Elected Officials’ Retirement Plan (EORP)

Revision Date: 
Monday, August 27, 2018

AGENCY CONTACT INFORMATION

Public Safety Personnel Retirement System- Elected Officials

Authority

Laws 1950, Chapter 59, First Special Session created the Judges’ Retirement Fund, which ultimately merged with EORP. The first incarnation of EORP was created by Laws 1981, Chapter 284. These two programs were merged by Laws 1985, Chapter 309. Statutory authority is found at Arizona Revised Statutes §§ 38-801 to 38-823.

Function

The Elected Officials’ Retirement Plan provides a statewide retirement system for elected officials in Arizona. State and county elected officials, including judges, are eligible to participate. Other political subdivisions may become a part of EORP by joinder agreement. The Public Safety Personnel Retirement System Board of Trustees administers EORP. EORP is funded by cost-sharing contributions from members and members’ employers, as well as monies derived from a share of court fees.

The Board of Trustees provides oversight for investments pursuant to A.R.S.§ 38-803. Although the Board is not responsible for the actions or omissions of the local boards, it has the authority to seek review or rehearing in order to protect the System as a whole. The Board of Trustees is made up of nine members, appointed to five-year terms.

History

Legislation adopted in 1950 provided a pension for judges of the Supreme Court and the Superior Court who had at least 20 years of service at age 65. The amount of the pension was initially established as two-thirds of the salary at the time of retirement from the bench.

Additionally, any judge with at least 10 years of service who had to retire for medical reasons (mental or physical) could be awarded a pension by the Governor upon petition. If a retired judge received retirement pay, the Supreme Court could call on that judge to aid the Supreme or Superior Court as the Supreme Court deemed fit which could include examining the facts of a case, examining citations, or preparing opinions for the court. Additionally, retired judges receiving a pension could not practice law privately or engage in any other public service for compensation.

A fund was created consisting of 25% from each of the following: the county library fund from each county in Arizona, monthly fees collected by the Clerk of the Superior Court, and monthly fees collected by the Clerk of the Supreme Court. Additionally, 5% was deducted from the salary of each Supreme Court and Superior Court judge. The State Treasurer oversaw the fund. See Laws 1950, Chapter 59, First Special Session.

Laws 1957, Chapter 25 provided for any judge with at least 12 years of service to receive a pension, although it was proportionate to a pension for 20 years of service (i.e. 12/20=60%, so only 60% of a normal pension was given).

Laws 1981, Chapter 284 created the EORP. Previously, elected officials had been members of the Arizona State Retirement System (ASRS). As a result, all unencumbered monies paid into ASRS by elected state or county officials or on their behalf was transferred to the EORP fund, now part of the PSPRS. Elected officials were entitled to a pension amounting to half their final annual salary, provided they had at least 15 years of service. For those with fewer than 15 years of service, their pension would decrease by 3.5% for each year below the 15 year mark (i.e. 13 years of service meant a pension of only 43% of an official’s final annual salary). A similar increase to an elected official’s pension occurred for each year of service beyond 15 years.

Laws 1982, Chapter 261 repealed and replaced the changes made by Laws 1981, Chapter 284, creating a comprehensive framework for EORP. This included, but was not limited to, optional forms of payment, modified powers and duties for the PSPRS fund manager, and an exemption from state taxes for contributions and benefits.

Laws 1985, Chapter 309 repealed Articles 3 (Judge’s Retirement Plan) and 3.1 (EORP) of Title 38, Chapter 5 and added a new Article 3 that combined both plans into a new EORP. The fund manager of the PSPRS continued to administer the new EORP fund. The cap on annual compensation also increased significantly to $90,000 or 100% of the member’s average compensation across their 3 highest earning consecutive years, whichever was less.

Laws 2011, Chapter 357 made changes to each of the state retirement systems (PSPRS, CORP, EORP and ASRS). Section 55, Legislative findings, stated in part: “The Legislature recognizes that in order to have a sound public retirement system that benefits this state, taxpayers and member of the retirement systems, the public retirement systems must be funded with contributions and investment earnings based on actuarial methods and assumptions that meet generally accepted actuarial standards. ... The Legislature finds the current structures of ... the plans do not achieve this goal … and intends to modify and amend these various retirement programs in order to protect the best interests of the members and beneficiaries.”

The 2011 measure made a number of significant changes, including cost of living adjustments, return to work, member’s contribution rates, compensation, calculation of retirement benefits, and purchase of credited service. The measure also created the Defined Contribution and Retirement Study Committee to study the feasibility and cost of transferring existing or new members to a defined contribution. A written report of findings and recommendations was required to be submitted to the Governor, Legislature and Secretary of State by December 31, 2012.

Laws 2013, Chapter 217 established a defined contribution retirement system for elected officials, rather than a defined benefit program, for those who are elected or appointed on or after January 1, 2014.

Laws 2018, Chapter 140 repealed existing statute relating to EORP permanent benefit increases and instead established an EORP cost of living adjustment. The change was referred to the voters by House Concurrent Resolution 2032. The changes became effective when Proposition 125 was approved by the voters in the November 2018 general election.

A second enactment in 2018 eliminated the specific EORP employer contribution rate of 23.5% and required the employee contribution rate to be set at the actuarial value determined for each fiscal year. This measure was introduced in response to the Arizona Supreme Court 2016 decision Hall v. Elected Officials’ Retirement Plan, 241 Ariz. 33, 383 P.3d 1107(2016). See Laws 2018, Chapter 343.

Sources

  • Arizona Revised Statutes §§38-801 et seq.
  • Session Laws
    • Laws 1950, Chapter 59, 1st Special Session
    • Laws 1957, Chapter 25
    • Laws 1981, Chapter 284
    • Laws 1982, Chapter 261
    • Laws 1985, Chapter 309
    • Laws 2011, Chapter 357
    • Laws 2013, Chapter 217
    • Laws 2018, Chapter 140 and Chapter 343

 

House Concurret Resolution 2032

2018 General Election Publicity Pamphlet, Proposition 125

State of Arizona Official Canvass of the Nov 6, 2018 General Election

Arizona Public Safety Personnel Retirement System annual reports (consult for year by year changes). See also: Annual Reports on the Arizona Memory Project.