REFERENCE TITLE: retirement; judges; elected officials State of Arizona Senate Fifty-seventh Legislature First Regular Session 2025 SB 1712 Introduced by Senator Gowan An Act amending sections 12-284.03 and 38-727, Arizona Revised Statutes; amending title 38, chapter 5, article 2, Arizona Revised Statutes, by adding section 38-728; amending sections 38-810 and 38-831, Arizona Revised Statutes; appropriating monies; relating to public retirement systems. (TEXT OF BILL BEGINS ON NEXT PAGE)
REFERENCE TITLE: retirement; judges; elected officials
State of Arizona Senate Fifty-seventh Legislature First Regular Session 2025
SB 1712
Introduced by Senator Gowan
REFERENCE TITLE: retirement; judges; elected officials
State of Arizona
Senate
Fifty-seventh Legislature
First Regular Session
2025
SB 1712
Introduced by
Senator Gowan
An Act
amending sections 12-284.03 and 38-727, Arizona Revised Statutes; amending title 38, chapter 5, article 2, Arizona Revised Statutes, by adding section 38-728; amending sections 38-810 and 38-831, Arizona Revised Statutes; appropriating monies; relating to public retirement systems.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona: Section 1. Section 12-284.03, Arizona Revised Statutes, is amended to read: START_STATUTE12-284.03. Distribution of fees A. Excluding the monies that are kept by the court pursuant to subsection B of this section, the county treasurer shall transmit, distribute or deposit all monies received from the clerk of the superior court pursuant to section 12-284, subsection K as follows: 1. 1.20 percent to the state treasurer for deposit in the resource center fund established by and for the purposes of section 41-2402, subsection G. 2. 8.18 percent to the state treasurer for deposit in the domestic violence services fund established by section 36-3002. 3. 1.78 percent to the state treasurer for deposit in the child abuse prevention fund established by section 8-550.01. 4. In the county law library fund established by section 12-305, either: (a) 7.02 percent if the county treasurer is serving in a county with a population of more than five hundred thousand persons. (b) 14.09 percent if the county treasurer is serving in a county with a population of five hundred thousand persons or less. 5. 0.32 percent to the state treasurer for deposit in the alternative dispute resolution fund established by section 12-135. 6. To the elected officials' retirement plan fund established by section 38-802, either of the following percentages, which shall be distributed to the fund pursuant to section 38-810: (a) 21.91 percent if the county treasurer is serving in a county with a population of more than five hundred thousand persons. (b) 14.09 percent if the county treasurer is serving in a county with a population of five hundred thousand persons or less. 7. 17.62 percent to the state treasurer for deposit in the judicial collection enhancement fund established by section 12-113. 8. 0.24 percent to the state treasurer for deposit in the confidential intermediary and fiduciary fund established by section 8-135. 9. In the county general fund, the following percentages: (a) 28.81 percent if the county treasurer is serving in a county with a population of more than five hundred thousand persons. (b) 29.56 percent if the county treasurer is serving in a county with a population of five hundred thousand persons or less. 10. 6.00 5.70 percent to the elected officials' retirement plan fund established by section 38-802 for the purpose of funding a portion of the employers' contributions required pursuant to section 38-810. 11. 0.30 percent to the state general fund. B. 6.92 percent of the monies transmitted, distributed or deposited pursuant to subsection A of this section shall be kept and used by the court collecting the fees in the same manner as the seven dollars $7 of the time payment fee prescribed by section 12-116, subsection B.END_STATUTE Sec. 2. Section 38-727, Arizona Revised Statutes, is amended to read: START_STATUTE38-727. Eligibility; options A. The following provisions apply to all employees hired on or after the effective date: 1. All employees and officers of this state and all officers and employees of political subdivisions establishing a retirement plan administered by the board pursuant to this article are subject to this article, except that membership is not mandatory: (a) On the part of any employee who is eligible and who elects to participate in the optional retirement programs established by the Arizona board of regents pursuant to the authority conferred by section 15-1628 or by a community college district board pursuant to authority conferred by section 15-1451. (b) For a state elected official who is subject to term limits, who is elected or appointed before January 1, 2014, who is eligible for participation in ASRS because the state elected official elected not to participate in the elected officials' retirement plan as provided in section 38-804, subsection A and who elects not to participate in ASRS as provided in paragraph 7 of this subsection. (c) On the part of any employee or officer who is eligible to participate and who participates in the elected officials' retirement plan pursuant to article 3 of this chapter, the elected officials' defined contribution retirement system pursuant to article 3.1 of this chapter, the public safety personnel retirement system pursuant to article 4 of this chapter or the corrections officer retirement plan pursuant to article 6 of this chapter. 2. All employees and officers of political subdivisions whose compensation is provided wholly or in part from state monies and who are declared to be state employees and officers by the legislature for retirement purposes are subject, on legislative enactment, to this article and are members of ASRS. 3. Any member whose service terminates other than by death or withdrawal from membership is deemed to be a member of ASRS until the member's death benefit is paid. 4. Employees and officers shall not become members of ASRS and, if they are members immediately before becoming employed as provided by this section, shall have their membership status suspended while they are employed by state departments paying the salaries of their officers and employees wholly or in part from monies received from sources other than appropriations from the state general fund for the period or periods payment of the employer contributions is not made by or on behalf of the departments. 