Alaska Senate Bill SB28 Introduced / Bill

                     
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 SENATE BILL NO. 28 
 
IN THE LEGISLATURE OF THE STATE OF ALASKA 
 
THIRTY-FOURTH LEGISLATURE - FIRST SESSION 
 
BY SENATOR GIESSEL 
 
Introduced:  1/10/25 
Referred:  Prefiled  
 
 
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 AS 14.25.009 is repealed and reenacted to read: 7 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, 2025, 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    34-LS0280\A 
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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 of the system after June 30, 2006, and 4 
before July 1, 2025, or who has elected under former AS 14.25.540 to participate in 5 
the defined contribution retirement plan under AS 14.25.310 - 14.25.590, is subject to 6 
AS 14.25.009 - 14.25.220 and is not eligible to participate in the defined contribution 7 
retirement plan established in AS 14.25.310 - 14.25.590 if the teacher  8 
(1)  is not employed by an employer on July 1, 2025;  9 
(2)  is reemployed by an employer after July 1, 2025; and  10 
(3)  has, before the date of reemployment, received  11 
(A) a distribution, other than a rollover distribution, of the 12 
entire balance in the teacher's individual account in the defined contribution 13 
retirement plan; or  14 
(B)  a rollover distribution of the entire balance in the teacher's 15 
individual account in the defined contribution retirement plan under 16 
AS 14.25.310 - 14.25.590 and has not within 180 days of reemployment had 17 
all or part of a direct rollover distribution from an eligible retirement plan 18 
owned by the teacher paid directly into the teacher's individual account under 19 
AS 14.25.310 - 14.25.590. 20 
   * Sec. 4. AS 14.25 is amended by adding a new section to read: 21 
Sec. 14.25.044. Election of defined benefit retirement plan by reemployed 22 
teachers. (a) A teacher may make a one-time election to participate in the defined 23 
benefit retirement plan under AS 14.25.009 - 14.25.220 if the teacher 24 
(1)  became a member of the defined contribution retirement plan under 25 
AS 14.25.310 - 14.25.590 after June 30, 2006, and before July 1, 2025; 26 
(2)  is not employed by an employer on July 1, 2025; 27 
(3)  is reemployed by an employer after July 1, 2025; and 28 
(4)  before the date of reemployment,  29 
(A)  has not received a distribution of the entire balance in the 30 
teacher's individual account under the defined contribution retirement plan 31    34-LS0280\A 
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under AS 14.25.310 - 14.25.590; or  1 
(B)  has received a rollover distribution of the entire balance in 2 
the teacher's individual account in the plan under AS 14.25.310 - 14.25.590 3 
and has within 180 days of reemployment had all or part of a direct rollover 4 
distribution from an eligible retirement plan owned by the teacher paid directly 5 
into the teacher's individual account under AS 14.25.310 - 14.25.590. 6 
(b)  An election under (a) of this section may be made not more than 180 days 7 
after the date of reemployment. A reemployed teacher electing to participate under (a) 8 
of this section shall use the balance of the member's individual account in the plan 9 
under AS 14.25.310 - 14.25.590, including any rollover contributions, to purchase 10 
credited service in the plan under AS 14.25.009 - 14.25.220. An election made under 11 
(a) of this section must be made in writing in the manner prescribed by the 12 
administrator. An election made by a teacher who is married is not effective unless the 13 
election is signed by the teacher's spouse. The administrator shall provide a teacher 14 
who is eligible to make an election under (a) of this section with information about the 15 
potential consequences of the teacher's election, including calculations to illustrate the 16 
effect of moving the teacher's retirement plan from a defined contribution retirement 17 
plan to a defined benefit retirement plan. 18 
(c)  An election made under (a) of this section to participate in the plan under 19 
AS 14.25.009 - 14.25.220 is irrevocable. On the effective date of the election, the 20 
teacher shall be enrolled as a member of the plan, and the teacher's participation in the 21 
plan shall be governed by the applicable provisions of the plan. The teacher's 22 
enrollment in the plan is retroactive to the date of hire.  23 
(d) When a teacher makes an election under this section, the administrator 24 
shall cause the total amount of the teacher's member and employer contributions to the 25 
plan under AS 14.25.310 - 14.25.590, with investment earnings and losses through the 26 
day of the teacher's election to participate as a member in the plan under AS 14.25.009 27 
- 14.25.220, to be actuarially calculated and, subject to (f) of this section, transferred 28 
to the retirement fund in the plan under AS 14.25.009 - 14.25.220. On the effective 29 
date of the teacher's participation in the plan under AS 14.25.009 - 14.25.220, the 30 
teacher shall be credited with service in the plan. The board shall determine the cost of 31    34-LS0280\A 
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the teacher's actual service time based on the teacher's accrued actuarial liability of 1 
pension benefits in the plan, and credit the teacher with service time equal to the value 2 
actuarially calculated and transferred to the retirement fund in the plan under 3 
AS 14.25.009 - 14.25.220. The board shall adopt regulations establishing transfer 4 
procedures. The transfer may not occur later than 60 days after the date the 5 
administrator receives the teacher's election, unless the major financial markets for 6 
securities available for a transfer are seriously disrupted by an unforeseen event that 7 
also causes the suspension of trading on a national securities exchange in the country 8 
where the securities were issued; in that event, the 60-day period may be extended by 9 
a resolution of the board. A transfer is not commissionable or subject to a fee and may 10 
be in the form of cash or a security as determined by the board. The value of a security 11 
shall be assessed on the date the security is received in the teacher's account. 12 
(e) When making a transfer under (d) of this section or a transfer for a 13 
reemployed teacher subject to the plan under AS 14.25.040(h), the administrator shall 14 
transfer  15 
(1)  an amount equal to the decrease in the accrued actuarial liability of 16 
the death and disability trust in the plan established under AS 14.25.310 - 14.25.590 17 
resulting from the transfer as of the date of transfer, based on the most recent actuarial 18 
valuation of the death and disability trust, from the death and disability trust in the 19 
plan established under AS 14.25.310 - 14.25.590 to the retirement fund in the plan 20 
established under AS 14.25.009 - 14.25.220; and  21 
(2)  an amount equal to the increase in the accrued actuarial liability of 22 
the health care trust in the plan established under AS 14.25.009 - 14.25.220 resulting 23 
from the transfer as of the date of transfer, based on the actuarial assumptions set out 24 
in (g) of this section, from the trust established under AS 39.30.097(b) for the 25 
prefunding of medical benefits provided by AS 14.25.480 to the trust established 26 
under AS 39.30.097(a) for the prefunding of medical benefits provided by 27 
AS 14.25.171. 28 
(f)  If the value actuarially calculated under (d) of this section is insufficient to 29 
pay for service credit equal to the teacher's actual service time, the administrator shall 30 
allow the teacher the option of purchasing service credit in an amount up to the 31    34-LS0280\A 
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amount needed to eliminate the insufficiency; however, if that value exceeds the 1 
amount needed to pay for service credit equal to the teacher's actual service, the 2 
administrator shall cause the excess to be paid to the employee as a rollover transfer to 3 
either an individual employee annuity account in the Department of Administration 4 
under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 5 
Plan) or, if the member's employer does not participate in the State of Alaska 6 
Supplemental Annuity Plan, to an eligible retirement plan as defined in 7 
AS 14.25.360(d). An excess may not be used to purchase additional service credit in 8 
the plan under AS 14.25.009 - 14.25.220. When a reemployed teacher enters the plan 9 
under AS 14.25.040(h), the administrator shall allow the teacher to pay for a period of 10 
service credit up to the teacher's actual service. When a teacher elects to purchase 11 
service credit under this section and does not immediately pay for the service credit 12 
purchased, an indebtedness is established. Interest as prescribed by regulation accrues 13 
on a teacher's indebtedness. If the indebtedness exists when the teacher is appointed to 14 
retirement, the administrator shall make a corresponding actuarial adjustment to the 15 
benefit payable to the teacher for service in the defined contribution retirement plan.  16 
(g) Actuarial assumptions about the plan under AS 14.25.009 - 14.25.220 17 
must be based on the most recent actuarial valuation of the plan, except that the 18 
retirement rates are computed at 25 percent of the retirement rates used in the most 19 
recent actuarial valuation of the retirement fund plus 75 percent of the retirement rates 20 
used in the most recent actuarial valuation of the plan under AS 14.25.310 - 14.25.590. 21 
(h)  The provisions of this section are subject to the requirements of the 22 
Internal Revenue Code and the limitations under AS 14.25.010, 14.25.181, 23 
14.25.320(c) and (d), and 14.25.490. 24 
   * Sec. 5. AS 14.25.048(b) is amended to read: 25 
(b)  An employee or former employee who first became a member of the 26 
plan before July 1, 2006, may receive credit for retroactive membership service for 27 
employment before June 5, 1988, if the employee or former employee met the 28 
requirements listed in (a) of this section at the time of the employment. To receive 29 
credit for the retroactive membership service, the employee or former employee shall 30 
claim the service and pay the retroactive contributions required under former 31    34-LS0280\A 
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AS 14.25.061. However, an employee or former employee may not receive retroactive 1 
credit under this subsection if the employee received credited service under AS 39.35 2 
for the employment.  3 
   * Sec. 6. AS 14.25.048(c) is amended to read: 4 
(c) An employee or former employee who first became a member of the 5 
plan before July 1, 2006, and who received credit under AS 39.35 for service that 6 
qualifies under (a) of this section may elect to transfer those periods of employment to 7 
the plan. To receive credit for retroactive membership service under this subsection, 8 
the employee or former employee shall claim the service and pay the retroactive 9 
contributions required under former AS 14.25.061.  10 
   * Sec. 7. AS 14.25.050(a) is amended to read: 11 
(a)  Except as provided in (c) and (e) of this section, beginning January 1, 12 
1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 13 
member's base salary accrued from July 1 to the following June 30. [THE 14 
EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 15 
SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 16 
CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 17 
CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 18 
FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 19 
APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 20 
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 21 
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 22 
INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 23 
EMPLOYER.]  24 
   * Sec. 8. AS 14.25.050 is amended by adding new subsections to read: 25 
(e)  A member who first participates in the plan after June 30, 2006, shall 26 
contribute to the plan an amount equal to eight percent of the member's base salary 27 
accrued from July 1 to the following June 30. The board may, from time to time, 28 
adjust the contribution under this subsection to an amount that,  29 
(1)  if decreased, is not less than eight percent of the member's base 30 
salary; and  31    34-LS0280\A 
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(2) if increased, is not more than 12 percent of the member's base 1 
salary. 2 
(f)  The employer shall deduct a contribution under this section from the 3 
member's salary at the end of each payroll period, and the contribution shall be 4 
credited by the plan to the member contribution account. The contributions shall be 5 
deducted from member compensation before the computation of applicable federal 6 
taxes and 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 in cash 8 
instead of having the contribution picked up by the employer.  9 
(g)  The board shall increase the member contribution under (e) of this section 10 
if the board determines that, unless the contribution is increased, the portion of the 11 
liability of the plan that is attributable to all members who first became members of 12 
the plan after June 30, 2006, will be funded below 90 percent. The board may not 13 
increase the member contribution unless the board increases the employer contribution 14 
