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CS FOR SENATE BILL NO. 88(L&C)
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - FIRST SESSION
BY THE SENATE LABOR AND COMMERCE COMMITTEE
Offered: 5/1/23
Referred: Finance
Sponsor(s): SENATORS GIESSEL, Bishop, Stevens, Kiehl, Kawasaki, Tobin, Wielechowski, Gray-Jackson,
Dunbar, Claman
A BILL
FOR AN ACT ENTITLED
"An Act relating to the Public Employees' Retirement System of Alaska and the 1
teachers' retirement system; providing certain employees an opportunity to choose 2
between the defined benefit and defined contribution plans of the Public Employees' 3
Retirement System of Alaska and the teachers' retirement system; and providing for an 4
effective date." 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 6
* Section 1. AS 14.25.009 is repealed and reenacted to read: 7
Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 8
AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the 9
defined benefit retirement plan under AS 14.25.009 - 14.25.220 and are not members 10
of the defined contribution retirement plan under AS 14.25.310 - 14.25.590. 11
* Sec. 2. AS 14.25.040(a) is amended to read: 12
(a) A teacher or member contracting for service with a participating
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employer is subject to AS 14.25.009 - 14.25.220 unless the [UNLESS A] teacher or 1
member 2
(1) participates in a university retirement program under AS 14.40.661 3
- 14.40.799; 4
(2) became a member after June 30, 2006, and before July 1, 2024, 5
is eligible to participate in the defined contribution retirement plan under 6
AS 14.25.310 - 14.25.590, and does not elect to participate in the defined benefit 7
retirement plan under AS 14.25.009 - 14.25.220; or 8
(3) has elected under former AS 14.25.540 to participate in the plan 9
established in AS 14.25.310 - 14.25.590 and does not elect to participate in the 10
defined benefit retirement plan under AS 14.25.009 - 14.25.220 [, A TEACHER 11
OR MEMBER CONTRACTING FOR SERVICE WITH A PARTICIPATING 12
EMPLOYER IS SUBJECT TO AS 14.25.009 - 14.25.220]. 13
* Sec. 3. AS 14.25.040 is amended by adding new subsections to read: 14
(f) An active member of this plan who is also employed in a position in the 15
public employees' retirement plan under AS 39.35.095 - 39.35.680 may elect to 16
participate solely in this plan if 17
(1) the member directs the public employees' retirement plan employer 18
in writing to 19
(A) pay into this plan the employer contributions required for a 20
member under AS 14.25.009 - 14.25.220; and 21
(B) deduct from the member's salary and pay into this plan 22
(i) the employee contributions required for a member 23
under AS 14.25.009 - 14.25.220; and 24
(ii) an amount equal to the difference between the total 25
employer and state contributions required for a member under 26
AS 14.25.009 - 14.25.220 and the employer contributions that would be 27
required under AS 39.35.095 - 39.35.680 if the member participated in 28
that plan; and 29
(2) the member provides written notice to the administrator. 30
(g) An active member of this plan who elects to participate solely in this plan 31 33-LS0505\D
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under (f) of this section may not, while participating solely in this plan, receive 1
credited service for benefit eligibility for service performed in a position in the public 2
employees' retirement plan. 3
(h) A teacher who became a member after June 30, 2006, and before July 1, 4
2024, is subject to AS 14.25.009 - 14.25.220 and is not eligible to participate in the 5
defined contribution retirement plan established in AS 14.25.310 - 14.25.590 if the 6
teacher 7
(1) is not employed by an employer on July 1, 2024; 8
(2) is reemployed by an employer after July 1, 2024; and 9
(3) has, before the date of reemployment, received 10
(A) a distribution, other than a rollover distribution, of the 11
entire balance in the teacher's individual account in the defined contribution 12
retirement plan; or 13
(B) a rollover distribution of the entire balance in the teacher's 14
individual account in the defined contribution retirement plan under 15
AS 14.25.310 - 14.25.590 and has not within 120 days of reemployment had 16
all or part of a direct rollover distribution from an eligible retirement plan 17
owned by the teacher paid directly into the teacher's individual account under 18
AS 14.25.310 - 14.25.590. 19
* Sec. 4. AS 14.25 is amended by adding a new section to read: 20
Sec. 14.25.044. Election of defined benefit retirement plan by reemployed 21
teachers. (a) A teacher may make a one-time election to participate in the defined 22
benefit retirement plan under AS 14.25.009 - 14.25.220 if the teacher 23
(1) was first hired after June 30, 2006, and before July 1, 2024; 24
(2) is not employed by an employer on July 1, 2024; 25
(3) is reemployed by an employer after July 1, 2024; and 26
(4) before the date of reemployment, 27
(A) has not received a distribution of the entire balance in the 28
teacher's individual account under the defined contribution retirement plan 29
under AS 14.25.310 - 14.25.590; or 30
(B) has received a rollover distribution of the entire balance in 31 33-LS0505\D
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the teacher's individual account in the plan under AS 14.25.310 - 14.25.590 1
and has within 120 days of reemployment had all or part of a direct rollover 2
distribution from an eligible retirement plan owned by the teacher paid directly 3
into the teacher's individual account under AS 14.25.310 - 14.25.590. 4
(b) An election under (a) of this section may be made not more than 120 days 5
after the date of reemployment. A reemployed teacher electing to participate under (a) 6
of this section shall use the balance of the member's individual account in the plan 7
under AS 14.25.310 - 14.25.590, including any rollover contributions, to purchase 8
credited service in the plan under AS 14.25.009 - 14.25.220. An election made under 9
(a) of this section must be made in writing in the manner prescribed by the 10
administrator. An election made by a teacher who is married is not effective unless the 11
election is signed by the teacher's spouse. The administrator shall provide a teacher 12
who is eligible to make an election under (a) of this section with information about the 13
potential consequences of the teacher's election, including calculations to illustrate the 14
effect of moving the teacher's retirement plan from a defined contribution retirement 15
plan to a defined benefit retirement plan. 16
(c) An election made under (a) of this section to participate in the plan under 17
AS 14.25.009 - 14.25.220 is irrevocable. On the effective date of the election, the 18
teacher shall be enrolled as a member of the plan, and the teacher's participation in the 19
plan shall be governed by the applicable provisions of the plan. The teacher's 20
enrollment in the plan is retroactive to the date of hire. 21
(d) When a teacher makes an election under this section, the administrator 22
shall cause the total amount of the teacher's member and employer contributions to the 23
plan under AS 14.25.310 - 14.25.590, with investment earnings and losses through the 24
day of the teacher's election to participate as a member in the plan under AS 14.25.009 25
- 14.25.220, to be actuarially calculated and, subject to (f) of this section, transferred 26
to the retirement fund in the plan under AS 14.25.009 - 14.25.220. On the effective 27
date of the teacher's participation in the plan under AS 14.25.009 - 14.25.220, the 28
teacher shall be credited with service in the plan. The board shall determine the cost of 29
the teacher's actual service time based on the teacher's accrued actuarial liability of 30
pension benefits in the plan, and credit the teacher with service time equal to the value 31 33-LS0505\D
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actuarially calculated and transferred to the retirement fund in the plan under 1
AS 14.25.009 - 14.25.220. The board shall adopt regulations establishing transfer 2
procedures. The transfer may not occur later than 60 days after the date the 3
administrator receives the teacher's election, unless the major financial markets for 4
securities available for a transfer are seriously disrupted by an unforeseen event that 5
also causes the suspension of trading on any national securities exchange in the 6
country where the securities were issued. In that event, the 60-day period may be 7
extended by a resolution of the board. A transfer is not commissionable or subject to 8
other fees and may be in the form of cash or a security as determined by the board. A 9
security shall be valued on the date of receipt in the teacher's account. 10
(e) When making a transfer under (d) of this section, or for a reemployed 11
teacher entering the plan under AS 14.25.040(h), the administrator shall transfer an 12
amount equal to the decrease in the accrued actuarial liability of the death and 13
disability trust in the plan established under 14.25.310 - 14.25.590 resulting from the 14
transfer as of the date of transfer, based on the most recent actuarial valuation of the 15
death and disability trust, from the death and disability trust in the plan established 16
under 14.25.310 - 14.25.590 to the retirement fund in the plan under AS 14.25.009 - 17
14.25.220. 18
(f) If the value actuarially calculated under (d) of this section is insufficient to 19
pay for service credit equal to the teacher's actual service time, the administrator shall 20
allow the teacher the option of purchasing service credit in an amount up to the 21
amount needed to eliminate the insufficiency; however, if that value exceeds the 22
amount needed to pay for service credit equal to the teacher's actual service, the 23
administrator shall cause the excess to remain in the teacher's individual account in the 24
plan under AS 14.25.310 - 14.25.590. The excess may not be used to purchase 25
additional service credit in the plan under AS 14.25.009 - 14.25.220. When a 26
reemployed teacher enters the plan under AS 14.25.040(h), the administrator shall 27
allow the teacher to pay for a period of service credit up to the teacher's actual service. 28
When a teacher elects to purchase service credit under this section and does not 29
immediately pay for the service credit purchased, an indebtedness is established. 30
Interest as prescribed by regulation accrues on a teacher's indebtedness. Indebtedness 31 33-LS0505\D
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that exists at the time the teacher is appointed to retirement necessitates an actuarial 1
adjustment to the benefits payable due to service in the defined contribution retirement 2
plan. 3
(g) Actuarial assumptions about the plan under AS 14.25.009 - 14.25.220 4
must be based on the most recent actuarial valuation of the plan, except that the 5
retirement rates are computed at 25 percent of the retirement rates used in the most 6
recent actuarial valuation of the retirement fund plus 75 percent of the retirement rates 7
used in the most recent actuarial valuation of the plan under AS 14.25.310 - 14.25.590. 8
(h) The provisions of this section are subject to the requirements of the 9
Internal Revenue Code and the limitations under AS 14.25.010, 14.25.181, 10
14.25.320(c) and (d), and 14.25.490. 11
* Sec. 5. AS 14.25.048(b) is amended to read: 12
(b) An employee or former employee who first became a member of the 13
plan before July 1, 2006, may receive credit for retroactive membership service for 14
employment before June 5, 1988, if the employee or former employee met the 15
requirements listed in (a) of this section at the time of the employment. To receive 16
credit for the retroactive membership service, the employee or former employee shall 17
claim the service and pay the retroactive contributions required under former 18
AS 14.25.061. However, an employee or former employee may not receive retroactive 19
credit under this subsection if the employee received credited service under AS 39.35 20
for the employment. 21
* Sec. 6. AS 14.25.048(c) is amended to read: 22
(c) An employee or former employee who first became a member of the 23
plan before July 1, 2006, and who received credit under AS 39.35 for service that 24
qualifies under (a) of this section may elect to transfer those periods of employment to 25
the plan. To receive credit for retroactive membership service under this subsection, 26
the employee or former employee shall claim the service and pay the retroactive 27
contributions required under former AS 14.25.061. 28
* Sec. 7. AS 14.25.050(a) is amended to read: 29
(a) Except as provided in (c) and (e) of this section, beginning January 1, 30
1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 31 33-LS0505\D
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member's base salary accrued from July 1 to the following June 30. [THE 1
EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 2
SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 3
CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 4
CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 5
FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 6
APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 7
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 8
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 9
INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 10
EMPLOYER.] 11
* Sec. 8. AS 14.25.050 is amended by adding new subsections to read: 12
(e) A member who first participates in the plan after June 30, 2006, shall 13
contribute to the plan an amount equal to eight percent of the member's base salary 14
accrued from July 1 to the following June 30. The board may, from time to time, 15
adjust the contribution under this subsection to an amount that, 16
(1) if decreased, is not less than eight percent of the member's base 17
salary; and 18
(2) if increased, is not more than 12 percent of the member's base 19
salary. 20
(f) The employer shall deduct a contribution under this section from the 21
member's salary at the end of each payroll period, and the contribution shall be 22
credited by the plan to the member contribution account. The contributions shall be 23
deducted from member compensation before the computation of applicable federal 24
taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 25
member may not have the option of making the payroll deduction directly in cash 26
instead of having the contribution picked up by the employer. 27
(g) The board may increase the member contribution rate under (e) of this 28
section if the board determines that the portion of the liability of the plan that is 29
attributable to all members who first became members of the plan after June 30, 2006, 30
is funded below 90 percent. Before increasing the member contribution rate under (e) 31 33-LS0505\D
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of this section, the board shall determine an amount sufficient to address the plan's 1
past service liability attributable to all members who first became members of the plan 2
after June 30, 2006. An increase to the member contribution rate may raise not more 3
than 50 percent of the amount sufficient to address the plan's past service liability 4
attributable to all members who first became members of the plan after June 30, 2006. 5
The board may decrease the rate under (e) of this section if the board determines that 6
the portion of the liability of the plan that is attributable to all members who first 7
became members of the plan after June 30, 2006, is funded above 90 percent. 8
* Sec. 9. AS 14.25.065(b) is amended to read: 9
(b) The contributions of employers under AS 14.25.070 must be transmitted to 10
the plan for deposit in the retirement fund and the Alaska retiree health care trust at the 11
close of each pay period. If the contributions are not submitted within the prescribed 12
time limit, interest must be assessed on the outstanding contributions at [ONE AND 13
ONE-HALF TIMES] the most recent actuarially determined rate of earnings for the 14
plan from the date that contributions were originally due. Amounts due from an 15
employer and interest as prescribed in this section may be claimed by the 16
administrator from any agency of the state or political subdivision that has in its 17
possession funds of the employer or that is authorized to disburse funds to the 18
employer that are not restricted by statute or appropriation to a specific purpose. The 19
amount claimed shall be certified by the administrator as sufficient to pay the 20
contributions and interest due from the employer. The amount claimed shall be 21
submitted to the administrator for deposit in the retirement fund and the Alaska retiree 22
health care trust. 23
* Sec. 10. AS 14.25.070(a) is amended to read: 24
(a) Each employer shall contribute to the system every payroll period the 25
lesser of 26
(1) an amount calculated by applying a rate of 12.56 percent to the 27
total of all base salaries paid by the employer to active members of the system and to 28
members who are retired from the plan and reemployed under AS 14.20.136, 29
including any adjustments to contributions required by AS 14.25.173(a); or 30
(2) an amount calculated by applying a rate established by the 31 33-LS0505\D
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board under AS 37.10.220 to the total of all base salaries paid by the employer to 1
active members of the system and to members who are retired from the plan and 2
reemployed under AS 14.20.136, including any adjustments to contributions 3
required by AS 14.25.173(a); the rate must be at least 12 percent and be sufficient 4
to pay the actuarially determined employer normal cost, all contributions 5
required under AS 14.25.350 and AS 39.30.370, and past service cost for 6
members of the system. 7
* Sec. 11. AS 14.25.070 is amended by adding a new subsection to read: 8
(i) If the legislature appropriates funds for the purpose of decreasing an 9
employer's contribution, the employer's contribution under (a) of this section shall 10
decrease by that amount. 11
* Sec. 12. AS 14.25.075(a) is amended to read: 12
(a) An employee who is eligible to purchase credited service under 13
AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 14
under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 15
[14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligible to purchase credited 16
service under AS 14.20.345, AS 14.25.044, 14.25.050 [AS 14.25.050], or 14.25.105, 17
in lieu of making payments directly to the plan, may elect to have the member's 18
employer make payments as provided in this section. 19
* Sec. 13. AS 14.25.075(b) is amended to read: 20
(b) A member may elect to have the employer make payments for all or any 21
portion of the amounts payable for the member's purchase of credited service through 22
a salary reduction program as follows: 23
(1) the amounts paid under a salary reduction program are in lieu of 24
contributions by the member making the election; the electing member's salary or 25
other compensation shall be reduced by the amount paid by the employer under this 26
subsection; 27
(2) the member shall make an irrevocable election under this 28
subsection to purchase credited service as permitted in former AS 14.25.061 or in 29
AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 30
14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107 before the member's 31 33-LS0505\D
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termination of employment; the irrevocable election must specify the number of 1
payroll periods that deductions will be made from the member's compensation and the 2
dollar amount of deductions for each payroll period during the specified number of 3
payroll periods; the deductions made under this paragraph cease upon the earlier of the 4
member's termination of employment with the employer or the member's death; 5
amounts paid by an employer under (f) of this section may not be applied toward the 6
payment of the dollar amount of the deductions representing the portion of the credited 7
service that is being purchased by the member through payroll deduction in 8
accordance with the member's irrevocable election under this paragraph; 9
(3) amounts paid by an employer under this subsection shall be treated 10
as employer contributions for the purpose of determining tax treatment under 26 11
U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 12
may not be included in the member's gross income for income tax purposes until those 13
amounts are distributed by refund or retirement benefit payments. 14
* Sec. 14. AS 14.25.075(i) is amended to read: 15
(i) On satisfaction of the eligibility requirements of former AS 14.25.061 or 16
of AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 17
14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107, the requirements of this 18
section, and the administrative filing requirements specified by the administrator, the 19
plan shall adjust the member's credited service history and add any additional service 20
credits acquired. 21
* Sec. 15. AS 14.25 is amended by adding a new section to read: 22
Sec. 14.25.086. Contributions for member who first became a member 23
after June 30, 2006. Contributions made by an employer under AS 14.25.070 and 24
14.25.085 for a member who first became a member after June 30, 2006, other than 25
contributions separately computed for medical benefits under AS 14.25.087, and the 26
member's contribution account must be deposited in a sub-trust of the retirement fund 27
established by the board. 28
* Sec. 16. AS 14.25.087 is amended to read: 29
Sec. 14.25.087. Contributions for medical benefits. Contributions made by 30
an employer under AS 14.25.070 and 14.25.085 must [SHALL] be separately 31 33-LS0505\D
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computed for benefits provided by AS 14.25.168, 14.25.171, and AS 39.30.400. The 1
contributions computed for benefits provided under 2
(1) AS 14.25.168 must [AND SHALL] be deposited in the Alaska 3
retiree health care trust established under AS 39.30.097(a); 4
(2) AS 14.25.171 must be deposited in the Alaska retiree health 5
care trust established under AS 39.30.097(b); and 6
(3) AS 39.30.400 must be deposited in the teachers' and public 7
employees' retiree health reimbursement arrangement plan trust fund 8
established under AS 39.30.340. 9
* Sec. 17. AS 14.25.110(a) is amended to read: 10
(a) Subject to AS 14.25.167, 11
(1) a member who first became a member of the plan before July 1, 12
2006, is eligible for a normal retirement benefit if the member 13
(A) [(1)] was first hired before July 1, 1975, has attained the 14
age of 55 years, and has at least 15 years of credited service, the last five of 15
which have been membership service, or is otherwise vested in the plan; 16
(B) [(2)] has attained the age of 60 years and has at least eight 17
years of membership service; 18
(C) [(3)] has attained the age of 60 years, has at least five years 19
of membership service, and has Alaska BIA service which, when added to the 20
membership service, will equal at least eight years; 21
(D) [(4)] has at least 25 years of credited service, the last five 22
of which have been membership service; 23
(E) [(5)] has at least 20 years of membership service; 24
(F) [(6)] has at least 20 years of combined membership service 25
and Alaska BIA service, the last five of which have been membership service; 26
or 27
(G) [(7)] has, for each of 20 school years, 28
(i) [(A)] at least one-half year of membership service as 29
a part-time teacher; 30
(ii) [(B)] one full year of membership service as a full-31 33-LS0505\D
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time teacher; or 1
(iii) [(C)] any combination of service qualified under 2
this subparagraph; 3
(2) a member who first became a member of the plan after 4
June 30, 2006, is eligible for a normal retirement benefit if the member 5
(A) has attained the age of 60 years and has at least five 6
years of membership service; or 7
(B) has at least 30 years of membership service 8
[PARAGRAPH]. 9
* Sec. 18. AS 14.25.110(b) is amended to read: 10
(b) Subject to AS 14.25.167, a member is eligible for an early retirement 11
benefit upon completing the service requirements in (a)(1)(A) [(a)(1)] of this section 12
and attaining the age of 50 years or upon completing the service requirements in 13
(a)(1)(B) or (C) [(a)(2) OR (3)] of this section and attaining the age of 55 years. 14
* Sec. 19. AS 14.25.110(d) is amended to read: 15
(d) The monthly amount of a retirement benefit 16
(1) for a member who first became a member of the plan before 17
July 1, 2006, and who has paid the full amount of any indebtedness is one-twelfth of 18
the member's average base salary during any three school years of membership service 19
multiplied by 20
(A) [(1)] two percent of the years of credited service earned 21
before June 30, 1990, including credited fractional years, and the years of 22
credited service through a total of 20 years; plus 23
(B) [(2)] two and one-half percent of the years of credited 24
service earned after June 30, 1990, that are more than 20 years of total credited 25
service; 26
(2) for a member who first became a member of the plan after 27
June 30, 2006, and who has paid the full amount of any indebtedness is one-28
twelfth of the member's average base salary during any five school years of 29
membership service multiplied by 30
(A) two percent of the years of credited service through a 31 33-LS0505\D
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total of 10 years; plus 1
(B) two and one-quarter percent of the years over 10 years 2
of total credited service through 20 years; plus 3
(C) two and one-half percent of the years of credited service 4
that are more than 20 years of total credited service. 5
* Sec. 20. AS 14.25.142(a) is amended to read: 6
(a) While residing in the state, a person who first became a member of the 7
plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220, 8
and who is at least 65 years of age or a person who first became a member of the 9
plan before July 1, 2006, and who is receiving a disability benefit under 10
AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost-of-living allowance in 11
addition to the basic benefit. The amount of this allowance is 10 percent of the basic 12
benefit. 13
* Sec. 21. AS 14.25.143(a) is amended to read: 14
(a) Once each year, the administrator shall increase benefit payments to 15
eligible disabled members, to persons age 60 or older receiving benefits under this 16
plan in the preceding calendar year, and to persons who have received benefits under 17
this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 18
under this section. 19
* Sec. 22. AS 14.25.143(b) is amended to read: 20
(b) Subject to (g) and (h) of this section, the [THE] increase in benefit 21
payments applies to total benefit payments except for the cost-of-living allowance 22
under AS 14.25.142. The amount of the increase is a percentage of the current benefit 23
equal to 24
(1) the lesser of 75 percent of the increase in the cost of living in the 25
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 26
years old and for members receiving disability benefits; and 27
(2) the lesser of 50 percent of the increase in the cost of living in the 28
preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 29
less than 65 years old or for recipients who on July 1 are less than 60 years old but 30
who have received benefits from the plan for at least eight years. 31 33-LS0505\D
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* Sec. 23. AS 14.25.143 is amended by adding new subsections to read: 1
(g) Subject to (h) of this section, the amount of an increase for members who 2
first became members of the plan after June 30, 2006, and do not meet the eligibility 3
requirements for a permanent fund dividend in effect on July 1, 2024, under 4
AS 43.23.005(a) is equal to one-half of the applicable percentage under (b) of this 5
section. 6
(h) If the board determines that the portion of the liability of the plan that is 7
attributable to all members who first became members of the plan after June 30, 2006, 8
is funded below 90 percent, the board may reduce the amount of the increase 9
determined under (b) or (g) of this section that is payable to a member who first 10
became a member after June 30, 2006. At any time, the board may terminate a 11
reduction made under this subsection. 12
* Sec. 24. AS 14.25.168(a) is amended to read: 13
(a) Except as provided in AS 14.25.171 and (c) of this section, the following 14
persons are entitled to major medical insurance coverage under this section: 15
(1) for teachers first hired before July 1, 1990, 16
(A) a teacher who is receiving a monthly benefit from the plan 17
and who has elected coverage; 18
(B) the spouse and dependent children of the teacher described 19
in (A) of this paragraph; 20
(C) the surviving spouse of a deceased teacher who is receiving 21
a monthly benefit from the plan and who has elected coverage; 22
(D) the dependent children of a deceased teacher who are 23
dependent on the surviving spouse described in (C) of this paragraph; 24
(2) for teachers first hired [ON OR] after June 30 [JULY 1], 1990, 25
(A) a teacher who is receiving a monthly benefit from the plan 26
and who has elected coverage for the teacher; 27
(B) the spouse of the teacher described in (A) of this paragraph 28
if the teacher elected coverage for the spouse; 29
(C) the dependent children of the teacher described in (A) of 30
this paragraph if the teacher elected coverage for the dependent children; 31 33-LS0505\D
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(D) the surviving spouse of a deceased teacher who is receiving 1
a monthly benefit from the plan and who has elected coverage; 2
(E) the dependent children of a deceased teacher who are 3
dependent on the surviving spouse described in (D) of this paragraph if the 4
surviving spouse has elected coverage for the dependent children. 5
* Sec. 25. AS 14.25 is amended by adding a new section to read: 6
Sec. 14.25.171. Medical benefit; eligibility of employees first hired after 7
June 30, 2006; surviving spouses and dependents. (a) A teacher who first became a 8
member of the plan after June 30, 2006, receives a monthly benefit from the plan, 9
retired directly from the plan, and has elected benefits under this section is entitled to 10
medical benefits under this section. A member who applies for medical benefits under 11
this section shall apply on the forms and in the manner prescribed by the 12
administrator. A member is eligible to retire from the plan if the member has been an 13
active member for at least 12 months before application for retirement and the member 14
(1) has at least 30 years of service; or 15
(2) reaches the age set for Medicare eligibility and has at least 10 years 16
of service. 17
(b) The member's surviving spouse is eligible to elect medical benefits if the 18
member had retired or was eligible for retirement and medical benefits at the time of 19
the member's death. 20
(c) The medical benefits available to eligible persons are access to the retiree 21
major medical insurance plan and access to the health reimbursement arrangement 22
plan under AS 39.30.300. Access to the retiree major medical insurance plan means 23
that an eligible person may not be denied insurance coverage except for failure to pay 24
the required premium. 25
(d) Retiree major medical insurance plan coverage elected by an eligible 26
member under this section covers the eligible member, the spouse of the eligible 27
member, and the dependent children of the eligible member. 28
(e) Retiree major medical insurance plan coverage elected by a surviving 29
spouse of an eligible member under this section covers the surviving spouse and the 30
dependent children of the eligible member who are dependent on the surviving spouse. 31 33-LS0505\D
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(f) Participation in the retiree major medical insurance plan is not required in 1
order to participate in the health reimbursement arrangement plan. 2
(g) A person eligible for medical benefits under this section is not required to 3
participate in the health reimbursement arrangement plan in order to participate in the 4
retiree major medical insurance plan. 5
(h) A person who is eligible for medical benefits under this section must make 6
the irrevocable election to participate or not participate in the retiree major medical 7
insurance plan on or before the date the person reaches 70 1/2 years of age or when the 8
person applies for retirement and medical benefits, whichever is later. 9
(i) Major medical insurance coverage takes effect on the first day of the month 10
following the date of the administrator's approval of the election and stops when the 11
person who elects coverage dies or fails to make a required premium payment. 12
(j) The coverage for persons 65 years of age or older is the same as that 13
available for persons under 65 years of age. The benefits payable to those persons 65 14
years of age or older supplement any benefits provided under the federal old age, 15
survivors, and disability insurance program. 16
(k) The medical and optional insurance premiums owed by the person who 17
elects coverage may be deducted from the health reimbursement arrangement plan. If 18
the amount of the health reimbursement arrangement plan becomes insufficient to pay 19
the premiums, the person who elects coverage under (a) of this section shall pay the 20
premiums directly. 21
(l) The cost of premiums for retiree major medical insurance coverage under 22
this section for an eligible member or surviving spouse who is 23
(1) not eligible for Medicare is an amount equal to the full monthly 24
group premiums for retiree major medical insurance coverage; 25
(2) eligible for Medicare is the following percentage of the premium 26
amounts established for retirees who are eligible for Medicare: 27
(A) 30 percent if the member had 10 or more, but less than 15, 28
years of service; 29
(B) 25 percent if the member had 15 or more, but less than 20, 30
years of service;
31 33-LS0505\D
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(C) 20 percent if the member had 20 or more, but less than 25, 1
years of service; 2
(D) 15 percent if the member had 25 or more, but less than 30, 3
years of service; 4
(E) 10 percent if the member had 30 or more years of service. 5
(m) The eligibility for retiree major medical insurance coverage for an 6
alternate payee under a qualified domestic relations order shall be determined based 7
on the eligibility of the member to elect coverage. The alternate payee shall pay the 8
full monthly premium for retiree major medical insurance coverage. 9
(n) The administrator shall 10
(1) inform a person entitled to retiree major medical insurance 11
coverage under this section in writing 12
(A) that the health insurance coverage available to retired 13
members may be different from the health insurance coverage provided to 14
employees; 15
(B) of time limits for selecting optional health insurance 16
coverage; and 17
(C) whether the election is irrevocable; and 18
(2) require that a person entitled to retiree major medical insurance 19
coverage under this section indicate in writing on a form provided by the administrator 20
whether the person has chosen to receive optional health insurance coverage. 21
(o) The monthly group premiums for retiree major medical insurance coverage 22
under this section are established by the administrator in accordance with 23
AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 24
(a) of this section a monthly group premium rate for retiree major medical insurance 25
coverage other than the premium in effect for the month in which the premium is due 26
for coverage for that month. 27
(p) In this section, "health reimbursement arrangement plan" means the State 28
of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 29
Arrangement Plan established in AS 39.30.300. 30
* Sec. 26. AS 14.25.220(5) is amended to read: 31 33-LS0505\D
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(5) "average base salary" means, 1
(A) for a teacher who first became a member before July 1, 2
2006, the result obtained by dividing the sum of the member's three highest 3
years' base salary by three, or if a member does not have three years base 4
salary, then by dividing the sum of all base salaries by the number of years of 5
base salary; the base salary for a year in which credit is granted for disability 6
totaling more than one-third of a year may not be used in the computation of 7
the average base salary; the base salary in a school year for which the member 8
receives compensation for less than two-thirds of a year may not be used in the 9
computation of the average base salary; if compensation is received for more 10
than two-thirds of a year, the full base salary for that school year shall be used 11
in the computation of the average base salary; 12
(B) for a teacher who first became a member after June 30, 13
2006, the result obtained by dividing the sum of the member's five highest 14
years' base salary by five, or if a member does not have five years' base 15
salary, then by dividing the sum of all base salaries by the number of 16
years of base salary; the base salary for a year in which credit is granted 17
for disability totaling more than one-third of a year may not be used in the 18
computation of the average base salary; the base salary in a school year 19
for which the member receives compensation for less than two-thirds of a 20
year may not be used in the computation of the average base salary; if 21
compensation is received for more than two-thirds of a year, the full base 22
salary for that school year shall be used in the computation of the average 23
base salary; 24
* Sec. 27. AS 14.25.220(6) is amended to read: 25
(6) "base salary" 26
(A) means the total remuneration payable under contract for a 27
full year of membership service, including addenda to the contract and, for a 28
member who elects to participate solely in this plan under AS 14.25.040(f), 29
remuneration paid by the public employees' retirement plan employer, 30
but, for a member first hired on or after July 1, 1996, does not include 31 33-LS0505\D
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remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17); 1
(B) has the same meaning as "compensation" under 2
AS 39.35.680(9) when applied to a state legislator who elects membership 3
under AS 14.25.040(b); 4
* Sec. 28. AS 14.25.220(46) is amended to read: 5
(46) "vested member" or "vested teacher" means an active member 6
who [HAS COMPLETED EITHER] 7
(A) first became a member before July 1, 2006, and has 8
completed 9
(i) 15 years of service, the last five of which have been 10
membership service, for a member first hired before July 1, 1975; 11
(ii) [(B)] eight years of membership service; 12
(iii) [(C)] five years of membership and three years of 13
BIA service; or 14
(iv) [(D)] 12 school years of part-time membership 15
service or 12 school years in each of which the member earned either 16
part-time or full-time membership service; 17
(B) first became a member after June 30, 2006, and has 18
