employer" has the same meaning prescribed in section 38‑831.
5. "Employer contributions" means all amounts paid into the EODC disability program by an employer.
6. "EODC disability program" or "program" means the elected officials' defined contribution retirement system disability program established by this article.
7. "Member" has the same meaning prescribed in section 38‑831.
8. "State" has the same meaning prescribed in section 38‑842.
9. "System" means the public safety personnel retirement system established by article 4 of this chapter.
38-840.01. EODC disability program; administration; power and duties of the board; hearing
A. The elected officials' defined contribution retirement system disability program is established for members of the elected officials' defined contribution retirement system. The board shall administer the EODC disability program.
B. The board may delegate authority to administer the program as it deems necessary and prudent to the administrator employed pursuant to section 38-848.
C. The board, in the administration, management and operation of the program, shall:
1. Account for the operation, administration and investment expenses and allocate them against investment income.
2. Contract on a fee basis with an actuary to make an actuarial valuation of the program based on the valuation method and valuation assumptions recommended by the actuary and approved by the board. The actuary shall be a member of the American academy of actuaries.
3. Contract on a fee basis with an independent auditing firm to make an annual audit of the accounting records of the fund and file a copy of the audit with the auditor general.
4. Invest the monies in the fund as provided in article 4 of this chapter.
5. On or before December 31 of each year, submit to the governor, the speaker of the house of representatives and the president of the senate a detailed report of the operation and the investment performance of the program that includes the contribution rate for the ensuing fiscal year.
D. The board, in the administration, management and operation of the program, may:
1. Employ services as it deems necessary.
2. Either keep invested monies separate or commingle invested monies as it deems appropriate.
3. Do all acts, whether expressly authorized, that may be deemed necessary or proper for the protection of the fund.
4. Determine the rights, benefits or obligations of any person under this article and afford any person dissatisfied with a determination of the person's rights, benefits or obligations under this article with a hearing on the determination.
38-840.02. EODC disability program trust fund
A. The EODC disability program trust fund is established for the purpose of paying benefits under and costs of administering the EODC disability program. The trust fund shall be administered by the board.
B. The EODC disability program trust fund consists of all monies paid into the trust fund pursuant to this article, whether in the form of cash, securities or other assets, and all monies received from any other source. Except as provided in subsection C, paragraph 1 of this section, the EODC disability program trust fund is exempt from title 44, chapter 3.
C. Abandoned monies shall revert to the EODC disability program trust fund under the following conditions:
1. Monies in the trust fund are presumed abandoned if the system has taken the required action described in this subsection to identify and locate the apparent owner and the apparent owner as defined in section 44-301 has not communicated in writing with the system and has not otherwise indicated an interest in the monies for the three‑year period following the required beginning date of distributions.
2. Before monies are presumed abandoned, the system shall attempt to contact the apparent owner in writing. If this notice is returned by the postal authority as undeliverable, then each year for three years from the date that distributions should have begun, the system shall make a good faith attempt to locate the apparent owner, including contacting any known beneficiary on record with the system, searching public databases to identify the address of the apparent owner or using the services of a third-party address verification service. If the good faith attempt to locate the apparent owner fails, monies are presumed abandoned pursuant to this subsection.
3. At the time monies are presumed abandoned pursuant to this subsection, any other property right accrued or accruing to the owner as a result of the interest in those monies, and not previously presumed abandoned, is also presumed abandoned.
4. Interest ceases to accrue on the monies on the date the monies are presumed abandoned.
D. The custody, management and investment of the EODC disability program trust fund are as prescribed by this article and article 4 of this chapter.
38-840.03. Eligibility
All members are subject to this article and shall participate in the EODC disability program.
38-840.04. Employer and member contributions
A. Beginning January 1, 2014, employers shall contribute the percentage of the gross 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 one-half of all benefits under and costs of administering the EODC disability program.
B. Beginning January 1, 2014, a member shall contribute a percentage of the member's gross compensation equal to the employer contribution for the member required pursuant to subsection A of this section.
