Alaska 2023-2024 Regular Session

Alaska House Bill HB22 Compare Versions

Only one version of the bill is available at this time.

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2	2	HB0022a -1- HB 22
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5	5	33-LS0259\A
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10	10
11	11	HOUSE BILL NO. 22
12	12
13	13	IN THE LEGISLATURE OF THE STATE OF ALASKA
14	14
15	15	THIRTY-THIRD LEGISLATURE - FIRST SESSION
16	16
17	17	BY REPRESENTATIVE JOSEPHSON
18	18
19	19	Introduced: 1/9/23
20	20	Referred: Prefiled
21	21
22	22
23	23	A BILL
24	24
25	25	FOR AN ACT ENTITLED
26	26
27	27	"An Act relating to participation of certain peace officers and firefighters in the defined 1
28	28	benefit and defined contribution plans of the Public Employees' Retirement System of 2
29	29	Alaska; relating to eligibility of peace officers and firefighters for medical, disability, 3
30	30	and death benefits; relating to liability of the Public Employees' Retirement System of 4
31	31	Alaska; and providing for an effective date." 5
32	32	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 6
33	33	* Section 1. AS 37.10.220(a) is amended to read: 7
34	34	(a) The board shall 8
35	35	(1) hold regular and special meetings at the call of the chair or of at 9
36	36	least five members; meetings are open to the public, and the board shall keep a full 10
37	37	record of all its proceedings; 11
38	38	(2) after reviewing recommendations from the Department of 12
39	39	Revenue, adopt investment policies for each of the funds entrusted to the board; 13 33-LS0259\A
40	40	HB 22 -2- HB0022a
41	41	New Text Underlined [DELETED TEXT BRACKETED]
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43	43	(3) determine the appropriate investment objectives for the defined 1
44	44	benefit plans established under the teachers' retirement system under AS 14.25 and the 2
45	45	public employees' retirement system under AS 39.35; 3
46	46	(4) assist in prescribing the policies for the proper operation of the 4
47	47	systems and take other actions necessary to carry out the intent and purpose of the 5
48	48	systems in accordance with AS 37.10.210 - 37.10.390; 6
49	49	(5) provide a range of investment options and establish the rules by 7
50	50	which participants can direct their investments among those options with respect to 8
51	51	accounts established under 9
52	52	(A) AS 14.25.340 - 14.25.350 (teachers' retirement system 10
53	53	defined contribution individual accounts); 11
54	54	(B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 12
55	55	Annuity Plan); 13
56	56	(C) AS 39.35.730 - 39.35.750 (public employees' retirement 14
57	57	system defined contribution individual accounts); and 15
58	58	(D) AS 39.45.010 - 39.45.060 (public employees' deferred 16
59	59	compensation program); 17
60	60	(6) establish the rate of interest that shall be annually credited to each 18
61	61	member's individual contribution account in accordance with AS 14.25.145 and 19
62	62	AS 39.35.100 and the rate of interest that shall be annually credited to each member's 20
63	63	account in the health reimbursement arrangement plan under AS 39.30.300 - 21
64	64	39.30.495; the rate of interest shall be adopted on the basis of the probable effective 22
65	65	rate of interest on a long-term basis, and the rate may be changed from time to time; 23
66	66	(7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 24
67	67	(8) coordinate with the retirement system administrator to have an 25
68	68	annual actuarial valuation of each retirement system prepared to determine system 26
69	69	assets, accrued liabilities, and funding ratios and to certify to the appropriate 27
70	70	budgetary authority of each employer in the system 28
71	71	(A) an appropriate contribution rate for normal costs; [AND] 29
72	72	(B) an appropriate contribution rate for liquidating any past 30
73	73	service liability; in this subparagraph, the appropriate contribution rate for 31 33-LS0259\A
74	74	HB0022a -3- HB 22
75	75	New Text Underlined [DELETED TEXT BRACKETED]
76	76
77	77	liquidating the past service liability of the defined benefit retirement plan under 1
78	78	AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 2
79	79	retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level 3
80	80	percent of pay method based on amortization of the past service liability for a 4
81	81	closed term of 25 years; 5
82	82	(C) an appropriate monthly employer contribution rate 6
83	83	under AS 39.35.255(j); and 7
84	84	(D) appropriate adjustments, if any, under AS 39.35.160(e) 8
85	85	and 39.35.475; 9
86	86	(9) review actuarial assumptions prepared and certified by a member 10
87	87	of the American Academy of Actuaries and conduct experience analyses of the 11
88	88	retirement systems not less than once every four years, except for health cost 12
89	89	assumptions, which shall be reviewed annually; the results of all actuarial assumptions 13
90	90	prepared under this paragraph shall be reviewed and certified by a second member of 14
91	91	the American Academy of Actuaries before presentation to the board; 15
92	92	(10) contract for an independent audit of the state's actuary not less 16
93	93	than once every four years; 17
94	94	(11) contract for an independent audit of the state's performance 18
95	95	consultant not less than once every four years; 19
96	96	(12) obtain an external performance review to evaluate the investment 20
97	97	policies of each fund entrusted to the board and report the results of the review to the 21
98	98	appropriate fund fiduciary; 22
99	99	(13) by the first day of each regular legislative session, report to the 23
100	100	governor, the legislature, and the individual employers participating in the state's 24
101	101	retirement systems on the financial condition of the systems in regard to 25
102	102	(A) the valuation of trust fund assets and liabilities; 26
103	103	(B) current investment policies adopted by the board; 27
104	104	(C) a summary of assets held in trust listed by the categories of 28
105	105	investment; 29
106	106	(D) the income and expenditures for the previous fiscal year; 30
107	107	(E) the return projections for the next calendar year; 31 33-LS0259\A
108	108	HB 22 -4- HB0022a
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111	111	(F) one-year, three-year, five-year, and 10-year investment 1
112	112	performance for each of the funds entrusted to the board; and 2
113	113	(G) other statistical data necessary for a proper understanding 3
114	114	of the financial status of the systems; 4
115	115	(14) submit quarterly updates of the investment performance reports to 5