under AS 14.25.070(a)(2) by an equal amount. The board may decrease the 15 
contribution under (e) of this section if the board determines that, after the 16 
contribution is decreased, the portion of the liability of the plan that is attributable to 17 
all members who first became members of the plan after June 30, 2006, will be funded 18 
above 90 percent. The board may not decrease the member contribution unless the 19 
board decreases the employer contribution under AS 14.25.070(a)(2) by an equal 20 
amount. 21 
   * Sec. 9. AS 14.25.065(b) is amended to read: 22 
(b)  The contributions of employers under AS 14.25.070 must be transmitted to 23 
the plan for deposit in the retirement fund and the Alaska retiree health care trust at the 24 
close of each pay period. If the contributions are not submitted within the prescribed 25 
time limit, interest must be assessed on the outstanding contributions at [ONE AND 26 
ONE-HALF TIMES] the most recent actuarially determined rate of earnings for the 27 
plan from the date that contributions were originally due. Amounts due from an 28 
employer and interest as prescribed in this section may be claimed by the 29 
administrator from any agency of the state or political subdivi
sion that has in its 30 
possession funds of the employer or that is authorized to disburse funds to the 31    34-LS0280\A 
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employer that are not restricted by statute or appropriation to a specific purpose. The 1 
amount claimed shall be certified by the administrator as sufficient to pay the 2 
contributions and interest due from the employer. The amount claimed shall be 3 
submitted to the administrator for deposit in the retirement fund and the Alaska retiree 4 
health care trust.  5 
   * Sec. 10. AS 14.25.070(a) is amended to read: 6 
(a) Each employer shall contribute to the system every payroll period the 7 
lesser of 8 
(1)  an amount calculated by applying a rate of 12.56 percent to the 9 
total of all base salaries paid by the employer to active members of the system and to 10 
members who are retired from the plan and reemployed under AS 14.20.136, 11 
including any adjustments to contributions required by AS 14.25.173(a); or  12 
(2) an amount calculated by applying a rate established by the 13 
board under AS 37.10.220 to the total of all base salaries paid by the employer to 14 
active members of the system and to members who are retired from the plan and 15 
reemployed under AS 14.20.136, including any adjustments to contributions 16 
required by AS 14.25.173(a); the rate must be at least 12 percent and be sufficient 17 
to pay the actuarially determined employer normal cost, all contributions 18 
required under AS 14.25.350 and AS 39.30.370, and past service cost for 19 
members of the system. 20 
   * Sec. 11. AS 14.25.070 is amended by adding a new subsection to read: 21 
(i) If the legislature appropriates funds for the purpose of decreasing an 22 
employer's contribution, the employer's contribution under (a) of this section shall 23 
decrease by that amount. 24 
   * Sec. 12. AS 14.25.075(a) is amended to read: 25 
(a) An employee who is eligible to purchase credited service under 26 
AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 27 
under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 28 
[14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligible to purchase credited 29 
service under AS 14.20.345, AS 14.25.044, 14.25.050 [AS 14.25.050], or 14.25.105, 30 
in lieu of making payments directly to the plan, may elect to have the member's 31    34-LS0280\A 
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employer make payments as provided in this section.  1 
   * Sec. 13. AS 14.25.075(b) is amended to read: 2 
(b)  A member may elect to have the employer make payments for all or any 3 
portion of the amounts payable for the member's purchase of credited service through 4 
a salary reduction program as follows:  5 
(1)  the amounts paid under a salary reduction program are in lieu of 6 
contributions by the member making the election; the electing member's salary or 7 
other compensation shall be reduced by the amount paid by the employer under this 8 
subsection;  9 
(2) the member shall make an irrevocable election under this 10 
subsection to purchase credited service as permitted in former AS 14.25.061 or in 11 
AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 12 
14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107 before the member's 13 
termination of employment; the irrevocable election must specify the number of 14 
payroll periods that deductions will be made from the member's compensation and the 15 
dollar amount of deductions for each payroll period during the specified number of 16 
payroll periods; the deductions made under this paragraph cease upon the earlier of the 17 
member's termination of employment with the employer or the member's death; 18 
amounts paid by an employer under (f) of this section may not be applied toward the 19 
payment of the dollar amount of the deductions representing the portion of the credited 20 
service that is being purchased by the member through payroll deduction in 21 
accordance with the member's irrevocable election under this paragraph;  22 
(3)  amounts paid by an employer under this subsection shall be treated 23 
as employer contributions for the purpose of determining tax treatment under 26 24 
U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 25 
may not be included in the member's gross income for income tax purposes until those 26 
amounts are distributed by refund or retirement benefit payments.  27 
   * Sec. 14. AS 14.25.075(i) is amended to read: 28 
(i)  On satisfaction of the eligibility requirements of former AS 14.25.061 or 29 
of 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, the requirements of this 31    34-LS0280\A 
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section, and the administrative filing requirements specified by the administrator, the 1 
plan shall adjust the member's credited service history and add any additional service 2 
credits acquired.  3 
   * Sec. 15. AS 14.25 is amended by adding a new section to read: 4 
Sec. 14.25.086. Sub-trust for members who first became members after 5 
June 30, 2006. The administrator shall deposit a portion of employer contributions 6 
under AS 14.25.070 and 14.25.085 in a sub-trust of the retirement fund established by 7 
the board for members who first became members after June 30, 2006. The amount 8 
deposited, when combined with the amount separately computed for medical benefits 9 
under AS 14.25.087, must be sufficient to pay the actuarially determined employer 10 
normal cost and past service cost for members of the system who first became 11 
members after June 30, 2006. When the amount sufficient to pay the actuarially 12 
determined employer normal cost, all contributions required under AS 14.25.350 and 13 
AS 39.30.370, and past service cost for members of the system is less than 12 percent 14 
of all base salaries paid to active members of the system and to members who are 15 
retired from the plan and reemployed under AS 14.20.136, including any adjustments 16 
to contributions required by AS 14.25.173(a), the administrator shall deposit the 17 
difference in the sub-trust established under this section. 18 
   * Sec. 16. AS 14.25.087 is amended to read: 19 
Sec. 14.25.087. Contributions for medical benefits. Contributions made by 20 
an employer under AS 14.25.070 and 14.25.085 must [SHALL] be separately 21 
computed for benefits provided by AS 14.25.168 and retiree major medical 22 
insurance plan benefits provided under AS 14.25.171, and must [SHALL] be 23 
deposited in the Alaska retiree health care trust established under AS 39.30.097(a).  24 
   * Sec. 17. AS 14.25.110(a) is amended to read: 25 
(a)  Subject to AS 14.25.167,  26 
(1)  a member who first became a member of the plan before July 1, 27 
2006, is eligible for a normal retirement benefit if the member  28 
(A) [(1)]  was first hired before July 1, 1975, has attained the 29 
age of 55 years, and has at least 15 years of credited service, the last five of 30 
which have been membership service, or is otherwise vested in the plan;  31    34-LS0280\A 
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(B) [(2)]  has attained the age of 60 years and has at least eight 1 
years of membership service;  2 
(C) [(3)]  has attained the age of 60 years, has at least five years 3 
of membership service, and has Alaska BIA service which, when added to the 4 
membership service, will equal at least eight years;  5 
(D) [(4)]  has at least 25 years of credited service, the last five 6 
of which have been membership service;  7 
(E) [(5)]  has at least 20 years of membership service;  8 
(F) [(6)]  has at least 20 years of combined membership service 9 
and Alaska BIA service, the last five of which have been membership service; 10 
or  11 
(G) [(7)]  has, for each of 20 school years,  12 
(i) [(A)]  at least one-half year of membership service as 13 
a part-time teacher;  14 
(ii) [(B)]  one full year of membership service as a full-15 
time teacher; or  16 
(iii) [(C)] any combination of service qualified under 17 
this subparagraph; 18 
(2) a member who first became a member of the plan after 19 
June 30, 2006, is eligible for a normal retirement benefit if the member  20 
(A)  has attained the age of 60 years and has at least five 21 
years of membership service; or 22 
(B) has at least 30 years of membership service 23 
[PARAGRAPH].  24 
   * Sec. 18. AS 14.25.110(b) is amended to read: 25 
(b) Subject to AS 14.25.167, a member is eligible for an early retirement 26 
benefit upon completing the service requirements in (a)(1)(A) [(a)(1)] of this section 27 
and attaining the age of 50 years or upon completing the service requirements in 28 
(a)(1)(B) or (C) [(a)(2) OR (3)] of this section and attaining the age of 55 years.  29 
   * Sec. 19. AS 14.25.110(d) is amended to read: 30 
(d)  The monthly amount of a retirement benefit  31    34-LS0280\A 
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(1)  for a member who first became a member of the plan before 1 
July 1, 2006, and who has paid the full amount of any indebtedness is one-twelfth of 2 
the member's average base salary during any three school years of membership service 3 
multiplied by  4 
(A) [(1)] two percent of the years of credited service earned 5 
before June 30, 1990, including credited fractional years, and the years of 6 
credited service through a total of 20 years; plus  7 
(B) [(2)] two and one-half percent of the years of credited 8 
service earned after June 30, 1990, that are more than 20 years of total credited 9 
service; 10 
(2)  for a member who first became a member of the plan after 11 
June 30, 2006, and who has paid the full amount of any indebtedness is one-12 
twelfth of the member's average base salary during any five school years of 13 
membership service multiplied by  14 
(A)  two percent of the years of credited service through a 15 
total of 10 years; plus  16 
(B)  two and one-quarter percent of the years over 10 years 17 
of total credited service through 20 years; plus 18 
(C)  two and one-half percent of the years of credited service 19 
that are more than 20 years of total credited service.  20 
   * Sec. 20. AS 14.25.142(a) is amended to read: 21 
(a)  While residing in the state, a person who first became a member of the 22 
plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220, 23 
and who is at least 65 years of age or a person who first became a member of the 24 
plan before July 1, 2006, and who is receiving a disability benefit under 25 
AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost-of-living allowance in 26 
addition to the basic benefit. The amount of this allowance is 10 percent of the basic 27 
benefit.  28 
   * Sec. 21. AS 14.25.143(a) is amended to read: 29 
(a) Once each year, the administrator shall increase benefit payments to 30 
eligible disabled members, to persons age 60 or older receiving benefits under this 31    34-LS0280\A 
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plan in the preceding calendar year, and to persons who have received benefits under 1 
this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 2 
under this section.  3 
   * Sec. 22. AS 14.25.143(b) is amended to read: 4 
(b)  Subject to (g) and (h) of this section, the [THE] increase in benefit 5 
payments applies to total benefit payments except for the cost-of-living allowance 6 
under AS 14.25.142. The amount of the increase is a percentage of the current benefit 7 
equal to  8 
(1)  the lesser of 75 percent of the increase in the cost of living in the 9 
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 10 
years old and for members receiving disability benefits; and  11 
(2)  the lesser of 50 percent of the increase in the cost of living in the 12 
preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 13 
less than 65 years old or for recipients who on July 1 are less than 60 years old but 14 
who have received benefits from the plan for at least five [EIGHT] years.  15 
   * Sec. 23. AS 14.25.143 is amended by adding new subsections to read: 16 
(g)  Subject to (h) of this section, the amount of an increase for members who 17 
first became members of the plan after June 30, 2006, and do not meet the eligibility 18 
requirements for a permanent fund dividend in effect on July 1, 2025, under 19 
