38-891

38-891. Employer and member
contributions

A. As determined by actuarial valuations reported to the employers and the local
boards by the board, each employer shall make level per cent of salary contributions
sufficient under the actuarial valuations to meet both the normal cost plus the
actuarially determined amount required to amortize the unfunded accrued liability over,
beginning July 1, 2005 a rolling period of at least twenty and not more than thirty years
that is established by the board taking into account the recommendation of the plan's
actuary, except that, beginning with fiscal year 2006-2007, except as otherwise provided,
the employer contribution rate shall not be less than six per cent of salary. For any
employer whose actual contribution rate is less than six per cent of salary for fiscal
year 2006-2007 and each year thereafter, that employer's contribution rate shall be at
least five per cent and not more than the employer's actual contribution rate. An
employer may pay a higher level per cent of salary thereby reducing its unfunded past
service liability. All contributions made by the employers and all state taxes allocated
to the fund shall be irrevocable and shall be used to pay benefits under the plan or to
pay expenses of the plan and fund. The minimum employer contribution that is paid and
that is in excess of the normal cost plus the actuarially determined amount required to
amortize the unfunded accrued liability as calculated pursuant to this subsection shall
be used to reduce future employer contribution increases and shall not be used to pay for
an increase in benefits that are otherwise payable to members. The board shall separately
account for these monies in the fund. Forfeitures arising because of severance of
employment before a member becomes eligible for a pension or for any other reason shall
be applied to reduce the cost to the employer, not to increase the benefits otherwise
payable to members. After the close of any fiscal year, if the plan's actuary determines
that the actuarial valuation of an employer's account contains excess valuation assets
other than excess valuation assets that were in the employer's account as of fiscal year
2004-2005 and is more than one hundred per cent funded, the board shall account for fifty
per cent of the excess valuation assets in a stabilization reserve account. After the
close of any fiscal year, if the plan's actuary determines that the actuarial valuation
of an employer's account has a valuation asset deficiency and an unfunded actuarial
accrued liability, the board shall use any valuation assets in the stabilization reserve
account for that employer, to the extent available, to limit the decline in that
employer's funding ratio to not more than two per cent.

B. Except as provided by subsection I, each member shall contribute 7.96 per cent
of the member's salary to the retirement plan. Member contributions shall be made by
payroll deduction. Continuation of employment by the member constitutes consent and
agreement to the deduction of the applicable member contribution. Payment of the
member's salary less the deducted contributions constitutes full and complete discharge
and satisfaction of all claims and demands of the member relating to salary for services
rendered during the period covered by the payment.

C. Each participating employer shall cause the member contributions to be deducted
from the salary of each member. The deducted member contributions shall be paid to the
retirement plan within five working days and shall be credited to the member's individual
account.

D. During a period when an employee is on industrial leave and the employee elects
to continue contributions during the period of industrial leave, the employer and
employee shall make contributions based on the salary the employee would have received in
the employee's job classification if the employee was in normal employment status.

E. The local board of the state department of corrections or the local board of the
department of juvenile corrections may specify a position within that department as a
designated position if the position is filled by an employee who has at least five years
of credited service under the plan, who is transferred to temporarily fill the position
and who makes a written request to the local board to specify the position as a
designated position within ninety days of being transferred. On the employee leaving the
position, the position is no longer a designated position. For the purposes of this
subsection, "temporarily filled" means an employee is transferred to fill the position
for a period of not more than one year.

F. The local board of the state department of corrections or the local board of the
department of juvenile corrections may specify a designated position within the
department as a nondesignated position if the position is filled by an employee who has
at least five years of credited service under the Arizona state retirement system and who
makes a written request to the local board to specify the position as a nondesignated
position within ninety days of accepting the position. On the employee leaving the
position, the position reverts to a designated position.

G. The local board of the judiciary may specify positions within the administrative
office of the courts that require direct contact with and primarily provide training or
technical expertise to county probation, surveillance or juvenile detention officers as a
designated position if the position is filled by an employee who is a member of the plan
currently employed in a designated position as a probation, surveillance or juvenile
detention officer and who has at least five years of credited service under the plan. An
employee who fills such a position shall make a written request to the local board to
specify the position as a designated position within ninety days of accepting the
position. On the employee leaving the position, the position reverts to a nondesignated
position.

H. Beginning with fiscal year 2008-2009, if the aggregate computed employer
contribution rate that is calculated pursuant to subsection A is less than six per cent
of salary, beginning on July 1 of the following fiscal year the member contribution rate
prescribed in subsection B or I is permanently reduced by an amount that is equal to the
difference between six per cent and the aggregate computed employer contribution rate.
Notwithstanding this subsection, the member contribution rate shall not be less than 7.65
per cent of the member's salary.

I. Notwithstanding subsection B, except for a full-time dispatcher, a member shall
contribute 8.41 per cent of the member's salary to the retirement plan. After the close
of any fiscal year, if the plan's actuary determines that the aggregate ratio of the
funding value of accrued assets to the accrued liabilities of the fund is at least one
hundred per cent, from and after June 30 of the following year, except for a full-time
dispatcher, a member shall contribute 7.96 per cent of the member's salary to the
retirement plan. Additionally, the member's contribution to the retirement plan may also
be permanently reduced pursuant to subsection H.