CORRECTIONS OFFICER RETIREMENT PLAN
2001 PROPOSED LEGISLATION

May 18, 2001

The Legislature adjourned sine die on May 10, 2001.  The effective date for non-emergency bills is August 9, 2001

H.B. 2046 CORP; normal retirement; contribution rate
This bill would provide for normal retirement at twenty years of service. The pension at 20 years of credited service would be 50% of a three year average salary with 2% increments for every year over 20 years of credited service up to 25 years of credited service. With 25 or more years of credited service, the accrual rate would be 2.5% each year. This bill also lowers the employee contribution rate from the current 8.5% of salary to 7.65% of salary.

Action: Assigned House Retirement and Government Operations; approp.; Hearing 1/16/01; Passed 1/16/01, to approp.;

H.B. 2060 CORP; membership; nursing personnel
This bill would eliminate the designated position of nursing personnel from the list of positions eligible for membership in the Corrections Officer Retirement Plan. Nursing personnel who are currently in the CORP would have until December 31, 2001 elect to remain in the CORP or have their credited service transferred to the Arizona State Retirement System.

Action: Assigned House pub. inst.; retirement and government operations; Hearing 1/23/01; Held;

H.B. 2111 state retirement service credits; transfers
This bill would allow a person who left their retirement contributions on account with the plan but who has terminated employment to transfer or buy back service credits from another state retirement system or plan. The transfer or buy back must be in a form so as to not cause either retirement system or plan to incur any unfunded accrued liability.

Action:  Assigned House Retirement and Government Operation approp.; Hearing 1/16/01; Passed 1/16/01; to approp;  Hearing 2/19/01, no action; Hearing 2/19/01 passed approp. 2/19/01; Passed House 2/27/01 60-0; Assigned to Senate Fin.; Hearing 3/12/01; passed 3/12/01; Passed Senate 25-5 4/4/01; Ready for Governor; filed into law without Governor's signature 4/17/01, Laws 2001, Chapter 123. 

H.B. 2159 state employees; retirees; health insurance
This bill would require the state department of administration for its’ full-time employees and the Arizona state retirement system for its’ group retiree health insurance program in procuring health and accident coverage to only enter into statewide contracts and not contracts on a regional basis.

Action: Assigned House Retirement and Government Operations; fin-ins.; Hearing 1/23/01; Held; Hearing 3/6/01, a strike everything amendment on an unrelated topic will be offered at this hearing.  Therefore, we will no longer be following this bill.

H.B. 2164 Retirees; health insurance subsidies
This proposed bill would increase the maximum monthly subsidy to each eligible retiree and survivor of the PSPRS, CORP, and EORP. The bill as amended by the conference committee provides for the following increase in subsidy retroactively effective to July 1, 2001:

 Action: Assigned House Retirement and Government Operations; approp.; Hearing 1/23/01; Held; Hearing; 2/6/01; passed 2/6/01 with amendments, to approp.; Hearing 2/19/01, held; Hearing 2/26/01, passed approp. 2/27/01; Passed House 3/12/01 50-0; ready for Senate; Assigned Senate fin, approp.; Hearing appropriations 3/27/01; Passed approp. 2/27/01; Hearing Senate Finance 4/9/01; Passed; Ready for floor action; Passed Senate COW with amendments 4/27/01; Passed Senate 28-1 4/30/01; House refused to concur in Senate Amendments 4/30/01, conference committee created; House adopted the conference committee report 5/2/01, 54-0, Senate passed 28-2; Ready for Governor; Signed by Governor 5/8/01 Laws 2001, Chapter 383.

H.B. 2169 Supplemental defined contribution plans

Identical to S.B. 1100.  See the summary for S.B. 1100. 

Action: Assigned House Retirement and Government Operations; Hearing 1/23/01; Held; Hearing 1/30/01; Passed 1/30/01; Passed House 57-1 2/14/01; Assigned Senate Finance; Hearing 4/2/01, A strike everything amendment on un unrelated topic is scheduled to be offered.  Therefore, we will no longer be following this bill.