AS 43.23.005(a) is equal to one-half of the applicable percentage under (b) of this 20 
section. 21 
(h)  If the board determines that the portion of the liability of the plan that is 22 
attributable to all members who first became members of the plan after June 30, 2006, 23 
is funded below 90 percent, the board may reduce the amount of the increase 24 
determined under (b) or (g) of this section that is payable to a member who first 25 
became a member after June 30, 2006. At any time, the board may terminate a 26 
reduction made under this subsection. 27 
   * Sec. 24. AS 14.25.168(a) is amended to read: 28 
(a)  Except as provided in AS 14.25.171 and (c) of this section, the following 29 
persons are entitled to major medical insurance coverage under this section:  30 
(1)  for teachers first hired before July 1, 1990,  31    34-LS0280\A 
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(A)  a teacher who is receiving a monthly benefit from the plan 1 
and who has elected coverage;  2 
(B)  the spouse and dependent children of the teacher described 3 
in (A) of this paragraph;  4 
(C)  the surviving spouse of a deceased teacher who is receiving 5 
a monthly benefit from the plan and who has elected coverage;  6 
(D) the dependent children of a deceased teacher who are 7 
dependent on the surviving spouse described in (C) of this paragraph;  8 
(2)  for teachers first hired [ON OR] after June 30 [JULY 1], 1990,  9 
(A)  a teacher who is receiving a monthly benefit from the plan 10 
and who has elected coverage for the teacher;  11 
(B)  the spouse of the teacher described in (A) of this paragraph 12 
if the teacher elected coverage for the spouse;  13 
(C)  the dependent children of the teacher described in (A) of 14 
this paragraph if the teacher elected coverage for the dependent children;  15 
(D)  the surviving spouse of a deceased teacher who is receiving 16 
a monthly benefit from the plan and who has elected coverage;  17 
(E) the dependent children of a deceased teacher who are 18 
dependent on the surviving spouse described in (D) of this paragraph if the 19 
surviving spouse has elected coverage for the dependent children.  20 
   * Sec. 25. AS 14.25 is amended by adding a new section to read: 21 
Sec. 14.25.171. Medical benefit; eligibility of employees first hired after 22 
June 30, 2006; surviving spouses and dependents. (a) A teacher who first became a 23 
member of the plan after June 30, 2006, receives a monthly benefit from the plan, 24 
retired directly from the plan, and has elected benefits under this section is entitled to 25 
medical benefits under this section. A member who applies for medical benefits under 26 
this section shall apply on the forms and in the manner prescribed by the 27 
administrator. A member is eligible to retire from the plan if the member has been an 28 
active member for at least 12 months before application for retirement and the member 29 
(1)  has at least 30 years of service; or 30 
(2)  reaches the age set for Medicare eligibility and has at least 10 years 31    34-LS0280\A 
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of service. 1 
(b)  The member's surviving spouse is eligible to elect medical benefits if the 2 
member had retired or was eligible for retirement and medical benefits at the time of 3 
the member's death.  4 
(c)  The medical benefits available to eligible persons are access to the retiree 5 
major medical insurance plan and access to the health reimbursement arrangement 6 
plan under AS 39.30.300. Access to the retiree major medical insurance plan means 7 
that an eligible person may not be denied insurance coverage except for failure to pay 8 
the required premium.  9 
(d) Retiree major medical insurance plan coverage elected by an eligible 10 
member under this section covers the eligible member, the spouse of the eligible 11 
member, and the dependent children of the eligible member.  12 
(e) Retiree major medical insurance plan coverage elected by a surviving 13 
spouse of an eligible member under this section covers the surviving spouse and the 14 
dependent children of the eligible member who are dependent on the surviving spouse.  15 
(f)  Participation in the retiree major medical insurance plan is not required in 16 
order to participate in the health reimbursement arrangement plan.  17 
(g)  A person eligible for medical benefits under this section is not required to 18 
participate in the health reimbursement arrangement plan in order to participate in the 19 
retiree major medical insurance plan.  20 
(h)  A person who is eligible for medical benefits under this section must make 21 
the irrevocable election to participate or not participate in the retiree major medical 22 
insurance plan on or before the date the person reaches 70 1/2 years of age or when the 23 
person applies for retirement and medical benefits, whichever is later. 24 
(i)  Major medical insurance coverage takes effect on the first day of the month 25 
following the date of the administrator's approval of the election and stops when the 26 
person who elects coverage dies or fails to make a required premium payment.  27 
(j) The coverage for persons 65 years of age or older is the same as that 28 
available for persons under 65 years of age. The benefits payable to those persons 65 29 
years of age or older supplement any benefits provided under the federal old age, 30 
survivors, and disability insurance program.  31    34-LS0280\A 
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(k)  The medical and optional insurance premiums owed by the person who 1 
elects coverage may be deducted from the health reimbursement arrangement plan. If 2 
the amount of the health reimbursement arrangement plan becomes insufficient to pay 3 
the premiums, the person who elects coverage under (a) of this section shall pay the 4 
premiums directly.  5 
(l)  The cost of premiums for retiree major medical insurance coverage under 6 
this section for an eligible member or surviving spouse who is  7 
(1)  not eligible for Medicare is an amount equal to the full monthly 8 
group premiums for retiree major medical insurance coverage;  9 
(2)  eligible for Medicare is the following percentage of the premium 10 
amounts established for retirees who are eligible for Medicare: 11 
(A)  30 percent if the member had 10 or more, but less than 15, 12 
years of service;  13 
(B)  25 percent if the member had 15 or more, but less than 20, 14 
years of service;  15 
(C)  20 percent if the member had 20 or more, but less than 25, 16 
years of service;  17 
(D)  15 percent if the member had 25 or more, but less than 30, 18 
years of service;  19 
(E)  10 percent if the member had 30 or more years of service.  20 
(m) The eligibility for retiree major medical insurance coverage for an 21 
alternate payee under a qualified domestic relations order shall be determined based 22 
on the eligibility of the member to elect coverage. The alternate payee shall pay the 23 
full monthly premium for retiree major medical insurance coverage.  24 
(n)  The administrator shall  25 
(1) inform a person entitled to retiree major medical insurance 26 
coverage under this section in writing  27 
(A) that the health insurance coverage available to retired 28 
members may be different from the health insurance coverage provided to 29 
employees;  30 
(B) of time limits for selecting optional health insurance 31    34-LS0280\A 
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coverage; and  1 
(C)  whether the election is irrevocable; and  2 
(2) require that a person entitled to retiree major medical insurance 3 
coverage under this section indicate in writing on a form provided by the administrator 4 
whether the person has chosen to receive optional health insurance coverage.  5 
(o)  The monthly group premiums for retiree major medical insurance coverage 6 
under this section are established by the administrator in accordance with 7 
AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 8 
(a) of this section a monthly group premium rate for retiree major medical insurance 9 
coverage other than the premium in effect for the month in which the premium is due 10 
for coverage for that month.  11 
(p)  In this section, "health reimbursement arrangement plan" means the State 12 
of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 13 
Arrangement Plan established in AS 39.30.300.  14 
   * Sec. 26. AS 14.25.220(5) is amended to read: 15 
(5)  "average base salary" means,  16 
(A)  for a teacher who first became a member before July 1, 17 
2006, the result obtained by dividing the sum of the member's three highest 18 
years' base salary by three, or if a member does not have three years base 19 
salary, then by dividing the sum of all base salaries by the number of years of 20 
base salary; the base salary for a year in which credit is granted for disability 21 
totaling more than one-third of a year may not be used in the computation of 22 
the average base salary; the base salary in a school year for which the member 23 
receives compensation for less than two-thirds of a year may not be used in the 24 
computation of the average base salary; if compensation is received for more 25 
than two-thirds of a year, the full base salary for that school year shall be used 26 
in the computation of the average base salary;  27 
(B)  for a teacher who first became a member after June 30, 28 
2006, the result obtained by dividing the sum of the member's five highest 29 
years' base salary by five, or if a member does not have five years' base 30 
salary, then by dividing the sum of all base salaries by the number of 31    34-LS0280\A 
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years of base salary; the base salary for a year in which credit is granted 1 
for disability totaling more than one-third of a year may not be used in the 2 
computation of the average base salary; the base salary in a school year 3 
for which the member receives compensation for less than two-thirds of a 4 
year may not be used in the computation of the average base salary; if 5 
compensation is received for more than two-thirds of a year, the full base 6 
salary for that school year shall be used in the computation of the average 7 
base salary; 8 
   * Sec. 27. AS 14.25.220(6) is amended to read: 9 
(6)  "base salary"  10 
(A)  means the total remuneration payable under contract for a 11 
full year of membership service, including addenda to the contract and, for a 12 
member who elects to participate solely in this plan under AS 14.25.040(f), 13 
remuneration paid by the public employees' retirement plan employer, 14 
but, for a member first hired on or after July 1, 1996, does not include 15 
remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17);  16 
(B) has the same meaning as "compensation" under 17 
AS 39.35.680(9) when applied to a state legislator who elects membership 18 
under AS 14.25.040(b);  19 
   * Sec. 28. AS 14.25.220(46) is amended to read: 20 
(46) "vested member" or "vested teacher" means an active member 21 
who [HAS COMPLETED EITHER]  22 
(A)  first became a member before July 1, 2006, and has 23 
completed  24 
(i)  15 years of service, the last five of which have been 25 
membership service, for a member first hired before July 1, 1975;  26 
(ii) [(B)]  eight years of membership service;  27 
(iii) [(C)]  five years of membership and three years of 28 
BIA service; or  29 
(iv) [(D)] 12 school years of part-time membership 30 
service or 12 school years in each of which the member earned either 31    34-LS0280\A 
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part-time or full-time membership service;  1 
(B) first became a member after June 30, 2006, and has 2 
completed five years of membership service; 3 
   * Sec. 29. AS 14.25.220 is amended by adding a new paragraph to read: 4 
(48)  "first became a member after June 30, 2006" and "first became a 5 
member of the plan after June 30, 2006" include a member who elected under former 6 
AS 14.25.540 to participate in the defined contribution retirement plan under 7 
AS 14.25.310 - 14.25.590 and who elects to participate in the defined benefit 8 
retirement plan under AS 14.25.009 - 14.25.220. 9 
   * Sec. 30. AS 14.25.310 is amended to read: 10 
Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 11 
AS 14.25.310 - 14.25.590 apply only to  12 
(1)  teachers who first become members [ON OR] after June 30, 2006, 13 
and before July 1, 2025, and who are eligible but do not elect to participate in a 14 
defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 15 
39.35.680; and  16 
(2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 17 
EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 18 
DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 19 
- 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBER S] 20 
who transferred [TRANSFER] into the defined contribution retirement plan under 21 
former AS 14.25.540 and do not elect to participate in the defined benefit 22 
retirement plan under AS 14.25.009 - 14.25.220.  23 
   * Sec. 31. AS 14.25.310 is amended by adding a new subsection to read: 24 
(b) An employer that participates in the plan shall also participate in the 25 
defined benefit retirement plan under AS 14.25.009 - 14.25.220. 26 
   * Sec. 32. AS 14.25.330(a) is amended to read: 27 
(a)  A teacher who first becomes a member [ON OR] after June 30, 2006, and 28 