completed five years of membership service; 19
* Sec. 29. AS 14.25.220 is amended by adding a new paragraph to read: 20
(48) "first became a member after June 30, 2006" includes a member 21
who elected under former AS 14.25.540 to participate in the defined contribution 22
retirement plan under AS 14.25.310 - 14.25.590 and who elects to participate in the 23
defined benefit retirement plan under AS 14.25.009 - 14.25.220. 24
* Sec. 30. AS 14.25.310 is amended to read: 25
Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 26
AS 14.25.310 - 14.25.590 apply only to 27
(1) teachers who first become members [ON OR] after June 30, 2006, 28
and before July 1, 2024, and who are eligible but do not elect to participate in a 29
defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 30
39.35.680; and 31 33-LS0505\D
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(2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 1
EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 2
DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 3
- 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBER S] 4
who transferred [TRANSFER] into the defined contribution retirement plan under 5
former AS 14.25.540 and do not elect to participate in the defined benefit 6
retirement plan under AS 14.25.009 - 14.25.220. 7
* Sec. 31. AS 14.25.310 is amended by adding a new subsection to read: 8
(b) An employer that participates in the plan shall also participate in the 9
defined benefit retirement plan under AS 14.25.009 - 14.25.220. 10
* Sec. 32. AS 14.25.330(a) is amended to read: 11
(a) A teacher who first becomes a member [ON OR] after June 30, 2006, and 12
before July 1, 2024, and who does not participate in a defined benefit retirement 13
plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, 14
SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contribution 15
retirement plan. 16
* Sec. 33. AS 14.25.490(a) is amended to read: 17
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 18
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 19
time, in whole or in part, including the right to make retroactive amendments referred 20
to in 26 U.S.C. 401(b). 21
* Sec. 34. AS 14.25.490(b) is amended to read: 22
(b) The plan administrator may not modify or amend the plan retroactively [IN 23
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 24
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 25
MADE] before the modification or amendment except to the extent that the reduction 26
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 27
Revenue Code. 28
* Sec. 35. AS 14.25.490(c) is amended to read: 29
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 30
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 31 33-LS0505\D
SB0088B -21- CSSB 88(L&C)
New Text Underlined [DELETED TEXT BRACKETED]
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 1
is terminated, all investments at the time of termination remain in force until all 2
individual accounts have been completely distributed under the plan. After [, AND, 3
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 4
employer. 5
* Sec. 36. AS 14.25.490(d) is repealed and reenacted to read: 6
(d) Within one year after determining that a contribution to the plan by an 7
employer was the result of a mistake of fact, the administrator shall return the 8
contribution to the employer. 9
* Sec. 37. AS 37.10.220(a) is amended to read: 10
(a) The board shall 11
(1) hold regular and special meetings at the call of the chair or of at 12
least five members; meetings are open to the public, and the board shall keep a full 13
record of all its proceedings; 14
(2) after reviewing recommendations from the Department of 15
Revenue, adopt investment policies for each of the funds entrusted to the board; 16
(3) determine the appropriate investment objectives for the defined 17
benefit plans established under the teachers' retirement system under AS 14.25 and the 18
public employees' retirement system under AS 39.35; 19
(4) assist in prescribing the policies for the proper operation of the 20
systems and take other actions necessary to carry out the intent and purpose of the 21
systems in accordance with AS 37.10.210 - 37.10.390; 22
(5) provide a range of investment options and establish the rules by 23
which participants can direct their investments among those options with respect to 24
accounts established under 25
(A) AS 14.25.340 - 14.25.350 (teachers' retirement system 26
defined contribution individual accounts); 27
(B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 28
Annuity Plan); 29
(C) AS 39.35.730 - 39.35.750 (public employees' retirement 30
system defined contribution individual accounts); and 31 33-LS0505\D
CSSB 88(L&C) -22- SB0088B
New Text Underlined [DELETED TEXT BRACKETED]
(D) AS 39.45.010 - 39.45.060 (public employees' deferred 1
compensation program); 2
(6) establish the rate of interest that shall be annually credited to each 3
member's individual contribution account in accordance with AS 14.25.145 and 4
AS 39.35.100 and the rate of interest that shall be annually credited to each member's 5
account in the health reimbursement arrangement plan under AS 39.30.300 - 6
39.30.495; the rate of interest shall be adopted on the basis of the probable effective 7
rate of interest on a long-term basis, and the rate may be changed from time to time; 8
(7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 9
(8) coordinate with the retirement system administrator to have an 10
annual actuarial valuation of each retirement system prepared to determine system 11
assets, accrued liabilities, and funding ratios and to certify to the appropriate 12
budgetary authority of each employer in the system 13
(A) an appropriate contribution rate for normal costs; [AND] 14
(B) an appropriate contribution rate for liquidating any past 15
service liability; in this subparagraph, the appropriate contribution rate for 16
liquidating the past service liability of the defined benefit retirement plan under 17
AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 18
retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level 19
percent of pay method based on amortization of the past service liability for a 20
closed term of 25 years; 21
(C) an appropriate monthly employer contribution rate 22
under AS 14.25.070 and AS 39.35.255; and 23
(D) appropriate adjustments, if any, under AS 14.25.050(e) 24
and AS 39.35.160(e); 25
(9) review actuarial assumptions prepared and certified by a member 26
of the American Academy of Actuaries and conduct experience analyses of the 27
retirement systems not less than once every four years, except for health cost 28
assumptions, which shall be reviewed annually; the results of all actuarial assumptions 29
prepared under this paragraph shall be reviewed and certified by a second member of 30
the American Academy of Actuaries before presentation to the board; 31 33-LS0505\D
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(10) contract for an independent audit of the state's actuary not less 1
than once every four years; 2
(11) contract for an independent audit of the state's performance 3
consultant not less than once every four years; 4
(12) obtain an external performance review to evaluate the investment 5
policies of each fund entrusted to the board and report the results of the review to the 6
appropriate fund fiduciary; 7
(13) by the first day of each regular legislative session, report to the 8
governor, the legislature, and the individual employers participating in the state's 9
retirement systems on the financial condition of the systems in regard to 10
(A) the valuation of trust fund assets and liabilities; 11
(B) current investment policies adopted by the board; 12
(C) a summary of assets held in trust listed by the categories of 13
investment; 14
(D) the income and expenditures for the previous fiscal year; 15
(E) the return projections for the next calendar year; 16
(F) one-year, three-year, five-year, and 10-year investment 17
performance for each of the funds entrusted to the board; and 18
(G) other statistical data necessary for a proper understanding 19
of the financial status of the systems; 20
(14) submit quarterly updates of the investment performance reports to 21
the Legislative Budget and Audit Committee; 22
(15) develop an annual operating budget; [AND] 23
(16) administer pension forfeitures required under AS 37.10.310 using 24
the procedures of AS 44.62 (Administrative Procedure Act); 25
(17) establish one or more sub-trusts of the pension fund to hold 26
employer contributions, employee contributions, assets, and earnings attributable 27
to members of the defined benefit retirement plan under AS 14.25.009 - 14.25.220 28
or the defined benefit retirement plan under AS 39.35.095 - 39.35.680 who first 29
became members of the respective plan after June 30, 2006; and 30
(18) account for and track employer contributions, employee 31 33-LS0505\D
CSSB 88(L&C) -24- SB0088B
New Text Underlined [DELETED TEXT BRACKETED]
contributions, assets, and earnings in each trust fund or sub-trust attributable to 1
members who first became members after June 30, 2006, of the defined benefit 2
retirement plan under AS 14.25.009 - 14.25.220 and members who first became 3
members after June 30, 2006, of the defined benefit retirement plan under 4
AS 39.35.095 - 39.35.680; employer contributions that exceed those assigned to 5
members who first became members after June 30, 2006, of the defined benefit 6
retirement plan under AS 14.25.009 - 14.25.220 and members who first became 7
members after June 30, 2006, of the defined benefit retirement plan under 8
AS 39.35.095 - 39.35.680 shall be transferred or retained in trusts or sub-trusts 9
with liability allocated toward employer normal costs for members who became 10
members of the respective defined benefit retirement plan before July 1, 2024, 11
past service costs, the State of Alaska Teachers' and Public Employees' Retiree 12
Health Reimbursement Arrangement Plan under AS 39.30.300 - 39.30.495, and 13
employer contributions under AS 14.25.350 and AS 39.35.750. 14
* Sec. 38. AS 37.10.220(b) is amended to read: 15
(b) The board may 16
(1) employ outside investment advisors to review investment policies; 17
(2) enter into an agreement with the fiduciary of another state fund in 18
order to assume the management and investment of those assets; 19
(3) contract for other services necessary to execute the board's powers 20
and duties; 21
(4) enter into confidentiality agreements that would exempt records 22
from AS 40.25.110 and 40.25.120 if the records contain information that could affect 23
the value of investment by the board or that could impair the ability of the board to 24
acquire, maintain, or dispose of investments; 25
(5) adjust the amount of the increase in benefits payable to a 26
member who first became a member after June 30, 2006, as provided under 27
AS 14.25.143 and AS 39.35.475; 28
(6) adjust contribution rates under AS 14.25.050(e) and 29
AS 39.35.160(e). 30
* Sec. 39. AS 39.30.090(a) is amended to read: 31 33-LS0505\D
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New Text Underlined [DELETED TEXT BRACKETED]
(a) The Department of Administration may obtain a policy or policies of group 1
insurance covering state employees, persons entitled to coverage under AS 14.25.168, 2
14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 3
AS 39.37.145, employees of other participating governmental units, or persons 4
entitled to coverage under AS 23.15.136, subject to the following conditions: 5
(1) a group insurance policy shall provide one or more of the following 6
benefits: life insurance, accidental death and dismemberment insurance, weekly 7
indemnity insurance, hospital expense insurance, surgical expense insurance, dental 8
expense insurance, audiovisual insurance, or other medical care insurance; 9
(2) each eligible employee of the state, the spouse and the unmarried 10
children chiefly dependent on the eligible employee for support, and each eligible 11
employee of another participating governmental unit shall be covered by the group 12
policy, unless exempt under regulations adopted by the commissioner of 13
administration; 14
(3) a governmental unit may participate under a group policy if 15
(A) its governing body adopts a resolution authorizing 16
participation and payment of required premiums; 17
(B) a certified copy of the resolution is filed with the 18
Department of Administration; and 19
(C) the commissioner of administration approves the 20
participation in writing; 21
(4) in procuring a policy of group health or group life insurance as 22
provided under this section or excess loss insurance as provided in AS 39.30.091, the 23
Department of Administration shall comply with the dual choice requirements of 24
AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 25
transact business in the state under AS 21.09, a hospital or medical service corporation 26
authorized to transact business in this state under AS 21.87, or a health maintenance 27
organization authorized to operate in this state under AS 21.86; an excess loss 28