H.B. 2255 state retired employees; health insurance

This proposed bill would increase the maximum monthly subsidy to each eligible retiree and survivor of the PSPRS, CORP, and EORP. The bill leaves the proposed increases as blanks:

Action: Assigned House approp.; 

H.B. 2328 CORP; normal retirement; twenty years

This bill would provide for normal retirement at twenty years of service. The pension at 20 years of credited service would be 50% of a three year average salary with 2.5% increments for every year over 20 years of credited service.

Action: Assigned House Retirement and Government Operations; approp; Hearing 3/6/01 A strike everything amendment on an unrelated topic will be offered at this hearing.  Therefore, we will no longer be following this bill.  But see S.B. 1129.  

H.B. 2331 CORP; deferred retirement option plan

This bill would establish a deferred retirement option plan (DROP) for the Corrections Officer Retirement Plan. Beginning July 1, 2002, the fund manager shall offer the DROP to eligible members on a voluntary basis as an alternative method of benefit accrual under the Plan. Under the DROP at the option of the employee who was eligible for normal retirement, an agreement would be entered into that for a period of up to 60 months, the employee would enter into the DROP. During the period of the DROP, the employee would cease accruing benefits under the CORP but would continue employment with the employer as a full-time paid correctional officer or detention officer. Neither the employer nor employee could make any contributions to the plan on behalf of the employee. The employee’s benefits under the CORP would be calculated as the time of entering the DROP. The monthly payments entitled to be received by the employee during the DROP period would be credited to a DROP account with the fund manager. Interest on that account would accrue monthly at a rate determined by the fund manager. At the end of the DROP period, the employee must terminate employment with the employer and would then begin receiving the monthly pension directly in the same amount as calculated at the beginning of the DROP period. The monies in the DROP account would be distributed to the member in a lump sum or rolled over to an individual retirement account. During the DROP period, the member is not entitle d to receive any benefit increases provided by the Plan or the health insurance subsidy amounts provide by the Plan. The DROP is a pilot program that will expire on June 30, 2007.

Action: Assigned House Retirement and Government Operations, approp.; Hearing 1/23/01; Passed 1/23/01;

H.B. 2333 retirees; health insurance; tax equity

This proposed bill would increase the maximum monthly subsidy to each eligible retiree and survivor of the PSPRS, CORP, and EORP. The bill also provides that if the member does not enroll in the Arizona State Retiree Group Insurance Program or their employer’s retiree insurance program the member would receive the subsidy amount through an increase in their monthly retirement pension.

This bill also would provide that any EORP or PSPRS member who was employed before September 15, 1989 and who retired after October 31, 2001 would be entitled to receive a tax equity benefit allowance consisting of two per cent of the member’s base benefit retroactive to the date of retirement. This bill would be a permanent fix to the tax equity problem. The tax equity benefit allowance is intended to offset the state income tax that is imposed upon certain Arizona retirees due to the U.S. Supreme Court decision in Davis v Michigan effective retroactive to September 15, 1989 which caused the Arizona state legislature to amend the state income tax scheme for all retirees. Because of the amended legislation, all Arizona residents who are receiving a pension, after the first $2,500 in pension, are subject to state income tax on that pension. Previously, a retiree of the PSPRS or EORP was not subject to state tax on the pension amount received.

Action: Assigned House Retirement and Government Operations, approp.; Hearing 3/12/01 A strike everything amendment will be offered in committee on an unrelated topic.  Therefore, we will no longer be following this bill.

S.B. 1045 CORP; benefit increases

This bill would prescribe that benefit increases granted to eligible retirees under the Corrections Officer Retirement Plan would be capped at 4% of the retiree’s pension. Under current law, the cap is at the equivalent of 4% of the average normal benefit being received by all retirees. Under current law, all eligible retirees receive the same dollar amount of benefit increase. Under the proposal, each retiree would receive a percentage increase capped at 4% of the retiree’s pension.

Action: Assigned Senate Finance; Hearing 2/12/01; Passed 2/12/01; Passed Senate 2/19/01 27-1; Ready for House; Assigned to House Retirement and Government Operations; Hearing 4/3/01; Passed; Ready for House floor action; Passed House 56-0 4/16/01; Ready for Governor; Signed by Governor 4/20/01, Laws 2001, Chapter 203.