116	116	the Legislative Budget and Audit Committee; 6
117	117	(15) develop an annual operating budget; [AND] 7
118	118	(16) administer pension forfeitures required under AS 37.10.310 using 8
119	119	the procedures of AS 44.62 (Administrative Procedure Act); and 9
120	120	(17) determine the amount of the monthly employer contribution 10
121	121	under AS 39.35.255(j). 11
122	122	* Sec. 2. AS 37.10.220(b) is amended to read: 12
123	123	(b) The board may 13
124	124	(1) employ outside investment advisors to review investment policies; 14
125	125	(2) enter into an agreement with the fiduciary of another state fund in 15
126	126	order to assume the management and investment of those assets; 16
127	127	(3) contract for other services necessary to execute the board's powers 17
128	128	and duties; 18
129	129	(4) enter into confidentiality agreements that would exempt records 19
130	130	from AS 40.25.110 and 40.25.120 if the records contain information that could affect 20
131	131	the value of investment by the board or that could impair the ability of the board to 21
132	132	acquire, maintain, or dispose of investments; 22
133	133	(5) adjust the amount of the increase in benefits payable to a peace 23
134	134	officer or firefighter who first becomes a member after June 30, 2006, as 24
135	135	provided under AS 39.35.475; 25
136	136	(6) adjust employee contribution rates under AS 39.35.160(e). 26
137	137	* Sec. 3. AS 37.10.390 is amended by adding a new paragraph to read: 27
138	138	(5) "peace officer" or "firefighter" has the meaning given in 28
139	139	AS 39.35.680. 29
140	140	* Sec. 4. AS 39.30.090(a) is amended to read: 30
141	141	(a) The Department of Administration may obtain a policy or policies of group 31 33-LS0259\A
142	142	HB0022a -5- HB 22
143	143	New Text Underlined [DELETED TEXT BRACKETED]
144	144
145	145	insurance covering state employees, persons entitled to coverage under AS 14.25.168, 1
146	146	14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 2
147	147	AS 39.37.145, employees of other participating governmental units, or persons 3
148	148	entitled to coverage under AS 23.15.136, subject to the following conditions: 4
149	149	(1) a group insurance policy shall provide one or more of the following 5
150	150	benefits: life insurance, accidental death and dismemberment insurance, weekly 6
151	151	indemnity insurance, hospital expense insurance, surgical expense insurance, dental 7
152	152	expense insurance, audiovisual insurance, or other medical care insurance; 8
153	153	(2) each eligible employee of the state, the spouse and the unmarried 9
154	154	children chiefly dependent on the eligible employee for support, and each eligible 10
155	155	employee of another participating governmental unit shall be covered by the group 11
156	156	policy, unless exempt under regulations adopted by the commissioner of 12
157	157	administration; 13
158	158	(3) a governmental unit may participate under a group policy if 14
159	159	(A) its governing body adopts a resolution authorizing 15
160	160	participation and payment of required premiums; 16
161	161	(B) a certified copy of the resolution is filed with the 17
162	162	Department of Administration; and 18
163	163	(C) the commissioner of administration approves the 19
164	164	participation in writing; 20
165	165	(4) in procuring a policy of group health or group life insurance as 21
166	166	provided under this section or excess loss insurance as provided in AS 39.30.091, the 22
167	167	Department of Administration shall comply with the dual choice requirements of 23
168	168	AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 24
169	169	transact business in the state under AS 21.09, a hospital or medical service corporation 25
170	170	authorized to transact business in this state under AS 21.87, or a health maintenance 26
171	171	organization authorized to operate in this state under AS 21.86; an excess loss 27
172	172	insurance policy may be obtained from a life or health insurer authorized to transact 28
173	173	business in this state under AS 21.09 or from a hospital or medical service corporation 29
174	174	authorized to transact business in this state under AS 21.87; 30
175	175	(5) the Department of Administration shall make available bid 31 33-LS0259\A
176	176	HB 22 -6- HB0022a
177	177	New Text Underlined [DELETED TEXT BRACKETED]
178	178
179	179	specifications for desired insurance benefits or for administration of benefit claims and 1
180	180	payments to (A) all insurance carriers authorized to transact business in this state 2
181	181	under AS 21.09 and all hospital or medical service corporations authorized to transact 3
182	182	business under AS 21.87 who are qualified to provide the desired benefits; and (B) 4
183	183	insurance carriers authorized to transact business in this state under AS 21.09, hospital 5
184	184	or medical service corporations authorized to transact business under AS 21.87, and 6
185	185	third-party administrators licensed to transact business in this state and qualified to 7
186	186	provide administrative services; the specifications shall be made available at least once 8
187	187	every five years; the lowest responsible bid submitted by an insurance carrier, hospital 9
188	188	or medical service corporation, or third-party administrator with adequate servicing 10
189	189	facilities shall govern selection of a carrier, hospital or medical service corporation, or 11
190	190	third-party administrator under this section or the selection of an insurance carrier or a 12
191	191	hospital or medical service corporation to provide excess loss insurance as provided in 13
192	192	AS 39.30.091; 14
193	193	(6) if the aggregate of dividends payable under the group insurance 15
194	194	policy exceeds the governmental unit's share of the premium, the excess shall be 16
195	195	applied by the governmental unit for the sole benefit of the employees; 17
196	196	(7) a person receiving benefits under AS 14.25.110, AS 22.25, 18
197	197	AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 19
198	198	effect under this section at the time of termination of employment with the state or 20
199	199	participating governmental unit; 21
200	200	(8) a person electing to have insurance under (7) of this subsection 22
201	201	shall pay the cost of this insurance; 23
202	202	(9) for each permanent part-time employee electing coverage under 24
203	203	this section, the state shall contribute one-half the state contribution rate for permanent 25
204	204	full-time state employees, and the permanent part-time employee shall contribute the 26
205	205	other one-half; 27