5. Notwithstanding other provisions of this section, a temporary employee of the legislature whose projected term of employment is for not more than six months is ineligible for membership in ASRS. If the employment continues beyond six successive months, the employee may elect to either: (a) Receive credit for service for the first six months of employment and establish membership in ASRS as of the beginning of the current term of employment if, within forty-five days after the first six months of employment, both the employer and the employee contribute to ASRS the amount that would have been required to be contributed to ASRS during the first six months of employment as if the employee had been a member of ASRS during those six months. (b) Establish membership in ASRS as of the day following the completion of six months of employment. 6. A person who is employed in postgraduate training in an approved medical residency training program of an employer or a postdoctoral scholar who is employed by a university under the jurisdiction of the Arizona board of regents is ineligible for membership in ASRS. 7. A state elected official who is subject to term limits, who is elected or appointed before January 1, 2014 and who is eligible for participation in ASRS because the state elected official elected not to participate in the elected officials' retirement plan as provided in section 38-804, subsection A may elect not to participate in ASRS. The election not to participate is specific for that term of office. The state elected official who is subject to term limits shall make the election in writing and file the election with ASRS within thirty days after the elected official's retirement plan mails the notice to the state elected official of the state elected official's eligibility to participate in ASRS. The election is effective on the first day of the state elected official's eligibility. If a state elected official who is subject to term limits fails to make an election as provided in this paragraph, the state elected official is deemed to have elected to participate in ASRS. The election not to participate in ASRS is irrevocable and constitutes a waiver of all benefits provided by ASRS for the state elected official's entire term, except for any benefits accrued by the state elected official in ASRS for periods of participation before being elected to an office subject to term limits or any benefits expressly provided by law. 8. A person may elect not to participate in ASRS if the person becomes employed by an employer after the person has attained at least sixty-five years of age, is not an active member, inactive member, retired member or receiving benefits pursuant to article 2.1 of this chapter and does not have any credited service or prior service in ASRS. The employee shall make the election not to participate in writing and file the election with ASRS within thirty days after employment. The election not to participate is irrevocable for the remainder of the person's employment for which the person made the election and constitutes a waiver of all benefits provided by the Arizona state retirement system ASRS. The period the person works is not eligible for purchase under section 38-743 or 38-744. 9. The following are ineligible for membership in ASRS: (a) A person who performs services in a hospital, home or other institution as an inmate or patient at the hospital, home or other institution. (b) A person who performs agricultural labor services, as defined in section 210 of the social security act. (c) A person who is a nonresident alien temporarily residing in the United States and who holds an F-1, J-1, M-1 or Q-1 visa when services are performed. (d) A person who performs services for a school, college or university in this state at which the person is enrolled as a student, as defined by the employing institution. The employing institution shall maintain an appeal process for a person who disagrees with the employing institution's determination that the person is a student and not eligible for membership in ASRS. (e) A person who performs services under a program designed to relieve the person from unemployment. B. The following elected officials are subject to this article if the member's employer is an employer under article 3 of this chapter: 1. A state elected official who is subject to term limits, who is elected or appointed on or before December 31, 2013 and who is an active, an inactive or a retired member of ASRS or a member of ASRS with a disability because the state elected official had previously elected not to participate in the elected officials' retirement plan as provided in section 38-804, subsection A. 2. An elected official, as defined in section 38-831, who is an active, an inactive or a retired member of ASRS or a member of ASRS with a disability, if the elected official's employer is a participating employer under this article and the elected official is eligible for ASRS service credit for the elected official's service. 3. A judicial officer or clerk or an elected official, as defined in section 38-728, who makes an election pursuant to section 38-728 to participate in ASRS. END_STATUTE Sec. 3. Title 38, chapter 5, article 2, Arizona Revised Statutes, is amended by adding section 38-728, to read: START_STATUTE38-728. Benefit election; eligibility; judicial officers; court clerks; elected officials; definitions A. A judicial officer or clerk or an elected official who is elected or appointed on or after July 1, 2026 and who was not an active, an inactive or a retired member or a member with a disability of ASRS pursuant to this ARTICLE or article 2.1 of this chapter, the elected officials' retirement plan established by article 3 of this chapter or the elected officials' defined contribution retirement system established by article 3.1 of this chapter may make one of the following irrevocable elections: 1. To participate solely in ASRS pursuant to this article and article 2.1 of this chapter. 