15-1628

15-1628. Powers and procedures pertaining to
optional retirement programs

A. The Arizona board of regents may establish optional retirement programs under
which contracts providing retirement and death benefits may be purchased for members of
the faculty and administrative officers of the institutions under its jurisdiction. The
benefits to be provided for or on behalf of participants in the optional retirement
program shall be provided through annuity contracts, fixed or variable in nature, or a
combination thereof, or other retirement plans approved by the Arizona board of regents.

B. Elections to participate in the optional retirement programs shall be made as
follows:

1. Eligible employees initially appointed on or after August 9, 1974 shall elect to
become members of the Arizona state retirement system or to participate in an optional
retirement program established by the Arizona board of regents. The election shall be
made in writing and filed with the Arizona state retirement system and the disbursing
officer of the employing institution and shall be effective as of the effective date of
appointment. If an eligible employee fails to make an election as provided in this
paragraph, the eligible employee shall be deemed to have elected membership in the
Arizona state retirement system.

2. Eligible employees initially appointed before August 9, 1974 may elect to
participate in the optional retirement programs. The election shall be made in writing
and filed with the Arizona state retirement system and the disbursing officer of the
employing institution on or before December 14, 1974, shall become effective as of
January 1, 1975 and shall constitute a waiver of all benefits provided by the Arizona
state retirement system, except all such benefits as are expressly provided by law.

3. Any employee who becomes eligible may elect an optional retirement program. The
election shall be made in writing and filed with the Arizona state retirement system and
the disbursing officer of the employing institution within thirty days after notice in
writing to the employee of the employee's eligibility, and shall become effective on the
first day of the pay period following such election, and shall constitute a waiver of all
benefits provided by the Arizona state retirement system, except all such benefits as are
expressly provided by law.

4. Any eligible employee who is a member of the Arizona state retirement system at
the time the employee elects to participate in the optional retirement program shall
leave the funds in the employee's retirement account on deposit with the Arizona state
retirement system during the continuance of employment. Additional contributions to the
employee's retirement account shall not be required and continued service with the
Arizona board of regents or an institution under the jurisdiction of the Arizona board of
regents while under an optional retirement program shall be deemed to be member service
in the Arizona state retirement system for the purpose of determining eligibility for any
benefits under such system. The amount of any such benefits under such system shall be
computed only on the basis of service otherwise creditable to a member of the system and
the employee's compensation during such service. For purposes of subsection D of this
section, years of member service in the Arizona state retirement system shall count as
years of service under the optional retirement programs.

C. The Arizona board of regents shall contribute public funds appropriated or any
other funds available for such purpose on behalf of each participant in the optional
retirement programs in an amount equal to seven per cent of the participant's
compensation. Each participant shall also contribute an amount equal to seven per cent
of the participant's compensation. The appropriation to each university for purposes of
enabling the Arizona board of regents to make the contribution provided in this
subsection shall not exceed the employer contribution required under the Arizona state
retirement system as prescribed by title 38, chapter 5, article 2. Funds utilized by the
board of regents or by a university to pay that portion of the contribution that
represents the difference between the employer contribution as prescribed by title 38,
chapter 5, article 2 and the contribution rate provided in this subsection for an
optional retirement program do not constitute a use of appropriated monies for
supplemental retirement.

D. In the case of an electing employee initially appointed on or after August 9,
1974, contributions pursuant to subsection C of this section shall not be made by the
Arizona board of regents until the employee's completion of five years of
service. Employee contributions required during this initial five year period and during
continued service with an institution under the jurisdiction of the Arizona board of
regents shall be promptly remitted to the optional retirement programs approved by the
Arizona board of regents. At the end of an electing employee's completion of five years
of service, a single contribution in an amount determined pursuant to subsection C of
this section, with interest, shall be made by the chief financial officer of the
employing institution to the approved company or companies on behalf of such
employee. In the case of an electing employee who does not continue in service with an
institution under the jurisdiction of the Arizona board of regents for at least five
years, the amount of employer contributions, with interest, shall be refunded to this
state.

E. If an employee's service is terminated by death prior to the completion of five
years of service, a death benefit equal to the sums appropriated for such employee, plus
interest, shall be paid to the beneficiary designated by the participant under the
participant's optional retirement program.

F. The provisions of subsection D of this section shall not apply to any electing
employee who, at the time of initial appointment, owns a contract determined by the
Arizona board of regents to be acceptable for use in the optional retirement program.

G. The Arizona board of regents may provide for the administration of such optional
retirement programs and perform or authorize the performance of such functions as may be
necessary for such purposes. The Arizona board of regents shall approve the company or
companies from which benefits may be purchased under the optional retirement
programs. Such optional retirement programs shall not permit loans. In giving its
approval, the board shall consider:

1. The nature and extent of the rights and benefits to be provided for participants
and their beneficiaries.

2. The relation of such rights and benefits to the amount of contributions to be
made.

3. The suitability of such rights and benefits to the needs of the participants and
the interests of the institutions under its jurisdiction in the recruitment and retention
of faculty and administrative officers.

4. The ability of the approved company or companies to provide such suitable rights
and benefits.

H. Any eligible employee initially appointed after August 9, 1974, electing to
participate in the optional retirement programs, shall be ineligible for membership in
the Arizona state retirement system as long as the employee remains continuously employed
in any position by the Arizona board of regents or by an institution under its
jurisdiction, except as expressly provided by law.

I. The benefits, annuities and employee and employer contributions provided for in
this section, and all interest, earnings and other credits pertaining to such benefits,
annuities and contributions, shall not be subject to execution or attachment and shall be
nonassignable. The employee and employer contributions provided for in this section and
all interest, earnings and other credits pertaining to such contributions are exempt from
state, county and municipal taxes. The benefits and annuities received by an employee
under this section after December 31, 1988 are subject to tax pursuant to title 43.

J. Subject to amendment of the federal-state agreement provided for in section
38-702, every eligible employee electing to participate in the optional retirement
programs shall have old age, survivors and disability insurance coverage provided by the
federal social security act in accordance with the provisions of title 38, chapter 5,
article 1.