Approve the issuance of refunds to the applicable Elected Official Retirement Plan (EORP) and Public Safety Personnel Retirement Plan (PSPRS) members who were identified by PSPRS to be impacted by the Hall decision in the amount of $903,616.04 from the general fund for 91 individuals, the majority of which are still employed by Cochise County.

The State legislature passed a law increasing the rate to be paid by members of EORP and PSPRS retirement systems beginning July 1, 2011.  The increase to the rate was 4%.  Members, impacted by this change, sued PSPRS claiming that the increase was unconstitutional.  The Hall case pertained to EORP and the Parker case pertains to PSPRS.  Over the last several years, the law suit(s) was making its way through the courts to the Arizona Supreme Court.  In November, 2016, the Arizona Supreme Court Ruled in the Hall case and  directed employers to reduce the rate that members were paying back to the original rate.  Employers also were been directed to refund back to the applicable members, the increased amount that was sent to PSPRS since July 11, 2011.  While the Parker case has not been finalized through the Arizona Supreme Court, PSPRS has directed employers to apply the opinion of the Hall case to members impacted by the 4% increase in order to minimize any additional interest that employers may owe at the time that the Parker case is complete. 

Finance took action to lower the rate for affected members still working for Cochise County with the pay period beginning April 9, 2017.  The second step is to issue the refunds for the amount of wages that were sent to PSPRS but should not have been.  Finance and HR have received the information for all but 4 members to complete the issuance of the refunds.  However, at a later date, Finance will receive information to issue another round of refunds for the interest.  It is expected that Finance will receive the information on interest for members impacted by the Hall case in August but no date has been provided for members impacted by the Parker case as that case is still at the Arizona Supreme Court.  However, interest has been estimated to be as high as $200,000.00. 

Issue the refunds to the applicable members on Wednesday, June 28, 2017.

As the refunds are a result of an Arizona Supreme Court decision, the refunds will eventually need to be issued by the County and the delay in issuing the refunds will result in an increase to the amount of interest that the County will have to pay overall.  Also the County has budget capacity to pay the refunds in FY17 where FY18 has less capacity.

Notify Finance of approval of agenda item.