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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
ASRS; contribution prepayment; appropriation
Purpose
Appropriates $45,000,000 from the state General Fund in FY 2023 to the Arizona State Retirement System (ASRS) to prepay the state's required pension contributions.
Background
The ASRS Defined Benefit plan is a mandatory-participation retirement plan that provides ASRS retirees with statutorily prescribed benefit payments. ASRS members and employers pay contributions to ASRS, and ASRS invests those contributions and pays members who meet retirement eligibility a lifetime benefit payment. The benefit amount varies based on a person's age at retirement, years of service and average monthly compensation (ASRS).
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. The ASRS Trust Fund contains all monies and other assets of ASRS. All accounts, depositories and funds of ASRS are included in the ASRS Trust Fund (A.R.S. § 38-712).
H.B. 2020 appropriates $45,000,000 from the state General Fund in FY 2023 to ASRS to prepay the state's required pension contributions. The appropriation will result in future savings, as the state would use the prepaid amount as outlined in the prepayment agreement to reduce future years' employer contributions (JLBC fiscal note).
Provisions
1. Appropriates $45,000,000 from the state General Fund in FY 2023 to ASRS to prepay the state's required pension contributions.
2. Exempts the appropriation from lapsing.
3. Becomes effective on signature of the Governor.
House Action
WM 1/25/23 DP 6-4-0-0
APPROP 2/8/23 DPA 12-0-3-0
3rd Read 2/28/23 31-26-3
Prepared by Senate Research
March 9, 2023
MG/ZS/sr