My biggest question is, if this law was effective in August, 2012, why hasn't the Director incorporated it into policy?  He is fond of stating that he makes policy, and can modify it at will, so why is this law not found in policy?  If you have need of the protections guaranteed by this law, contact Gail Perry.


Supplemental Benefit Program for Public Safety Employees

Language contained in this memorandum has been prepared for information only. This
information is not legal advice and should not be relied upon as such. Implementation needs
within specific jurisdictions, the possibility for legislative changes, or differences in opinion and
interpretation might suggest cities and towns seek legal advice from attorneys or other advisors.
Overview
A.R.S. §38-961 requires any political subdivision or state agency that employs a public safety
employee on a full-time basis and meeting certain criteria outlined in this policy to have in place
a supplemental benefits plan (SBP or “plan”) for public safety employees. A.R.S. §38-961 takes
effect on August 2, 2012 and is set for repeal September 30, 2014.
To become eligible for benefits under the plan, the public safety employee must have been
injured in the line of official duty to the extent he or she cannot perform the functions of the
position and must be receiving workers’ compensation benefits pursuant to A.R.S. §23-1041.
The plan must be structured to provide wage reimbursement and other benefits from the
employer to approximate the public safety employee’s pre-injury base salary, minus taxes, for
up to a six-month period. The employer can choose to extend the supplemental benefits for up
to an additional six months for a total of one calendar year. A.R.S. §38-961 is specific as to
certain benefits that must be provided under the plan.
Plan components relevant to municipalities under A.R.S. §38-961 include consideration of the
following:
 Public Safety Employee: For purposes of SBP eligibility, a public safety employee is an
individual who is a member of the Public Safety Personnel Retirement System or the
Corrections Officer Retirement Plan or who is a probation officer, surveillance officer or
juvenile detention officer employed by a city or town.
A.R.S. §38-961 does not include civilian employees of a public safety department, or
volunteers. Nothing in this statute precludes a city or town from expanding coverage to
other employee groups or classes.
 Time Period for Coverage: Benefits available under the SBP must be offered to eligible
public safety employees for an initial six month time period with potential extension as
determined by the city or town for an additional six month time period. The maximum
time in the plan is one year.
 Eligibility: A.R.S. §38-961 specifically allows each city or town discretion to determine
eligibility of an injured employee for supplemental benefits, within the parameters of the
law. The employer can establish injury standards for plan eligibility and can exclude
eligibility in cases where the injury is the result of gross negligence or other standards
determined by the employer. It is important that cities and towns have policies and
procedures in place alongside the plan to assure fair treatment of plan applicants.
Although city and town discretion regarding an employee’s eligibility is outlined in the
law, there may be risks to a city or town in making eligibility determinations on a caseby-
case basis. Cities and towns may find it administratively easier, less politically
sensitive, and perhaps more risk tolerant to simply allow all employees eligible under the
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basic criteria contained in A.R.S.§38-961 and the employer’s specific uniform standards
to participate in the plan.
The same evaluation might hold true for cities and towns in deciding whether to extend
benefits for some or all employees who meet plan eligibility criteria beyond the initial six
month plan duration and request continuation for the optional additional six months.
 Accrual of Official Leave: Public safety employees accepted into a SBP under
A.R.S.§38-961 do not accrue any additional sick or vacation leave during the time they
are in the plan, nor may the employee’s sick leave or vacation time be decreased during
the time they are in the plan. The injured employee should essentially be held steady
with regards to accrual of official leave.
 Accrual of Public Safety Retirement Benefits: Under A.R.S.§38-961, the city or town
must pay all employer and employee retirement plan contributions to the Public Safety
Personnel Retirement System or the Corrections Officer Retirement Plan. The
employee will continue to accrue credited service for purposes of retirement during the
time they are on the plan.
 Employer-Sponsored Health Benefits: During an employee’s time in the plan, the city
or town will continue to pay employer-funded portions of any employer-sponsored health
care plan. The employee will still be responsible for the employee’s portion of a health
care benefit and/or any elective healthcare options or additional insurance premiums
normally paid by the employee.
 Discipline: Employees in the plan may be disciplined, including termination of
employment, subject to city or town policies and agreements.
