Alaska 2025-2026 Regular Session

Alaska Senate Bill SB28 Compare Versions

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

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11	11	SENATE BILL NO. 28
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13	13	IN THE LEGISLATURE OF THE STATE OF ALASKA
14	14
15	15	THIRTY-FOURTH LEGISLATURE - FIRST SESSION
16	16
17	17	BY SENATOR GIESSEL
18	18
19	19	Introduced: 1/10/25
20	20	Referred: Prefiled
21	21
22	22
23	23	A BILL
24	24
25	25	FOR AN ACT ENTITLED
26	26
27	27	"An Act relating to the Public Employees' Retirement System of Alaska and the 1
28	28	teachers' retirement system; providing certain employees an opportunity to choose 2
29	29	between the defined benefit and defined contribution plans of the Public Employees' 3
30	30	Retirement System of Alaska and the teachers' retirement system; and providing for an 4
31	31	effective date." 5
32	32	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 6
33	33	* Section 1. AS 14.25.009 is repealed and reenacted to read: 7
34	34	Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 8
35	35	AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the 9
36	36	defined benefit retirement plan under AS 14.25.009 - 14.25.220 and are not members 10
37	37	of the defined contribution retirement plan under AS 14.25.310 - 14.25.590. 11
38	38	* Sec. 2. AS 14.25.040(a) is amended to read: 12
39	39	(a) A teacher or member contracting for service with a participating
40	40	13 34-LS0280\A
41	41	SB 28 -2- SB0028A
42	42	New Text Underlined [DELETED TEXT BRACKETED]
43	43
44	44	employer is subject to AS 14.25.009 - 14.25.220 unless the [UNLESS A] teacher or 1
45	45	member 2
46	46	(1) participates in a university retirement program under AS 14.40.661 3
47	47	- 14.40.799; 4
48	48	(2) became a member after June 30, 2006, and before July 1, 2025, 5
49	49	is eligible to participate in the defined contribution retirement plan under 6
50	50	AS 14.25.310 - 14.25.590, and does not elect to participate in the defined benefit 7
51	51	retirement plan under AS 14.25.009 - 14.25.220; or 8
52	52	(3) has elected under former AS 14.25.540 to participate in the plan 9
53	53	established in AS 14.25.310 - 14.25.590 and does not elect to participate in the 10
54	54	defined benefit retirement plan under AS 14.25.009 - 14.25.220 [, A TEACHER 11
55	55	OR MEMBER CONTRACTING FOR SERVICE WITH A PARTICIPATING 12
56	56	EMPLOYER IS SUBJECT TO AS 14.25.009 - 14.25.220]. 13
57	57	* Sec. 3. AS 14.25.040 is amended by adding new subsections to read: 14
58	58	(f) An active member of this plan who is also employed in a position in the 15
59	59	public employees' retirement plan under AS 39.35.095 - 39.35.680 may elect to 16
60	60	participate solely in this plan if 17
61	61	(1) the member directs the public employees' retirement plan employer 18
62	62	in writing to 19
63	63	(A) pay into this plan the employer contributions required for a 20
64	64	member under AS 14.25.009 - 14.25.220; and 21
65	65	(B) deduct from the member's salary and pay into this plan 22
66	66	(i) the employee contributions required for a member 23
67	67	under AS 14.25.009 - 14.25.220; and 24
68	68	(ii) an amount equal to the difference between the total 25
69	69	employer and state contributions required for a member under 26
70	70	AS 14.25.009 - 14.25.220 and the employer contributions that would be 27
71	71	required under AS 39.35.095 - 39.35.680 if the member participated in 28
72	72	that plan; and 29
73	73	(2) the member provides written notice to the administrator. 30
74	74	(g) An active member of this plan who elects to participate solely in this plan 31 34-LS0280\A
75	75	SB0028A -3- SB 28
76	76	New Text Underlined [DELETED TEXT BRACKETED]
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78	78	under (f) of this section may not, while participating solely in this plan, receive 1
79	79	credited service for benefit eligibility for service performed in a position in the public 2
80	80	employees' retirement plan. 3
81	81	(h) A teacher who became a member of the system after June 30, 2006, and 4
82	82	before July 1, 2025, or who has elected under former AS 14.25.540 to participate in 5
83	83	the defined contribution retirement plan under AS 14.25.310 - 14.25.590, is subject to 6