insurance policy may be obtained from a life or health insurer authorized to transact 29
business in this state under AS 21.09 or from a hospital or medical service corporation 30
authorized to transact business in this state under AS 21.87; 31 33-LS0505\D
CSSB 88(L&C) -26- SB0088B
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(5) the Department of Administration shall make available bid 1
specifications for desired insurance benefits or for administration of benefit claims and 2
payments to (A) all insurance carriers authorized to transact business in this state 3
under AS 21.09 and all hospital or medical service corporations authorized to transact 4
business under AS 21.87 who are qualified to provide the desired benefits; and (B) 5
insurance carriers authorized to transact business in this state under AS 21.09, hospital 6
or medical service corporations authorized to transact business under AS 21.87, and 7
third-party administrators licensed to transact business in this state and qualified to 8
provide administrative services; the specifications shall be made available at least once 9
every five years; the lowest responsible bid submitted by an insurance carrier, hospital 10
or medical service corporation, or third-party administrator with adequate servicing 11
facilities shall govern selection of a carrier, hospital or medical service corporation, or 12
third-party administrator under this section or the selection of an insurance carrier or a 13
hospital or medical service corporation to provide excess loss insurance as provided in 14
AS 39.30.091; 15
(6) if the aggregate of dividends payable under the group insurance 16
policy exceeds the governmental unit's share of the premium, the excess shall be 17
applied by the governmental unit for the sole benefit of the employees; 18
(7) a person receiving benefits under AS 14.25.110, AS 22.25, 19
AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 20
effect under this section at the time of termination of employment with the state or 21
participating governmental unit; 22
(8) a person electing to have insurance under (7) of this subsection 23
shall pay the cost of this insurance; 24
(9) for each permanent part-time employee electing coverage under 25
this section, the state shall contribute one-half the state contribution rate for permanent 26
full-time state employees, and the permanent part-time employee shall contribute the 27
other one-half; 28
(10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 29
or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 30
and eligible dependents under this section; the level of coverage for persons over 65 31 33-LS0505\D
SB0088B -27- CSSB 88(L&C)
New Text Underlined [DELETED TEXT BRACKETED]
shall be the same as that available before reaching age 65 except that the benefits 1
payable shall be supplemental to any benefits provided under the federal old age, 2
survivors, and disability insurance program; a person electing to have insurance under 3
this paragraph shall pay the cost of the insurance; the commissioner of administration 4
shall adopt regulations implementing this paragraph; 5
(11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 6
or former AS 39.37 may obtain long-term care insurance for that person and eligible 7
dependents under this section; a person who elects insurance under this paragraph 8
shall pay the cost of the insurance premium; the commissioner of administration shall 9
adopt regulations to implement this paragraph; 10
(12) each licensee holding a current operating agreement for a vending 11
facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 12
applies to governmental units other than the state. 13
* Sec. 40. AS 39.30.097(b) is amended to read: 14
(b) The commissioner of administration is authorized to prefund medical 15
benefits provided by AS 14.25.171, 14.25.480 [AS 14.25.480], AS 39.30.300, 16
AS 39.35.537, and 39.35.880 [AS 39.35.880] by establishing an irrevocable trust that 17
is exempt from federal income tax under 26 U.S.C. 115 and subject to the applicable 18
financial reporting, disclosure, and actuarial requirements of the Governmental 19
Accounting Standards Board. 20
* Sec. 41. AS 39.30.300 is amended to read: 21
Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 22
Health Reimbursement Arrangement Plan established. The State of Alaska 23
Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 24
established for 25
(1) teachers who first become members of the [DEFINED 26
CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 - 27
14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], 28
and teachers who elected under former AS 14.25.540 to participate in the plan 29
under AS 14.25.310 - 14.25.590; and 30
(2) employees of the state, political subdivisions of the state, and 31 33-LS0505\D
CSSB 88(L&C) -28- SB0088B
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public organizations of the state who first become members [OF THE DEFINED 1
CONTRIBUTION PLAN] of the Public Employees' Retirement System of Alaska 2
(AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER 3
AS 39.35.700 - 39.35.990 ON OR] after June 30, 2006, and employees of the state, 4
political subdivisions of the state, and public organizations of the state who 5
elected under former AS 39.35.940 to participate in the plan established under 6
AS 39.35.700 - 39.35.990 [JULY 1, 2006]. 7
* Sec. 42. AS 39.30.380 is amended to read: 8
Sec. 39.30.380. Termination of employment. A person who terminates 9
employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470, 10
AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 11
contributions made on behalf of the person to the teachers' and public employees' 12
retiree health reimbursement arrangement trust fund. If a person returns to 13
employment with a participating employer by December 31 of the year in which the 14
person reaches 65 years of age, the person's account balance shall be restored in the 15
amount recorded on the date of termination from the trust, adjusted for inflation at the 16
rate of the Consumer Price Index for Anchorage, Alaska. The earlier period of 17
employment with a participating employer shall be credited toward eligibility for 18
medical benefits. 19
* Sec. 43. AS 39.30.390 is amended to read: 20
Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 21
eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 22
[AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the 23
individual account established for a member under the plan, except members do not 24
have to retire directly from the system. A person who is the dependent child of an 25
eligible member is eligible for reimbursements if the eligible member and surviving 26
spouse have both died so long as the person meets the definition of dependent child. 27
* Sec. 44. AS 39.30.400(a) is amended to read: 28
(a) The administrator may deduct the cost of monthly premiums from the 29
individual account for retiree major medical insurance on behalf of an eligible person 30
who elected retiree major medical insurance under AS 14.25.171, 14.25.480, 31 33-LS0505\D
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AS 39.35.537, or 39.35.880 [AS 14.25.480 OR AS 39.35.880]. 1
* Sec. 45. AS 39.30.420(a) is amended to read: 2
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 3
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 4
time, in whole or in part, including the right to make retroactive amendments referred 5
to in 26 U.S.C. 401(b). 6
* Sec. 46. AS 39.30.420(b) is amended to read: 7
(b) The plan administrator may not modify or amend the plan retroactively [IN 8
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 9
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 10
MADE] before the modification or amendment except to the extent that the reduction 11
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 12
Revenue Code. 13
* Sec. 47. AS 39.30.420(c) is amended to read: 14
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 15
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 16
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 17
is terminated, all investments at the time of termination remain in force until all 18
individual accounts have been completely distributed under the plan. After [, AND, 19
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 20
employer. 21
* Sec. 48. AS 39.30.420(d) is repealed and reenacted to read: 22
(d) Within one year after determining that a contribution to the plan by an 23
employer was the result of a mistake of fact, the administrator shall return the 24
contribution to the employer. 25
* Sec. 49. AS 39.30.495(5) is amended to read: 26
(5) "eligible person" means a person who meets the eligibility 27
requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 28
OR AS 39.35.870]; 29
* Sec. 50. AS 39.30.495(6) is amended to read: 30
(6) "employer" has the meaning given in AS 14.25.220 for employers 31 33-LS0505\D
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of teachers in the defined benefit retirement plan established in AS 14.25.009 - 1
14.25.220, has the meaning given in AS 14.25.590 for employers of teachers in the 2
defined contribution plan established in AS 14.25.310 - 14.25.590, has the meaning 3
given in AS 39.35.680 for employers of public employees in the defined benefit 4
retirement plan established in AS 39.35.095 - 39.35.680, and has the meaning given 5
in AS 39.35.990 for employers of public employees in the defined contribution plan 6
established in AS 39.35.700 - 39.35.990; 7
* Sec. 51. AS 39.30.495(9) is amended to read: 8
(9) "member" means a member of the State of Alaska Teachers' and 9
Public Employees' Retiree Health Reimbursement Arrangement Plan established 10
in AS 39.30.300 - 39.30.495 [DEFINED CONTRIBUTION PLAN OF THE 11
TEACHERS' RETIREMENT SYSTEM IN AS 14.25.310 - 14.25.590 OR A 12
MEMBER OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM IN 13
AS 39.35.700 - 39.35.990]; 14
* Sec. 52. AS 39.35.095 is amended to read: 15
Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 16
[FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 17
only to members first hired 18
(1) before July 1, 2006, who have not elected under former 19
AS 39.35.940 to participate in the defined contribution retirement plan under 20
AS 39.35.700 - 39.35.990; 21
(2) after June 30, 2006, and before July 1, 2024, who are former 22
members of the defined contribution retirement plan under AS 39.35.700 - 23
39.35.990; or 24
(3) on or after July 1, 2024 [: AS 39.35.095 - 39.35.680]. 25
* Sec. 53. AS 39.35.095 is amended by adding a new subsection to read: 26
(b) An employee who became a member after June 30, 2006, and before 27
July 1, 2024, is subject to AS 39.35.095 - 39.35.680 if the employee 28
(1) is not employed by an employer on July 1, 2024; 29
(2) is reemployed by an employer after July 1, 2024; and 30
(3) has, before the date of reemployment, received 31 33-LS0505\D
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(A) a distribution, other than a rollover distribution, of the 1
entire balance in the member's individual account in the defined contribution 2
retirement plan; or 3
(B) a rollover distribution of the entire balance in the member's 4
individual account in the defined contribution retirement plan and has not 5
within 120 days of reemployment had all or part of a direct rollover 6
distribution from an eligible retirement plan owned by the member paid 7
directly into the member's individual account. 8
* Sec. 54. AS 39.35.100(b) is amended to read: 9
(b) An individual account shall be maintained for each employee to record the 10
amount of the employee's mandatory contributions collected under AS 39.35.160 11
[AS 39.35.160(a)]. As of the last day of each calendar year and of each fiscal year, this 12
account shall be credited with interest by applying the prescribed rate of interest, as 13
determined by the board, to the balance in the account as of that date. When the 14
employee is appointed to retirement, the amount held in the individual account shall 15
be used first to fully finance the benefits paid. Once this account has been exhausted, 16
the plan shall fully finance the benefits paid that were not financed by the employee's 17
individual account. 18
* Sec. 55. AS 39.35 is amended by adding a new section to article 3 to read: 19
Sec. 39.35.159. Election of defined benefit retirement plan by reemployed 20
employees. (a) An employee may make a one-time election to participate in the plan 21
under AS 39.35.095 - 39.35.680 if the employee 22
(1) was first hired after June 30, 2006, and before July 1, 2024; 23
(2) is not employed by an employer on July 1, 2024; 24
(3) is reemployed by an employer after July 1, 2024; and 25
(4) before the date of reemployment, 26
(A) has not received a distribution of the entire balance in the 27
employee's individual account under the defined contribution retirement plan 28
established in AS 39.35.700 - 39.35.990; or 29
(B) has received a rollover distribution of the entire balance in 30
the member's individual account in the defined contribution retirement plan 31 33-LS0505\D