 Risk Management Requirements: A.R.S. §38-961 requires that employees accepted
into the plan must comply with all risk management requirements, such as evaluation for
transitional return to work or light duty assignment, or rehabilitation services and
programs. Failure by the employee to comply can result in termination of supplemental
plan benefits.
 Other Benefits: The provisions of the plan do not supersede any other plan or policy
that provides greater benefits currently being offered by a city or town.
Suggestions for establishing and administering a SPB in cities and towns
Because A.R.S. §38-961 requires formation of a supplemental benefits plan for public safety
employees and prescribes certain provisions, the city or town council may not need to pass a
resolution or ordinance to implement a plan and could instead establish the plan as part of
administrative action. On the other hand, there are certain aspects of plan implementation that
might suggest city or town council action via resolution or ordinance is preferable:
 Certain applications of the plan may require the city or town to exercise discretion in the
administration of plan provisions, including the need to make decisions about individual
eligibility for benefits or to continue in the plan.
 There may be optional benefits a city or town could elect to include in the plan.
 The requirement for the city or town to pay the employee’s share of his or her normal
retirement contribution obligates municipal funds to the benefit plan.
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In addition, some cities or towns may have charter or code requirements that require such
policies to be adopted by ordinance or resolution.
Regardless, it is a good idea to be sure the elected body knows about A.R.S. §38-961 and the
plan being implemented. Input from the city or town manager, human resources director, risk
manager, police chief, and fire chief is suggested. The city or town should request review and
advice from legal counsel, as well.
Overall responsibility for administration and tracking of the SBP for public safety employees
should be assigned to a single person in the city or town. This person will serve as the SBP
administrator. Good candidates in a city or town for this role would be the manager, clerk,
human resources director, risk manager, or similar senior staff person. It is probably best to
avoid assignment of these responsibilities to the police chief or public safety staff, although
sometimes it may be necessary to do so.
The designated SBP administrator should:
 Communicate and coordinate with the city or town manager, elected body, injured
employee, workers’ compensation carrier, and other staff as necessary.
 Determine eligibility for benefits as defined in the plan, or escalate the decision as
appropriate.
 Maintain all records associated with the plan in compliance with federal laws, Arizona
Revised Statutes and local ordinances pertaining to records retention, destruction and
archiving.
If the city or town has a risk manager, the following tasks may be best suited to that role.
Otherwise, the SBP administrator should also:
 Assist city or town departments in locating light-duty assignments for injured employees
eligible for the plan.
 Track and evaluate the implementation, value, and total costs of the plan, including
direct and indirect expense.
 Communicate with key workers’ compensation claim participants including the injured
employee, claims adjuster, nurse case manager, vocational rehabilitation consultant, or
others in the employee’s rehabilitation and return-to-work program.
 Create additional controls to limit the possibility of fraud or abuse under the plan.
If the city or town has a human resources director, the following tasks may be best suited to that
role. Otherwise, the designated SBP administrator should also:
 Review and revise personnel policies and employee benefit programs as needed to
maintain consistency with the plan.
 Communicate terms of the plan to public safety employees and coordinate
communication upon an employee’s injury that suggests possible eligibility under the
plan.
 Educate department heads and supervisors about the plan, their role in working with
injured employees, and related matters.
 Assist in locating light duty assignments for employees eligible for the plan.
 Help evaluate the plan to determine impacts on the city or town.
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 Ensure continuation of employee health insurance benefits and appropriate
communication of the same.
There are several payroll-related and financial tracking tasks appropriate for a city or town
finance director, or similar role, to manage. These tasks include:
 Freeze the injured employee’s existing leave accruals during his or her time in the plan.
 Issue supplemental payments under the plan, applying the same tax status as applied at
time of injury.
 Ensure the employee receives appropriate retirement credit during period of injury,
including continued accrual in the Public Safety Personnel Retirement System or the
Corrections Officer Retirement Plan.
 Adjust payroll deductions as needed to cover voluntary deductions by the employee.
 Calculate the correct application of benefits and any reimbursements due the employee
given timing of notice by the employee, receipt of workers’ compensation lost-time wage
replacement benefits, and related administrative timing.
 Ensure the injured employee is not unlawfully enriched.
 Track costs of administering and implementing the plan to assist in its overall evaluation.
Eligibility and related considerations
Under A.R.S. §38-961, plan benefits must be provided to eligible employees for an initial period
of six months. Benefits can be extended for an additional six month time period at the discretion
of the city or town. Benefits under this plan terminate after a period of one year as noted in
statute, although a city or town could decide to offer benefits in addition to those required under
A.R.S. §38-961.
