AZ SB1178

Amends Arizona Revised Statutes Section 38-751 to restructure how the Arizona State Retirement System (ASRS) allocates liabilities for employers that stop participating in ASRS.

Establishes separate funds for nonparticipating employers based on their actuarial accrued liability and designated asset amounts calculated at the nonparticipation date.

Expands the definition of "no longer participating" to include employers experiencing a 30% or more reduction in actively contributing employees over three years, or a 50% or more reduction over any period.

Requires nonparticipating employers and their enrolled employees to continue making contributions to their separate fund, calculated based on normal costs and amortization of past service funding requirements.

Specifies that ASRS makes all decisions regarding nonparticipating employer separate funds and that these funds are adjusted for employee/employer contributions, benefits paid, investment gains/losses, and administrative expenses.