before July 1, 2025, and who does not participate in a defined benefit retirement 29 
plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, 30 
SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contribution 31    34-LS0280\A 
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retirement plan.  1 
   * Sec. 33. AS 14.25.490(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. 34. AS 14.25.490(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. 35. AS 14.25.490(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. 36. AS 14.25.490(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. 37. AS 37.10.220(a) is amended to read: 26 
(a)  The board shall  27 
(1)  hold regular and special meetings at the call of the chair or of at 28 
least five members; meetings are open to the public, and the board shall keep a full 29 
record of all its proceedings;  30 
(2) after reviewing recommendations from the Department of 31    34-LS0280\A 
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Revenue, adopt investment policies for each of the funds entrusted to the board;  1 
(3) determine the appropriate investment objectives for the defined 2 
benefit plans established under the teachers' retirement system under AS 14.25 and the 3 
public employees' retirement system under AS 39.35;  4 
(4) assist in prescribing the policies for the proper operation of the 5 
systems and take other actions necessary to carry out the intent and purpose of the 6 
systems in accordance with AS 37.10.210 - 37.10.390;  7 
(5)  provide a range of investment options and establish the rules by 8 
which participants can direct their investments among those options with respect to 9 
accounts established under  10 
(A) AS 14.25.340 - 14.25.350 (teachers' retirement system 11 
defined contribution individual accounts);  12 
(B)  AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 13 
Annuity Plan);  14 
(C) AS 39.35.730 - 39.35.750 (public employees' retirement 15 
system defined contribution individual accounts); and  16 
(D) AS 39.45.010 - 39.45.060 (public employees' deferred 17 
compensation program);  18 
(6)  establish the rate of interest that shall be annually credited to each 19 
member's individual contribution account in accordance with AS 14.25.145 and 20 
AS 39.35.100 and the rate of interest that shall be annually credited to each member's 21 
account in the health reimbursement arrangement plan under AS 39.30.300 - 22 
39.30.495; the rate of interest shall be adopted on the basis of the probable effective 23 
rate of interest on a long-term basis, and the rate may be changed from time to time;  24 
(7)  adopt a contribution surcharge as necessary under AS 39.35.160(c);  25 
(8) coordinate with the retirement system administrator to have an 26 
annual actuarial valuation of each retirement system prepared to determine system 27 
assets, accrued liabilities, and funding ratios and to certify to the appropriate 28 
budgetary authority of each employer in the system  29 
(A)  an appropriate contribution rate for normal costs; [AND]  30 
(B) an appropriate contribution rate for liquidating any past 31    34-LS0280\A 
SB0028A -23- SB 28 
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service liability; in this subparagraph, the appropriate contribution rate for 1 
liquidating the past service liability of the defined benefit retirement plan under 2 
AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 3 
retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level 4 
percent of pay method based on amortization of the past service liability for a 5 
closed term of 25 years;  6 
(C)  an appropriate monthly employer contribution under 7 
AS 14.25.070 and AS 39.35.255; and 8 
(D)  appropriate adjustments, if any, under AS 14.25.050(e) 9 
and AS 39.35.160(e); 10 
(9)  review actuarial assumptions prepared and certified by a member 11 
of the American Academy of Actuaries and conduct experience analyses of the 12 
retirement systems not less than once every four years, except for health cost 13 
assumptions, which shall be reviewed annually; the results of all actuarial assumptions 14 
prepared under this paragraph shall be reviewed and certified by a second member of 15 
the American Academy of Actuaries before presentation to the board;  16 
(10) contract for an independent audit of the state's actuary not less 17 
than once every four years;  18 
(11) contract for an independent audit of the state's performance 19 
consultant not less than once every four years;  20 
(12)  obtain an external performance review to evaluate the investment 21 
policies of each fund entrusted to the board and report the results of the review to the 22 
appropriate fund fiduciary;  23 
(13)  by the first day of each regular legislative session, report to the 24 
governor, the legislature, and the individual employers participating in the state's 25 
retirement systems on the financial condition of the systems in regard to  26 
(A)  the valuation of trust fund assets and liabilities;  27 
(B)  current investment policies adopted by the board;  28 
(C)  a summary of assets held in trust listed by the categories of 29 
investment;  30 
(D)  the income and expenditures for the previous fiscal year;  31    34-LS0280\A 
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(E)  the return projections for the next calendar year;  1 
(F) one-year, three-year, five-year, and 10-year investment 2 
performance for each of the funds entrusted to the board; and  3 
(G)  other statistical data necessary for a proper understanding 4 
of the financial status of the systems;  5 
(14)  submit quarterly updates of the investment performance reports to 6 
the Legislative Budget and Audit Committee;  7 
(15)  develop an annual operating budget; [AND]  8 
(16)  administer pension forfeitures required under AS 37.10.310 using 9 
the procedures of AS 44.62 (Administrative Procedure Act); 10 
(17)  establish one or more sub-trusts of the pension fund to hold 11 
employer contributions deposited under AS 14.25.086 and AS 39.35.281, 12 
employee contributions, assets, and earnings attributable to members of the 13 
defined benefit retirement plan under AS 14.25.009 - 14.25.220 or the defined 14 
benefit retirement plan under AS 39.35.095 - 39.35.680 who first became 15 
members of the respective plan after June 30, 2006; and 16 
(18) account for and track employer contributions, employee 17 
contributions, assets, and earnings in each trust fund or sub-trust attributable to 18 
members who first became members after June 30, 2006, of the defined benefit 19 
retirement plan under AS 14.25.009 - 14.25.220 and members who first became 20 
members after June 30, 2006, of the defined benefit retirement plan under 21 
AS 39.35.095 - 39.35.680; employer contributions that exceed those assigned to 22 
members who first became members after June 30, 2006, of the defined benefit 23 
retirement plan under AS 14.25.009 - 14.25.220 and members who first became 24 
members after June 30, 2006, of the defined benefit retirement plan under 25 
AS 39.35.095 - 39.35.680 shall be transferred or retained in trusts or sub-trusts 26 
with liability allocated toward employer normal costs for members who became 27 
members of the respective defined benefit retirement plan before July 1, 2025, 28 
past service costs, the State of Alaska Teachers' and Public Employees' Retiree 29 
Health Reimbursement Arrangement Plan under AS 39.30.300 - 39.30.495, and 30 
employer contributions under AS 14.25.350 and AS 39.35.750.  31    34-LS0280\A 
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   * Sec. 38. AS 37.10.220(b) is amended to read: 1 
(b)  The board may  2 
(1)  employ outside investment advisors to review investment policies;  3 
(2)  enter into an agreement with the fiduciary of another state fund in 4 
order to assume the management and investment of those assets;  5 
(3)  contract for other services necessary to execute the board's powers 6 
and duties;  7 
(4) enter into confidentiality agreements that would exempt records 8 
from AS 40.25.110 and 40.25.120 if the records contain information that could affect 9 
the value of investment by the board or that could impair the ability of the board to 10 
acquire, maintain, or dispose of investments; 11 
(5) adjust the amount of the increase in benefits payable to a 12 
member who first became a member after June 30, 2006, as provided under 13 
AS 14.25.143 and AS 39.35.475; 14 
(6) adjust contributions under AS 14.25.050(e) and 15 
AS 39.35.160(e). 16 
   * Sec. 39. AS 39.30.090(a) is amended to read: 17 
(a)  The Department of Administration may obtain a policy or policies of group 18 
insurance covering state employees, persons entitled to coverage under AS 14.25.168, 19 
14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 20 
AS 39.37.145, employees of other participating governmental units, or persons 21 
entitled to coverage under AS 23.15.136, subject to the following conditions:  22 
(1)  a group insurance policy shall provide one or more of the following 23 
benefits: life insurance, accidental death and dismemberment insurance, weekly 24 
indemnity insurance, hospital expense insurance, surgical expense insurance, dental 25 
expense insurance, audiovisual insurance, or other medical care insurance;  26 
(2)  each eligible employee of the state, the spouse and the unmarried 27 
children chiefly dependent on the eligible employee for support, and each eligible 28 
employee of another participating governmental unit shall be covered by the group 29 
policy, unless exempt under regulations adopted by the commissioner of 30 
administration;  31    34-LS0280\A 
SB 28 -26- SB0028A 
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(3)  a governmental unit may participate under a group policy if  1 
(A) its governing body adopts a resolution authorizing 2 
participation and payment of required premiums;  3 
(B) a certified copy of the resolution is filed with the 4 
Department of Administration; and  5 
(C) the commissioner of administration approves the 6 
participation in writing;  7 
(4) in procuring a policy of group health or group life insurance as 8 
provided under this section or excess loss insurance as provided in AS 39.30.091, the 9 
Department of Administration shall comply with the dual choice requirements of 10 
AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 11 
transact business in the state under AS 21.09, a hospital or medical service corporation 12 
authorized to transact business in this state under AS 21.87, or a health maintenance 13 
organization authorized to operate in this state under AS 21.86; an excess loss 14 
insurance policy may be obtained from a life or health insurer authorized to transact 15 
business in this state under AS 21.09 or from a hospital or medical service corporation 16 
authorized to transact business in this state under AS 21.87;  17 
(5) the Department of Administration shall make available bid 18 
specifications for desired insurance benefits or for administration of benefit claims and 19 
payments to (A) all insurance carriers authorized to transact business in this state 20 
under AS 21.09 and all hospital or medical service corporations authorized to transact 21 
business under AS 21.87 who are qualified to provide the desired benefits; and (B) 22 
insurance carriers authorized to transact business in this state under AS 21.09, hospital 23 
or medical service corporations authorized to transact business under AS 21.87, and 24 
third-party administrators licensed to transact business in this state and qualified to 25 
provide administrative services; the specifications shall be made available at least once 26 
every five years; the lowest responsible bid submitted by an insurance carrier, hospital 27 
or medical service corporation, or third-party administrator with adequate servicing 28 
facilities shall govern selection of a carrier, hospital or medical service corporation, or 29 
third-party administrator under this section or the selection of an insurance carrier or a 30 
hospital or medical service corporation to provide excess loss insurance as provided in 
31    34-LS0280\A 
SB0028A -27- SB 28 
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AS 39.30.091;  1 
(6) if the aggregate of dividends payable under the group insurance 2 
policy exceeds the governmental unit's share of the premium, the excess shall be 3 
applied by the governmental unit for the sole benefit of the employees;  4 
(7) a person receiving benefits under AS 14.25.110, AS 22.25, 5 
AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 6 
effect under this section at the time of termination of employment with the state or 7 
participating governmental unit;  8 
(8) a person electing to have insurance under (7) of this subsection 9 
shall pay the cost of this insurance;  10 
(9) for each permanent part-time employee electing coverage under 11 
this section, the state shall contribute one-half the state contribution rate for permanent 12 
full-time state employees, and the permanent part-time employee shall contribute the 13 
other one-half;  14 
(10)  a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 15 
or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 16 
and eligible dependents under this section; the level of coverage for persons over 65 17 
shall be the same as that available before reaching age 65 except that the benefits 18 
payable shall be supplemental to any benefits provided under the federal old age, 19 