There are some administrative necessities regarding eligibility simply not addressed by A.R.S.
§38-961, such as how long an employee has to notify the city or town about application for
benefits. These kinds of administrative issues are addressed in the baseline policy contained at
the end of this memo and can be adapted to meet the specific needs in a city or town.
Notwithstanding administrative provisions, key policy considerations for a city or town related to
implementation of eligibility criteria include:
 Whether to create initial additional eligibility criteria consistent with A.R.S. §38-961 and
how to evaluate an individual’s eligibility for plan benefits if such criteria are established.
 Whether to create additional or different criteria for continuation into the optional sixmonth
extension period, and how to adjudicate applications for such continuation.
 Whether to establish any criteria outlining circumstances that would render an employee
ineligible for plan participation.
 Whether to extend some or all benefits to other employees, not otherwise eligible under
A.R.S. §38-961.
The intent of A.R.S. §38-961 is to make sure injured public safety employees are “made whole”
with regard to salary during a period of time they are off work. Since workers’ compensation
benefits also provide limited wage replacement benefits, the primary beneficiaries under A.R.S.
§38-961 will be injured employees making more than the maximum average monthly wage upon
which benefits are calculated under workers’ compensation laws.
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All injured public safety employees eligible under the plan will benefit from the law’s requirement
that the city or town pay the employee’s share of retirement contributions. Because this will
mean additional cost for cities and towns, and a substantial benefit for injured employees, some
cities and towns may be concerned about protecting against fraud or abuse of the plan through
application of discretionary evaluation of eligibility.
As a protection for the city or town, A.R.S. §38-961 requires injured employees to comply with
all risk management requirements, including evaluation for light duty, rehabilitation programs,
etc. Failure to do so can result in termination of the SPB for that employee.
A city or town can also establish criteria that would make an employee ineligible for benefits
under the plan. For instance, the city or town could establish that an employee will be
considered ineligible for benefits under the plan, regardless of any other determination under
workers’ compensation or any other benefit, if the employee’s injury results from or is worsened
in whole or part by:
 Horseplay;
 Unapproved physical activities, including physical fitness activities whether or not
during work hours;
 Misuse of tools or equipment;
 Any form of dishonesty surrounding the cause of injury.
Cities and towns should think carefully about application of eligibility (or ineligibility) criteria.
There may be social, political, economic, or legal risks to a city or town making eligibility
determinations on a case-by-case basis. Cities and towns may find it administratively easier,
less politically sensitive, and perhaps more risk tolerant to simply allow all employees eligible
under the basic criteria contained in A.R.S. §38-961 to participate in the plan.
The same is probably true in deciding whether to extend benefits for some or all employees who
meet plan eligibility criteria beyond the initial six month plan duration. Decisions about eligibility
are key to discuss with city or town legal counsel.
Baseline policy for consideration and drafting by cities and towns
Following is basic policy language cities and towns can use as a starting point for discussing or
developing a supplemental benefits plan for public safety employees. To help appreciate what
policy language is required by A.R.S. §38-961 versus what might be open to city or town
discretion, language that is directly tied to statutory provisions is shown in red.
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CITY/TOWN OF___________________
SUPPLEMENTAL BENEFITS PLAN FOR PUBLIC SAFETY EMPLOYEES
Purpose
The purpose of this Supplemental Benefits Plan for Public Safety Employees (plan) is to meet
the requirements of A.R.S. §38-961 and provide additional economic benefits to police, fire and
correctional employees who are injured and eligible for a specific category of workers’
compensation benefits.
Eligibility
The City/Town has discretion to determine eligibility of an employee to participate or continue in
this plan. To be eligible for supplemental benefits under this plan initially and to continue in the
plan as described in this policy, the employee must meet all of the following criteria:
1. Be a police or fire officer, or a correctional officer, employed full-time by the City/Town at
the time of injury.
2. Be injured and eligible for workers’ compensation benefits pursuant to A.R.S. §23-1021.
3. Be receiving workers’ compensation lost-time wage replacement benefits pursuant to
A.R.S. §23-1041 and related statutes.
4. Request supplemental benefits, in writing addressed to the City/Town Manager’s office,
within 30 days of receiving first payment of workers’ compensation lost-time wage
replacement benefits pursuant to A.R.S. §23-1041.