C. The employer shall pay the member contributions required of members on account of gross compensation earned. All employer and member contributions shall be paid to the board. The board shall allocate the contributions to the EODC disability program trust fund and shall place the contributions in the EODC disability program's depository.
D. Each employer shall certify on each payroll the amount to be contributed to the EODC disability program and shall remit that amount to the board.
E. The department of administration and the treasurer of each county and participating city and town shall transfer to the board the contributions provided for in subsections A and B of this section within ten working days after each payroll date. Contributions transferred after these dates shall include a penalty equal to ten per cent per annum, compounded daily, for each day that the contributions are late. Delinquent payments due under this subsection, together with interest charges as provided in this subsection and court costs, may be recovered by action in a court of competent jurisdiction against the person or persons responsible for the payments or, at the request of the board, may be deducted from any other monies, including excise revenue taxes, payable to a political subdivision 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.
38-840.05. Contribution rate
A. Employer contributions shall be a percentage of gross compensation for each member, as the SYSTEM 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 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.
B. All contributions made by the employer and allocated to the EODC disability program trust fund established by section 38‑840.02 are irrevocable and shall be used as benefits under this article or to pay expenses of the EODC disability program.
38-840.06. EODC disability program benefits
In determining eligibility for and continuation of a disability benefit and computing the amount available to a member, the board shall follow the same procedures and methods as prescribed in section 38-806, except that the credited service used to compute the benefit shall be only the time earned while a member of the elected officials' defined contribution retirement system established pursuant to article 3.1 of this chapter.
38-840.07. Errors; benefit recomputation
If any change or error in the records results in any member receiving from the EODC disability program more or less than the member would have been entitled to receive if the records had been correct, the board shall correct the error and shall adjust the payments in a manner so that the equivalent of the benefit to which the member was correctly entitled is paid. The board shall correct any change or error and shall pay the appropriate monies to a member or shall recover monies from the member if the member was overpaid. The board shall recover monies by reducing any benefit that is otherwise payable by the EODC disability program to a disabled member.
38-840.08. Facility of payment
In the case of incapacity of a member receiving EODC disability program benefits, or in the case of any other emergency as determined by the board, the board may make EODC disability program benefit payments on behalf of the member to another person or persons the board determines to be lawfully entitled to receive payment. The payment is payment for the account of the member and all persons entitled to payment and, to the extent of the payment, is a full and complete discharge of all liability of the board or the EODC disability program, or both, under or in connection with the EODC disability program.
38-840.09. Assurances and liabilities
A. This article does not establish:
1. A contract of employment between an employer and any employee.
2. A right of any member to continue in the employment of an employer.
3. A limitation of the rights of an employer to discharge any of its employees, with or without cause.
B. A member does not have any right to, or interest in, any EODC disability program assets on termination of the member's employment or otherwise, except as provided in this article, and then only to the extent of the benefits payable to the member out of EODC disability program assets. All payments of benefits shall be made solely out of EODC disability program assets, and the employers, the board and members of the board are not liable for payment of benefits in any manner.
C. Benefits, employer and member contributions, earnings and all other credits payable under this article are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, either voluntary or involuntary, before actually being received by a person entitled to the benefit, earning or credit, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, garnish, execute or levy or otherwise dispose of any benefit, earning or credit under this article is void. The EODC disability program trust fund is not in any manner liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to any benefit, earning or credit under this article.
D. The employers, the board and members of the board do not guarantee the EODC disability program trust fund established by section 38‑840.02 in any manner against loss or depreciation and are not liable for any act or failure to act that is made in good faith pursuant to this article. The employers are not responsible for any act or failure to act of the board or any member of the board. The board and members of the board are not responsible for any act or failure to act of any employer.
E. This section does not exempt benefits under the program from a writ of attachment, a writ of execution, a writ of garnishment and orders of assignment issued by a court of record as the result of a judgment for arrearages of child support or for child support debt.
38-840.10. Exemption from execution and attachment; taxation
A. The employer and member contributions and the securities in the EODC disability program trust fund established by section 38‑840.02 are not subject to execution or attachment and are nonassignable. The employer and member contributions and the securities in the EODC disability program trust fund established by section 38‑840.02 are exempt from state, county and municipal income taxes. Benefits received by a member from the EODC disability program are subject to tax pursuant to title 43.