survivors, and disability insurance program; a person electing to have insurance under 20 
this paragraph shall pay the cost of the insurance; the commissioner of administration 21 
shall adopt regulations implementing this paragraph;  22 
(11)  a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 23 
or former AS 39.37 may obtain long-term care insurance for that person and eligible 24 
dependents under this section; a person who elects insurance under this paragraph 25 
shall pay the cost of the insurance premium; the commissioner of administration shall 26 
adopt regulations to implement this paragraph;  27 
(12)  each licensee holding a current operating agreement for a vending 28 
facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 29 
applies to governmental units other than the state.  30 
   * Sec. 40. AS 39.30.097(a) is amended to read: 31    34-LS0280\A 
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(a) The commissioner of administration is authorized to prefund medical 1 
benefits provided by AS 14.25.168, 14.25.171, AS 22.25.090, [AND] AS 39.35.535, 2 
and 39.35.537 by establishing an irrevocable trust that is exempt from federal income 3 
tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 4 
and actuarial requirements of the Governmental Accounting Standards Board.  5 
   * Sec. 41. AS 39.30.097(b) is amended to read: 6 
(b) The commissioner of administration is authorized to prefund medical 7 
benefits provided by AS 14.25.480 [, AS 39.30.300,] and AS 39.35.880 by 8 
establishing an irrevocable trust that is exempt from federal income tax under 26 9 
U.S.C. 115 and subject to the applicable financial reporting, disclosure, and actuarial 10 
requirements of the Governmental Accounting Standards Board. 11 
   * Sec. 42. AS 39.30.097 is amended by adding a new subsection to read: 12 
(f) The commissioner of administration is authorized to prefund medical 13 
benefits provided by AS 39.30.300 by establishing an irrevocable trust that is exempt 14 
from federal income tax under 26 U.S.C. 115 and subject to the applicable financial 15 
reporting, disclosure, and actuarial requirements of the Governmental Accounting 16 
Standards Board. 17 
   * Sec. 43. AS 39.30.300 is amended to read: 18 
Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 19 
Health Reimbursement Arrangement Plan established. The State of Alaska 20 
Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 21 
established for  22 
(1)  teachers who first become members of the [DEFINED 23 
CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 - 24 
14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], 25 
and teachers who elected under former AS 14.25.540 to participate in the plan 26 
under AS 14.25.310 - 14.25.590; and 27 
(2)  employees of the state, political subdivisions of the state, and 28 
public organizations of the state who first become members [OF THE DEFINED 29 
CONTRIBUTION PLAN] of the Public Employees' Retirement System of Alaska 30 
(AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER 31    34-LS0280\A 
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AS 39.35.700 - 39.35.990 ON OR] after June 30, 2006, and employees of the state, 1 
political subdivisions of the state, and public organizations of the state who 2 
elected under former AS 39.35.940 to participate in the plan established under 3 
AS 39.35.700 - 39.35.990 [JULY 1, 2006]. 4 
   * Sec. 44. AS 39.30.340 is amended to read: 5 
Sec. 39.30.340. Powers and duties of the administrator. The administrator 6 
shall establish a teachers' and public employees' retiree health reimbursement 7 
arrangement plan trust fund under AS 39.30.097(f) in which the assets of the plan 8 
shall be deposited and held. [THE RETIREE HEALTH REIMBURSEMENT 9 
ARRANGEMENT PLAN TRUST FUND MAY BE A SUB-TRUST OF THE 10 
ALASKA RETIREE HEALTH CARE TRUST ESTABLISHED UNDER 11 
AS 39.30.097(b).] The administrator has the same powers and duties with regard to 12 
the plan and the trust fund as provided in AS 14.25.003 and 14.25.004. 13 
   * Sec. 45. AS 39.30.380 is amended to read: 14 
Sec. 39.30.380. Termination of employment. A person who terminates 15 
employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470, 16 
AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 17 
contributions made on behalf of the person to the teachers' and public employees' 18 
retiree health reimbursement arrangement trust fund. If a person returns to 19 
employment with a participating employer by December 31 of the year in which the 20 
person reaches 65 years of age, the person's account balance shall be restored in the 21 
amount recorded on the date of termination from the trust, adjusted for inflation at the 22 
rate of the Consumer Price Index for Anchorage, Alaska. The earlier period of 23 
employment with a participating employer shall be credited toward eligibility for 24 
medical benefits.  25 
   * Sec. 46. AS 39.30.390 is amended to read: 26 
Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 27 
eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 28 
[AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the 29 
individual account established for a member under the plan, except members do not 30 
have to retire directly from the system. A person who is the dependent child of an 31    34-LS0280\A 
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eligible member is eligible for reimbursements if the eligible member and surviving 1 
spouse have both died so long as the person meets the definition of dependent child. 2 
   * Sec. 47. AS 39.30.400(a) is amended to read: 3 
(a) The administrator may deduct the cost of monthly premiums from the 4 
individual account for retiree major medical insurance on behalf of an eligible person 5 
who elected retiree major medical insurance under AS 14.25.171, 14.25.480, 6 
AS 39.35.537, or 39.35.880 [AS 14.25.480 OR AS 39.35.880].  7 
   * Sec. 48. AS 39.30.420(a) is amended to read: 8 
(a)  Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 9 
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 10 
time, in whole or in part, including the right to make retroactive amendments referred 11 
to in 26 U.S.C. 401(b).  12 
   * Sec. 49. AS 39.30.420(b) is amended to read: 13 
(b)  The plan administrator may not modify or amend the plan retroactively [IN 14 
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 15 
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 16 
MADE] before the modification or amendment except to the extent that the reduction 17 
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 18 
Revenue Code.  19 
   * Sec. 50. AS 39.30.420(c) is amended to read: 20 
(c)  Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 21 
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 22 
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 23 
is terminated, all investments at the time of termination remain in force until all 24 
individual accounts have been completely distributed under the plan. After [, AND, 25 
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 26 
employer.  27 
   * Sec. 51. AS 39.30.420(d) is repealed and reenacted to read: 28 
(d)  Within one year after determining that a contribution to the plan by an 29 
employer was the result of a mistake of fact, the administrator shall return the 30 
contribution to the employer.  31    34-LS0280\A 
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   * Sec. 52. AS 39.30.495(5) is amended to read: 1 
(5) "eligible person" means a person who meets the eligibility 2 
requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 3 
OR AS 39.35.870];  4 
   * Sec. 53. AS 39.30.495(6) is amended to read: 5 
(6)  "employer" has the meaning given in AS 14.25.220 for employers 6 
of teachers in the defined benefit retirement plan established in AS 14.25.009 - 7 
14.25.220, has the meaning given in AS 14.25.590 for employers of teachers in the 8 
defined contribution plan established in AS 14.25.310 - 14.25.590, has the meaning 9 
given in AS 39.35.680 for employers of public employees in the defined benefit 10 
retirement plan established in AS 39.35.095 - 39.35.680, and has the meaning given 11 
in AS 39.35.990 for employers of public employees in the defined contribution plan 12 
established in AS 39.35.700 - 39.35.990;  13 
   * Sec. 54. AS 39.30.495(9) is amended to read: 14 
(9)  "member" means a member of the State of Alaska Teachers' and 15 
Public Employees' Retiree Health Reimbursement Arrangement Plan established 16 
in AS 39.30.300 - 39.30.495 [DEFINED CONTRIBUTION PLAN OF THE 17 
TEACHERS' RETIREMENT SYSTEM IN AS 14.25.310 - 14.25.590 OR A 18 
MEMBER OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM IN 19 
AS 39.35.700 - 39.35.990];  20 
   * Sec. 55. AS 39.35.095 is amended to read: 21 
Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 22 
[FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 23 
only to members first hired 24 
(1)  before July 1, 2006, who have 25 
(A)  not elected under former AS 39.35.940 to participate in 26 
the defined contribution retirement plan under AS 39.35.700 - 39.35.990; 27 
or 28 
(B)  elected under former AS 39.35.940 to participate in the 29 
defined contribution retirement plan under AS 39.35.700 - 39.35.990 and 30 
are former members of the defined contribution retirement plan under 31    34-LS0280\A 
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AS 39.35.700 - 39.35.990;  1 
(2)  after June 30, 2006, and before July 1, 2025, who are former 2 
members of the defined contribution retirement plan under AS 39.35.700 - 3 
39.35.990; or 4 
(3)  on or after July 1, 2025 [: AS 39.35.095 - 39.35.680].  5 
   * Sec. 56. AS 39.35.095 is amended by adding a new subsection to read: 6 
(b)  An employee who became a member of the system after June 30, 2006, 7 
and before July 1, 2025, or who has elected under former AS 39.35.940 to participate 8 
in the defined contribution retirement plan under AS 39.35.700 - 39.35.990, is subject 9 
to AS 39.35.095 - 39.35.680 if the employee  10 
(1)  is not employed by an employer on July 1, 2025;  11 
(2)  is reemployed by an employer after July 1, 2025; and  12 
(3)  has, before the date of reemployment, received  13 
(A) a distribution, other than a rollover distribution, of the 14 
entire balance in the member's individual account in the defined contribution 15 
retirement plan; or 16 
(B)  a rollover distribution of the entire balance in the member's 17 
individual account in the defined contribution retirement plan and has not 18 
within 180 days of reemployment had all or part of a direct rollover 19 
distribution from an eligible retirement plan owned by the member paid 20 
directly into the member's individual account. 21 
   * Sec. 57. AS 39.35.100(b) is amended to read: 22 
(b)  An individual account shall be maintained for each employee to record the 23 
amount of the employee's mandatory contributions collected under AS 39.35.160 24 
[AS 39.35.160(a)]. As of the last day of each calendar year and of each fiscal year, this 25 
account shall be credited with interest by applying the prescribed rate of interest, as 26 
determined by the board, to the balance in the account as of that date. When the 27 
employee is appointed to retirement, the amount held in the individual account shall 28 
be used first to fully finance the benefits paid. Once this account has been exhausted, 29 
the plan shall fully finance the benefits paid that were not financed by the employee's 30 
individual account.  31    34-LS0280\A 
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   * Sec. 58. AS 39.35 is amended by adding a new section to article 3 to read: 1 
Sec. 39.35.159. Election of defined benefit retirement plan by reemployed 2 
employees. (a) An employee may make a one-time election to participate in the plan 3 
under AS 39.35.095 - 39.35.680 if the employee 4 
(1)  became a member of the defined contribution retirement plan under 5 
AS 39.35.700 - 39.35.990 after June 30, 2006, and before July 1, 2025;  6 
(2)  is not employed by an employer on July 1, 2025; 7 
(3)  is reemployed by an employer after July 1, 2025; and 8 
(4)  before the date of reemployment,  9 
(A)  has not received a distribution of the entire balance in the 10 
employee's individual account under the defined contribution retirement plan 11 
established in AS 39.35.700 - 39.35.990; or  12 
(B)  has received a rollover distribution of the entire balance in 13 
the member's individual account in the defined contribution retirement plan 14 
and has within 180 days of reemployment had all or part of a direct rollover 15 
distribution from an eligible retirement plan owned by the member paid 16 
directly into the member's individual account. 17 
(b)  An election under (a) of this section may be made not more than 180 days 18 
after the date of reemployment. A reemployed employee electing to participate under 19 
(a) of this section shall use the balance of the employee's individual account in the 20 
plan under AS 39.35.700 - 39.35.990, including any rollover contributions, to 21 
purchase credited service in the plan under AS 39.35.095 - 39.35.680. An election 22 
made under (a) of this section must be made in writing in the manner prescribed by the 23 
administrator. An election made by an employee who is married is not effective unless 24 
the election is signed by the employee's spouse. The administrator shall provide an 25 
employee who is eligible to make an election under (a) of this section with 26 
information about the potential consequences of the employee's election, including 27 