2. To participate solely in the elected officials' defined contribution retirement system established by article 3.1 of this chapter. B. The judicial officer or clerk or elected official shall make an election under this section within ninety days after the date the judicial officer or clerk or elected official was elected or appointed. If the judicial officer or clerk or elected official does not make an election on or before the ninetieth day after the date the judicial officer or clerk or elected official was elected or appointed, the judicial officer or clerk or elected official is deemed to have elected to participate solely in ASRS. C. Any election made under this section shall be made in writing and filed with the disbursing officer of the employing institution and the retirement system the judicial officer or clerk or elected official elects and becomes effective on the first day of the pay period following the retirement system election. D. For the purposes of this section: 1. "Elected official" means every elected official of this state and every elected official of each county of this state. 2. "Judicial officer or clerk" means a supreme court justice, court of appeals judge, superior court judge, full-time superior court commissioner or justice of the peace or an elected clerk of the superior court. END_STATUTE Sec. 4. Section 38-810, Arizona Revised Statutes, is amended to read: START_STATUTE38-810. Contributions; appropriations A. Each member shall contribute to the fund an amount equal to the amount prescribed in subsection G of this section. Contributions of members shall be made by payroll deductions. Every member is deemed to consent to these deductions. Payment of a member's compensation, less these payroll deductions, constitutes a full and complete discharge and satisfaction of all claims and demands by the member relating to remuneration for the member's services rendered during the period covered by the payment, except with respect to the benefits provided under the plan. A member may not, under any circumstance, borrow from, take a loan against or remove contributions from the member's account before the termination of membership in the plan or the receipt of a pension. B. The board's office shall be credited monthly with monies collected pursuant to section 12-119.01, subsection B, paragraph 2, section 12-120.31, subsection D, paragraph 2, section 12-284.03, subsection A, paragraph 6, section 22-281, subsection C, paragraph 3 and section 41-178. The monies credited to the fund pursuant to this subsection shall be deposited in the fund on a monthly basis, and there shall be a complete accounting of the determination of these monies deposited in the fund. C. Beginning on July 1, 2018, as determined by actuarial valuations performed by the plan's actuary each employer shall make contributions on a level percent of compensation basis for all employees of the employer who are either members under this article, article 3.1 of this chapter or article 2 of this chapter pursuant to section 38-727, subsection B or section 38-728 sufficient under the actuarial valuation to meet both the normal cost plus the actuarially determined amount required to amortize the unfunded accrued liability over a closed 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 and the employer's contribution under the elected officials' defined contribution retirement system established pursuant to article 3.1 of this chapter and the employer's contribution under article 2 of this chapter for members who are eligible pursuant to section 38-727, subsection B or section 38-728. The employer also shall pay the amount required by section 38-797.05 for members under article 2 of this chapter who are eligible pursuant to section 38-727, subsection B or section 38-728 and the amount required by article 3.2 of this chapter for members under article 3.1 of this chapter. The monies deposited in the fund pursuant to subsection B of this section shall be used to supplement the contributions required of all employers under the plan. The employer level percent compensation contribution that is paid pursuant to this subsection, less the amount contributed by the employer pursuant to section 38-833 and section 38-737 for members eligible pursuant to section 38-727, subsection B or section 38-728, shall not be used to pay for an increase in benefits that is otherwise payable to members but shall be used to meet the normal cost plus an amount to amortize the unfunded accrued liability. D. In any fiscal year, an employer's contribution to the plan in combination with member contributions may not be less than the actuarially determined normal cost for that fiscal year. After the close of any fiscal year, if the plan's actuary determines that the actuarial valuation of the fund contains excess valuation assets and is more than one hundred percent funded, the board shall account for fifty percent 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 the fund has a valuation asset deficiency and an unfunded actuarial accrued liability, the board shall use any valuation assets in the stabilization reserve account, to the extent available, to limit the decline in the fund's funding ratio to not more than two percent. E. The department of administration and the treasurer of each county and participating city and town shall transfer to the board the contributions provided for in subsections A and C of this section within ten working days after each payroll date. The state, county treasurers and clerks of the superior court shall transfer the monies credited under subsection B of this section to the board on or before the fifteenth day of each calendar month that follows the month in which the court fees were collected. Contributions and monies credited under subsection B of this section and transferred after these dates shall include a penalty equal to ten percent a year, compounded annually, for each day that the contributions or monies credited under subsection B of this section are late. Delinquent payments due under this subsection, together with interest charges as provided in this subsection and court costs, may be recovered by action in a court of competent jurisdiction against the person or persons responsible for the payments or, at the request of the board, may be deducted from any other monies, including excise revenue taxes, payable to a political subdivision by any department or agency of this state. If requested by the board, the state, county treasurers or clerks of the superior court shall transfer the monies credited under subsection B of this section, in an amount determined by the board, directly to the qualified governmental excess benefit arrangement established pursuant to section 38-803.01. F. The employer shall pay the member contributions required of members on account of compensation earned after August 7, 1985. The paid contributions shall be treated as employer contributions