AZ SB1178

Amends the definition of "average monthly compensation" in the Arizona State Retirement System (ASRS) to clarify calculation methods for members with less than 36 consecutive months of service.

Modifies long-term disability (LTD) program benefits effective January 1, 2014: reduces monthly benefits from two-thirds to 60 percent of average monthly compensation for members whose disability commences on or after that date.

Establishes that total monthly income from LTD benefits and other income sources cannot exceed 100 percent of the member's monthly or average monthly compensation at time of disability, with ASRS offsetting benefits as necessary.

References the effective date of August 2, 2012 for certain disability benefit reduction provisions affecting members with disabilities commencing on or after that date.

Appropriates $35,000 from the ASRS administration account in fiscal year 2013-2014 for implementation of the act, with exemption from lapsing appropriations provisions.