206	206	(10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 28
207	207	or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 29
208	208	and eligible dependents under this section; the level of coverage for persons over 65 30
209	209	shall be the same as that available before reaching age 65 except that the benefits
210	210	31 33-LS0259\A
211	211	HB0022a -7- HB 22
212	212	New Text Underlined [DELETED TEXT BRACKETED]
213	213
214	214	payable shall be supplemental to any benefits provided under the federal old age, 1
215	215	survivors, and disability insurance program; a person electing to have insurance under 2
216	216	this paragraph shall pay the cost of the insurance; the commissioner of administration 3
217	217	shall adopt regulations implementing this paragraph; 4
218	218	(11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 5
219	219	or former AS 39.37 may obtain long-term care insurance for that person and eligible 6
220	220	dependents under this section; a person who elects insurance under this paragraph 7
221	221	shall pay the cost of the insurance premium; the commissioner of administration shall 8
222	222	adopt regulations to implement this paragraph; 9
223	223	(12) each licensee holding a current operating agreement for a vending 10
224	224	facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 11
225	225	applies to governmental units other than the state. 12
226	226	* Sec. 5. AS 39.30.097(a) is amended to read: 13
227	227	(a) The commissioner of administration is authorized to prefund medical 14
228	228	benefits provided by AS 14.25.168, AS 22.25.090, [AND] AS 39.35.535, and 15
229	229	39.35.537 by establishing an irrevocable trust that is exempt from federal income tax 16
230	230	under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, and 17
231	231	actuarial requirements of the Governmental Accounting Standards Board. 18
232	232	* Sec. 6. AS 39.30.097(b) is amended to read: 19
233	233	(b) The commissioner of administration is authorized to prefund medical 20
234	234	benefits provided by AS 14.25.480, AS 39.30.300, AS 39.35.537, and 39.35.880 21
235	235	[AS 39.35.880] by establishing an irrevocable trust that is exempt from federal income 22
236	236	tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 23
237	237	and actuarial requirements of the Governmental Accounting Standards Board. 24
238	238	* Sec. 7. AS 39.30.300 is amended to read: 25
239	239	Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 26
240	240	Health Reimbursement Arrangement Plan established. The State of Alaska 27
241	241	Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 28
242	242	established for teachers who first become members of the defined contribution plan of 29
243	243	the teachers' retirement system under AS 14.25.310 - 14.25.590 on or after July 1, 30
244	244	2006, and employees of the state, political subdivisions of the state, and public 31 33-LS0259\A
245	245	HB 22 -8- HB0022a
246	246	New Text Underlined [DELETED TEXT BRACKETED]
247	247
248	248	organizations of the state who first become members [OF THE DEF INED 1
249	249	CONTRIBUTION PLAN] of the Public Employees' Retirement System of Alaska 2
250	250	(AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER 3
251	251	AS 39.35.700 - 39.35.990] on or after July 1, 2006. 4
252	252	* Sec. 8. AS 39.30.380 is amended to read: 5
253	253	Sec. 39.30.380. Termination of employment. A person who terminates 6
254	254	employment before meeting the eligibility requirements of AS 14.25.470, 7
255	255	AS 39.35.537, or 39.35.870 [OR AS 39.35.870] loses any right to the contributions 8
256	256	made on behalf of the person to the teachers' and public employees' retiree health 9
257	257	reimbursement arrangement trust fund. If a person returns to employment with a 10
258	258	participating employer by December 31 of the year in which the person reaches 65 11
259	259	years of age, the person's account balance shall be restored in the amount recorded on 12
260	260	the date of termination from the trust, adjusted for inflation at the rate of the Consumer 13
261	261	Price Index for Anchorage, Alaska. The earlier period of employment with a 14
262	262	participating employer shall be credited toward eligibility for medical benefits. 15
263	263	* Sec. 9. AS 39.30.390 is amended to read: 16
264	264	Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 17
265	265	eligibility requirements of AS 14.25.470, AS 39.35.537, or 39.35.870 [AND 18
266	266	AS 39.35.870] are eligible for reimbursements from the individual account established 19
267	267	for a member under the plan, except members do not have to retire directly from the 20
268	268	system. A person who is the dependent child of an eligible member is eligible for 21
269	269	reimbursements if the eligible member and surviving spouse have both died so long as 22
270	270	the person meets the definition of dependent child. 23
271	271	* Sec. 10. AS 39.30.400(a) is amended to read: 24
272	272	(a) The administrator may deduct the cost of monthly premiums from the 25
273	273	individual account for retiree major medical insurance on behalf of an eligible person 26
274	274	who elected retiree major medical insurance under AS 14.25.480, AS 39.35.537, or 27
275	275	39.35.880 [OR AS 39.35.880]. 28
276	276	* Sec. 11. AS 39.30.495(5) is amended to read: 29
277	277	(5) "eligible person" means a person who meets the eligibility 30
278	278	requirements of AS 14.25.470, AS 39.35.537, or 39.35.870 [OR AS 39.35.870]; 31 33-LS0259\A
279	279	HB0022a -9- HB 22
280	280	New Text Underlined [DELETED TEXT BRACKETED]
281	281
282	282	* Sec. 12. AS 39.35.095 is amended to read: 1
283	283	Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 2
284	284	[FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 3
285	285	only to members 4
286	286	(1) first hired before July 1, 2006; or 5
287	287	(2) who are peace officers or firefighters and 6
288	288	(A) former members of the defined contribution retirement 7
289	289	plan under AS 39.35.700 - 39.35.990; or 8
290	290	(B) first hired after June 30, 2006, and have not been 9
291	291	members of the defined contribution retirement plan under AS 39.35.700 - 10
292	292	39.35.990 [: AS 39.35.095 - 39.35.680]. 11
293	293	* Sec. 13. AS 39.35.160(a) is amended to read: 12
294	294	(a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 13
295	295	each peace officer or firefighter shall contribute to the plan an amount equal to seven 14
296	296	and one-half percent of the peace officer's or firefighter's compensation. Except as 15
297	297	provided in (d) and (e) of this section, beginning January 1, 1987, each other 16
