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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
public pensions; proxy voting
Purpose
Prohibits a public entity's retirement plan from entering into an agreement with a proxy advisory firm for proxy advisory services unless the firm acknowledges its obligations to vote all shares in the sole economic interest of the plan's participants and beneficiaries as outlined by the plan.
Background
The state offers four retirement programs, including: 1) the Arizona State Retirement System (ASRS) for all employees and officers of the state and political subdivisions; 2) the Corrections Officer Retirement Plan for correctional officers; 3) the Elected Officials' Retirement plan for eligible elected officials; and 4) the Public Safety Personnel Retirement System (PSPRS) for public safety employees (A.R.S. Title 38, Chapter 5).
Additionally, ASRS may establish one or more supplemental savings plans for employers to provide public employees an opportunity to save additional tax-deferred monies for retirement. A political subdivision or political subdivision entity that is not participating in ASRS may elect to allow its employees to participate in a supplemental employee deferral plan overseen by ASRS by entering into an agreement with ASRS.
Beginning July 1, 2022, an employee of an employer who is not participating in PSPRS, or any PSPRS-administered retirement plan, may elect to participate in an ASRS supplemental employee deferral plan (A.R.S. § 38-781).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Prohibits a plan from entering into an agreement with a proxy advisory firm for proxy advisory services unless the firm acknowledges its obligations to vote all shares in the sole economic interest of the plan's participants and beneficiaries as outlined by the plan.
2. Defines plan as a plan, fund or program established, maintained or offered by a public entity, including a public retirement system, if by its terms or as a result of surrounding circumstances the plan, fund or program:
a) provides retirement income or other retirement benefits to employees or former employees; or
b) results in a deferral of income by employees for a period extending to the termination of covered employment or beyond.
3. Defines proxy advisory firm as a person who is engaged in the business of providing proxy voting advice, research, analysis, ratings or recommendations to a fiduciary or providing proxy voting advice, research, analysis, ratings or recommendations relating to an issuer of securities.
4. Defines sole economic interest as the maximization of risk-adjusted investment returns of the participants and beneficiaries of a pension benefit plan over a time period consistent with the risk management profile of the plan.
5. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Prohibits a public entity's pension benefit plan from entering into an agreement with a proxy advisory firm for proxy advisory services unless the firm acknowledges its obligations to vote all shares in the sole economic interest of the plan's participants and beneficiaries as outlined by the plan.
2. Removes the prescribed requirements and prohibitions for fiduciaries, proxy advisory firms and pension benefit plans relating to proxy voting for the sole economic interest of beneficiaries.
3. Removes the authority of the Attorney General to enforce the proxy voting requirements and prohibitions and seek civil penalties for violations.
4. Removes the prescribed consumer disclosure requirements and proxy voting reporting requirements.
5. Makes conforming changes.
Senate Action
FIN 2/9/26 DP 4-3-0
Prepared by Senate Research
March 9, 2026
MG/hk