Fiscal Note
BILL # SB 1086 TITLE: appropriation; unfunded liability; PSPRS; CORP
SPONSOR: Livingston STATUS: As Amended by Senate APPROP
PREPARED BY: Molly Murphy
Description
The bill appropriates $81.0 million from the General Fund in FY 2022 to the Public Safety Personnel Retirement System
(PSPRS) to be deposited in multiple state PSPRS employer group accounts to eliminate the current unfunded accrued
liability. The bill also appropriates $6.7 million from the General Fund in FY 2022 to PSPRS to be deposited in several state
Corrections Officer Retirement Plan (CORP) employer accounts to eliminate the current unfunded accrued liability.
Estimated Impact
The PSPRS/CORP employer contribution rates have 2 components. The first component is the normal cost, which is the
immediate cost associated with the benefit being earned. The second component is the unfunded liability, which
represents prior benefits earned by members that are unfunded due to changes in the plan's actuarial performance or
assumptions. The bill's appropriation would eliminate the current unfunded liability for various state PSPRS/CORP
employer groups, which would reduce the employer contribution rates paid by those state agencies. Given the timing of
PSPRS/CORP actuarial valuations, the employer contribution rates would be reduced beginning in FY 2024.
The bill would increase General Fund spending by $87.7 million one-time in FY 2022. Beginning in FY 2024, we estimate
that annual PSPRS/CORP employer contributions would be reduced by $9.2 million, with $1.7 million of those savings
accruing to the General Fund and $7.5 million of those savings accruing to non-General Fund sources.
Table 1 includes the deposit by employer group, the resulting contribution rate decrease, and the General Fund and non-
General Fund savings by employer group.
Table 1
Employer Group
General Fund
Deposit
Contribution Rate
Percentage Change GF Savings
Non-GF
Savings Total
PSPRS - State Agencies
DEMA 8,542,800 31.25% - 813,100 813,100
Attorney General 9,117,700 32.80% 51,000 1,015,800 1,066,800
Dept. of Liquor 7,628,900 100.41% - 865,700 865,700
State Parks 8,820,600 105.92% - 792,200 792,200
ASU Police 23,565,000 36.64% - 1,845,800 1,845,800
U of A Police 15,645,900 36.76% 787,100 1,912,400 2,699,500
NAU Police 7,725,600 46.94% 232,000 236,400 468,400
Total 81,046,500 1,070,100 7,481,400 8,551,500
CORP - State Agencies
DPS – Dispatch 6,351,900 76.25% 622,800 21,500 644,300
DPS – Detention 309,200 7.19% 24,000 800 24,800
Total 6,661,100 646,800 22,300 669,100
(Continued) - 2 -
Analysis
Based on data provided by PSPRS, by appropriating $87.7 million to the various PSPRS/CORP employer groups as listed in
Table 1, the employer groups' contribution rates would decrease by the percentages listed. These contribution rate
changes were then applied to the agencies' PSPRS/CORP salary bases, which reflect the amounts and fund sources as
reported in FY 2023 agency budget requests.
Given the timing of PSPRS/CORP actuarial valuations, the employer savings amounts displayed in Table 1 would occur
beginning in FY 2024. Any estimate of savings beyond FY 2024 would depend on the long-term actuarial performance of
the PSPRS/CORP plans, such as annual investment returns.
Local Government Impact
None, as the bill's appropriation would only impact the state PSPRS/CORP employer groups listed in Table 1 and would
not impact local government PSPRS/CORP contribution rates.
1/26/22