84	84	AS 14.25.009 - 14.25.220 and is not eligible to participate in the defined contribution 7
85	85	retirement plan established in AS 14.25.310 - 14.25.590 if the teacher 8
86	86	(1) is not employed by an employer on July 1, 2025; 9
87	87	(2) is reemployed by an employer after July 1, 2025; and 10
88	88	(3) has, before the date of reemployment, received 11
89	89	(A) a distribution, other than a rollover distribution, of the 12
90	90	entire balance in the teacher's individual account in the defined contribution 13
91	91	retirement plan; or 14
92	92	(B) a rollover distribution of the entire balance in the teacher's 15
93	93	individual account in the defined contribution retirement plan under 16
94	94	AS 14.25.310 - 14.25.590 and has not within 180 days of reemployment had 17
95	95	all or part of a direct rollover distribution from an eligible retirement plan 18
96	96	owned by the teacher paid directly into the teacher's individual account under 19
97	97	AS 14.25.310 - 14.25.590. 20
98	98	* Sec. 4. AS 14.25 is amended by adding a new section to read: 21
99	99	Sec. 14.25.044. Election of defined benefit retirement plan by reemployed 22
100	100	teachers. (a) A teacher may make a one-time election to participate in the defined 23
101	101	benefit retirement plan under AS 14.25.009 - 14.25.220 if the teacher 24
102	102	(1) became a member of the defined contribution retirement plan under 25
103	103	AS 14.25.310 - 14.25.590 after June 30, 2006, and before July 1, 2025; 26
104	104	(2) is not employed by an employer on July 1, 2025; 27
105	105	(3) is reemployed by an employer after July 1, 2025; and 28
106	106	(4) before the date of reemployment, 29
107	107	(A) has not received a distribution of the entire balance in the 30
108	108	teacher's individual account under the defined contribution retirement plan 31 34-LS0280\A
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112	112	under AS 14.25.310 - 14.25.590; or 1
113	113	(B) has received a rollover distribution of the entire balance in 2
114	114	the teacher's individual account in the plan under AS 14.25.310 - 14.25.590 3
115	115	and has within 180 days of reemployment had all or part of a direct rollover 4
116	116	distribution from an eligible retirement plan owned by the teacher paid directly 5
117	117	into the teacher's individual account under AS 14.25.310 - 14.25.590. 6
118	118	(b) An election under (a) of this section may be made not more than 180 days 7
119	119	after the date of reemployment. A reemployed teacher electing to participate under (a) 8
120	120	of this section shall use the balance of the member's individual account in the plan 9
121	121	under AS 14.25.310 - 14.25.590, including any rollover contributions, to purchase 10
122	122	credited service in the plan under AS 14.25.009 - 14.25.220. An election made under 11
123	123	(a) of this section must be made in writing in the manner prescribed by the 12
124	124	administrator. An election made by a teacher who is married is not effective unless the 13
125	125	election is signed by the teacher's spouse. The administrator shall provide a teacher 14
126	126	who is eligible to make an election under (a) of this section with information about the 15
127	127	potential consequences of the teacher's election, including calculations to illustrate the 16
128	128	effect of moving the teacher's retirement plan from a defined contribution retirement 17
129	129	plan to a defined benefit retirement plan. 18
130	130	(c) An election made under (a) of this section to participate in the plan under 19
131	131	AS 14.25.009 - 14.25.220 is irrevocable. On the effective date of the election, the 20
132	132	teacher shall be enrolled as a member of the plan, and the teacher's participation in the 21
133	133	plan shall be governed by the applicable provisions of the plan. The teacher's 22
134	134	enrollment in the plan is retroactive to the date of hire. 23
135	135	(d) When a teacher makes an election under this section, the administrator 24
136	136	shall cause the total amount of the teacher's member and employer contributions to the 25
137	137	plan under AS 14.25.310 - 14.25.590, with investment earnings and losses through the 26
138	138	day of the teacher's election to participate as a member in the plan under AS 14.25.009 27