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and has within 120 days of reemployment had all or part of a direct rollover 1
distribution from an eligible retirement plan owned by the member paid 2
directly into the member's individual account. 3
(b) An election under (a) of this section may be made not more than 120 days 4
after the date of reemployment. A reemployed employee electing to participate under 5
(a) of this section shall use the balance of the employee's individual account in the 6
plan under AS 39.35.700 - 39.35.990, including any rollover contributions, to 7
purchase credited service in the plan under AS 39.35.095 - 39.35.680. An election 8
made under (a) of this section must be made in writing in the manner prescribed by the 9
administrator. An election made by an employee who is married is not effective unless 10
the election is signed by the employee's spouse. The administrator shall provide an 11
employee who is eligible to make an election under (a) of this section with 12
information about the potential consequences of the employee's election, including 13
calculations to illustrate the effect of moving the employee's retirement plan from a 14
defined contribution retirement plan to a defined benefit retirement plan. 15
(c) An election made under (a) of this section to participate in the plan under 16
AS 39.35.095 - 39.35.680 is irrevocable. On the effective date of the election, an 17
eligible employee shall be enrolled as a member of the plan, and the employee's 18
participation in the plan shall be governed by the applicable provisions of the plan. 19
The employee's enrollment in the plan is retroactive to the date of hire. 20
(d) When an eligible employee makes an election under this section, the 21
administrator shall cause the total amount of the employee's employee and employer 22
contributions to the plan under AS 39.35.700 - 39.35.990, with investment earnings 23
and losses through the day of the employee's election to participate as a member in the 24
plan under AS 39.35.095 - 39.35.680, to be actuarially calculated and, subject to (f) of 25
this section, transferred to the pension fund in the plan under AS 39.35.095 - 26
39.35.680. On the effective date of the employee's participation in the plan under 27
AS 39.35.095 - 39.35.680, the employee shall be credited with service in the plan. The 28
board shall determine the cost of the employee's actual service time based on the 29
employee's accrued actuarial liability of pension benefits in the plan, and credit the 30
employee with service time equal to the value actuarially calculated and transferred to 31 33-LS0505\D
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the pension fund in the plan under AS 39.35.095 - 39.35.680. The board shall adopt 1
regulations establishing transfer procedures. The transfer may not occur later than 60 2
days after the date the administrator receives the employee's election, unless the major 3
financial markets for securities available for a transfer are seriously disrupted by an 4
unforeseen event that also causes the suspension of trading on any national securities 5
exchange in the country where the securities were issued. In that event, the 60-day 6
period may be extended by a resolution of the board. A transfer is not commissionable 7
or subject to other fees and may be in the form of cash or a security as determined by 8
the board. A security shall be valued on the date of receipt in the employee's account. 9
(e) When making a transfer under (d) of this section, or for a reemployed 10
employee entering the plan under AS 39.35.095(b), the administrator shall transfer an 11
amount equal to the decrease in the accrued actuarial liability of the death and 12
disability trust in the plan under AS 39.35.700 - 39.35.990 resulting from the transfer 13
as of the date of transfer, based on the most recent actuarial valuation of the death and 14
disability trust, from the death and disability trust in the plan under AS 39.35.700 - 15
39.35.990 to the pension fund in the plan under AS 39.35.095 - 39.35.680. 16
(f) If the value actuarially calculated under (d) of this section is insufficient to 17
pay for service credit equal to the employee's actual service, the administrator shall 18
allow the employee the option of purchasing service credit in an amount up to the 19
amount needed to eliminate the insufficiency; however, if that value exceeds the 20
amount needed to pay for service credit equal to the employee's actual service, the 21
administrator shall cause the excess to remain in the employee's individual account in 22
the plan under AS 39.35.700 - 39.35.990. The excess may not be used to purchase 23
additional service credit in the plan under AS 39.35.095 - 39.35.680. When a 24
reemployed employee enters the plan under AS 39.35.095(b), the administrator shall 25
allow the employee to pay for a period of service credit up to the employee's actual 26
service. When an employee elects to purchase service credit under this section and 27
does not immediately pay for the service credit purchased, an indebtedness is 28
established. Interest as prescribed by regulation accrues on an employee's 29
indebtedness. Indebtedness that exists at the time the employee is appointed to 30
retirement necessitates an actuarial adjustment to the benefits payable due to service in 31 33-LS0505\D
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the defined contribution retirement plan. 1
(g) Actuarial assumptions about the plan under AS 39.35.095 - 39.35.680 2
must be based on the most recent actuarial valuation of the plan, except that the 3
retirement rates are computed at 25 percent of the retirement rates used in the most 4
recent actuarial valuation of the pension fund for the plan plus 75 percent of the 5
retirement rates used in the most recent actuarial valuation of the plan under 6
AS 39.35.700 - 39.35.990. 7
(h) The provisions of this section are subject to the requirements of the 8
Internal Revenue Code and the limitations under AS 39.35.115, 39.35.678, 9
39.35.710(c) and (d), and 39.35.895. In this subsection, "Internal Revenue Code" has 10
the meaning given in AS 39.35.990. 11
* Sec. 56. AS 39.35.160(a) is amended to read: 12
(a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 13
each peace officer or firefighter shall contribute to the plan an amount equal to seven 14
and one-half percent of the peace officer's or firefighter's compensation, and, except [. 15
EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, 16
each other employee shall contribute to the plan an amount equal to six and three-17
quarters percent of the employee's compensation. [THE CONTRIBUTIONS SHALL 18
BE DEDUCTED BY THE EMPLOYER AT THE END OF EACH PAYROLL 19
PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 20
COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 21
TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 22
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 23
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 24
OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 25
* Sec. 57. AS 39.35.160 is amended by adding new subsections to read: 26
(e) An employee who first participates in the plan after June 30, 2006, shall 27
contribute to the plan an amount equal to eight percent of the employee's 28
compensation. The board may, from time to time, adjust the employee contribution 29
under this subsection to an amount that, 30
(1) if decreased, is not less than eight percent of the employee's 31 33-LS0505\D
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compensation; and 1
(2) if increased, is not more than 12 percent of the employee's 2
compensation. 3
(f) Contributions under (a) and (e) of this section shall be deducted by the 4
employer at the end of each payroll period. The contributions shall be deducted from 5
employee compensation before computation of applicable federal taxes, and the 6
contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 7
member may not have the option of making the payroll deduction directly instead of 8
having the contribution picked up by the employer. 9
(g) The board may increase the employee contribution rate under (e) of this 10
section if the board determines that the portion of the liability of the plan that is 11
attributable to employees who first participate in the plan after June 30, 2006, is 12
funded below 90 percent. Before increasing the member contribution rate under (e) of 13
this section, the board shall determine an amount sufficient to address the plan's past 14
service liability attributable to all members who first became members of the plan 15
after June 30, 2006. An increase to the employee contribution rate may raise not more 16
than 50 percent of the amount sufficient to address the plan's past service liability 17
attributable to all members who first became members of the plan after June 30, 2006. 18
The board may decrease the rate under (e) of this section if the board determines that 19
the portion of the liability of the plan that is attributable to all members who first 20
became members of the plan after June 30, 2006, is funded above 90 percent. 21
* Sec. 58. AS 39.35.165(a) is amended to read: 22
(a) An employee who is eligible to purchase credited service under 23
AS 39.35.159, 39.35.310 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 24
39.35.360, or 39.35.370, a member who is eligible to purchase credited service under 25
AS 39.35.375, or an elected public official who is eligible to purchase credited service 26
under AS 39.35.381 is an employee for purposes of this section. An employee may, in 27
lieu of making payments directly to the plan, elect to have the employee's employer 28
make payments as provided in this section. 29
* Sec. 59. AS 39.35.165(b) is amended to read: 30
(b) An employee may elect to have the employer make payments for all or any 31 33-LS0505\D
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New Text Underlined [DELETED TEXT BRACKETED]
portion of the amounts payable for the employee's purchase of credited service 1
through a salary reduction program as follows: 2
(1) the amounts paid under a salary reduction program are in lieu of 3
contributions by the employee making the election; the electing employee's salary or 4
other compensation shall be reduced by the amount paid by the employer under this 5
subsection; 6
(2) the employee shall make an irrevocable election under this section 7
to purchase credited service as permitted in AS 39.35.159, 39.35.310 [AS 39.35.310], 8
39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 39.35.375, or 9
39.35.381 and before the employee's termination of employment; the irrevocable 10
election must specify the number of payroll periods that deductions will be made from 11
the employee's compensation and the dollar amount of deductions for each payroll 12
period during the specified number of payroll periods; the deductions made under this 13
paragraph cease upon the earlier of the member's termination of employment with the 14
employer or the member's death; amounts paid by an employer under (f) of this 15
section may not be applied toward the payment of the dollar amount of the deductions 16
representing the portion of the credited service that is being purchased by the member 17
through payroll deduction in accordance with the member's irrevocable election under 18
this subsection; 19
(3) amounts paid by an employer under this subsection shall be treated 20
as employer contributions for the purpose of determining tax treatment under the 21
Internal Revenue Code; the amounts paid by the employer under this section may not 22
be included in the member's gross income for income tax purposes until those amounts 23
are distributed by refund or retirement benefit payments. 24
* Sec. 60. AS 39.35.165(g) is amended to read: 25
(g) Payments made under this section shall be applied to reduce the 26
employee's outstanding indebtedness described in AS 39.35.159, 39.35.310 27
[AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 28
39.35.375, or 39.35.381 at the time that the contributions are received by the plan. 29
* Sec. 61. AS 39.35.165(i) is amended to read: 30
(i) On satisfaction of the eligibility requirements of AS 39.35.159, 39.35.310 31 33-LS0505\D
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[AS 39.35.310], 39.35.330, 39.35.340, 39.35.341, 39.35.345, 39.35.360, 39.35.370, 1
39.35.375, or 39.35.381, the requirements of this section, and the administrative filing 2
requirements specified by the commissioner, the plan shall adjust the employee's 3
credited service history and add any additional service credits acquired. 4
* Sec. 62. AS 39.35.255(a) is amended to read: 5
(a) Each employer, except as provided in (h) of this section, shall contribute to 6
the system every payroll period the lesser of 7
(1) an amount calculated by applying a rate of 22 percent of the greater 8
of the total of all base salaries 9
(A) [(1)] paid by the employer to employees who are active 10
members of the system, including any adjustments to contributions required by 11
AS 39.35.520; or 12
(B) [(2)] paid by the employer to employees who were active 13