5. Follow all other procedures for requesting benefits as outlined in this policy or related
documents.
6. Participate in all risk management activities related to his or her workers’ compensation
injury.
7. Be physically unable to return to work for the City/Town in any capacity, including
alternative work assignments or light duty, as determined by the City/Town and as
supported by the employee’s physician or an independent medical exam (IME) ordered
by the City/Town directly or through its workers’ compensation insurance provider. The
employee’s inability to work in a capacity assigned by the City/Town, including inability to
work light duty assignments, must be supported by appropriate medical documentation
in order for the employee to remain eligible under this supplemental benefits plan.
8. Remain a City/Town full time employee during the time period the employee is receiving
the supplemental benefits.
Benefits
All benefits under this plan will be provided while the employee meets all eligibility criteria, for a
period up to six months1 from the date the employee receives first payment of workers’
compensation lost-time wage replacement benefits pursuant to A.R.S. § 23-1041.
1 City/Town may consider a six-month extension of the SBP at a future time.
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Benefits under this plan include:
1. Payment by the City/Town of the difference in salary between the employee’s base preinjury
salary, less taxes and the workers’ compensation benefit paid to the employee
under A.R.S. 38-961, and any other voluntary deductions on the part of the employee.
2. Continued payment of the City/Town’s employer portion of premium for health care
benefits as was paid pre-injury and/or as is paid for other similarly enrolled employees.
The employee remains responsible for paying the same portion of his/her health care
benefits as was paid pre-injury and/or as is paid by similarly enrolled employees.
3. Payment by the City/Town of both employer and employee contributions to the Public
Safety Personnel Retirement System or the Corrections Officer Retirement Plan as
based on the employee’s pre-injury salary.
4. Credit for service in the Public Safety Personnel Retirement System or the Corrections
Officer Retirement Plan at the same accrual rate as pre-injury.
5. Maintenance of accrued City/Town leave balances at pre-injury level, including sick and
vacation leave, and/or PTO.
To the extent the employee is eligible for and receives salary or benefit changes while receiving
benefits under this plan, the plan benefits will be adjusted accordingly. For instance, if all
employees are provided automatic salary adjustments as part of an annual process, the
employee will receive benefits under this plan based on his/her new adjusted salary as he/she
would receive if not injured. Such adjustments may or may not benefit the employee. For
instance, if during the benefit period under this plan the City/Town changes employer health
care benefits contributions from 80 percent to 70 percent, the employee may be required to pay
additional premiums as would any other similarly situated employee.
Procedure
 The City/Town Manager’s Office will receive all requests for plan benefits, in writing from
the employee outlining the request and any relevant information needed for decision
making by the City/Town. Such request must be made within 30 days of the employee’s
receipt of his or her first lost-time wage replacement benefit paid under workers’
compensation. The City/Town Manager’s Office will provide the request to the
employer-designated SBP administrator, __________________________. Failure to
make a request within the timeframe established herein shall be construed as a waiver
of any rights under A.R.S. §38-961.
 The City/Town SBP administrator will review the written request, the circumstances
surrounding the injury, employee eligibility for workers’ compensation, and any other
relevant factors. Within 30 days of receipt of request for benefits under this plan, the
SBP administrator shall provide the employee with written determination of benefits
eligibility under this plan.
 Supplemental benefits under the plan will be provided from the date of an employee’s
injury for a period not to exceed six months, as long as the employee continues to meet
all eligibility criteria.
 Employees granted benefits under this plan will cooperate fully with the City/Town, SBP
administrator, and others working to coordinate benefits.
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 The employee’s City/Town leave accounts will be frozen as of date of injury until
conclusion of participation in the plan.
 If an employee is denied participation in the plan for any reason, he or she has a right to
appeal such denial. The process for doing so is, exclusively, the following:
 Within ten (10) working days from receipt of denial letter file a written appeal with the
City/Town Manager stating the reason for the appeal and facts that the employee
wishes to have considered.
 Within five (5) working days the City/Town Manager will render a written opinion
affirming or denying eligibility based upon the information provided.
 If the City/Town Manager is also the SPB administrator, the appeals process shall be
to the City/Town Council. Under such provision, the City/Town Council shall have up
to thirty (30) days to render a written opinion.
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