HB 2035 Summary

• Requires employers to pay the Arizona State Retirement System (ASRS) the actuarial unfunded liability created by termination incentive programs.

• Employers must notify ASRS before implementing a termination incentive program that may affect ASRS funding.

• Defines "termination incentive program" as either a compensation increase of 30 percent or more used in calculating retirement benefits (not attributable to promotion), or any valuable consideration conditioned on employee termination (excluding accrued vacation, sick leave, or compensatory time unless enhanced).

• Employers have 90 days to pay assessed unfunded liability costs; unpaid amounts accrue interest at the board-approved actuarial equivalency rate.

• Specifies how "unfunded liability" is calculated differently depending on whether the incentive involves compensation increases or other forms of consideration provided to retiring members.