298	298	employee shall contribute to the plan an amount equal to six and three-quarters percent 17
299	299	of the employee's compensation. [THE CONTRIBUTIONS SHALL BE DEDUCTED 18
300	300	BY THE EMPLOYER AT THE END OF EACH PAYROLL PERIOD. THE 19
301	301	CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 20
302	302	COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 21
303	303	TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 22
304	304	CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 23
305	305	THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 24
306	306	OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 25
307	307	* Sec. 14. AS 39.35.160 is amended by adding new subsections to read: 26
308	308	(e) A peace officer or firefighter who first participates in the plan after 27
309	309	June 30, 2006, shall contribute to the plan an amount equal to eight percent of the 28
310	310	employee's compensation. The board may, from time to time, adjust the employee 29
311	311	contribution under this subsection to an amount that, 30
312	312	(1) if decreased, is not less than eight percent of the employee's 31 33-LS0259\A
313	313	HB 22 -10- HB0022a
314	314	New Text Underlined [DELETED TEXT BRACKETED]
315	315
316	316	compensation; and 1
317	317	(2) if increased, is not more than 10 percent of the employee's 2
318	318	compensation. 3
319	319	(f) Contributions under (a) and (e) of this section shall be deducted by the 4
320	320	employer at the end of each payroll period. The contributions shall be deducted from 5
321	321	employee compensation before computation of applicable federal taxes, and the 6
322	322	contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 7
323	323	member may not have the option of making the payroll deduction directly instead of 8
324	324	having the contribution picked up by the employer. 9
325	325	* Sec. 15. AS 39.35.255(a) is amended to read: 10
326	326	(a) Each employer, except as provided in (h) and (j) of this section, shall 11
327	327	contribute to the system every payroll period an amount calculated by applying a rate 12
328	328	of 22 percent of the greater of the total of all base salaries 13
329	329	(1) paid by the employer to employees, other than peace officers or 14
330	330	firefighters who first became members of the plan after June 30, 2006, who are 15
331	331	active members of the system, including any adjustments to contributions required by 16
332	332	AS 39.35.520; or 17
333	333	(2) paid by the employer to employees, other than peace officers or 18
334	334	firefighters who first became members of the plan after June 30, 2006, who were 19
335	335	active members of the system during the corresponding payroll period for the fiscal 20
336	336	year ending 21
337	337	(A) June 30, 2008; or 22
338	338	(B) June 30, 2012, if that total is less than the total under (A) of 23
339	339	this paragraph, and the employer is a municipality in which the population 24
340	340	decreased by more than 25 percent between 2000 and 2010, according to the 25
341	341	decennial census conducted by the United States Bureau of the Census. 26
342	342	* Sec. 16. AS 39.35.255(d) is amended to read: 27
343	343	(d) Notwithstanding (a) and (j) of this section, the annual employer 28
344	344	contribution rate may not be less than the rate sufficient to allow payment of the 29
345	345	employer normal cost and the employer contributions required under AS 39.30.370 30
346	346	and AS 39.35.750. 31 33-LS0259\A
347	347	HB0022a -11- HB 22
348	348	New Text Underlined [DELETED TEXT BRACKETED]
349	349
350	350	* Sec. 17. AS 39.35.255(e) is amended to read: 1
351	351	(e) An employer of a retired member rehired under AS 39.35.150 shall include 2
352	352	that member's base salary when calculating the contribution amount established in (a) 3
353	353	or (j) of this section. 4
354	354	* Sec. 18. AS 39.35.255 is amended by adding new subsections to read: 5
355	355	(j) An employer that employs a peace officer or firefighter who first 6
356	356	participates in the plan after June 30, 2006, shall contribute to the system every payroll 7
357	357	period an amount equal to the greater of 8
358	358	(1) a per capita amount that is calculated by applying a rate, 9
359	359	determined by the board, of not less than 12 percent of the total monthly compensation 10
360	360	the employer pays to all peace officers and firefighters who first became members of 11
361	361	the plan after June 30, 2006; and 12
362	362	(2) a per capita amount, determined by the board, that is equal to the 13
363	363	amount calculated under (a) of this section expressed on a per capita basis. 14
364	364	(k) The board may, from time to time, increase the percentage rate determined 15
365	365	under (j)(1) of this section; however, that increase must be based on a concurrent 16
366	366	increase, if any, in the employee contribution rate under AS 39.35.160(e). 17
367	367	* Sec. 19. AS 39.35.282 is amended to read: 18
368	368	Sec. 39.35.282. Contributions for medical benefits. Contributions made by 19
369	369	an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 20
370	370	computed for benefits provided by AS 39.35.535 and 39.35.537. The contributions 21
371	371	computed for benefits provided by AS 39.35.535 must [AND SHALL] be deposited 22
372	372	in the Alaska retiree health care trust established under AS 39.30.097(a), and the 23
373	373	contributions computed for benefits provided by AS 39.35.537 must be deposited 24
374	374	in the teachers' and public employees' retiree health reimbursement arrangement 25
375	375	plan trust fund established under AS 39.30.340. 26
376	376	* Sec. 20. AS 39.35.370(a) is amended to read: 27
377	377	(a) Subject to AS 39.35.450, a terminated employee who first became a 28
378	378	member before July 1, 2006, is eligible for a normal retirement benefit 29
379	379	(1) at age 60 with at least five years of credited service; 30
380	380	(2) with at least 20 years of credited service as a peace officer or 31 33-LS0259\A
381	381	HB 22 -12- HB0022a
382	382	New Text Underlined [DELETED TEXT BRACKETED]
383	383
384	384	firefighter; or 1
385	385	(3) with at least 30 years of credited service for all other employees. 2
386	386	* Sec. 21. AS 39.35.370 is amended by adding a new subsection to read: 3
387	387	(l) Subject to AS 39.35.450, a terminated employee who first becomes a 4
388	388	member after June 30, 2006, is eligible for a normal retirement benefit 5
389	389	(1) at age 60 with at least five years of credited service in the system as 6
390	390	a peace officer or firefighter; or 7
391	391	(2) at age 55 with at least 20 years of credited service in the system as 8
392	392	a peace officer or firefighter. 9
