ARIZONA STATE SENATE
Forty-seventh Legislature, Second Regular Session
FACT SHEET FOR S.B. 1359
public retirement plans; administration amendments
Purpose
Makes numerous statutory changes related to the administration of the Public Safety Personnel Retirement System, the Corrections Officer Retirement System and the Elected Officials’ Retirement System.
Background
In order to provide a uniform, consistent and equitable statewide program for public safety personnel who are regularly assigned hazardous duty, the Public Safety Personnel Retirement System (PSPRS) was created effective as of July 1, 1968, as an amendment to and continuation of three prior retirement systems. Employees and their employers are required to make stipulated contributions to support the system’s benefit structure. Monies are administered by the five-person group referred to as the Fund Manager. The Fund Manager also is the administrator of the Corrections Officer Retirement Plan (CORP) and the Elected Officials’ Retirement Plan (EORP).
S.B. 1359 makes numerous changes to statutes governing the Fund Manager, including modifying permitted investments and allowing active members to transfer to or from certain municipal retirement systems.
The fiscal impact has not been determined.
Provisions
1. Exempts, from open meeting law and public records requirements, conference calls and meetings of the Fund Manager that are required by sudden capital market shifts or discussing or taking action on private equity, joint venture or real estate related investments.
2. Requires the Fund Manager to maintain minutes of such conference calls and meetings and make available to the public all portions of the minutes that do not contain confidential or proprietary information.
3. Stipulates that financial or commercial information provided to the Fund Manager in connection with investments is confidential, proprietary or not a public record.
4. Exempts public officers and employees from liability for acts done in official capacity based on the good faith reliance or written opinions of any authorized private attorney for the independent public retirement trust fund or system.
5. Subjects a person who defrauds or takes, converts, steals or embezzles monies owned by or from PSPRS, CORP or EORP to a civil suit in superior court.
6. Requires the court to award PSPRS, CORP or EORP with litigation costs upon an entry of an order finding that a person has defrauded or taken, converted, stolen or embezzled monies owned by or from PSPRS, CORP or EORP.
7. Requires the court to grant a judicial lien on all nonexempt property of the person in an amount equal to all amounts awarded to PSPRS, CORP or EORP, plus interest.
8. Allows the Fund Manager to offset the court-ordered judgments against the person’s retirement benefits.
9. Prohibits a PSPRS, CORP or EORP member, survivor or beneficiary from choosing provisions from different generations of the plan’s enabling legislation with the intent of demanding the right to retire or receive benefits under the combined terms of the provisions.
10. Requires PSPRS, CORP and EORP members and survivors to be governed by the terms of the plan’s enabling legislation in effect during any point of the member’s service.
11. Requires PSPRS, CORP and EORP members and survivors to elect one generation of the plan’s enabling legislation to control all of the member’s pension rights.
12. Defines “killed in the line of duty” for the purposes of determining death benefits under PSPRS and CORP.
13. Allows the Fund Manager to form, invest in, lend monies to or guarantee the repayment of monies by a limited liability company (LLC), limited partnership, joint venture, partnership, limited liability partnership (LLP) or trust in which PSPRS has a financial interest that is engaged in real estate activities, money lending, venture capital or the creation, development or funding of corporations or other entities with the intent of making the corporations valuable and profitable. These entities may be publicly traded or closely held.
14. Allows the Fund Manager to make an investment in any asset not otherwise statutorily limited or prohibited.
15. Excludes investments in a LLC, limited partnership, joint venture, partnership, LLP or trust from the restriction that a maximum of 70 percent of the PSPRS pension fund can be invested in stocks.
16. Excludes investments in a LLC, limited partnership, joint venture, partnership, LLP or trust from the restriction that a maximum of 5 percent of the voting stock of any one corporation can be owned.
17. Allows the Fund Manager to invest in publicly traded exchange traded funds.
18. Clarifies that the assistant administrators of the Fund Manager are not subject to the state merit system.
19. Specifies that PSPRS’ assets are not subject to the constitutional debt limit.
20. Defines “same position” for the purposes of allowing a member of PSPRS to be reemployed and receive a pension at the same time.
21. Expands the ability of a member of PSPRS or CORP who changes employment to the same or another state employer and is no longer eligible for PSPRS, to transfer all credited service to the applicable retirement system, to municipal employers.
22. Includes the City of Phoenix Employees’ Retirement System and the City of Tucson Supplemental Retirement System to the list of retirement systems or plans an active or inactive member may transfer service credits to or from.
23. Excludes payment for on-call time from the definition of “salary” and defines “base salary” for the purposes of calculating retirement benefits for members of CORP.
24. Requires a CORP local board to disregard any other evidence or opinions, other than the medical evidence from a local board selected clinic or doctor, when basing a finding of total and permanent and accidental disability.
25. Makes technical, clarifying and conforming changes.
26. Conditions the enactment of this legislation on the funding ratio of CORP being actuarially determined to be 100 percent, but no sooner than January 1, 2008.
27. Becomes effective on the general effective date, subject to the provisions of the conditional enactment.
Prepared by Senate Research
February 14, 2006
SL/jas