for the purpose of determining tax treatment under the United States internal revenue code. The effective date of the employer payment shall not be before the date the retirement plan has received notification from the United States internal revenue service that pursuant to section 414(h) of the United States internal revenue code the member contributions paid will not be included in gross income for income tax purposes until the paid contributions are distributed by refund or pension payments. The employer shall pay the member contributions from monies established and available in the retirement deduction account, which monies would otherwise have been designated as member contributions and paid to the retirement plan. Member contributions paid pursuant to this subsection shall be treated for all other purposes, in the same manner and to the same extent, as member contributions made before August 7, 1985. G. An elected official who became a member of the plan before July 20, 2011 shall contribute seven percent of the member's gross salary pursuant to subsection A of this section. The amount contributed pursuant to subsection A of this section by an elected official who became a member of the plan on or after July 20, 2011 is: 1. For fiscal year 2011-2012, ten percent of the member's gross salary. 2. For fiscal year 2012-2013, eleven and one-half percent of the member's gross salary. 3. For fiscal year 2013-2014 and each fiscal year thereafter, thirteen percent of the member's gross salary. H. For fiscal year 2011-2012 and each fiscal year thereafter, the amount of the member's contribution that exceeds seven percent of the member's compensation shall not be used to reduce the employer's contributions that are calculated pursuant to subsection C of this section. I. In fiscal years 2013-2014 through 2042-2043, the sum of $5,000,000 is appropriated in each fiscal year from the state general fund to the elected officials' retirement plan fund to supplement the normal cost plus an amount to amortize the unfunded accrued liability pursuant to subsection C of this section. Monies appropriated pursuant to this subsection shall not be used to pay for an increase in benefits that is otherwise payable to members and shall only be used as specified in this subsection. Monies appropriated pursuant to this subsection are exempt from the provisions of section 35-190 relating to lapsing of appropriations. END_STATUTE Sec. 5. Section 38-831, Arizona Revised Statutes, is amended to read: START_STATUTE38-831. Definitions In this article, unless the context otherwise requires: 1. "Annuity account" means an account that is established for each member to record the deposit deposits of member the member's contributions, employer contributions and interest, dividends or other accumulations credited on behalf of the member. 2. "Board" means the board of trustees of the public safety personnel retirement system established by pursuant to section 38-848. 3. "Defined contribution system" means the elected officials' defined contribution retirement system established pursuant to this article. 4. "Elected official" means: (a) Every elected official of this state who was elected or appointed on or after January 1, 2014 and before July 1, 2026 and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013. (b) Every elected official of each county of this state who was elected or appointed on or after January 1, 2014 and before July 1, 2026 and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013. (c) Every elected official of this state and elected official of each county of this state who was elected or appointed on or after July 1, 2026, who was not an active, an inactive or a retired member of the plan or a member of the plan with a disability on June 30, 2026 and who made an election to participate in the defined contribution retirement system pursuant to section 38-728. (c) (d) Every justice of the supreme court who was appointed on or after January 1, 2014 and before July 1, 2026, and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013. (d) (e) Every judge of the court of appeals who was appointed on or after January 1, 2014 and before July 1, 2026, and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013. (e) (f) Every judge of the superior court who was elected or appointed on or after January 1, 2014 and before July 1, 2026, and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013. (f) (g) Every full-time superior court commissioner, except full-time superior court commissioners who failed to make a timely election of membership under the judges' retirement plan, repealed on August 7, 1985, who was hired on or after January 1, 2014 and before July 1, 2026, and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013. (g) (h) Each elected official of an incorporated city or town whose employer has executed a proper joinder agreement with the plan for coverage of its elected officials, who was elected or appointed on or after January 1, 2014 and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013. (i) A justice of the supreme court, a court of appeals judge, a superior court judge, a full-time superior court commissioner who was elected or appointed on or AFTER July 1, 2026, who was not an active, an inactive or a retired member of the plan or a member of the plan with a disability on June 30, 2026 and who made an election to participate in the defined contribution system pursuant to section 38-728. 5. "Employer" means a department or political subdivision of this state that makes employer contributions to the defined contribution system on behalf of a member. 6. "Employer contribution" means an amount deposited by an employer, from the employer's own monies, in the member's annuity account on a periodic basis coinciding with the member's regular pay period. 7. "Member" means an elected official under the defined contribution system. 8. "Plan" means the elected officials' retirement plan established by article 3 of this chapter. END_STATUTE Sec. 6. Appropriation; Arizona administrative office of the courts; fiscal year 2026-2027 In addition to any other appropriation made in fiscal year 2026-2027, the sum of $150,000 is appropriated from the state general fund in fiscal year 2026-2027 to the Arizona administrative office of the courts for the Arizona state retirement system employer contribution costs associated with this act. Sec. 7. Effective date This act is effective from and after June 30, 2026.