S.B. 1100 supplemental defined contribution plans

This bill would repeal the defined contribution retirement plan option which requires term-limited state elected officials and exempt state employees to chose either a defined contribution plan (DC plan) or the state’s defined benefit plan (DB plan) at the time of employment. This bill would also repeal the special 5% money purchase plan that only legislative employees are eligible to elect. Both of these plans would be replaced by a supplemental defined contribution plan. Under this supplemental plan, any person who is eligible for one of the four state retirement systems or plans would remain a member of that system or plan but would have the option of contributing further employee monies into a supplemental defined contribution plan. The employee could contribute an amount beginning at one per cent of salary and increase this amount annually in one percent increments as allowed by federal tax laws. Under this bill, an employer could elect to match all or any portion of the employees’ contribution for that employer’s budget cycle. The supplemental defined contribution plan is designed to provide for further retirement savings at the election of the employee.

A DC plan is different from a DB plan in that under a DC plan, contributions are accrued in an individual’s personal account and the person has the responsibility for investing that money. The money on account at the time of retirement under a DC plan is what the person is entitled to as his retirement pension. Under a DB plan, the person does not make investment decisions regarding his contributions but instead is promised a pension based upon his years of service and salary. Under a DB plan, the pension amount is guaranteed, provided that the member meets the retirement eligibility requirements. The major difference between a DC plan and a DB plan is that under a DC plan the investment risk is shifted from the employer to the employee.

Action:  Assigned Senate Finance; Hearing 2/26/01; Passed 2/26/01 with amendments; Passed Senate 3/12/01 18-10; ready for House; Assigned House retirement and Government Operations, ways & means; Hearing 3/20/01; Held; Hearing 3/27/01; Held; Hearing 4/3/01; Passed; withdrawn from ways & means; ready for floor action; Passed COW 4/10/01; Passed House 55-0 4/11/01; Ready for Senate action on House amendments; Passed Senate 4/26/01 23-6; Ready for Governor; Signed by Governor 5/1/01, Laws 2001, Chapter 280.

S.B. 1106 retiree health insurance study committee

This bill would create a legislative study committee on retiree health insurance.  The committee would examine availability of health insurance for retirees throughout the state and premium costs for such insurance.  The committee would also examine the reasons for the premium costs for such coverage.  The committee would make a report to the legislative leadership and the governor by November 1, 2002. 

Action:  Assigned Senate Finance; Hearing 1/29/01; Held;

S.B. 1107 retirees; health insurance; subsidies

Retroactively effective to July 1, 2001 this proposed bill would temporarily increase the maximum monthly subsidy to each eligible retiree and survivor of the PSPRS, CORP, and EORP who live in a nonservice area. A nonservice area would be defined as an area in this state where either the ASRS, the department of administration, if a state employee, or the employee's employer does not offer a health care services organization (HMO) for which the retiree is eligible.  This temporary increase in subsidies for these people would last through June 30, 2003.   

FOR PERSONS LIVING IN A NON SERVICE AREA ONLY:

Action:  Assigned Senate Finance; approp.; Hearing 2/12/01; Passed 2/12/01; Hearing approp. 3/6/01; passed approp. 3/12/01; Passed Senate 3/14/01 25-4; Ready for House; Assigned House Financial Institutions & Insurance, approp.; Hearing 4/4/01; Passed with amendments; Hearing approp. 4/18/01; Passed 4/18/01; Ready for rules; Ready for floor action; Passed House 4/25/01 54-2; Ready for Senate action on House amendments; Senate concurred in House amendments 23-5 5/1/01; Ready for Governor; Signed by Governor 5/7/01 Laws 2001, Chapter 376  .

S.B. 1129 CORP; members; normal retirement

This bill would provide for normal retirement at twenty years of service. The pension at 20 years of credited service would be 50% of a three year average salary with 2% increments for every year over 20 years of credited service up to 25 years of credited service. With 25 or more years of credited service, the accrual rate would be 2.5% each year.  This bill would also entitle full-time dispatchers who are employed by an employer that has members in the Public Safety Personnel Retirement System to elect to come into the CORP, however, see the amendment to S.B. 1295 below.

