Some Paychecks to Have More Money ... for Now

It's not a raise, but employees will find extra cash from a benefits premium holiday. ASRS members get backpay as well.
May 23, 2012
Tim Bee, associate vice president for state relations
Tim Bee, associate vice president for state relations

University employees in the Arizona State Retirement System may have noticed a tiny increase in their May 18 paychecks.

A 0.65 percent increase, to be exact.

And there's more on the way for those employees. Gov. Jan Brewer signed HB 2264 (PDF) into law on May 7, repealing legislation passed last year that required state employees to chip in more than half of the amount that goes into the retirement system each paycheck.

Plus, all employees who are on the state health plan will have two paychecks in the coming fiscal year, which begins July 1, in which no health insurance premiums will be withheld. That's in addition to the June 29 and Nov. 30 paychecks, which are the third checks of those months and therefore will not include some deductions, including health premiums.

In an effort to balance the state budget last year, Brewer passed a law that said state employers would contribute 47 percent of the amount put into the state pension plan, while state employees would contribute 53 percent.

It did not affect employees on the Optional Retirement Plan.

A group of ASRS members filed a lawsuit as soon as last year's legislation passed, and in February a Maricopa County Superior Court judge issued a ruling that sided with them.

Judge Eileen Willett said the change violated the Arizona Constitution, which says membership in the retirement system is a contract and that benefits "shall not be diminished or impaired."

In anticipation of the ruling, state lawmakers already had put together a budget that returned the contribution split to 50/50 and refunded the excess amount collected since July 1, said Tim Bee, the UA's associate vice president for state relations.

"There might be a little bonus here as we head into the summer," he said, noting it's not likely to add up to a lot.

Friday's paycheck was the first to be issued since Brewer signed the new budget, and it reflected the move back to a 50/50 contribution, with each side now contributing a total of 10.74 percent of each employee's pay, down for employees from the 11.39 percent they have paid since last summer.

The University has until Sept. 30 to refund all of the extra 3 percent that has been collected this fiscal year, and the payroll department is working to determine how that will happen, said Payroll Manager Michelle Meyer.

The money will not come from University coffers; rather, it comes from the state. But the University must put the appropriate accounting systems in place and figure out whether to spread the amount over several checks and, if so, how many.

The hope is to have it all returned before the deadline, Meyer said.

"We're still pulling the information together, testing the system before we send it (the refund) out to campus," she said.

But the pleasant feelings over that bump in pay, however slight, may be short-lived, as there is talk that the ASRS might increase the contribution percentage again this year.

"There's no confirmation yet as to whether it's going to go up or not," Meyer said.

Bee said nothing has been decided, but he has heard talk of a possible increase of 0.4 percent in each side's contribution, bumping the contribution rate back to more than 11 percent if that amount goes through. 

If there's an increase, it will begin July 1 with the new fiscal year.

Meanwhile, the state approved a so-called "premium holiday" for two pay periods in the next fiscal year, resulting from a surplus in the reserve held by the Arizona Department of Administration, Bee said.

Brewer had actually looked at the surplus as a possible source of pay raises, he said, but the Legislature settled on the premium holiday instead.

Joan Feldman, director of benefits and technology solutions for Human Resources, said the premium holiday will apply only to medical insurance, not dental or vision, for University employees who are on state insurance – through UnitedHealthCare, Blue Cross/Blue Shield, Cigna or Aetna.

Bee said the University, which contributes a sizable portion of employee health insurance, will save $1.6 million as well. Depending on the medical plan and level of coverage, employees pay (PDF) anywhere from 6 to 20 percent of the premium, and the University picks up the rest.

But the "when" for those savings is yet to be determined.

"That hasn't been worked out yet," he said.