139	139	- 14.25.220, to be actuarially calculated and, subject to (f) of this section, transferred 28
140	140	to the retirement fund in the plan under AS 14.25.009 - 14.25.220. On the effective 29
141	141	date of the teacher's participation in the plan under AS 14.25.009 - 14.25.220, the 30
142	142	teacher shall be credited with service in the plan. The board shall determine the cost of 31 34-LS0280\A
143	143	SB0028A -5- SB 28
144	144	New Text Underlined [DELETED TEXT BRACKETED]
145	145
146	146	the teacher's actual service time based on the teacher's accrued actuarial liability of 1
147	147	pension benefits in the plan, and credit the teacher with service time equal to the value 2
148	148	actuarially calculated and transferred to the retirement fund in the plan under 3
149	149	AS 14.25.009 - 14.25.220. The board shall adopt regulations establishing transfer 4
150	150	procedures. The transfer may not occur later than 60 days after the date the 5
151	151	administrator receives the teacher's election, unless the major financial markets for 6
152	152	securities available for a transfer are seriously disrupted by an unforeseen event that 7
153	153	also causes the suspension of trading on a national securities exchange in the country 8
154	154	where the securities were issued; in that event, the 60-day period may be extended by 9
155	155	a resolution of the board. A transfer is not commissionable or subject to a fee and may 10
156	156	be in the form of cash or a security as determined by the board. The value of a security 11
157	157	shall be assessed on the date the security is received in the teacher's account. 12
158	158	(e) When making a transfer under (d) of this section or a transfer for a 13
159	159	reemployed teacher subject to the plan under AS 14.25.040(h), the administrator shall 14
160	160	transfer 15
161	161	(1) an amount equal to the decrease in the accrued actuarial liability of 16
162	162	the death and disability trust in the plan established under AS 14.25.310 - 14.25.590 17
163	163	resulting from the transfer as of the date of transfer, based on the most recent actuarial 18
164	164	valuation of the death and disability trust, from the death and disability trust in the 19
165	165	plan established under AS 14.25.310 - 14.25.590 to the retirement fund in the plan 20
166	166	established under AS 14.25.009 - 14.25.220; and 21
167	167	(2) an amount equal to the increase in the accrued actuarial liability of 22
168	168	the health care trust in the plan established under AS 14.25.009 - 14.25.220 resulting 23
169	169	from the transfer as of the date of transfer, based on the actuarial assumptions set out 24
170	170	in (g) of this section, from the trust established under AS 39.30.097(b) for the 25
171	171	prefunding of medical benefits provided by AS 14.25.480 to the trust established 26
172	172	under AS 39.30.097(a) for the prefunding of medical benefits provided by 27
173	173	AS 14.25.171. 28
174	174	(f) If the value actuarially calculated under (d) of this section is insufficient to 29
175	175	pay for service credit equal to the teacher's actual service time, the administrator shall 30
176	176	allow the teacher the option of purchasing service credit in an amount up to the 31 34-LS0280\A
177	177	SB 28 -6- SB0028A
178	178	New Text Underlined [DELETED TEXT BRACKETED]
179	179
180	180	amount needed to eliminate the insufficiency; however, if that value exceeds the 1
181	181	amount needed to pay for service credit equal to the teacher's actual service, the 2
182	182	administrator shall cause the excess to be paid to the employee as a rollover transfer to 3
183	183	either an individual employee annuity account in the Department of Administration 4
184	184	under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 5
185	185	Plan) or, if the member's employer does not participate in the State of Alaska 6
186	186	Supplemental Annuity Plan, to an eligible retirement plan as defined in 7
187	187	AS 14.25.360(d). An excess may not be used to purchase additional service credit in 8
188	188	the plan under AS 14.25.009 - 14.25.220. When a reemployed teacher enters the plan 9
189	189	under AS 14.25.040(h), the administrator shall allow the teacher to pay for a period of 10
190	190	service credit up to the teacher's actual service. When a teacher elects to purchase 11