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 12-284.03, Arizona Revised Statutes, is amended to read:
START_STATUTE12-284.03. Distribution of fees
A. Excluding the monies that are kept by the court pursuant to subsection B of this section, the county treasurer shall transmit, distribute or deposit all monies received from the clerk of the superior court pursuant to section 12-284, subsection K as follows:
1. 1.20 percent to the state treasurer for deposit in the resource center fund established by and for the purposes of section 41-2402, subsection G.
2. 8.18 percent to the state treasurer for deposit in the domestic violence services fund established by section 36-3002.
3. 1.78 percent to the state treasurer for deposit in the child abuse prevention fund established by section 8-550.01.
4. In the county law library fund established by section 12-305, either:
(a) 7.02 percent if the county treasurer is serving in a county with a population of more than five hundred thousand persons.
(b) 14.09 percent if the county treasurer is serving in a county with a population of five hundred thousand persons or less.
5. 0.32 percent to the state treasurer for deposit in the alternative dispute resolution fund established by section 12-135.
6. To the elected officials' retirement plan fund established by section 38-802, either of the following percentages, which shall be distributed to the fund pursuant to section 38-810:
(a) 21.91 percent if the county treasurer is serving in a county with a population of more than five hundred thousand persons.
(b) 14.09 percent if the county treasurer is serving in a county with a population of five hundred thousand persons or less.
7. 17.62 percent to the state treasurer for deposit in the judicial collection enhancement fund established by section 12-113.
8. 0.24 percent to the state treasurer for deposit in the confidential intermediary and fiduciary fund established by section 8-135.
9. In the county general fund, the following percentages:
(a) 28.81 percent if the county treasurer is serving in a county with a population of more than five hundred thousand persons.
(b) 29.56 percent if the county treasurer is serving in a county with a population of five hundred thousand persons or less.
10. 6.00 5.70 percent to the elected officials' retirement plan fund established by section 38-802 for the purpose of funding a portion of the employers' contributions required pursuant to section 38-810.
11. 0.30 percent to the state general fund.
B. 6.92 percent of the monies transmitted, distributed or deposited pursuant to subsection A of this section shall be kept and used by the court collecting the fees in the same manner as the seven dollars $7 of the time payment fee prescribed by section 12-116, subsection B.END_STATUTE
Sec. 2. Section 38-727, Arizona Revised Statutes, is amended to read:
START_STATUTE38-727. Eligibility; options
A. The following provisions apply to all employees hired on or after the effective date:
1. All employees and officers of this state and all officers and employees of political subdivisions establishing a retirement plan administered by the board pursuant to this article are subject to this article, except that membership is not mandatory:
(a) On the part of any employee who is eligible and who elects to participate in the optional retirement programs established by the Arizona board of regents pursuant to the authority conferred by section 15-1628 or by a community college district board pursuant to authority conferred by section 15-1451.
(b) For a state elected official who is subject to term limits, who is elected or appointed before January 1, 2014, who is eligible for participation in ASRS because the state elected official elected not to participate in the elected officials' retirement plan as provided in section 38-804, subsection A and who elects not to participate in ASRS as provided in paragraph 7 of this subsection.
(c) On the part of any employee or officer who is eligible to participate and who participates in the elected officials' retirement plan pursuant to article 3 of this chapter, the elected officials' defined contribution retirement system pursuant to article 3.1 of this chapter, the public safety personnel retirement system pursuant to article 4 of this chapter or the corrections officer retirement plan pursuant to article 6 of this chapter.
2. All employees and officers of political subdivisions whose compensation is provided wholly or in part from state monies and who are declared to be state employees and officers by the legislature for retirement purposes are subject, on legislative enactment, to this article and are members of ASRS.
3. Any member whose service terminates other than by death or withdrawal from membership is deemed to be a member of ASRS until the member's death benefit is paid.
4. Employees and officers shall not become members of ASRS and, if they are members immediately before becoming employed as provided by this section, shall have their membership status suspended while they are employed by state departments paying the salaries of their officers and employees wholly or in part from monies received from sources other than appropriations from the state general fund for the period or periods payment of the employer contributions is not made by or on behalf of the departments.