Action:  Assigned Senate Finance; Hearing 1/22/01; Passed 1/22/01; Senate COW approved 2/5/01; Passed Senate 2/7/01 24-6; ready for House; Assigned House retirement& gov. op; ways-means; withdrawn from ways-means 2/28/01; additionally assigned to approp. 3/6/01; Hearing 3/20/01; Passed 3/20/01; Hearing approp. 4/18/01; Passed 4/19/01; ready for floor action; Passed House 4/24/01 55-0; Ready for Governor; Signed by Governor 5/1/01, Laws 2001, Chapter 309.

S.B. 1133 CORP; retirees; health insurance subsidy

This proposed bill would increase the maximum monthly subsidy to each eligible retiree and survivor of the  CORP in an amount that was left blank in the introduced bill.

Action:  Assigned Senate Finance; Hearing 1/22/01; Held; Hearing 3/5/01 A strike everything amendment on an unrelated topic will be offered at this hearing.  Therefore, we will no longer be following this bill.

S.B. 1176  CORP; normal retirement; twenty years

This bill would provide for normal retirement at twenty years of service. The pension at 20 years of credited service would be 50% of a three year average salary with 2.5% increments for every year over 20 years of credited service up to a maximum amount of 75%.

Action:  Assigned Senate Finance; Hearing 2/5/01; Passed 2/5/01; Passed Senate COW 2/14/01; Passed Senate 2/19/01 24-4; ready for House; Assigned House Retirement and Government Operations, approp.; Hearing 4/3/01, a strike everything amendment will be offered in committee on an unrelated subject.  Therefore, we will no longer be following this bill.  But see S.B. 1129.

S.B. 1184 public retirees; health insurance; subsidies

This bill would permit a retiree under either the Arizona State Retirement System, the Public Safety Personnel Retirement System, the Corrections Officer Retirement Plan or the Elected Officials' Retirement Plan to receive a temporary increase in the member's pension equal to the health insurance subsidy currently provided by law.  This provision would be effective January 1, 2002 and would expire December 31, 2006. 

Action:  Assigned to Senate Finance;

S.B. 1230 defined contribution plan: employee contributions

Under this bill, exempt state officers and elected officials who are subject to term limits who elect to go into the defined contribution plan in lieu of their defined benefit plan could contribute more to the DC plan.  The bill allows beginning July 1, 2002 that such an employee could contribute up to the maximum employee contribution allowed by federal law.

Action:  Assigned to Senate Finance; Hearing 1/29/01; Held;

S.B. 1295 retirement benefits; defined contribution supplement

Nearly identical to S.B. 1100.  See the summary for S.B. 1100.

Action:  Assigned to Senate Finance; Hearing 2/26/01; Passed 2/26/01 with amendments; Senate COW approved 3/12/01; Passed Senate 3/14/01 24-5; Ready for House; Assigned House Retirement & Government Operations; Hearing 3/27/01; Passed; Ready for floor action; Passed House 4/26/01 56-0; Ready for Senate action on House amendments; Senate refused to concur in House Amendments 4/27/01, conference committee created; Conference committee adopted report which amended normal retirement for full-time dispatchers in the CORP to be 25 years; House adopted conference committee report 5/3/01 52-0, Senate adopted report 20-7; Ready for Governor; Signed by Governor 5/8/01 Laws 2001, Chapter 380.

S.B. 1399 supplemental defined contribution plans

Identical to S.B. 1100.  See the summary for S.B. 1100.

Action:  Assigned to Senate Finance; Hearing 3/5/01  A strike everything amendment on an unrelated topic will be offered at this hearing.  Therefore, we will no longer be following this bill.

S.B. 1567 health insurance subsidies; public retirees

This proposed bill would increase the maximum monthly subsidy to each eligible retiree and survivor of the PSPRS, CORP, and EORP as follows:

FOR PERSONS LIVING IN A NON SERVICE AREA ONLY (until December 31, 2006): A non service area is defined as an area in this state in which the Arizona State Retirement  System or the state Department of Administration or the member's employer does not have a managed care program for which the retired member or survivor is eligible.

Action:  Assigned Senate Finance; approp.