191	191	service credit under this section and does not immediately pay for the service credit 12
192	192	purchased, an indebtedness is established. Interest as prescribed by regulation accrues 13
193	193	on a teacher's indebtedness. If the indebtedness exists when the teacher is appointed to 14
194	194	retirement, the administrator shall make a corresponding actuarial adjustment to the 15
195	195	benefit payable to the teacher for service in the defined contribution retirement plan. 16
196	196	(g) Actuarial assumptions about the plan under AS 14.25.009 - 14.25.220 17
197	197	must be based on the most recent actuarial valuation of the plan, except that the 18
198	198	retirement rates are computed at 25 percent of the retirement rates used in the most 19
199	199	recent actuarial valuation of the retirement fund plus 75 percent of the retirement rates 20
200	200	used in the most recent actuarial valuation of the plan under AS 14.25.310 - 14.25.590. 21
201	201	(h) The provisions of this section are subject to the requirements of the 22
202	202	Internal Revenue Code and the limitations under AS 14.25.010, 14.25.181, 23
203	203	14.25.320(c) and (d), and 14.25.490. 24
204	204	* Sec. 5. AS 14.25.048(b) is amended to read: 25
205	205	(b) An employee or former employee who first became a member of the 26
206	206	plan before July 1, 2006, may receive credit for retroactive membership service for 27
207	207	employment before June 5, 1988, if the employee or former employee met the 28
208	208	requirements listed in (a) of this section at the time of the employment. To receive 29
209	209	credit for the retroactive membership service, the employee or former employee shall 30
210	210	claim the service and pay the retroactive contributions required under former 31 34-LS0280\A
211	211	SB0028A -7- SB 28
212	212	New Text Underlined [DELETED TEXT BRACKETED]
213	213
214	214	AS 14.25.061. However, an employee or former employee may not receive retroactive 1
215	215	credit under this subsection if the employee received credited service under AS 39.35 2
216	216	for the employment. 3
217	217	* Sec. 6. AS 14.25.048(c) is amended to read: 4
218	218	(c) An employee or former employee who first became a member of the 5
219	219	plan before July 1, 2006, and who received credit under AS 39.35 for service that 6
220	220	qualifies under (a) of this section may elect to transfer those periods of employment to 7
221	221	the plan. To receive credit for retroactive membership service under this subsection, 8
222	222	the employee or former employee shall claim the service and pay the retroactive 9
223	223	contributions required under former AS 14.25.061. 10
224	224	* Sec. 7. AS 14.25.050(a) is amended to read: 11
225	225	(a) Except as provided in (c) and (e) of this section, beginning January 1, 12
226	226	1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 13
227	227	member's base salary accrued from July 1 to the following June 30. [THE 14
228	228	EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 15
229	229	SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 16
230	230	CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 17
231	231	CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 18
232	232	FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 19
233	233	APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 20
234	234	CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 21
235	235	THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 22
236	236	INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 23
237	237	EMPLOYER.] 24
238	238	* Sec. 8. AS 14.25.050 is amended by adding new subsections to read: 25
239	239	(e) A member who first participates in the plan after June 30, 2006, shall 26
240	240	contribute to the plan an amount equal to eight percent of the member's base salary 27
241	241	accrued from July 1 to the following June 30. The board may, from time to time, 28
242	242	adjust the contribution under this subsection to an amount that, 29
243	243	(1) if decreased, is not less than eight percent of the member's base 30
244	244	salary; and 31 34-LS0280\A
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248	248	(2) if increased, is not more than 12 percent of the member's base 1
249	249	salary. 2
