ASRS; termination incentive programs

HB 2035 requires Arizona state and local government employers to cover retirement system costs when offering certain termination incentives. Specifically, if an employer provides a compensation increase of 30% or more before retirement (not tied to promotion) or other value tied to leaving a job (like extra service credits), and this creates extra costs for the Arizona State Retirement System (ASRS), the employer must pay ASRS the difference. Employers must notify ASRS before implementing such programs, and if they fail to pay within 90 days, interest accrues on the unpaid amount. The bill, signed into law on July 1, 2025, directly affects public employers who use these incentive programs, ensuring ASRS isn't burdened by unfunded retirement costs.