5. Notwithstanding other provisions of this section, a temporary employee of the legislature whose projected term of employment is for not more than six months is ineligible for membership in ASRS. If the employment continues beyond six successive months, the employee may elect to either:
(a) Receive credit for service for the first six months of employment and establish membership in ASRS as of the beginning of the current term of employment if, within forty-five days after the first six months of employment, both the employer and the employee contribute to ASRS the amount that would have been required to be contributed to ASRS during the first six months of employment as if the employee had been a member of ASRS during those six months.
(b) Establish membership in ASRS as of the day following the completion of six months of employment.
6. A person who is employed in postgraduate training in an approved medical residency training program of an employer or a postdoctoral scholar who is employed by a university under the jurisdiction of the Arizona board of regents is ineligible for membership in ASRS.
7. A state elected official who is subject to term limits, who is elected or appointed before January 1, 2014 and who is eligible for participation in ASRS because the state elected official elected not to participate in the elected officials' retirement plan as provided in section 38-804, subsection A may elect not to participate in ASRS. The election not to participate is specific for that term of office. The state elected official who is subject to term limits shall make the election in writing and file the election with ASRS within thirty days after the elected official's retirement plan mails the notice to the state elected official of the state elected official's eligibility to participate in ASRS. The election is effective on the first day of the state elected official's eligibility. If a state elected official who is subject to term limits fails to make an election as provided in this paragraph, the state elected official is deemed to have elected to participate in ASRS. The election not to participate in ASRS is irrevocable and constitutes a waiver of all benefits provided by ASRS for the state elected official's entire term, except for any benefits accrued by the state elected official in ASRS for periods of participation before being elected to an office subject to term limits or any benefits expressly provided by law.
8. A person may elect not to participate in ASRS if the person becomes employed by an employer after the person has attained at least sixty-five years of age, is not an active member, inactive member, retired member or receiving benefits pursuant to article 2.1 of this chapter and does not have any credited service or prior service in ASRS. The employee shall make the election not to participate in writing and file the election with ASRS within thirty days after employment. The election not to participate is irrevocable for the remainder of the person's employment for which the person made the election and constitutes a waiver of all benefits provided by the Arizona state retirement system ASRS. The period the person works is not eligible for purchase under section 38-743 or 38-744.
9. The following are ineligible for membership in ASRS:
(a) A person who performs services in a hospital, home or other institution as an inmate or patient at the hospital, home or other institution.
(b) A person who performs agricultural labor services, as defined in section 210 of the social security act.
(c) A person who is a nonresident alien temporarily residing in the United States and who holds an F-1, J-1, M-1 or Q-1 visa when services are performed.
(d) A person who performs services for a school, college or university in this state at which the person is enrolled as a student, as defined by the employing institution. The employing institution shall maintain an appeal process for a person who disagrees with the employing institution's determination that the person is a student and not eligible for membership in ASRS.
(e) A person who performs services under a program designed to relieve the person from unemployment.
B. The following elected officials are subject to this article if the member's employer is an employer under article 3 of this chapter:
1. A state elected official who is subject to term limits, who is elected or appointed on or before December 31, 2013 and who is an active, an inactive or a retired member of ASRS or a member of ASRS with a disability because the state elected official had previously elected not to participate in the elected officials' retirement plan as provided in section 38-804, subsection A.
2. An elected official, as defined in section 38-831, who is an active, an inactive or a retired member of ASRS or a member of ASRS with a disability, if the elected official's employer is a participating employer under this article and the elected official is eligible for ASRS service credit for the elected official's service.
3. A judicial officer or clerk or an elected official, as defined in section 38-728, who makes an election pursuant to section 38-728 to participate in ASRS. END_STATUTE
Sec. 3. Title 38, chapter 5, article 2, Arizona Revised Statutes, is amended by adding section 38-728, to read:
START_STATUTE38-728. Benefit election; eligibility; judicial officers; court clerks; elected officials; definitions
A. A judicial officer or clerk or an elected official who is elected or appointed on or after July 1, 2026 and who was not an active, an inactive or a retired member or a member with a disability of ASRS pursuant to this ARTICLE or article 2.1 of this chapter, the elected officials' retirement plan established by article 3 of this chapter or the elected officials' defined contribution retirement system established by article 3.1 of this chapter may make one of the following irrevocable elections:
1. To participate solely in ASRS pursuant to this article and article 2.1 of this chapter.
2. To participate solely in the elected officials' defined contribution retirement system established by article 3.1 of this chapter.
B. The judicial officer or clerk or elected official shall make an election under this section within ninety days after the date the judicial officer or clerk or elected official was elected or appointed. If the judicial officer or clerk or elected official does not make an election on or before the ninetieth day after the date the judicial officer or clerk or elected official was elected or appointed, the judicial officer or clerk or elected official is deemed to have elected to participate solely in ASRS.