393	393	* Sec. 22. AS 39.35.381(e) is amended to read: 10
394	394	(e) A person who retires under this section is not entitled to disability or death 11
395	395	benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 12
396	396	to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 13
397	397	section may not be used for vesting under AS 39.35.095 - 39.35.680. 14
398	398	* Sec. 23. AS 39.35.475(a) is amended to read: 15
399	399	(a) Subject to (g) of this section, once [ONCE] each year the administrator 16
400	400	shall increase benefit payments to eligible disabled members, to persons age 60 or 17
401	401	older receiving benefits under this plan in the preceding calendar year, and to persons 18
402	402	who have received benefits under this plan for at least five years who are not 19
403	403	otherwise eligible for an increase under this section. 20
404	404	* Sec. 24. AS 39.35.475(b) is amended to read: 21
405	405	(b) Subject to (h) of this section, the [THE] increase in benefit payments 22
406	406	applies to total benefit payments except for the cost-of-living allowance under 23
407	407	AS 39.35.480. The amount of the increase is a percentage of the current benefit equal 24
408	408	to 25
409	409	(1) the lesser of 75 percent of the increase in the cost of living in the 26
410	410	preceding calendar year or nine percent, for recipients who on July 1 are at least 65 27
411	411	years old and for members receiving disability benefits; and 28
412	412	(2) the lesser of 50 percent of the increase in the cost of living in the 29
413	413	preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 30
414	414	less than 65 years old or for recipients who are less than 60 years old on July 1 but 31 33-LS0259\A
415	415	HB0022a -13- HB 22
416	416	New Text Underlined [DELETED TEXT BRACKETED]
417	417
418	418	who have received benefits from the plan for at least five years. 1
419	419	* Sec. 25. AS 39.35.475 is amended by adding new subsections to read: 2
420	420	(g) A person who receives a benefit under AS 39.35.370(l) is eligible to 3
421	421	receive an increase in benefits under this section. 4
422	422	(h) If the board determines that the portion of the unfunded liability of the plan 5
423	423	that is attributable to all peace officers and firefighters who first become members of 6
424	424	the plan after June 30, 2006, is greater than 10 percent, the board may reduce the 7
425	425	amount of the increase under (b) of this section that is payable to a peace officer or 8
426	426	firefighter who first becomes a member after June 30, 2006. At any time, the board 9
427	427	may terminate a reduction made under this subsection. 10
428	428	* Sec. 26. AS 39.35.535(a) is amended to read: 11
429	429	(a) Except as provided in (d) and (g) of this section, the following persons are 12
430	430	entitled to major medical insurance coverage under this section: 13
431	431	(1) for employees first hired before July 1, 1986, 14
432	432	(A) an employee who is receiving a monthly benefit from the 15
433	433	plan and who has elected coverage; 16
434	434	(B) the spouse and dependent children of the employee 17
435	435	described in (A) of this paragraph; 18
436	436	(C) the surviving spouse of a deceased employee who is 19
437	437	receiving a monthly benefit from the plan and who has elected coverage; 20
438	438	(D) the dependent children of a deceased employee who are 21
439	439	dependent on the surviving spouse described in (C) of this paragraph; 22
440	440	(2) for members first hired on or after July 1, 1986, 23
441	441	(A) an employee who is receiving a monthly benefit from the 24
442	442	plan and who has elected coverage for the employee; 25
443	443	(B) the spouse of the employee described in (A) of this 26
444	444	paragraph if the employee elected coverage for the spouse; 27
445	445	(C) the dependent children of the employee described in (A) of 28
446	446	this paragraph if the employee elected coverage for the dependent children; 29
447	447	(D) the surviving spouse of a deceased employee who is 30
448	448	receiving a monthly benefit from the plan and who has elected coverage; 31 33-LS0259\A
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451	451
452	452	(E) the dependent children of a deceased employee who are 1
453	453	dependent on the surviving spouse described in (D) of this paragraph if the 2
454	454	surviving spouse has elected coverage for the dependent children. 3
455	455	* Sec. 27. AS 39.35.535(c) is amended to read: 4
456	456	(c) A benefit recipient who became a member before July 1, 2006, or the 5
457	457	surviving spouse of the member may elect major medical insurance coverage in 6
458	458	accordance with regulations and under the following conditions: 7
459	459	(1) a person, other than a disabled member or a disabled member who 8
460	460	is appointed to normal retirement, shall [MUST] pay an amount equal to the full 9
461	461	monthly group premium for retiree major medical insurance coverage if the person is 10
462	462	(A) younger than 60 years of age and has less than 11
463	463	(i) 25 years of credited service as a peace officer under 12
464	464	AS 39.35.360 and 39.35.370; or 13
465	465	(ii) 30 years of credited service under AS 39.35.360 and 14
466	466	39.35.370 that is not service as a peace officer; or 15
467	467	(B) of any age and has less than 10 years of credited service; 16
468	468	(2) a person is not required to make premium payments for retiree 17
469	469	major medical coverage if the person 18
470	470	(A) is a disabled member; 19
471	471	(B) is a disabled member who is appointed to normal 20
472	472	retirement; 21
473	473	(C) is 60 years of age or older and has at least 10 years of 22
474	474	credited service; or 23
475	475	(D) has at least 24
476	476	(i) 25 years of credited service as a peace officer under 25
477	477	AS 39.35.360 and 39.35.370; or 26
478	478	(ii) 30 years of credited service under AS 39.35.360 and 27
479	479	39.35.370 not as a peace officer. 28
480	480	* Sec. 28. AS 39.35.535 is amended by adding a new subsection to read: 29
481	481	(g) A benefit recipient who is a peace officer or firefighter and who first 30
482	482	becomes a member after June 30, 2006, or a surviving spouse who is eligible under 31 33-LS0259\A
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484	484	New Text Underlined [DELETED TEXT BRACKETED]
485	485
486	486	AS 39.35.537(b) may elect medical benefits under AS 39.35.537. 1
487	487	* Sec. 29. AS 39.35 is amended by adding a new section to read: 2
488	488	Sec. 39.35.537. Medical benefit; eligibility of peace officers or firefighters 3
489	489	first hired after June 30, 2006; surviving spouses and dependents. (a) A peace 4
