AZ PSPRS Reform Bills to Watch – HB2060 & HB2203

It’s too early to tell, but maybe the legislature is watching the PSPRS Board of Trustees (apparently only the FBI, the legislature, and Pensioners First are concerned).  Let’s all pay attention to Arizona House Bills HB2060 and HB 2203. 

HB2060 would provide the legislature with some such much needed oversight authority and would remove PSPRS’ procurement code exemption (PSPRS’ statutory flexibility has allowed the Trustees to dig an interesting hole).

HB2203 would add two additional Trustees to the board.  This might help the Governor select a few reform minded Trustees.  Pensioners First is skeptical.

I’m sure PSPRS’ highly paid lobbying firm will have something to say about these proposed reforms.  Why do government agencies have lobbyists?

http://www.azleg.gov

House of Representatives

HB 2060

PSPRS Oversight, Rulemaking, and Procurement (as of 1/28/2014)

Sponsor: Representative Kavanagh

Committee on Insurance and Retirement

Overview

HB 2060 establishes a Public Safety Personnel Retirement System administration account, consisting of monies used for administrative purposes that are mostly subject to legislative appropriation.

History

The Public Safety Personnel Retirement System (PSPRS) administers the statewide retirement program for public safety personnel who are regularly assigned hazardous duty, as well as the Corrections Officer Retirement Plan (CORP), and both the Elected Officials’ Retirement Plan (EORP) and the newly created Elected Officials’ Defined Contribution Retirement System (EODCRS) and Disability Program. The PSPRS Board of Trustees (Board) is a seven-member policy-making group that has a statutory responsibility to invest monies in PSPRS, keep records, and pay out benefits and refunds to members. The Board employs an administrator and administrative staff to complete these tasks. All monies that the system receives must be deposited into the PSPRS depository. The monies are expended and disbursed separate from any monies of the state, and fund and assets of the plans and the plans’ trusts for the purposes of investment are subject to the sole management of the Board, unless the Board authorizes a third party to manage funds for a particular investment. All property and monies of the fund and other retirement plans that the Board administers, including income from investments and from all other sources, are used to pay benefits to members or to pay expenses of operation and administration of the system (Arizona Revised Statutes § 38-848).

Provisions

·          Removes the Board’s exemption from state agency administration procedural rights and duties.

·          Eliminates the exemption of contracts for goods and services that are approved by the Board from the Arizona Procurement Code.

·          Requires the Board to establish and maintain an administration account and deposit the following monies into the account:

Ø  Appropriations made by the Arizona Legislature for PSPRS, EORP, EODCRS, and CORP administrative expenses.

Ø  Monies received for administrative expenses from departments that pay the salaries of their employees from sources other than appropriations from the state General Fund.

Ø  Monies received for administrative expenses from participating employers paying employer contributions.

Ø  Monies that are continuously appropriated from the fund for investment management fees and related consulting fees, rent, actuarial consulting fees, and retiree payroll.

·          States that with the exception of the continuously appropriated funds, account expenditures must be made in accordance with the Board and are subject to legislative appropriation.

·          Allows monies from the account to be expended for staff and related consulting fees that are necessary for account maintenance, reporting requirements, investment council, auditor general compliance, and actuary needs.

·          Stipulates that monies from the account must be used to pay for any costs related to continuing education programs for the Board or the cost of legal counsel.

____________________________________________________

HB2203 – Amends the PSPRS Board of Trustees and Rewrites Trustee Qualifications (as of 1/28/2014)

House of Representatives

HB 2203

ASRS; PSPRS; board membership

Sponsors: Representatives Lovas, Allen, Montenegro, et al.

Committee on Insurance and Retirement

Overview

HB 2203 modifies the membership for the Arizona State Retirement System (ASRS) Board of Trustees and the Public Safety Personnel Retirement System (PSPRS) Board of Trustees.

History

Arizona Revised Statutes (A.R.S.) §38-713 establishes the ASRS Board of Trustees consisting of nine members who are appointed to three year terms by the governor. The first five members represent an ASRS member group and are required to have no less than five years of administrative management experience. They include: (1) an educator, (2) an employee of a political subdivision, (3) a retired member, (4) a state employee, and (5) an at-large member who may represent any ASRS member group. The remaining four members represent the public and are not members of ASRS. Each of the four is required to have a minimum of ten years substantial investment experience in specified economic areas.

The PSPRS Board of Trustees, as outlined in A.R.S. §38-848, is appointed by the governor and is comprised of seven members who serve five year terms. Membership includes: (1) two elected members from a local board who represent the employees, (2) one member to represent the cities as an employer of public safety personnel, and (3) one member who is an elected county or state official or a judge of the superior court, court of appeals or Supreme Court. The additional three members must have a minimum of ten years substantial investment experience in specified economic areas and consist of; (1) one member to represent this state as an employer of public safety personnel, and (2) two public members.

Provisions

Arizona State Retirement System Board of Trustees

·          Replaces a member who is employed by a political subdivision with either of the following:

Ø  An employee of a city or town with a majority of its population located in a county with more than five hundred thousand people, or;

Ø  An employee of a county with a population of more than five hundred thousand people.

·          Replaces an at large member who may represent any ASRS member group with either of the following:

Ø  An employee of a city or town with a majority of its population located in a county with a population of five hundred thousand people or less, or;

Ø  An employee of a county with a population of five hundred thousand people or less.

·          Increases the number of members, from four to six, who are required to have at ten years substantial investment experience in specified economic areas.

·          Specifies that the member who is an educator must be employed by a school district, community college district or state university.

Public Safety Personnel Retirement System Board of Trustees

·          Reduces a member’s term of office to three years, rather than five years.

·          Increases the Board to nine members, rather than seven members, with the two additional members having the following qualifications:

Ø  An employer of public safety personnel from a political subdivision that has a majority of its population located in a county with a population of five hundred thousand people or less, and;

Ø  An elected county official or a judge from a court of appeals from a county with a population of more than five hundred thousand people or a state official or a Supreme Court judge.

·          Replaces the member who represents the cities as employers of public safety personnel with a member who represents a political subdivision as an employer of public safety personnel and has the following qualifications:

Ø  Is from a political subdivision that has a majority of its population located in a county with a population of more than five hundred thousand people and:

Ø  Has at least ten years substantial investment experience in specified economic areas.

·          Rewrites the qualifications of a member who is an elected county or state official or a judge from specific courts to specify that the member must be an elected county official or a superior court judge from a county with a population of five hundred thousand people or less.

·          Increases the number of members, from four to six, who are required to have at least ten years substantial investment experience in specified economic areas.

Miscellaneous

·          Permits current ASRS and PSPRS Board members to continue serving the length of their normal terms.

·          Requires the governor to make all subsequent appointments as prescribed by statute.

·          Makes technical and conforming changes.

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