C. Any election made under this section shall be made in writing and filed with the disbursing officer of the employing institution and the retirement system the judicial officer or clerk or elected official elects and becomes effective on the first day of the pay period following the retirement system election.
D. For the purposes of this section:
1. "Elected official" means every elected official of this state and every elected official of each county of this state.
2. "Judicial officer or clerk" means a supreme court justice, court of appeals judge, superior court judge, full-time superior court commissioner or justice of the peace or an elected clerk of the superior court. END_STATUTE
Sec. 4. Section 38-810, Arizona Revised Statutes, is amended to read:
START_STATUTE38-810. Contributions; appropriations
A. Each member shall contribute to the fund an amount equal to the amount prescribed in subsection G of this section. Contributions of members shall be made by payroll deductions. Every member is deemed to consent to these deductions. Payment of a member's compensation, less these payroll deductions, constitutes a full and complete discharge and satisfaction of all claims and demands by the member relating to remuneration for the member's services rendered during the period covered by the payment, except with respect to the benefits provided under the plan. A member may not, under any circumstance, borrow from, take a loan against or remove contributions from the member's account before the termination of membership in the plan or the receipt of a pension.
B. The board's office shall be credited monthly with monies collected pursuant to section 12-119.01, subsection B, paragraph 2, section 12-120.31, subsection D, paragraph 2, section 12-284.03, subsection A, paragraph 6, section 22-281, subsection C, paragraph 3 and section 41-178. The monies credited to the fund pursuant to this subsection shall be deposited in the fund on a monthly basis, and there shall be a complete accounting of the determination of these monies deposited in the fund.
C. Beginning on July 1, 2018, as determined by actuarial valuations performed by the plan's actuary each employer shall make contributions on a level percent of compensation basis for all employees of the employer who are either members under this article, article 3.1 of this chapter or article 2 of this chapter pursuant to section 38-727, subsection B or section 38-728 sufficient under the actuarial valuation to meet both the normal cost plus the actuarially determined amount required to amortize the unfunded accrued liability over a closed 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 and the employer's contribution under the elected officials' defined contribution retirement system established pursuant to article 3.1 of this chapter and the employer's contribution under article 2 of this chapter for members who are eligible pursuant to section 38-727, subsection B or section 38-728. The employer also shall pay the amount required by section 38-797.05 for members under article 2 of this chapter who are eligible pursuant to section 38-727, subsection B or section 38-728 and the amount required by article 3.2 of this chapter for members under article 3.1 of this chapter. The monies deposited in the fund pursuant to subsection B of this section shall be used to supplement the contributions required of all employers under the plan. The employer level percent compensation contribution that is paid pursuant to this subsection, less the amount contributed by the employer pursuant to section 38-833 and section 38-737 for members eligible pursuant to section 38-727, subsection B or section 38-728, shall not be used to pay for an increase in benefits that is otherwise payable to members but shall be used to meet the normal cost plus an amount to amortize the unfunded accrued liability.
D. In any fiscal year, an employer's contribution to the plan in combination with member contributions may not be less than the actuarially determined normal cost for that fiscal year. After the close of any fiscal year, if the plan's actuary determines that the actuarial valuation of the fund contains excess valuation assets and is more than one hundred percent funded, the board shall account for fifty percent 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 the fund has a valuation asset deficiency and an unfunded actuarial accrued liability, the board shall use any valuation assets in the stabilization reserve account, to the extent available, to limit the decline in the fund's funding ratio to not more than two percent.
E. The department of administration and the treasurer of each county and participating city and town shall transfer to the board the contributions provided for in subsections A and C of this section within ten working days after each payroll date. The state, county treasurers and clerks of the superior court shall transfer the monies credited under subsection B of this section to the board on or before the fifteenth day of each calendar month that follows the month in which the court fees were collected. Contributions and monies credited under subsection B of this section and transferred after these dates shall include a penalty equal to ten percent a year, compounded annually, for each day that the contributions or monies credited under subsection B of this section are late. Delinquent payments due under this subsection, together with interest charges as provided in this subsection and court costs, may be recovered by action in a court of competent jurisdiction against the person or persons responsible for the payments or, at the request of the board, may be deducted from any other monies, including excise revenue taxes, payable to a political subdivision by any department or agency of this state. If requested by the board, the state, county treasurers or clerks of the superior court shall transfer the monies credited under subsection B of this section, in an amount determined by the board, directly to the qualified governmental excess benefit arrangement established pursuant to section 38-803.01.