calculations to illustrate the effect of moving the employee's retirement plan from a 28 
defined contribution retirement plan to a defined benefit retirement plan. 29 
(c)  An election made under (a) of this section to participate in the plan under 30 
AS 39.35.095 - 39.35.680 is irrevocable. On the effective date of the election, an 31    34-LS0280\A 
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eligible employee shall be enrolled as a member of the plan, and the employee's 1 
participation in the plan shall be governed by the applicable provisions of the plan. 2 
The employee's enrollment in the plan is retroactive to the date of hire.  3 
(d) When an eligible employee makes an election under this section, the 4 
administrator shall cause the total amount of the employee's employee and employer 5 
contributions to the plan under AS 39.35.700 - 39.35.990, with investment earnings 6 
and losses through the day of the employee's election to participate as a member in the 7 
plan under AS 39.35.095 - 39.35.680, to be actuarially calculated and, subject to (f) of 8 
this section, transferred to the pension fund in the plan under AS 39.35.095 - 9 
39.35.680. On the effective date of the employee's participation in the plan under 10 
AS 39.35.095 - 39.35.680, the employee shall be credited with service in the plan. The 11 
board shall determine the cost of the employee's actual service time based on the 12 
employee's accrued actuarial liability of pension benefits in the plan, and credit the 13 
employee with service time equal to the value actuarially calculated and transferred to 14 
the pension fund in the plan under AS 39.35.095 - 39.35.680. The board shall adopt 15 
regulations establishing transfer procedures. The transfer may not occur later than 60 16 
days after the date the administrator receives the employee's election, unless the major 17 
financial markets for securities available for a transfer are seriously disrupted by an 18 
unforeseen event that also causes the suspension of trading on a national securities 19 
exchange in the country where the securities were issued; in that event, the 60-day 20 
period may be extended by a resolution of the board. A transfer is not commissionable 21 
or subject to a fee and may be in the form of cash or a security as determined by the 22 
board. The value of a security shall be assessed on the date the security is received in 23 
the employee's account. 24 
(e) When making a transfer under (d) of this section or a transfer for a 25 
reemployed employee subject to the plan under AS 39.35.095(b), the administrator 26 
shall transfer  27 
(1)  an amount equal to the decrease in the accrued actuarial liability of 28 
the death and disability trust in the plan under AS 39.35.700 - 39.35.990 resulting 29 
from the transfer as of the date of transfer, based on the most recent actuarial valuation 30 
of the death and disability trust, from the death and disability trust in the plan under 31    34-LS0280\A 
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AS 39.35.700 - 39.35.990 to the pension fund in the plan under AS 39.35.095 - 1 
39.35.680; and  2 
(2)  an amount equal to the increase in the accrued actuarial liability of 3 
the health care trust in the plan under AS 39.35.095 - 39.35.680 resulting from the 4 
transfer as of the date of transfer, based on the actuarial assumptions set out in (g) of 5 
this section, from the trust established under AS 39.30.097(b) for the prefunding of 6 
medical benefits provided by AS 39.35.880 to the trust established under 7 
AS 39.30.097(a) for the prefunding of medical benefits provided by AS 39.35.537.  8 
(f)  If the value actuarially calculated under (d) of this section is insufficient to 9 
pay for service credit equal to the employee's actual service, the administrator shall 10 
allow the employee the option of purchasing service credit in an amount up to the 11 
amount needed to eliminate the insufficiency; however, if that value exceeds the 12 
amount needed to pay for service credit equal to the employee's actual service, the 13 
administrator shall cause the excess to be paid to the employee as a rollover transfer to 14 
either an individual employee annuity account in the Department of Administration 15 
under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 16 
Plan) or, if the member's employer does not participate in the State of Alaska 17 
Supplemental Annuity Plan, to an eligible retirement plan as defined in 18 
AS 39.35.760(d). An excess may not be used to purchase additional service credit in 19 
the plan under AS 39.35.095 - 39.35.680. When a reemployed employee enters the 20 
plan under AS 39.35.095(b), the administrator shall allow the employee to pay for a 21 
period of service credit up to the employee's actual service. When an employee elects 22 
to purchase service credit under this section and does not immediately pay for the 23 
service credit purchased, an indebtedness is established. Interest as prescribed by 24 
regulation accrues on an employee's indebtedness. If the indebtedness exists when the 25 
employee is appointed to retirement, the administrator shall make a corresponding 26 
actuarial adjustment to the benefit payable to the employee for service in the defined 27 
contribution retirement plan.  28 
(g) Actuarial assumptions about the plan under AS 39.35.095 - 39.35.680 29 
must be based on the most recent actuarial valuation of the plan, except that the 30 
retirement rates are computed at 25 percent of the retirement rates used in the most 31    34-LS0280\A 
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recent actuarial valuation of the pension fund for the plan plus 75 percent of the 1 
retirement rates used in the most recent actuarial valuation of the plan under 2 
AS 39.35.700 - 39.35.990. 3 
(h)  The provisions of this section are subject to the requirements of the 4 
Internal Revenue Code and the limitations under AS 39.35.115, 39.35.678, 5 
39.35.710(c) and (d), and 39.35.895. In this subsection, "Internal Revenue Code" has 6 
the meaning given in AS 39.35.990. 7 
   * Sec. 59. AS 39.35.160(a) is amended to read: 8 
(a)  Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 9 
each peace officer or firefighter shall contribute to the plan an amount equal to seven 10 
and one-half percent of the peace officer's or firefighter's compensation, and, except [. 11 
EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, 12 
each other employee shall contribute to the plan an amount equal to six and three-13 
quarters percent of the employee's compensation. [THE CONTRIBUTIONS SHALL 14 
BE DEDUCTED BY THE EMPLOYER AT THE END OF EACH PAYROLL 15 
PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 16 
COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 17 
TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 18 
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 19 
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 20 
OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 21 
   * Sec. 60. AS 39.35.160 is amended by adding new subsections to read: 22 
(e)  An employee who first participates in the plan after June 30, 2006, shall 23 
contribute to the plan an amount equal to eight percent of the employee's 24 
compensation. The board may, from time to time, adjust the employee contribution 25 
under this subsection to an amount that,  26 
(1) if decreased, is not less than eight percent of the employee's 27 
compensation; and  28 
(2) if increased, is not more than 12 percent of the employee's 29 
compensation. 30 
(f) Contributions under (a) and (e) of this section shall be deducted by the 31    34-LS0280\A 
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employer at the end of each payroll period. The contributions shall be deducted from 1 
employee compensation before computation of applicable federal taxes, and the 2 
contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 3 
member may not have the option of making the payroll deduction directly instead of 4 
having the contribution picked up by the employer. 5 
(g) The board shall increase the employee contribution under (e) of this 6 
section if the board determines that, unless the contribution is increased, the portion of 7 
the liability of the plan that is attributable to employees who first participate in the 8 
plan after June 30, 2006, will be funded below 90 percent. The board may not increase 9 
the employee contribution unless the board increases the employer contribution under 10 
AS 39.35.255(a)(2) by an equal amount. The board may decrease the contribution 11 
under (e) of this section if the board determines that, after the contribution is 12 
decreased, the portion of the liability of the plan that is attributable to all members 13 
who first became members of the plan after June 30, 2006, will be funded above 90 14 
percent. The board may not decrease the employee contribution unless the board 15 
decreases the employer contribution under AS 39.35.255(a)(2) by an equal amount. 16 
   * Sec. 61. AS 39.35.165(a) is amended to read: 17 
(a) An employee who is eligible to purchase credited service under 18 
AS 39.35.159, 39.35.310 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 19 
39.35.360, or 39.35.370, a member who is eligible to purchase credited service under 20 
AS 39.35.375, or an elected public official who is eligible to purchase credited service 21 
under AS 39.35.381 is an employee for purposes of this section. An employee may, in 22 
lieu of making payments directly to the plan, elect to have the employee's employer 23 
make payments as provided in this section.  24 
   * Sec. 62. AS 39.35.165(b) is amended to read: 25 
(b)  An employee may elect to have the employer make payments for all or any 26 
portion of the amounts payable for the employee's purchase of credited service 27 
through a salary reduction program as follows:  28 
(1)  the amounts paid under a salary reduction program are in lieu of 29 
contributions by the employee making the election; the electing employee's salary or 30 
other compensation shall be reduced by the amount paid by the employer under this 31    34-LS0280\A 
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subsection;  1 
(2)  the employee shall make an irrevocable election under this section 2 
to purchase credited service as permitted in AS 39.35.159, 39.35.310 [AS 39.35.310], 3 
39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 39.35.375, or 4 
39.35.381 and before the employee's termination of employment; the irrevocable 5 
election must specify the number of payroll periods that deductions will be made from 6 
the employee's compensation and the dollar amount of deductions for each payroll 7 
period during the specified number of payroll periods; the deductions made under this 8 
paragraph cease upon the earlier of the member's termination of employment with the 9 
employer or the member's death; amounts paid by an employer under (f) of this 10 
section may not be applied toward the payment of the dollar amount of the deductions 11 
representing the portion of the credited service that is being purchased by the member 12 
through payroll deduction in accordance with the member's irrevocable election under 13 
this subsection;  14 
(3)  amounts paid by an employer under this subsection shall be treated 15 
as employer contributions for the purpose of determining tax treatment under the 16 
Internal Revenue Code; the amounts paid by the employer under this section may not 17 
be included in the member's gross income for income tax purposes until those amounts 18 
are distributed by refund or retirement benefit payments.  19 
   * Sec. 63. AS 39.35.165(g) is amended to read: 20 
(g) Payments made under this section shall be applied to reduce the 21 
employee's outstanding indebtedness described in AS 39.35.159, 39.35.310 22 
[AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 23 
39.35.375, or 39.35.381 at the time that the contributions are received by the plan.  24 
   * Sec. 64. AS 39.35.165(i) is amended to read: 25 
(i)  On satisfaction of the eligibility requirements of AS 39.35.159, 39.35.310 26 
[AS 39.35.310], 39.35.330, 39.35.340, 39.35.341, 39.35.345, 39.35.360, 39.35.370, 27 
39.35.375, or 39.35.381, the requirements of this section, and the administrative filing 28 
requirements specified by the commissioner, the plan shall adjust the employee's 29 
credited service history and add any additional service credits acquired.  30 
   * Sec. 65. AS 39.35.255(a) is amended to read: 31    34-LS0280\A 
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(a)  Each employer, except as provided in (h) of this section, shall contribute to 1 
the system every payroll period the lesser of 2 
(1)  an amount calculated by applying a rate of 22 percent of the greater 3 
of the total of all base salaries  4 
(A) [(1)] paid by the employer to employees who are active 5 
members of the system, including any adjustments to contributions required by 6 
AS 39.35.520; or  7 
(B) [(2)]  paid by the employer to employees who were active 8 
members of the system during the corresponding payroll period for the fiscal 9 
year ending  10 
(i) [(A)]  June 30, 2008; or  11 
(ii) [(B)]  June 30, 2012, if that total is less than the total 12 
under (i) of this subparagraph [(A) OF THIS PARAGRAPH], and the 13 
employer is a municipality in which the population decreased by more 14 