490	490	officer or firefighter who became a member of the plan after June 30, 2006, receives a 5
491	491	monthly benefit from the plan, and has elected benefits under this section is entitled to 6
492	492	medical benefits under this section. A member who applies for medical benefits under 7
493	493	this section shall apply on the forms and in the manner prescribed by the 8
494	494	administrator. 9
495	495	(b) The member's surviving spouse is eligible to elect medical benefits if the 10
496	496	member had retired or was eligible for retirement and medical benefits at the time of 11
497	497	the member's death. 12
498	498	(c) The medical benefits available to eligible persons are access to the retiree 13
499	499	major medical insurance plan and access to the health reimbursement arrangement 14
500	500	plan under AS 39.30.300. Access to the retiree major medical insurance plan means 15
501	501	that an eligible person may not be denied insurance coverage except for failure to pay 16
502	502	the required premium. 17
503	503	(d) Retiree major medical insurance plan coverage elected by an eligible 18
504	504	member under this section covers the eligible member, the spouse of the eligible 19
505	505	member, and the dependent children of the eligible member. 20
506	506	(e) Retiree major medical insurance plan coverage elected by a surviving 21
507	507	spouse of an eligible member under this section covers the surviving spouse and the 22
508	508	dependent children of the eligible member who are dependent on the surviving spouse. 23
509	509	(f) Participation in the retiree major medical insurance plan is not required in 24
510	510	order to participate in the health reimbursement arrangement plan. 25
511	511	(g) A person eligible for medical benefits under this section is not required to 26
512	512	participate in the health reimbursement arrangement plan in order to participate in the 27
513	513	retiree major medical insurance plan. 28
514	514	(h) A person who is eligible for medical benefits under this section must make 29
515	515	the irrevocable election to participate or not participate in the retiree major medical 30
516	516	insurance plan on or before the date the person reaches 70 1/2 years of age or when the 31 33-LS0259\A
517	517	HB 22 -16- HB0022a
518	518	New Text Underlined [DELETED TEXT BRACKETED]
519	519
520	520	person applies for retirement and medical benefits, whichever is later. 1
521	521	(i) Major medical insurance coverage takes effect on the first day of the month 2
522	522	following the date of the administrator's approval of the election and stops when the 3
523	523	person who elects coverage dies or fails to make a required premium payment. 4
524	524	(j) The coverage for persons 65 years of age or older is the same as that 5
525	525	available for persons under 65 years of age. The benefits payable to those persons 65 6
526	526	years of age or older supplement any benefits provided under the federal old age, 7
527	527	survivors, and disability insurance program. 8
528	528	(k) The medical and optional insurance premiums owed by the person who 9
529	529	elects coverage may be deducted from the health reimbursement arrangement. If the 10
530	530	amount of the health reimbursement arrangement becomes insufficient to pay the 11
531	531	premiums, the person who elects coverage under (a) of this section shall pay the 12
532	532	premiums directly. 13
533	533	(l) The cost of premiums for retiree major medical insurance coverage under 14
534	534	this section for an eligible member or surviving spouse who is 15
535	535	(1) not eligible for Medicare is an amount equal to the full monthly 16
536	536	group premiums for retiree major medical insurance coverage; 17
537	537	(2) eligible for Medicare is the following percentage of the premium 18
538	538	amounts established for retirees who are eligible for Medicare: 19
539	539	(A) 30 percent if the member had 10 or more, but less than 15, 20
540	540	years of service; 21
541	541	(B) 25 percent if the member had 15 or more, but less than 20, 22
542	542	years of service; 23
543	543	(C) 20 percent if the member had 20 or more, but less than 25, 24
544	544	years of service; 25
545	545	(D) 15 percent if the member had 25 or more, but less than 30, 26
546	546	years of service; 27
547	547	(E) 10 percent if the member had 30 or more years of service. 28
548	548	(m) The eligibility for retiree major medical insurance coverage for an 29
549	549	alternate payee under a qualified domestic relations order shall be determined based 30
550	550	on the eligibility of the member to elect coverage. The alternate payee shall pay the 31 33-LS0259\A
551	551	HB0022a -17- HB 22
552	552	New Text Underlined [DELETED TEXT BRACKETED]
553	553
554	554	full monthly premium for retiree major medical insurance coverage. 1
555	555	(n) A person who is entitled to retiree major medical insurance coverage under 2
556	556	this section shall 3
557	557	(1) be informed by the administrator in writing 4
558	558	(A) that the health insurance coverage available to retired 5
559	559	members may be different from the health insurance coverage provided to 6
560	560	employees; 7
561	561	(B) of time limits for selecting optional health insurance 8
562	562	coverage and whether the election is irrevocable; and 9
563	563	(2) indicate in writing on a form provided by the administrator that the 10
564	564	person has received the information required by this subsection and whether the 11
565	565	person has chosen to receive optional health insurance coverage. 12
566	566	(o) The monthly group premiums for retiree major medical insurance coverage 13
567	567	under this section are established by the administrator in accordance with 14
568	568	AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 15
569	569	(a) of this section a monthly group premium rate for retiree major medical insurance 16
570	570	coverage other than the premium in effect for the month in which the premium is due 17
571	571	for coverage for that month. 18
572	572	(p) In this section, "health reimbursement arrangement plan" means the plan 19
573	573	established in AS 39.30.300. 20
574	574	* Sec. 30. AS 39.35.680(4) is amended to read: 21
575	575	(4) "average monthly compensation" means the result obtained by 22
576	576	dividing the compensation earned by an employee during a considered period by the 23
577	577	number of months, including fractional months, for which compensation was earned; 24
578	578	an employee must have at least 115 days of credited service in the last payroll year in 25
579	579	order for that year to be used as part of the consecutive payroll years; the considered 26
