Bill Text: AZ SB1096 | 2015 | Fifty-second Legislature 1st Regular | Introduced
Bill Title: ASRS; actuarial valuation method
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2015-03-26 - Chapter 65 [SB1096 Detail]
Download: Arizona-2015-SB1096-Introduced.html
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REFERENCE TITLE: ASRS; actuarial valuation method |
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State of Arizona Senate Fifty-second Legislature First Regular Session 2015
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SB 1096 |
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Introduced by Senator Lesko
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AN ACT
Amending sections 38‑714, 38-721 and 38‑737, Arizona Revised Statutes; relating to the Arizona state retirement system.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 38-714, Arizona Revised Statutes, is amended to read:
38-714. Powers and duties of ASRS and board
A. ASRS shall have the powers and privileges of a corporation, shall have an official seal and shall transact all business in the name "Arizona state retirement system", and in that name may sue and be sued.
B. The board is responsible for supervising the administration of this article by the director of ASRS.
C. The board is responsible for the performance of fiduciary duties and other responsibilities required to preserve and protect the retirement trust fund established by section 38‑712.
D. The board shall not advocate for or against legislation providing for benefit modifications, except that the board shall provide technical and administrative information regarding the impact of benefit modification legislation.
E. The board may:
1. Determine the rights, benefits or obligations of any person under this article and afford any person dissatisfied with a determination a hearing on the determination.
2. Determine the amount, manner and time of payment of any benefits under this article.
3. Recommend amendments to this article and articles 2.1 and 7 of this chapter that are required for efficient and effective administration.
4. Adopt, amend or repeal rules for the administration of the plan, this article and articles 2.1 and 7 of this chapter.
F. Beginning June 30, 2016, the board shall determine which of the generally accepted actuarial cost methods shall be used in the annual actuarial valuation of the plan.
F. G. The board shall submit to the governor and legislature for each fiscal year no later than eight months after the close of the fiscal year a report of its operations and the operations of ASRS. The report shall follow generally accepted accounting principles and generally accepted financial reporting standards and shall include:
1. A report on an actuarial valuation of ASRS assets and liabilities.
2. Any other statistical and financial data that may be necessary for the proper understanding of the financial condition of ASRS and the results of board operations.
3. On request of the governor or the legislature, a list of investments owned. This list shall be provided in electronic format.
G. H. The board shall:
1. Prepare and publish a synopsis of the annual report for the information of ASRS members.
2. Contract for a study of the mortality, disability, service and other experiences of the members and employers participating in ASRS. The study shall be conducted for fiscal year 1990‑1991 and for at least every fifth fiscal year thereafter. A report of the study shall be completed within eight months of the close of the applicable fiscal year and shall be submitted to the governor and the legislature.
3. Conduct an annual actuarial valuation of ASRS assets and liabilities.
H. I. The auditor general may make an annual audit of ASRS and transmit the results to the governor and the legislature.
Sec. 2. Section 38-721, Arizona Revised Statutes, is amended to read:
38-721. Administration account
A. ASRS shall maintain an administration account consisting of all monies for administrative purposes. The following monies shall be deposited in the administration account:
1. All monies appropriated by the legislature to pay administrative expenses of ASRS.
2. All monies received for proportionate shares of administrative expenses from departments that pay the salaries of their officers and employees wholly or in part from monies received from sources other than appropriations from the state general fund.
3. All monies received for proportionate shares of administrative expenses from political subdivisions paying employer contributions.
4. Monies that the director transfers from the investment account and that are necessary for the payment of expenditures made pursuant to subsections C and D of this section.
B. Except as provided in subsection C of this section, expenditures from the administration account shall be made in accordance with board directives, subject to legislative appropriation.
C. Expenditures for the following are continuously appropriated and shall be paid from the administration account in the amount deemed necessary by the board:
1. Investment management fees and related consulting fees necessary to meet the board's investment objectives.
2. Rent.
3. Actuarial consulting fees.
4. Retiree payroll.
D. With the approval of the board, the director:
1. May expend monies from the administration account for staff, expenses and related consulting fees necessary to implement section 38‑714, subsection E, paragraph 1 and subsection G H, paragraphs 2 and 3, section 38‑718, subsection D, paragraph 5 and sections 38‑755 and 38‑756.
2. Shall pay from the administration account the costs for administering the health insurance program for retired members pursuant to section 38‑782, the cost of continuing education programs for the board and the cost of legal counsel.
Sec. 3. Section 38-737, Arizona Revised Statutes, is amended to read:
38-737. Employer contributions
A. Employer contributions shall be a percentage of compensation of all employees of the employers, excluding the compensation of those employees who are members of the defined contribution program administered by ASRS, as determined by the ASRS actuary pursuant to this section for June 30 of the fiscal year immediately preceding the preceding fiscal year, except that beginning with fiscal year 2001‑2002 the contribution rate shall not be less than two per cent percent of compensation of all employees of the employers. Beginning July 1, 2011 through June 29, 2016, the total employer contribution shall be determined on the projected unit credit method. Beginning June 30, 2016, the board shall determine the actuarial cost method pursuant to section 38‑714. 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 that is determined by the board and consistent with generally accepted actuarial standards. In determining the past service funding period, the board shall seek to improve the funded status whenever the ASRS trust fund is less than one hundred per cent percent funded.
B. All contributions made by the employer and allocated to the fund established by section 38‑712 are irrevocable and shall be used as benefits under this article or to pay expenses of ASRS.
C. The required employer contributions shall be determined on an annual basis by an actuary who is selected by the board and who is a fellow of the society of actuaries. ASRS shall provide a preliminary report by November 1 and a final report by December 15 of each fiscal year to the governor, the speaker of the house of representatives and the president of the senate on the contribution rate for the ensuing fiscal year and the unfunded actuarial accrued liability, the funded status based on the actuarial value of assets and market value of assets and the annualized rate of return and the ten‑year rate of return as of June 30 of the prior fiscal year.