than 25 percent between 2000 and 2010, according to the decennial 15 
census conducted by the United States Bureau of the Census; or 16 
(2) an amount calculated by applying a rate established by the 17 
board under AS 37.10.220 to the total of all base salaries paid by the employer to 18 
active members of the system; the rate must be at least 12 percent and be 19 
sufficient to pay the actuarially determined employer normal cost, all 20 
contributions required under AS 39.30.370 and AS 39.35.750, and past service 21 
cost for members of the system. 22 
   * Sec. 66. AS 39.35.255 is amended by adding a new subsection to read: 23 
(j) If the legislature appropriates funds for the purpose of decreasing an 24 
employer's contribution, the employer's contribution under (a) of this section shall 25 
decrease by that amount. 26 
   * Sec. 67. AS 39.35 is amended by adding a new section to read: 27 
Sec. 39.35.281. Sub-trust for members who first became members after 28 
June 30, 2006. The administrator shall deposit a portion of employer contributions 29 
under AS 39.35.255 and 39.35.280 in a sub-trust of the retirement fund established by 30 
the board for members who first became members after June 30, 2006. The amount 31    34-LS0280\A 
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deposited, when combined with the amount separately computed for medical benefits 1 
under AS 39.35.282, must be sufficient to pay the actuarially determined employer 2 
normal cost and past service cost for members of the system who first became 3 
members after June 30, 2006. When the amount sufficient to pay the actuarially 4 
determined employer normal cost, all contributions required under AS 39.30.370 and 5 
AS 39.35.750, and past service cost for members of the system is less than 12 percent 6 
of all base salaries paid to active members of the system, the administrator shall 7 
deposit the difference in the sub-trust established under this section.  8 
   * Sec. 68. AS 39.35.282 is amended to read: 9 
Sec. 39.35.282. Contributions for medical benefits. Contributions made by 10 
an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 11 
computed for benefits provided by AS 39.35.535 and retiree major medical 12 
insurance plan benefits provided under AS 39.35.537, and must [SHALL] be 13 
deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 14 
   * Sec. 69. AS 39.35.340(i) is amended to read: 15 
(i)  Notwithstanding (d) of this section, a member who retires as a peace officer 16 
or firefighter may elect to use five or fewer years of credited service granted under this 17 
section in computing years of credited service under AS 39.35.535(c) or 39.35.537. 18 
When eligibility for credited service for military service has been established and an 19 
election under this subsection has been made, an indebtedness in addition to the 20 
indebtedness determined under (b) of this section shall be determined for each year of 21 
military service used under this subsection, in an amount based on the increase, if any, 22 
in the present value of future benefits for that year as determined by the department.  23 
   * Sec. 70. AS 39.35.345(d) is amended to read: 24 
(d)  An employee may choose whether the credited service granted under this 25 
section is used to satisfy the credited service requirements for normal retirement under 26 
AS 39.35.370(a)(1)(B) or (C), 39.35.370(a)(2)(B), (C), or (D), [AS 39.35.370(a)(2) 27 
OR (3)] or 39.35.385(f) or is only used for the calculation of benefits. An election 28 
under this subsection is irrevocable and applies to all temporary credited service that 29 
the employee has accrued when the employee retires. An election under this 30 
subsection does not change the date that an employee is considered to have 31    34-LS0280\A 
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commenced participation in the plan under AS 39.35.120.  1 
   * Sec. 71. AS 39.35.370(a) is amended to read: 2 
(a)  Subject to AS 39.35.450, a terminated employee  3 
(1)  who first became a member before July 1, 2006, is eligible for a 4 
normal retirement benefit  5 
(A) [(1)]  at age 60 with at least five years of credited service;  6 
(B) [(2)]  with at least 20 years of credited service as a peace 7 
officer or firefighter; or  8 
(C) [(3)]  with at least 30 years of credited service; 9 
(2)  who first became a member after June 30, 2006, is eligible for a 10 
normal retirement benefit 11 
(A)  at age 60 with at least five years of credited service; 12 
(B)  at age 55 with at least 20 years of credited service as a 13 
peace officer or firefighter;  14 
(C)  at age 50 with at least 25 years of credited service as a 15 
peace officer or firefighter; or 16 
(D) with at least 30 years of credited service [FOR ALL 17 
OTHER EMPLOYEES]. 18 
   * Sec. 72. AS 39.35.381(e) is amended to read: 19 
(e)  A person who retires under this section is not entitled to disability or death 20 
benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 21 
to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 22 
section may not be used for vesting under AS 39.35.095 - 39.35.680.  23 
   * Sec. 73. AS 39.35.475(b) is amended to read: 24 
(b)  Subject to (g) and (h) of this section, the [THE] increase in benefit 25 
payments applies to total benefit payments except for the cost-of-living allowance 26 
under AS 39.35.480. The amount of the increase is a percentage of the current benefit 27 
equal to  28 
(1)  the lesser of 75 percent of the increase in the cost of living in the 29 
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 30 
years old and for members receiving disability benefits; and  31    34-LS0280\A 
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(2)  the lesser of 50 percent of the increase in the cost of living in the 1 
preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 2 
less than 65 years old or for recipients who are less than 60 years old on July 1 but 3 
who have received benefits from the plan for at least five years.  4 
   * Sec. 74. AS 39.35.475 is amended by adding new subsections to read:  5 
(g)  Subject to (h) of this section, the amount of an increase for members who 6 
first became members of the plan after June 30, 2006, and do not meet the eligibility 7 
requirements for a permanent fund dividend in effect on July 1, 2025, under 8 
AS 43.23.005(a) is equal to one-half of the applicable percentage under (b) of this 9 
section. 10 
(h)  If the board determines that the portion of the liability of the plan that is 11 
attributable to all members who first became members of the plan after June 30, 2006, 12 
is funded below 90 percent, the board may reduce the amount of the increase 13 
determined under (b) or (g) of this section that is payable to a member who first 14 
became a member after June 30, 2006. At any time, the board may terminate a 15 
reduction made under this subsection.  16 
   * Sec. 75. AS 39.35.480(a) is amended to read: 17 
(a)  While residing in the state, a person who first became a member of the 18 
plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680, 19 
and who is 65 years of age or older or a person who first became a member of the 20 
plan before July 1, 2006, and who is receiving a disability benefit is entitled to 21 
receive a monthly cost-of-living allowance in addition to the basic benefit. The 22 
amount of this allowance shall be $50 or 10 percent of the basic benefit, whichever is 23 
greater.  24 
   * Sec. 76. AS 39.35.535(a) is amended to read: 25 
(a)  Except as provided in (d) and (g) of this section, the following persons are 26 
entitled to major medical insurance coverage under this section:  27 
(1)  for employees first hired before July 1, 1986,  28 
(A)  an employee who is receiving a monthly benefit from the 29 
plan and who has elected coverage;  30 
(B) the spouse and dependent children of the employee 31    34-LS0280\A 
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described in (A) of this paragraph;  1 
(C) the surviving spouse of a deceased employee who is 2 
receiving a monthly benefit from the plan and who has elected coverage;  3 
(D) the dependent children of a deceased employee who are 4 
dependent on the surviving spouse described in (C) of this paragraph;  5 
(2)  for members first hired [ON OR] after June 30 [JULY 1], 1986,  6 
(A)  an employee who is receiving a monthly benefit from the 7 
plan and who has elected coverage for the employee;  8 
(B) the spouse of the employee described in (A) of this 9 
paragraph if the employee elected coverage for the spouse;  10 
(C)  the dependent children of the employee described in (A) of 11 
this paragraph if the employee elected coverage for the dependent children;  12 
(D) the surviving spouse of a deceased employee who is 13 
receiving a monthly benefit from the plan and who has elected coverage;  14 
(E) the dependent children of a deceased employee who are 15 
dependent on the surviving spouse described in (D) of this paragraph if the 16 
surviving spouse has elected coverage for the dependent children.  17 
   * Sec. 77. AS 39.35.535(c) is amended to read: 18 
(c)  A benefit recipient who became a member before July 1, 2006, or the 19 
surviving spouse of the member may elect major medical insurance coverage in 20 
accordance with regulations and under the following conditions: 21 
(1)  a person, other than a disabled member or a disabled member who 22 
is appointed to normal retirement, shall [MUST] pay an amount equal to the full 23 
monthly group premium for retiree major medical insurance coverage if the person is  24 
(A)  younger than 60 years of age and has less than  25 
(i)  25 years of credited service as a peace officer under 26 
AS 39.35.360 and 39.35.370; or  27 
(ii)  30 years of credited service under AS 39.35.360 and 28 
39.35.370 that is not service as a peace officer; or  29 
(B)  of any age and has less than 10 years of credited service; 30 
(2) a person is not required to make premium payments for retiree 31    34-LS0280\A 
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major medical coverage if the person  1 
(A)  is a disabled member;  2 
(B) is a disabled member who is appointed to normal 3 
retirement;  4 
(C) is 60 years of age or older and has at least 10 years of 5 
credited service; or  6 
(D)  has at least  7 
(i)  25 years of credited service as a peace officer under 8 
AS 39.35.360 and 39.35.370; or  9 
(ii)  30 years of credited service under AS 39.35.360 and 10 
39.35.370 not as a peace officer. 11 
   * Sec. 78. AS 39.35.535 is amended by adding a new subsection to read: 12 
(g)  A benefit recipient who first became a member after June 30, 2006, or a 13 
surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 14 
under this section but may elect medical benefits under AS 39.35.537.  15 
   * Sec. 79. AS 39.35 is amended by adding a new section to read: 16 
Sec. 39.35.537. Medical benefit; eligibility of employees first hired after 17 
June 30, 2006; surviving spouses and dependents. (a) An employee who first 18 
became a member of the plan after June 30, 2006, receives a monthly benefit from the 19 
plan, retired directly from the plan, and has elected benefits under this section is 20 
entitled to medical benefits under this section. A member who applies for medical 21 
benefits under this section shall apply on the forms and in the manner prescribed by 22 
the administrator. A member is eligible to retire from the plan if the member has been 23 
an active member for at least 12 months before application for retirement and the 24 
member 25 
(1)  is at least 26 
(A)  50 years of age and has at least 25 years of membership 27 
service as a peace officer or firefighter; 28 
(B)  55 years of age and has at least 20 years of membership 29 
service as a peace officer or firefighter;  30 
(2)  has at least 30 years of membership; or 31    34-LS0280\A 
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(3)  reaches the age set for Medicare eligibility and has at least 10 years 1 
of membership service. 2 
(b)  The member's surviving spouse is eligible to elect medical benefits if the 3 
member had retired or was eligible for retirement and medical benefits at the time of 4 
the member's death.  5 
(c)  The medical benefits available to eligible persons are access to the retiree 6 
major medical insurance plan and access to the health reimbursement arrangement 7 
plan under AS 39.30.300. Access to the retiree major medical insurance plan means 8 
that an eligible person may not be denied insurance coverage except for failure to pay 9 
the required premium.  10 
(d) Retiree major medical insurance plan coverage elected by an eligible 11 
member under this section covers the eligible member, the spouse of the eligible 12 
member, and the dependent children of the eligible member.  13 
(e) Retiree major medical insurance plan coverage elected by a surviving 14 
spouse of an eligible member under this section covers the surviving spouse and the 15 
dependent children of the eligible member who are dependent on the surviving spouse.  16 
(f)  Participation in the retiree major medical insurance plan is not required in 17 
order to participate in the health reimbursement arrangement plan.  18 
(g)  A person eligible for medical benefits under this section is not required to 19 
participate in the health reimbursement arrangement plan in order to participate in the 20 
retiree major medical insurance plan.  21 
(h)  A person who is eligible for medical benefits under this section must make 22 