580	580	period consists of 27
581	581	(A) for employees first hired before July 1, 1996, the three 28
582	582	consecutive payroll years during the period of credited service that yield the 29
583	583	highest average; 30
584	584	(B) for employees first hired on or after July 1, 1996, the five 31 33-LS0259\A
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587	587
588	588	consecutive payroll years during the period of credited service that yield the 1
589	589	highest average; 2
590	590	(C) if the employee does not have the number of consecutive 3
591	591	payroll years required by (A) or (B) of this paragraph, the actual number of 4
592	592	months, including fractional months, that the employee worked; 5
593	593	(D) for an employee who has made an election under 6
594	594	AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 7
595	595	fractional months, that the employee worked; 8
596	596	(E) for a peace officer or firefighter hired before July 1, 2006 9
597	597	[AT ANY TIME], the three consecutive payroll years during the period of 10
598	598	credited service that yield the highest average; 11
599	599	(F) for a peace officer or firefighter hired after June 30, 12
600	600	2006, the five consecutive payroll years during the period of credited 13
601	601	service that yield the highest average; 14
602	602	* Sec. 31. AS 39.35.680(18) is amended to read: 15
603	603	(18) "employer" means 16
604	604	(A) the State of Alaska; 17
605	605	(B) a political subdivision or public organization of the state 18
606	606	that participates in the plan based on a resolution to participate in the plan that 19
607	607	was approved by the administrator 20
608	608	(i) on or before July 1, 2006; or 21
609	609	(ii) for peace officers and firefighters; or 22
610	610	(C) a political subdivision or public organization of the state 23
611	611	that assumes liability for participation in the plan by another political 24
612	612	subdivision or public organization of the state [,] as a result of consolidation 25
613	613	or reorganization that occurs 26
614	614	(i) at any time, with respect to peace officers or 27
615	615	firefighters; 28
616	616	(ii) on or after July 1, 2006, with respect to employees 29
617	617	who are not peace officers or firefighters [ASSUMES LIABILITY 30
618	618	UNDER THE PLAN OF A POLITICAL SUBDIVISION OR PUBLIC 31 33-LS0259\A
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620	620	New Text Underlined [DELETED TEXT BRACKETED]
621	621
622	622	ORGANIZATION DESCRIBED IN (B) OF THIS PARAGRAPH]; 1
623	623	* Sec. 32. AS 39.35.680(26) is amended to read: 2
624	624	(26) "normal retirement" means retirement for a member who is 3
625	625	eligible to receive benefits under AS 39.35.370(a) or (l) or [UNDER] 39.35.385(a) or 4
626	626	(f); 5
627	627	* Sec. 33. AS 39.35.720 is amended to read: 6
628	628	Sec. 39.35.720. Membership. Except as provided in AS 39.35.095, an [AN] 7
629	629	employee who becomes a member on or after July 1, 2006, shall participate in the plan 8
630	630	set out in AS 39.35.700 - 39.35.990. 9
631	631	* Sec. 34. AS 39.35.750 is amended by adding a new subsection to read: 10
632	632	(f) This section does not apply to contributions made under AS 39.35.255(j) 11
633	633	and does not require an employer who makes a contribution for an employee under 12
634	634	AS 39.35.255(j) to make another contribution for that employee. 13
635	635	* Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 14
636	636	read: 15
637	637	RETIREMENT PLAN ELECTION. (a) A peace officer or firefighter who was first 16
638	638	hired after June 30, 2006, and before the effective date of this section, and who is a member 17
639	639	of the defined contribution retirement plan of the public employees' retirement system under 18
640	640	AS 39.35.700 - 39.35.990, may, within 90 days after the effective date of this section, make a 19
641	641	one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 20
642	642	39.35.680 and to transfer all contributions that have been made or should be made to the 21
643	643	defined contribution retirement plan for service the member completes before the effective 22
644	644	date of the member's participation in the defined benefit retirement plan. The transferred 23
645	645	contributions shall be used to purchase credited service in the defined benefit retirement plan 24
646	646	on an actuarial equivalent basis determined by the Alaska Retirement Management Board 25
647	647	established under AS 37.10.210. 26
648	648	(b) In this section, "peace officer" or "firefighter" has the meaning given in 27
649	649	AS 39.35.680. 28
650	650	* Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 29
651	651	read: 30
652	652	RETIREMENT PLAN ELECTION PROCEDURE. (a) An election made under sec. 31 33-LS0259\A
653	653	HB 22 -20- HB0022a
654	654	New Text Underlined [DELETED TEXT BRACKETED]
655	655
656	656	35 of this Act to participate in the defined benefit retirement plan under AS 39.35.095 - 1
657	657	39.35.680 must be made in writing on one or more forms and in the manner prescribed by the 2
658	658	administrator. Before accepting an election to participate in the defined benefit retirement 3
659	659	plan, the administrator shall provide the employee who plans on making an election to 4
660	660	participate in the defined benefit retirement plan with information, including calculations to 5
661	661	illustrate the effect of moving the employee's retirement plan from the defined contribution 6
662	662	retirement plan to the defined benefit retirement plan as well as other information that informs 7
663	663	the employee of potential consequences of the employee's election. 8
664	664	(b) An election made under sec. 35 of this Act to participate in the defined benefit 9
665	665	retirement plan is irrevocable. On the effective date of the election, an eligible employee who 10
666	666	makes the election shall be enrolled as a member of the defined benefit retirement plan, and 11
667	667	the employee's participation in the plan shall be governed by the applicable provisions of the 12
668	668	defined benefit retirement plan. The employee's enrollment in the defined benefit retirement 13
669	669	plan is retroactive to the date of hire. An election made by an eligible employee who is 14
670	670	married is not effective unless the election is signed by the employee's spouse. 15
671	671	(c) When an eligible employee makes a one-time election under sec. 35 of this Act, 16
672	672	the administrator shall cause the total amount of the employee's employee and employer 17
673	673	contributions, with investment earnings and losses through the day of the employee's election 18