members of the system during the corresponding payroll period for the fiscal 14
year ending 15
(i) [(A)] June 30, 2008; or 16
(ii) [(B)] June 30, 2012, if that total is less than the total 17
under (i) of this subparagraph [(A) OF THIS PARAGRAPH], and the 18
employer is a municipality in which the population decreased by more 19
than 25 percent between 2000 and 2010, according to the decennial 20
census conducted by the United States Bureau of the Census; or 21
(2) an amount calculated by applying a rate established by the 22
board under AS 37.10.220 to the total of all base salaries paid by the employer to 23
active members of the system; the rate must be at least 12 percent and be 24
sufficient to pay the actuarially determined employer normal cost, all 25
contributions required under AS 39.30.370 and AS 39.35.750, and past service 26
cost for members of the system. 27
* Sec. 63. AS 39.35.255 is amended by adding a new subsection to read: 28
(j) If the legislature appropriates funds for the purpose of decreasing an 29
employer's contribution, the employer's contribution under (a) of this section shall 30
decrease by that amount. 31 33-LS0505\D
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* Sec. 64. AS 39.35 is amended by adding a new section to read: 1
Sec. 39.35.281. Contributions for employee who first became a member 2
after June 30, 2006. Contributions made by an employer under AS 39.35.255 and 3
39.35.280 for an employee who first became a member after June 30, 2006, other than 4
contributions separately computed for medical benefits under AS 14.25.087, and the 5
employee's contribution account must be deposited in a sub-trust of the pension fund 6
established by the board. 7
* Sec. 65. AS 39.35.282 is amended to read: 8
Sec. 39.35.282. Contributions for medical benefits. Contributions made by 9
an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 10
computed for benefits provided by AS 39.35.535, 39.35.537, and AS 39.30.400. The 11
contributions computed for benefits provided under 12
(1) AS 39.35.535 must [AND SHALL] be deposited in the Alaska 13
retiree health care trust established under AS 39.30.097(a); 14
(2) AS 39.35.537 must be deposited in the Alaska retiree health 15
care trust established under AS 39.30.097(b); and 16
(3) AS 39.30.400 must be deposited in the teachers' and public 17
employees' retiree health reimbursement arrangement plan trust fund 18
established under AS 39.30.340. 19
* Sec. 66. AS 39.35.340(i) is amended to read: 20
(i) Notwithstanding (d) of this section, a member who retires as a peace officer 21
or firefighter may elect to use five or fewer years of credited service granted under this 22
section in computing years of credited service under AS 39.35.535(c) or 39.35.537. 23
When eligibility for credited service for military service has been established and an 24
election under this subsection has been made, an indebtedness in addition to the 25
indebtedness determined under (b) of this section shall be determined for each year of 26
military service used under this subsection, in an amount based on the increase, if any, 27
in the present value of future benefits for that year as determined by the department. 28
* Sec. 67. AS 39.35.345(d) is amended to read: 29
(d) An employee may choose whether the credited service granted under this 30
section is used to satisfy the credited service requirements for normal retirement under 31 33-LS0505\D
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AS 39.35.370(a)(1)(B) or (C), 39.35.370(a)(2)(B), (C), or (D), [AS 39.35.370(a)(2) 1
OR (3)] or 39.35.385(f) or is only used for the calculation of benefits. An election 2
under this subsection is irrevocable and applies to all temporary credited service that 3
the employee has accrued when the employee retires. An election under this 4
subsection does not change the date that an employee is considered to have 5
commenced participation in the plan under AS 39.35.120. 6
* Sec. 68. AS 39.35.370(a) is amended to read: 7
(a) Subject to AS 39.35.450, a terminated employee 8
(1) who first became a member before July 1, 2006, is eligible for a 9
normal retirement benefit 10
(A) [(1)] at age 60 with at least five years of credited service; 11
(B) [(2)] with at least 20 years of credited service as a peace 12
officer or firefighter; or 13
(C) [(3)] with at least 30 years of credited service; 14
(2) who first became a member after June 30, 2006, is eligible for a 15
normal retirement benefit 16
(A) at age 60 with at least five years of credited service; 17
(B) at age 55 with at least 20 years of credited service as a 18
peace officer or firefighter; 19
(C) at age 50 with at least 25 years of credited service as a 20
peace officer or firefighter; or 21
(D) with at least 30 years of credited service [FOR ALL 22
OTHER EMPLOYEES]. 23
* Sec. 69. AS 39.35.381(e) is amended to read: 24
(e) A person who retires under this section is not entitled to disability or death 25
benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 26
to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 27
section may not be used for vesting under AS 39.35.095 - 39.35.680. 28
* Sec. 70. AS 39.35.475(b) is amended to read: 29
(b) Subject to (g) and (h) of this section, the [THE] increase in benefit 30
payments applies to total benefit payments except for the cost-of-living allowance 31 33-LS0505\D
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under AS 39.35.480. The amount of the increase is a percentage of the current benefit 1
equal to 2
(1) the lesser of 75 percent of the increase in the cost of living in the 3
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 4
years old and for members receiving disability benefits; and 5
(2) the lesser of 50 percent of the increase in the cost of living in the 6
preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 7
less than 65 years old or for recipients who are less than 60 years old on July 1 but 8
who have received benefits from the plan for at least five years. 9
* Sec. 71. AS 39.35.475 is amended by adding new subsections to read: 10
(g) Subject to (h) of this section, the amount of an increase for members who 11
first became members of the plan after June 30, 2006, and do not meet the eligibility 12
requirements for a permanent fund dividend in effect on July 1, 2024, under 13
AS 43.23.005(a) is equal to one-half of the applicable percentage under (b) of this 14
section. 15
(h) If the board determines that the portion of the liability of the plan that is 16
attributable to all members who first became members of the plan after June 30, 2006, 17
is funded below 90 percent, the board may reduce the amount of the increase 18
determined under (b) or (g) of this section that is payable to a member who first 19
became a member after June 30, 2006. At any time, the board may terminate a 20
reduction made under this subsection. 21
* Sec. 72. AS 39.35.480(a) is amended to read: 22
(a) While residing in the state, a person who first became a member of the 23
plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680, 24
and who is 65 years of age or older or a person who first became a member of the 25
plan before July 1, 2006, and who is receiving a disability benefit is entitled to 26
receive a monthly cost-of-living allowance in addition to the basic benefit. The 27
amount of this allowance shall be $50 or 10 percent of the basic benefit, whichever is 28
greater. 29
* Sec. 73. AS 39.35.535(a) is amended to read: 30
(a) Except as provided in (d) and (g) of this section, the following persons are 31 33-LS0505\D
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entitled to major medical insurance coverage under this section: 1
(1) for employees first hired before July 1, 1986, 2
(A) an employee who is receiving a monthly benefit from the 3
plan and who has elected coverage; 4
(B) the spouse and dependent children of the employee 5
described in (A) of this paragraph; 6
(C) the surviving spouse of a deceased employee who is 7
receiving a monthly benefit from the plan and who has elected coverage; 8
(D) the dependent children of a deceased employee who are 9
dependent on the surviving spouse described in (C) of this paragraph; 10
(2) for members first hired [ON OR] after June 30 [JULY 1], 1986, 11
(A) an employee who is receiving a monthly benefit from the 12
plan and who has elected coverage for the employee; 13
(B) the spouse of the employee described in (A) of this 14
paragraph if the employee elected coverage for the spouse; 15
(C) the dependent children of the employee described in (A) of 16
this paragraph if the employee elected coverage for the dependent children; 17
(D) the surviving spouse of a deceased employee who is 18
receiving a monthly benefit from the plan and who has elected coverage; 19
(E) the dependent children of a deceased employee who are 20
dependent on the surviving spouse described in (D) of this paragraph if the 21
surviving spouse has elected coverage for the dependent children. 22
* Sec. 74. AS 39.35.535(c) is amended to read: 23
(c) A benefit recipient who became a member before July 1, 2006, or the 24
surviving spouse of the member may elect major medical insurance coverage in 25
accordance with regulations and under the following conditions: 26
(1) a person, other than a disabled member or a disabled member who 27
is appointed to normal retirement, shall [MUST] pay an amount equal to the full 28
monthly group premium for retiree major medical insurance coverage if the person is 29
(A) younger than 60 years of age and has less than 30
(i) 25 years of credited service as a peace officer under 31 33-LS0505\D
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AS 39.35.360 and 39.35.370; or 1
(ii) 30 years of credited service under AS 39.35.360 and 2
39.35.370 that is not service as a peace officer; or 3
(B) of any age and has less than 10 years of credited service; 4
(2) a person is not required to make premium payments for retiree 5
major medical coverage if the person 6
(A) is a disabled member; 7
(B) is a disabled member who is appointed to normal 8
retirement; 9
(C) is 60 years of age or older and has at least 10 years of 10
credited service; or 11
(D) has at least 12
(i) 25 years of credited service as a peace officer under 13
AS 39.35.360 and 39.35.370; or 14
(ii) 30 years of credited service under AS 39.35.360 and 15
39.35.370 not as a peace officer. 16
* Sec. 75. AS 39.35.535 is amended by adding a new subsection to read: 17
(g) A benefit recipient who first became a member after June 30, 2006, or a 18
surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 19
under this section but may elect medical benefits under AS 39.35.537. 20
* Sec. 76. AS 39.35 is amended by adding a new section to read: 21
Sec. 39.35.537. Medical benefit; eligibility of employees first hired after 22
June 30, 2006; surviving spouses and dependents. (a) An employee who first 23
became a member of the plan after June 30, 2006, receives a monthly benefit from the 24
plan, retired directly from the plan, and has elected benefits under this section is 25
entitled to medical benefits under this section. A member who applies for medical 26
benefits under this section shall apply on the forms and in the manner prescribed by 27
the administrator. A member is eligible to retire from the plan if the member has been 28
an active member for at least 12 months before application for retirement and the 29
member 30
(1) is at least 31 33-LS0505\D
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(A) 50 years of age and has at least 25 years of membership 1
service as a peace officer or firefighter; 2
(B) 55 years of age and has at least 20 years of membership 3
service as a peace officer or firefighter; 4
(2) has at least 30 years of membership; or 5
(3) reaches the age set for Medicare eligibility and has at least 10 years 6
of membership service. 7
(b) The member's surviving spouse is eligible to elect medical benefits if the 8
member had retired or was eligible for retirement and medical benefits at the time of 9
the member's death. 10
(c) The medical benefits available to eligible persons are access to the retiree 11
major medical insurance plan and access to the health reimbursement arrangement 12
plan under AS 39.30.300. Access to the retiree major medical insurance plan means 13
that an eligible person may not be denied insurance coverage except for failure to pay 14
the required premium. 15
(d) Retiree major medical insurance plan coverage elected by an eligible 16
member under this section covers the eligible member, the spouse of the eligible 17
member, and the dependent children of the eligible member. 18
(e) Retiree major medical insurance plan coverage elected by a surviving 19
spouse of an eligible member under this section covers the surviving spouse and the 20
dependent children of the eligible member who are dependent on the surviving spouse. 21
(f) Participation in the retiree major medical insurance plan is not required in 22
order to participate in the health reimbursement arrangement plan. 23
(g) A person eligible for medical benefits under this section is not required to 24