B. Interest, earnings and all other credits on monies in the EODC disability program trust fund are not subject to execution or attachment and are nonassignable.
38-840.11. Violation; classification
A person who knowingly makes any false statement or who falsifies or permits to be falsified any record of the EODC disability program with an intent to defraud the EODC disability program is guilty of a class 6 felony.
38-840.12. Reservation to legislature
The right to modify, amend or repeal this article, or any provisions of this article, is reserved to the legislature.
38-840.13. Liquidation of the EODC disability program
If the legislature determines that the EODC disability program is no longer to be operated for the purposes set forth in this article, any monies remaining in the EODC disability program trust fund after paying all liabilities of the program or after making adequate provision for paying those liabilities revert to the general funds of the employers that were making contributions to the EODC disability program at the time the legislature terminates the EODC disability program. The reverted monies shall be prorated according to the gross amount of contributions made by the employers to the EODC disability program."
Page 35, between lines 21 and 22, insert:
"(c) The elected officials' defined contribution retirement system established by article 3.1 of this chapter."
Reletter to conform
Strike lines 33 through 45, insert:
"Sec. 12. Section 38-952, Arizona Revised Statutes, is amended to read:
38-952. Supplemental defined contribution plan; establishment; administration
A. The board or employer of an eligible group may establish, administer, manage and operate a supplemental defined contribution plan. The board of trustees established by section 38-848 may establish a single supplemental defined contribution plan for all contributing members of the retirement system and plans it administers.
B. If a board or employer establishes a supplemental defined contribution plan:
1. The Arizona state retirement system board may delegate authority to implement the plan to its director appointed pursuant to section 38‑715.
2. The employer may delegate authority to implement the plan to its internal benefits administrator or designee.
3. The board of trustees may delegate authority to implement the plan to the administrator employed pursuant to section 38‑848, subsection K, paragraph 6.
4. The board or employer may:
(a) Employ services it deems necessary, including legal services, for the operation and administration of the plan.
(b) Administer the plan through contracts with multiple vendors.
(c) Perform all acts, whether or not expressly authorized, that it deems necessary and proper for the operation and protection of the plan.
(d) For the purposes of this article, enter into intergovernmental agreements pursuant to title 11, chapter 7, article 3.
5. The board of trustees shall participate in a competitive bid process at least once every five years to contract with a private person or any qualified company or companies to administer the plan established under this section. The contract shall include competitive fees and quarterly meetings with the public safety personnel retirement system.
C. A supplemental defined contribution plan shall be designed to be a qualified governmental plan under section 401(a) of the internal revenue code. The legislature intends that a supplemental defined contribution plan is a qualified plan under section 401 of the internal revenue code, as amended, or successor provisions of law, and that a plan is exempt from taxation under section 501 of the internal revenue code. The board or employer may adopt any additional provisions to a plan that are necessary to fulfill this intent.
D. Although designated as employee contributions, all employee contributions made to a plan shall be picked up and paid by the employer in lieu of contributions by the employee. The contributions picked up by an employer may be made through a reduction in the employee's compensation or an offset against future compensation increases, or a combination of both. An employee participating in a plan does not have the option of choosing to receive the contributed amounts directly instead of the employer paying the amounts to the plan. It is intended that all employee contributions that are picked up by the employer as provided in this subsection shall be treated as employer contributions under section 414(h) of the internal revenue code, shall be excluded from employees' gross income for federal and state income tax purposes and are includable in the gross income of the employees or their beneficiaries only in the taxable year in which they are distributed. The specified effective date of the pickup pursuant to this subsection shall not be before the date the plan receives notification from the internal revenue service that all employee contributions that are picked up by the employer as provided in this subsection shall be treated as employer contributions pursuant to section 414(h) of the internal revenue code. Until notification is received, any employee contributions made under section 38‑953 are made with after‑tax contributions."
Amend title to conform
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