Arizona House bill by Rep. Livingston mandates employer payments for retirement system liabilities

Passed bill authored by State Rep. David Livingston seeks to ensure employers pay actuarial liabilities to the Arizona State Retirement System when termination incentive programs create unfunded obligations, aiming to protect the system’s financial stability, according to the Arizona State House.

It passed both chambers as of June 27, clearing the House by a vote of 53-0 and the Senate by a vote of 29-0.

The bill, introduced as HB2035 on Jan. 8, ahead of the official start of the 57th Legislature’s first regular session on Jan. 13, was formally listed with the short title: ‘ASRS; termination incentive programs’.

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill amends Arizona Revised Statutes Section 38-749 regarding employer termination incentive programs that impact the Arizona State Retirement System (ASRS). It mandates that any employer offering such programs that result in an actuarial unfunded liability must pay the liability amount to ASRS, determined in consultation with its actuary. Employers must notify ASRS before implementing a termination incentive program affecting ASRS funding. If ASRS assesses an unfunded liability due to an incentive program, the employer has 90 days to pay; otherwise, the amount accrues interest. The bill defines termination incentive programs as extraordinary compensation increases or benefits conditioned on termination.

In the House, 24 Democrats and 29 Republicans voted in favor, with no opposition.

Meanwhile, in the Senate, 13 Democrats and 16 Republicans voted in favor, also with no opposing votes.

Livingston introduced the bill in the Arizona House on Jan. 8 ahead of the official start of the 57th Legislature’s first regular session on Jan. 13.

Livingston graduated from Arizona State University in 1988 with a BS.

Livingston, a Republican, was elected to the Arizona State House in 2023 to represent the state’s 28th House District, replacing previous state representative Kelli Butler.

The bill was signed into law by Gov. Katie Hobbs on July 1.

In Arizona, the legislative process begins when a bill is introduced in either the House of Representatives or the Senate. It is then assigned to one or more committees for discussion and possible amendment. If approved by committee, the bill proceeds to floor debate and voting in both chambers. If both chambers pass the bill, it is sent to the governor, who may sign it into law, veto it, or allow it to become law without a signature. The Arizona Legislature convenes annually in regular session starting the second Monday in January. Lawmakers introduce hundreds of bills each session, though only a portion make it into law. You can learn more about the legislative process on the Arizona State Legislature website.