As we wrap up Fiscal Year 2026 and prepare to welcome Fiscal Year 2027, the Arizona State Retirement System (ASRS) Contribution Accounting Team would like to share a few important reminders and best practices to help make year-end reporting smooth, accurate, and stress-free.
Fiscal Year Contribution Rate Changes
Please ensure your payroll systems are updated with the new FY2027 contribution rates:
Fiscal Year Retirement Rate LTD Rate
| Fiscal Year | Retirement Rate | LTD Rate |
|---|---|---|
| FY2026 | 11.86% | 0.14% |
| FY2027 | 11.87% | 0.11% |
Important Reminder:
The FY2027 rates must be applied for any Pay Period Ending (PPE) on or after July 1, 2026.
Before updating your payroll system:
• Ensure all FY2026 payrolls have been fully processed.
• Verify that Retirement and LTD contributions reflect the correct rates in your payroll files.
• Double-check new hires or employees whose first payroll occurs after July 1. We occasionally see employees hired before fiscal year close withheld at the prior year’s rate.
A tiny rate difference may not seem like much until it turns into an adjustment later. And nobody wants surprise adjustments in July.
End-of-Year Process Reminders
Late Charge Invoices
The 301 monies late charge invoices for FY2025 will be sent shortly. ASRS continues gathering information from employers through ESM and email communications.
To help avoid additional delays or charges:
• Ensure all FY2026 adjustments are completed and submitted to ASRS no later than July 14, 2026
• All adjustment templates must accompany a current CSR
• Adjustment templates submitted without a CSR cannot be validated
Balance of Contract (BOC) Reporting
Multiple PPE 06/30/2026 CSRs are acceptable. Please verify that all FY2026 reporting has been completed, including any applicable Balance of Contract reporting.
What is Balance of Contract Pay?
Balance of Contract Pay refers to the final payment made in a fiscal year covering the remaining portion of a member’s annual salary, based on the employee’s written request regarding how contract pay is distributed.
Example:
A teacher works under a 10-month contract from August through May. If they retire in April and receive a lump-sum payout for the remainder of their contract, that payment is considered Balance of Contract Pay.
Under Arizona Administrative Code R2-8-901 through R2-8-905, Balance of Contract Pay is considered compensation, meaning:
- • Retirement contributions must be remitted
- • The earnings are pensionable and may impact retirement calculations
Important FY2026 Reminder
• All Balance of Contract submissions must be reported within the fiscal year the service was performed
• The correct fiscal year contribution rate must be applied
• BOC pay should use a PPE date no later than June 30, 2026
• All BOC submissions must be received by July 14, 2026
This ensures member contributions are posted timely and accurately.
Service Purchase Reminder
Service Purchase payments must accompany a Pay Type 01 submission for each Service Purchase.
Please remember:
Bonus pay and performance pay cannot include Service Purchase deductions.
Pay Period End Date vs. Pay Date
The Contribution Accounting Team would like to remind employers about the important difference between a Pay Period End Date (PPE)and a Pay Date.
What is a PPE Date?
The Pay Period End Date is the final day worked within the payroll cycle.
Example:
• Pay period starts: 07/01/2026
• Pay period ends: 07/14/2026
The PPE date is 07/14/2026
The CSR submitted to ASRS should use the PPE date of 07/14/2026.
What is a Pay Date?
The Pay Date is simply the date printed on the payroll check or direct deposit.
Payroll Submission Deadline
FY2026 runs from:
July 1, 2025, through June 30, 2026
Critical Deadline
All FY2026 payrolls must be submitted by July 14, 2026. Why is this so important?
If payrolls with a PPE of 06/30/2026 are submitted after July 14:
• Member accounts may not update until fiscal year close processing is completed (typically at the end of September)
• The system will generate unavoidable late charges
• Retiring members may experience delays impacting benefit processing
Timely submissions help avoid delays for both employers and members.
Bi-Weekly Payroll Example
If your payroll period is:
• 06/19/2026 through 07/02/2026
• PPE date = 07/02/2026
Submit the payroll using the FY2027 contribution rate.
Please do not split the payroll.
Adjustment Guidelines
As we close out FY2026, here are several important adjustment reminders.
FY2026 Make-Up Adjustments
Please ensure all FY2026 make-up adjustments are submitted with the final FY2026 payroll (PPE June 30).
Examples may include:
• Pay increases
• Overlooked PPE submissions
• Missed contributions
Adjustments submitted before fiscal year close will correctly reflect on member accounts.
Adjustments
When processing credit adjustments:
Use the same PPE date and pay type as the original submission
Use negative amounts in both Gross and Retirement fields
If a credit adjustment must be processed on or before fiscal year-end, please contact the Contribution Accounting Team through ESM.
Timely adjustments help prevent delays for members approaching retirement.
Additional Training Resource
Today’s reminder does not include adjustment entry instructions, however employers can review the previous Contribution Accounting Lunch and Learn for guidance.
Training Materials are available at:
ASRS Employer Reference Materials
Final Thoughts
As Fiscal Year 2026 comes to a close, timely reporting, careful review of contribution rates, and accurate submissions remain essential to ensuring a smooth transition into the new fiscal year for both employers and ASRS members.
Your attention to detail and continued partnership help support accurate member records, timely benefit processing, and efficient year-end operations across the ASRS System.
Thank you for your continued partnership and commitment to supporting Arizona’s public employees. The ASRS Contribution Accounting Team truly appreciates all the work you do throughout the year!