F. The employer shall pay the member contributions required of members on account of compensation earned after August 7, 1985. The paid contributions shall be treated as employer contributions for the purpose of determining tax treatment under the United States internal revenue code. The effective date of the employer payment shall not be before the date the retirement plan has received notification from the United States internal revenue service that pursuant to section 414(h) of the United States internal revenue code the member contributions paid will not be included in gross income for income tax purposes until the paid contributions are distributed by refund or pension payments. The employer shall pay the member contributions from monies established and available in the retirement deduction account, which monies would otherwise have been designated as member contributions and paid to the retirement plan. Member contributions paid pursuant to this subsection shall be treated for all other purposes, in the same manner and to the same extent, as member contributions made before August 7, 1985.
G. An elected official who became a member of the plan before July 20, 2011 shall contribute seven percent of the member's gross salary pursuant to subsection A of this section. The amount contributed pursuant to subsection A of this section by an elected official who became a member of the plan on or after July 20, 2011 is:
1. For fiscal year 2011-2012, ten percent of the member's gross salary.
2. For fiscal year 2012-2013, eleven and one-half percent of the member's gross salary.
3. For fiscal year 2013-2014 and each fiscal year thereafter, thirteen percent of the member's gross salary.
H. For fiscal year 2011-2012 and each fiscal year thereafter, the amount of the member's contribution that exceeds seven percent of the member's compensation shall not be used to reduce the employer's contributions that are calculated pursuant to subsection C of this section.
I. In fiscal years 2013-2014 through 2042-2043, the sum of $5,000,000 is appropriated in each fiscal year from the state general fund to the elected officials' retirement plan fund to supplement the normal cost plus an amount to amortize the unfunded accrued liability pursuant to subsection C of this section. Monies appropriated pursuant to this subsection shall not be used to pay for an increase in benefits that is otherwise payable to members and shall only be used as specified in this subsection. Monies appropriated pursuant to this subsection are exempt from the provisions of section 35-190 relating to lapsing of appropriations. END_STATUTE
Sec. 5. Section 38-831, Arizona Revised Statutes, is amended to read:
START_STATUTE38-831. Definitions
In this article, unless the context otherwise requires:
1. "Annuity account" means an account that is established for each member to record the deposit deposits of member the member's contributions, employer contributions and interest, dividends or other accumulations credited on behalf of the member.
2. "Board" means the board of trustees of the public safety personnel retirement system established by pursuant to section 38-848.
3. "Defined contribution system" means the elected officials' defined contribution retirement system established pursuant to this article.
4. "Elected official" means:
(a) Every elected official of this state who was elected or appointed on or after January 1, 2014 and before July 1, 2026 and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013.
(b) Every elected official of each county of this state who was elected or appointed on or after January 1, 2014 and before July 1, 2026 and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013.
(c) Every elected official of this state and elected official of each county of this state who was elected or appointed on or after July 1, 2026, who was not an active, an inactive or a retired member of the plan or a member of the plan with a disability on June 30, 2026 and who made an election to participate in the defined contribution retirement system pursuant to section 38-728.
(c) (d) Every justice of the supreme court who was appointed on or after January 1, 2014 and before July 1, 2026, and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013.
(d) (e) Every judge of the court of appeals who was appointed on or after January 1, 2014 and before July 1, 2026, and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013.
(e) (f) Every judge of the superior court who was elected or appointed on or after January 1, 2014 and before July 1, 2026, and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013.
(f) (g) Every full-time superior court commissioner, except full-time superior court commissioners who failed to make a timely election of membership under the judges' retirement plan, repealed on August 7, 1985, who was hired on or after January 1, 2014 and before July 1, 2026, and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013.
(g) (h) Each elected official of an incorporated city or town whose employer has executed a proper joinder agreement with the plan for coverage of its elected officials, who was elected or appointed on or after January 1, 2014 and who was not an active, an inactive, a disabled or a retired member of the plan or a member of the plan with a disability on December 31, 2013.
(i) A justice of the supreme court, a court of appeals judge, a superior court judge, a full-time superior court commissioner who was elected or appointed on or AFTER July 1, 2026, who was not an active, an inactive or a retired member of the plan or a member of the plan with a disability on June 30, 2026 and who made an election to participate in the defined contribution system pursuant to section 38-728.
5. "Employer" means a department or political subdivision of this state that makes employer contributions to the defined contribution system on behalf of a member.
6. "Employer contribution" means an amount deposited by an employer, from the employer's own monies, in the member's annuity account on a periodic basis coinciding with the member's regular pay period.
7. "Member" means an elected official under the defined contribution system.
8. "Plan" means the elected officials' retirement plan established by article 3 of this chapter. END_STATUTE
Sec. 6. Appropriation; Arizona administrative office of the courts; fiscal year 2026-2027
In addition to any other appropriation made in fiscal year 2026-2027, the sum of $150,000 is appropriated from the state general fund in fiscal year 2026-2027 to the Arizona administrative office of the courts for the Arizona state retirement system employer contribution costs associated with this act.
Sec. 7. Effective date
This act is effective from and after June 30, 2026.