674	674	to participate as a member in the defined benefit retirement plan, to be actuarially calculated 19
675	675	and, subject to (e) of this section, transferred to the pension fund in the defined benefit 20
676	676	retirement plan. On the effective date of the employee's participation in the defined benefit 21
677	677	retirement plan, the employee shall be credited with service in the defined benefit retirement 22
678	678	plan that may be purchased under an actuarial equivalent purchase formula as determined by 23
679	679	the board. The board shall establish transfer procedures by regulation, but the actual transfer 24
680	680	may not occur later than 60 days after the date the administrator receives the employee's 25
681	681	completed forms under (a) of this section, unless the major financial markets for securities 26
682	682	available for a transfer are seriously disrupted by an unforeseen event that also causes the 27
683	683	suspension of trading on any national securities exchange in the country where the securities 28
684	684	were issued. In that event, the 60-day period may be extended by a resolution of the board. A 29
685	685	transfer is not commissionable or subject to other fees and may be in the form of cash or a
686	686	30
687	687	security as determined by the board. A security shall be valued on the date of receipt in the 31 33-LS0259\A
688	688	HB0022a -21- HB 22
689	689	New Text Underlined [DELETED TEXT BRACKETED]
690	690
691	691	employee's account. 1
692	692	(d) When making a transfer for an eligible employee under (c) of this section, the 2
693	693	administrator shall cause an amount equal to the 3
694	694	(1) decrease in the accrued actuarial liability of the occupational death and 4
695	695	disability trust in the defined contribution retirement plan resulting from the transfer as of the 5
696	696	date of transfer, based on the most recent actuarial valuation of the occupational death and 6
697	697	disability trust, to be transferred from the occupational death and disability trust in the defined 7
698	698	contribution retirement plan to the pension fund in the defined benefit retirement plan; and 8
699	699	(2) increase in the accrued actuarial liability of the health care trust in the 9
700	700	defined benefit retirement plan resulting from the transfer as of the date of transfer, based on 10
701	701	the actuarial assumptions set out in (g) of this section, to be transferred from the trust 11
702	702	established under AS 39.30.097(b) for the prefunding of medical benefits provided by 12
703	703	AS 39.35.880 to the trust established under AS 39.30.097(a) for the prefunding of medical 13
704	704	benefits provided by AS 39.35.537. 14
705	705	(e) If the value actuarially calculated under (c) of this section is insufficient to pay for 15
706	706	service credit equal to the employee's actual service, the administrator shall allow the 16
707	707	employee the option of purchasing any indebtedness up to the amount needed to eliminate the 17
708	708	insufficiency; however, if that value exceeds the amount needed to pay for a service credit 18
709	709	equal to the employee's actual service, the administrator shall cause the excess to remain in 19
710	710	the employee's retirement plan established under AS 39.35.700 - 39.35.990. An excess under 20
711	711	this subsection may not be used to purchase service credit in a retirement plan administered 21
712	712	under AS 39.35. 22
713	713	(f) The amount of service that can be purchased under (e) of this section is based on 23
714	714	the transferred employee's accrued actuarial liability of pension benefits in the defined benefit 24
715	715	retirement plan. The actuarial assumptions under this section are based on the actuarial 25
716	716	assumptions set out in (g) of this section. 26
717	717	(g) Actuarial assumptions must be based on the most recent actuarial valuation of the 27
718	718	defined benefit retirement plan, except that the retirement rates are computed at 75 percent of 28
719	719	the retirement rates for peace officers and firefighters used in the most recent actuarial 29
720	720	valuation of the defined contribution retirement pension fund plus 25 percent of the retirement 30
721	721	rates for peace officers and firefighters used in the most recent actuarial valuation of the 31 33-LS0259\A
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724	724
725	725	defined benefit retirement plan. 1
726	726	(h) The provisions of this section are subject to the requirements of the Internal 2
727	727	Revenue Code and the limitations under AS 39.35.115, 39.35.678, 39.35.710(c) and (d), and 3
728	728	39.35.895. 4
729	729	(i) In this section, 5
730	730	(1) "administrator" means the commissioner of administration or the person 6
731	731	designated by the commissioner of administration under AS 39.35.003 for a public 7
732	732	employees' retirement plan; 8
733	733	(2) "board" means the Alaska Retirement Management Board established 9
734	734	under AS 37.10.210; 10
735	735	(3) "defined benefit retirement plan" means the retirement plan established 11
736	736	under AS 39.35.095 - 39.35.680 for a public employee; 12
737	737	(4) "defined contribution retirement plan" means the retirement plan 13
738	738	established under AS 39.35.700 - 39.35.990 for a public employee; 14
739	739	(5) "Internal Revenue Code" has the meaning given in AS 39.35.990. 15
740	740	* Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 16
741	741	read: 17
742	742	ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 18
743	743	may adopt regulations necessary to implement secs. 1 - 3 of this Act. Regulations adopted by 19
744	744	the Alaska Retirement Management Board under this Act relate to the internal management of 20
745	745	a state agency and are not subject to AS 44.62 (Administrative Procedure Act) under 21
746	746	AS 37.10.240. 22
747	747	(b) The commissioner of administration may adopt regulations necessary to 23
748	748	implement secs. 4 - 36 of this Act. Regulations adopted by the commissioner of 24
749	749	administration under this Act relate to the internal management of a state agency and are not 25
750	750	subject to AS 44.62 (Administrative Procedure Act) under AS 39.30.098 and AS 39.35.005. 26
751	751	(c) Regulations adopted under this section may not take effect before the effective 27
752	752	date of the law being implemented by the regulation. 28
753	753	* Sec. 38. Section 37 of this Act takes effect immediately under AS 01.10.070(c). 29
754	754	* Sec. 39. Except as provided in sec. 38 of this Act, this Act takes effect July 1, 2023. 30