Ariz. Rev. Stat. § 38-814 – Termination of plan; adjustment and refund

A. If the plan terminates, each member's accrued benefits to the date of termination become one hundred percent nonforfeitable to the extent funded. After provision is made for all expenses of the plan, including expenses of liquidation, the assets of the plan shall be allocated by the payment or provision for the payment of benefits in the following order of preference:
1. 1. To pay each elected official and nonretired former elected official an amount equal to his accumulated contributions.
2. 2. To continue to pay pensions to retired members or their beneficiaries.
3. 3. To provide for potential rights of elected officials and former elected officials on an equitable and nondiscriminatory basis according to generally accepted actuarial principles.
4. 4. To pay any excess to this state.
B. The allocations in subsection A of this section may be implemented through the existing trust, a new trust instrument for that purpose or the purchase by the board of insurance company contracts, or by a combination of these methods. An elected official has no rights or claims on the plan or this state beyond the capacity of the assets held by the board to provide benefits in accordance with subsection A of this section.
C. If the allocations produce a pension of less than twenty-five dollars per month for any person, the board may pay a lump sum of actuarial equivalent value in lieu of the pension.
D. If more than the correct amount of employer or member contributions is paid into the plan by an employer through a mistake of fact, the board shall return those contributions to the employer if the employer requests return of the contributions within one year after the date of the overpayment. The board may not pay an employer earnings attributable to excess contributions but shall reduce the amount returned to an employer pursuant to this subsection by the amount of losses attributable to the excess contributions.