the irrevocable election to participate or not participate in the retiree major medical 23 
insurance plan on or before the date the person reaches 70 1/2 years of age or when the 24 
person applies for retirement and medical benefits, whichever is later. 25 
(i)  Major medical insurance coverage takes effect on the first day of the month 26 
following the date of the administrator's approval of the election and stops when the 27 
person who elects coverage dies or fails to make a required premium payment.  28 
(j) The coverage for persons 65 years of age or older is the same as that 29 
available for persons under 65 years of age. The benefits payable to those persons 65 30 
years of age or older supplement any benefits provided under the federal old age, 31    34-LS0280\A 
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survivors, and disability insurance program.  1 
(k)  The medical and optional insurance premiums owed by the person who 2 
elects coverage may be deducted from the health reimbursement arrangement plan. If 3 
the amount of the health reimbursement arrangement plan becomes insufficient to pay 4 
the premiums, the person who elects coverage under (a) of this section shall pay the 5 
premiums directly.  6 
(l)  The cost of premiums for retiree major medical insurance coverage under 7 
this section for an eligible member or surviving spouse who is  8 
(1)  not eligible for Medicare is an amount equal to the full monthly 9 
group premiums for retiree major medical insurance coverage;  10 
(2)  eligible for Medicare is the following percentage of the premium 11 
amounts established for retirees who are eligible for Medicare: 12 
(A)  30 percent if the member had 10 or more, but less than 15, 13 
years of service;  14 
(B)  25 percent if the member had 15 or more, but less than 20, 15 
years of service;  16 
(C)  20 percent if the member had 20 or more, but less than 25, 17 
years of service;  18 
(D)  15 percent if the member had 25 or more, but less than 30, 19 
years of service;  20 
(E)  10 percent if the member had 30 or more years of service.  21 
(m) The eligibility for retiree major medical insurance coverage for an 22 
alternate payee under a qualified domestic relations order shall be determined based 23 
on the eligibility of the member to elect coverage. The alternate payee shall pay the 24 
full monthly premium for retiree major medical insurance coverage.  25 
(n)  The administrator shall  26 
(1) inform a person entitled to retiree major medical insurance 27 
coverage under this section in writing  28 
(A) that the health insurance coverage available to retired 29 
members may be different from the health insurance coverage provided to 30 
employees;  31    34-LS0280\A 
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(B) of time limits for selecting optional health insurance 1 
coverage; and  2 
(C)  whether the election is irrevocable; and  3 
(2) require that a person entitled to retiree major medical insurance 4 
coverage under this section indicate in writing on a form provided by the administrator 5 
whether the person has chosen to receive optional health insurance coverage.  6 
(o)  The monthly group premiums for retiree major medical insurance coverage 7 
under this section are established by the administrator in accordance with 8 
AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 9 
(a) of this section a monthly group premium rate for retiree major medical insurance 10 
coverage other than the premium in effect for the month in which the premium is due 11 
for coverage for that month.  12 
(p)  In this section, "health reimbursement arrangement plan" means the State 13 
of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 14 
Arrangement Plan established in AS 39.30.300.  15 
   * Sec. 80. AS 39.35.610(a) is amended to read: 16 
(a)  The contributions of an employer and the contributions of its employees 17 
shall be transmitted to the administrator as soon as practicable after the close of the 18 
payroll period for which the contributions are made. Subject to (c) of this section, if an 19 
employer is delinquent in transferring the contributions for more than 15 days, interest 20 
shall be assessed on the outstanding contributions at [ONE AND ONE-HALF TIMES] 21 
the most recent actuarially determined rate of earnings for the retirement plan from the 22 
date that the contributions were originally due.  23 
   * Sec. 81. AS 39.35.680(4) is amended to read: 24 
(4) "average monthly compensation" means the result obtained by 25 
dividing the compensation earned by an employee during a considered period by the 26 
number of months, including fractional months, for which compensation was earned; 27 
an employee must have at least 115 days of credited service in the last payroll year in 28 
order for that year to be used as part of the consecutive payroll years; the considered 29 
period consists of  30 
(A) for employees first hired before July 1, 1996, the three 31    34-LS0280\A 
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consecutive payroll years during the period of credited service that yield the 1 
highest average;  2 
(B)  for employees first hired [ON OR] after June 30 [JULY 1], 3 
1996, the five consecutive payroll years during the period of credited service 4 
that yield the highest average;  5 
(C)  if the employee does not have the number of consecutive 6 
payroll years required by (A) or (B) of this paragraph, the actual number of 7 
months, including fractional months, that the employee worked;  8 
(D) for an employee who has made an election under 9 
AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 10 
fractional months, that the employee worked;  11 
(E)  for a peace officer or firefighter hired before July 1, 2006 12 
[AT ANY TIME], the three consecutive payroll years during the period of 13 
credited service that yield the highest average;  14 
   * Sec. 82. AS 39.35.680(18) is amended to read: 15 
(18)  "employer" means  16 
(A)  the State of Alaska;  17 
(B)  a political subdivision or public organization of the state 18 
that participates in the plan based on a resolution to participate in the plan that 19 
was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or  20 
(C)  a political subdivision or public organization of the state 21 
that, as a result of consolidation or reorganization [THAT OCCURS ON OR 22 
AFTER JULY 1, 2006], assumes liability under the plan of a political 23 
subdivision or public organization described in (B) of this paragraph;  24 
   * Sec. 83. AS 39.35.680 is amended by adding a new paragraph to read: 25 
(44)  "first became a member after June 30, 2006" and "first became a 26 
member of the plan after June 30, 2006" include a member who elected under former 27 
AS 39.35.940 to participate in the plan under AS 39.35.700 - 39.35.990 and who 28 
elects to participate in the defined benefit retirement plan under AS 39.35.095 - 29 
39.35.680. 30 
   * Sec. 84. AS 39.35.700 is amended to read: 31    34-LS0280\A 
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Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 1 
AS 39.35.700 - 39.35.990 apply only to 2 
(1)  members first hired [ON OR] after June 30, 2006, and before 3 
July 1, 2025, who do not participate in a defined benefit retirement plan under 4 
AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; and 5 
(2)  [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 6 
EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 7 
RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 8 
FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who 9 
transferred [TRANSFER] into the defined contribution retirement plan under former 10 
AS 39.35.940 and do not elect to participate in the defined benefit retirement plan 11 
under AS 39.35.095 - 39.35.680.  12 
   * Sec. 85. AS 39.35.700 is amended by adding a new subsection to read: 13 
(b) A public organization as defined in AS 39.35.680 or a municipality or 14 
other political subdivision of the state that participates in the plan shall also participate 15 
in the defined benefit retirement plan under AS 39.35.095 - 39.35.680.  16 
   * Sec. 86. AS 39.35.720 is amended to read: 17 
Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 18 
after June 30, 2006, and before July 1, 2025, who does not participate in a defined 19 
benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 20 
39.35.680 [JULY 1, 2006,] shall participate in the plan set out in AS 39.35.700 - 21 
39.35.990.  22 
   * Sec. 87. AS 39.35.895(a) is amended to read: 23 
(a)  Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 24 
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 25 
time, in whole or in part, including the right to make retroactive amendments referred 26 
to in 26 U.S.C. 401(b).  27 
   * Sec. 88. AS 39.35.895(b) is amended to read: 28 
(b)  The plan administrator may not modify or amend the plan retroactively [IN 29 
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 30 
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 31    34-LS0280\A 
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MADE] before the modification or amendment except to the extent that the reduction 1 
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 2 
Revenue Code.  3 
   * Sec. 89. AS 39.35.895(c) is amended to read: 4 
(c)  Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 5 
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 6 
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 7 
is terminated, all investments at the time of termination remain in force until all 8 
individual accounts have been completely distributed under the plan. After [, AND, 9 
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 10 
employer.  11 
   * Sec. 90. AS 39.35.895(d) is repealed and reenacted to read: 12 
(d)  Within one year after determining that a contribution to the plan by an 13 
employer was the result of a mistake of fact, the administrator shall return the 14 
contribution to the employer.  15 
   * Sec. 91. AS 14.25.012(c), 14.25.061, 14.25.540; and AS 39.35.940 are repealed. 16 
   * Sec. 92. The uncodified law of the State of Alaska is amended by adding a new section to 17 
read: 18 
TRANSITION: RETIREMENT PLAN ELECTION. (a) A teacher who became a 19 
member of the defined contribution retirement plan of the teachers' retirement system after 20 
June 30, 2006, and before July 1, 2025, and who, on July 1, 2025, is a member employed by 21 
an employer in the defined contribution retirement plan of the teachers' retirement system 22 
may, before January 1, 2026, make a one-time election to participate in the defined benefit 23 
retirement plan and to transfer all contributions that have been made or should be made to the 24 
defined contribution retirement plan for service the member completes before the effective 25 
date of the member's participation in the defined benefit retirement plan. The transferred 26 
contributions shall be used to purchase credited service in the defined benefit retirement plan 27 
on an actuarial equivalent basis determined by the Alaska Retirement Management Board 28 
established under AS 37.10.210. The provisions of AS 14.25.044 apply to an election made 29 
under this subsection. 30 
(b)  An employee who became a member of the defined contribution retirement plan 31    34-LS0280\A 
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of the public employees' retirement system after June 30, 2006, and before July 1, 2025, and 1 
who, on July 1, 2025, is a member employed by an employer in the defined contribution 2 
retirement plan of the public employees' retirement system may, before January 1, 2026, make 3 
a one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 4 
39.35.680 and to transfer all contributions that have been made or should be made to the 5 
defined contribution retirement plan for service the member completes before the effective 6 
date of the member's participation in the defined benefit retirement plan. The transferred 7 
contributions shall be used to purchase credited service in the defined benefit retirement plan 8 
on an actuarial equivalent basis determined by the Alaska Retirement Management Board 9 
established under AS 37.10.210. The provisions of AS 39.35.159 apply to an election made 10 
under this subsection. 11 
   * Sec. 93. The uncodified law of the State of Alaska is amended by adding a new section to 12 
read: 13 
ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 14 
may adopt regulations necessary to implement secs. 37 and 38 of this Act. Regulations 15 
adopted by the Alaska Retirement Management Board under this Act relate to the internal 16 
management of a state agency and are not subject to AS 44.62 (Administrative Procedure Act) 17 
under AS 37.10.240. 18 
(b) The commissioner of administration may adopt regulations necessary to 19 
implement secs. 1 - 36 and 39 - 92 of this Act. Regulations adopted by the commissioner of 20 
administration under this Act relate to the internal management of a state agency and are not 21 
subject to AS 44.62 (Administrative Procedure Act) under AS 14.25.005, AS 39.30.098, and 22 
AS 39.35.005. 23 
(c)  Regulations adopted under this section may not take effect before the effective 24 
date of the law being implemented by the regulation.  25 
   * Sec. 94. Section 93 of this Act takes effect immediately under AS 01.10.070(c). 26 
   * Sec. 95. Except as provided in sec. 94 of this Act, this Act takes effect July 1, 2025. 27