If you work in a school payroll or HR office, you know that Proposition 301 monies can come with a few extra reporting considerations. While these payments may be made outside of an employee’s regular payroll, they still need to be reported to the Arizona State Retirement System (ASRS) correctly.
Getting the details right the first time can save your payroll team and ASRS a lot of time and prevent unnecessary corrections later. More importantly, accurate reporting helps protect the accuracy of your employees’ ASRS records and retirement benefits.
What’s the Big Deal About 301 Monies?
Proposition 301 performance-based pay is a type of compensation that can create questions during contribution reporting. The pay type, Pay Period Ending (PPE) date, contribution rate, and timing of the payment all matter when reporting these funds.
301 monies should not simply be treated like regular wages because they are being paid through payroll. Using the correct ASRS pay type helps ASRS properly identify the compensation and determine how it should be treated for retirement purposes. ASRS has previously identified incorrect reporting of compensation as an issue that can result in inaccurate benefit calculations.
In other words, the way you report the money matters, not just the amount.
Best Practices for Reporting 301 Monies
- Use the Correct Pay Type. The correct pay type gives the ASRS important information about the nature of the payment and can help prevent follow-up questions and corrections.
- Pay Attention to the PPE Date. For 301 monies that are being issued after the fiscal year in which they were earned, it's especially important to make sure you're using the appropriate current fiscal-year PPE date and contribution rate. ASRS guidance has specifically addressed this situation.
- Check the Contribution Rate. Contribution rates change each fiscal year, effective July 1. For FY 2026-27, the employee and employer retirement contribution rate is 11.87%, with an additional 0.11% LTD rate, for a total of 11.98%. Verify that you're using the correct rate for the applicable PPE date. A small rate difference can become a much bigger headache when corrections are multiplied across an entire payroll.
- Don't Wait Until the Last Minute. One of the best ways to avoid reporting problems is to plan ahead. A few minutes of review before submission can save hours of research and correction later. Before submitting your 301 payroll:
• Confirm the payment date.
• Confirm the PPE date.
• Verify the correct ASRS pay type.
• Confirm the applicable fiscal-year contribution rate.
• Review your payroll totals before submitting.
• Make sure employee and employer contributions are accurate.
• Keep documentation supporting the payment and how it was reported.
- Review Before You Hit "Submit." Think of your final payroll review as a quick ASRS quality check. Ask yourself:
•Is this really 301 compensation?
•Did I use the correct pay type?
•Is the PPE date correct?
•Am I using the correct fiscal-year contribution rate?
•Do the compensation and contributions match?
•Have I reviewed the payroll for anything that looks unusual?
For questions that require member-specific research or detailed assistance, we recommend using an Employer Secure Message through your Secure Account. This creates a record of the question and allows the Employer Relations Team to research and respond appropriately.
Other Great Resources:
- Employer Reference Materials webpage,
- Employer live chat in your Employer Secure Account
- Call the Employer Relations Team at 602-542-2777