participate in the health reimbursement arrangement plan in order to participate in the 25
retiree major medical insurance plan. 26
(h) A person who is eligible for medical benefits under this section must make 27
the irrevocable election to participate or not participate in the retiree major medical 28
insurance plan on or before the date the person reaches 70 1/2 years of age or when the 29
person applies for retirement and medical benefits, whichever is later. 30
(i) Major medical insurance coverage takes effect on the first day of the month 31 33-LS0505\D
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following the date of the administrator's approval of the election and stops when the 1
person who elects coverage dies or fails to make a required premium payment. 2
(j) The coverage for persons 65 years of age or older is the same as that 3
available for persons under 65 years of age. The benefits payable to those persons 65 4
years of age or older supplement any benefits provided under the federal old age, 5
survivors, and disability insurance program. 6
(k) The medical and optional insurance premiums owed by the person who 7
elects coverage may be deducted from the health reimbursement arrangement plan. If 8
the amount of the health reimbursement arrangement plan becomes insufficient to pay 9
the premiums, the person who elects coverage under (a) of this section shall pay the 10
premiums directly. 11
(l) The cost of premiums for retiree major medical insurance coverage under 12
this section for an eligible member or surviving spouse who is 13
(1) not eligible for Medicare is an amount equal to the full monthly 14
group premiums for retiree major medical insurance coverage; 15
(2) eligible for Medicare is the following percentage of the premium 16
amounts established for retirees who are eligible for Medicare: 17
(A) 30 percent if the member had 10 or more, but less than 15, 18
years of service; 19
(B) 25 percent if the member had 15 or more, but less than 20, 20
years of service; 21
(C) 20 percent if the member had 20 or more, but less than 25, 22
years of service; 23
(D) 15 percent if the member had 25 or more, but less than 30, 24
years of service; 25
(E) 10 percent if the member had 30 or more years of service. 26
(m) The eligibility for retiree major medical insurance coverage for an 27
alternate payee under a qualified domestic relations order shall be determined based 28
on the eligibility of the member to elect coverage. The alternate payee shall pay the 29
full monthly premium for retiree major medical insurance coverage. 30
(n) The administrator shall 31 33-LS0505\D
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(1) inform a person entitled to retiree major medical insurance 1
coverage under this section in writing 2
(A) that the health insurance coverage available to retired 3
members may be different from the health insurance coverage provided to 4
employees; 5
(B) of time limits for selecting optional health insurance 6
coverage; and 7
(C) whether the election is irrevocable; and 8
(2) require that a person entitled to retiree major medical insurance 9
coverage under this section indicate in writing on a form provided by the administrator 10
whether the person has chosen to receive optional health insurance coverage. 11
(o) The monthly group premiums for retiree major medical insurance coverage 12
under this section are established by the administrator in accordance with 13
AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 14
(a) of this section a monthly group premium rate for retiree major medical insurance 15
coverage other than the premium in effect for the month in which the premium is due 16
for coverage for that month. 17
(p) In this section, "health reimbursement arrangement plan" means the State 18
of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 19
Arrangement Plan established in AS 39.30.300. 20
* Sec. 77. AS 39.35.610(a) is amended to read: 21
(a) The contributions of an employer and the contributions of its employees 22
shall be transmitted to the administrator as soon as practicable after the close of the 23
payroll period for which the contributions are made. Subject to (c) of this section, if an 24
employer is delinquent in transferring the contributions for more than 15 days, interest 25
shall be assessed on the outstanding contributions at [ONE AND ONE-HALF TIMES] 26
the most recent actuarially determined rate of earnings for the retirement plan from the 27
date that the contributions were originally due. 28
* Sec. 78. AS 39.35.680(4) is amended to read: 29
(4) "average monthly compensation" means the result obtained by 30
dividing the compensation earned by an employee during a considered period by the 31 33-LS0505\D
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number of months, including fractional months, for which compensation was earned; 1
an employee must have at least 115 days of credited service in the last payroll year in 2
order for that year to be used as part of the consecutive payroll years; the considered 3
period consists of 4
(A) for employees first hired before July 1, 1996, the three 5
consecutive payroll years during the period of credited service that yield the 6
highest average; 7
(B) for employees first hired [ON OR] after June 30 [JULY 1], 8
1996, the five consecutive payroll years during the period of credited service 9
that yield the highest average; 10
(C) if the employee does not have the number of consecutive 11
payroll years required by (A) or (B) of this paragraph, the actual number of 12
months, including fractional months, that the employee worked; 13
(D) for an employee who has made an election under 14
AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 15
fractional months, that the employee worked; 16
(E) for a peace officer or firefighter hired before July 1, 2006 17
[AT ANY TIME], the three consecutive payroll years during the period of 18
credited service that yield the highest average; 19
* Sec. 79. AS 39.35.680(18) is amended to read: 20
(18) "employer" means 21
(A) the State of Alaska; 22
(B) a political subdivision or public organization of the state 23
that participates in the plan based on a resolution to participate in the plan that 24
was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or 25
(C) a political subdivision or public organization of the state 26
that, as a result of consolidation or reorganization [THAT OCCURS ON OR 27
AFTER JULY 1, 2006], assumes liability under the plan of a political 28
subdivision or public organization described in (B) of this paragraph; 29
* Sec. 80. AS 39.35.680 is amended by adding a new paragraph to read: 30
(44) "first became a member after June 30, 2006," includes a member 31 33-LS0505\D
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who elected under former AS 39.35.940 to participate in the plan under AS 39.35.700 1
- 39.35.990 and who elects to participate in the defined benefit retirement plan under 2
AS 39.35.095 - 39.35.680. 3
* Sec. 81. AS 39.35.700 is amended to read: 4
Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 5
AS 39.35.700 - 39.35.990 apply only to 6
(1) members first hired [ON OR] after June 30, 2006, and before 7
July 1, 2024, who do not participate in a defined benefit retirement plan under 8
AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; and 9
(2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 10
EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 11
RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 12
FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who 13
transferred [TRANSFER] into the defined contribution retirement plan under former 14
AS 39.35.940 and do not elect to participate in the defined benefit retirement plan 15
under AS 39.35.095 - 39.35.680. 16
* Sec. 82. AS 39.35.700 is amended by adding a new subsection to read: 17
(b) A public organization as defined in AS 39.35.680 or a municipality or 18
other political subdivision of the state that participates in the plan shall also participate 19
in the defined benefit retirement plan under AS 39.35.095 - 39.35.680. 20
* Sec. 83. AS 39.35.720 is amended to read: 21
Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 22
after June 30, 2006, and before July 1, 2024, who does not participate in a defined 23
benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 24
39.35.680 [JULY 1, 2006,] shall participate in the plan set out in AS 39.35.700 - 25
39.35.990. 26
* Sec. 84. AS 39.35.895(a) is amended to read: 27
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 28
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 29
time, in whole or in part, including the right to make retroactive amendments referred 30
to in 26 U.S.C. 401(b). 31 33-LS0505\D
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* Sec. 85. AS 39.35.895(b) is amended to read: 1
(b) The plan administrator may not modify or amend the plan retroactively [IN 2
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 3
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 4
MADE] before the modification or amendment except to the extent that the reduction 5
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 6
Revenue Code. 7
* Sec. 86. AS 39.35.895(c) is amended to read: 8
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 9
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 10
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 11
is terminated, all investments at the time of termination remain in force until all 12
individual accounts have been completely distributed under the plan. After [, AND, 13
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 14
employer. 15
* Sec. 87. AS 39.35.895(d) is repealed and reenacted to read: 16
(d) Within one year after determining that a contribution to the plan by an 17
employer was the result of a mistake of fact, the administrator shall return the 18
contribution to the employer. 19
* Sec. 88. AS 14.25.012(c), 14.25.061, 14.25.540; and AS 39.35.940 are repealed. 20
* Sec. 89. The uncodified law of the State of Alaska is amended by adding a new section to 21
read: 22
TRANSITION: RETIREMENT PLAN ELECTION. (a) A teacher who was first hired 23
after June 30, 2006, and before July 1, 2024, and who, on July 1, 2024, is a member of the 24
defined contribution retirement plan of the teachers' retirement system may, before 25
November 1, 2024, make a one-time election to participate in the defined benefit retirement 26
plan and to transfer all contributions that have been made or should be made to the defined 27
contribution retirement plan for service the member completes before the effective date of the 28
member's participation in the defined benefit retirement plan. The transferred contributions 29
shall be used to purchase credited service in the defined benefit retirement plan on an actuarial 30
equivalent basis determined by the Alaska Retirement Management Board established under 31 33-LS0505\D
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AS 37.10.210. The provisions of AS 14.25.044 apply to an election made under this 1
subsection. 2
(b) An employee who was first hired after June 30, 2006, and before July 1, 2024, and 3
who, on July 1, 2024, is a member of the defined contribution retirement plan of the public 4
employees' retirement system may, before November 1, 2024, make a one-time election to 5
participate in the defined benefit retirement plan under AS 39.35.095 - 39.35.680 and to 6
transfer all contributions that have been made or should be made to the defined contribution 7
retirement plan for service the member completes before the effective date of the member's 8
participation in the defined benefit retirement plan. The transferred contributions shall be used 9
to purchase credited service in the defined benefit retirement plan on an actuarial equivalent 10
basis determined by the Alaska Retirement Management Board established under 11
AS 37.10.210. The provisions of AS 39.35.159 apply to an election made under this 12
subsection. 13
* Sec. 90. The uncodified law of the State of Alaska is amended by adding a new section to 14
read: 15
ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 16
may adopt regulations necessary to implement secs. 37 and 38 of this Act. Regulations 17
adopted by the Alaska Retirement Management Board under this Act relate to the internal 18
management of a state agency and are not subject to AS 44.62 (Administrative Procedure Act) 19
under AS 37.10.240. 20
(b) The commissioner of administration may adopt regulations necessary to 21
implement secs. 1 - 36 and 39 - 89 of this Act. Regulations adopted by the commissioner of 22
administration under this Act relate to the internal management of a state agency and are not 23
subject to AS 44.62 (Administrative Procedure Act) under AS 14.25.005, AS 39.30.098, and 24
AS 39.35.005. 25
(c) Regulations adopted under this section may not take effect before the effective 26
date of the law being implemented by the regulation. 27
* Sec. 91. Section 90 of this Act takes effect immediately under AS 01.10.070(c). 28
* Sec. 92. Except as provided in sec. 91 of this Act, this Act takes effect July 1, 2024. 29