250	250	(f) The employer shall deduct a contribution under this section from the 3
251	251	member's salary at the end of each payroll period, and the contribution shall be 4
252	252	credited by the plan to the member contribution account. The contributions shall be 5
253	253	deducted from member compensation before the computation of applicable federal 6
254	254	taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 7
255	255	member may not have the option of making the payroll deduction directly in cash 8
256	256	instead of having the contribution picked up by the employer. 9
257	257	(g) The board shall increase the member contribution under (e) of this section 10
258	258	if the board determines that, unless the contribution is increased, the portion of the 11
259	259	liability of the plan that is attributable to all members who first became members of 12
260	260	the plan after June 30, 2006, will be funded below 90 percent. The board may not 13
261	261	increase the member contribution unless the board increases the employer contribution 14
262	262	under AS 14.25.070(a)(2) by an equal amount. The board may decrease the 15
263	263	contribution under (e) of this section if the board determines that, after the 16
264	264	contribution is decreased, the portion of the liability of the plan that is attributable to 17
265	265	all members who first became members of the plan after June 30, 2006, will be funded 18
266	266	above 90 percent. The board may not decrease the member contribution unless the 19
267	267	board decreases the employer contribution under AS 14.25.070(a)(2) by an equal 20
268	268	amount. 21
269	269	* Sec. 9. AS 14.25.065(b) is amended to read: 22
270	270	(b) The contributions of employers under AS 14.25.070 must be transmitted to 23
271	271	the plan for deposit in the retirement fund and the Alaska retiree health care trust at the 24
272	272	close of each pay period. If the contributions are not submitted within the prescribed 25
273	273	time limit, interest must be assessed on the outstanding contributions at [ONE AND 26
274	274	ONE-HALF TIMES] the most recent actuarially determined rate of earnings for the 27
275	275	plan from the date that contributions were originally due. Amounts due from an 28
276	276	employer and interest as prescribed in this section may be claimed by the 29
277	277	administrator from any agency of the state or political subdivi
278	278	sion that has in its 30
279	279	possession funds of the employer or that is authorized to disburse funds to the 31 34-LS0280\A
280	280	SB0028A -9- SB 28
281	281	New Text Underlined [DELETED TEXT BRACKETED]
282	282
283	283	employer that are not restricted by statute or appropriation to a specific purpose. The 1
284	284	amount claimed shall be certified by the administrator as sufficient to pay the 2
285	285	contributions and interest due from the employer. The amount claimed shall be 3
286	286	submitted to the administrator for deposit in the retirement fund and the Alaska retiree 4
287	287	health care trust. 5
288	288	* Sec. 10. AS 14.25.070(a) is amended to read: 6
289	289	(a) Each employer shall contribute to the system every payroll period the 7
290	290	lesser of 8
291	291	(1) an amount calculated by applying a rate of 12.56 percent to the 9
292	292	total of all base salaries paid by the employer to active members of the system and to 10
293	293	members who are retired from the plan and reemployed under AS 14.20.136, 11
294	294	including any adjustments to contributions required by AS 14.25.173(a); or 12
295	295	(2) an amount calculated by applying a rate established by the 13
296	296	board under AS 37.10.220 to the total of all base salaries paid by the employer to 14
297	297	active members of the system and to members who are retired from the plan and 15
298	298	reemployed under AS 14.20.136, including any adjustments to contributions 16
299	299	required by AS 14.25.173(a); the rate must be at least 12 percent and be sufficient 17
300	300	to pay the actuarially determined employer normal cost, all contributions 18
301	301	required under AS 14.25.350 and AS 39.30.370, and past service cost for 19
302	302	members of the system. 20
303	303	* Sec. 11. AS 14.25.070 is amended by adding a new subsection to read: 21
304	304	(i) If the legislature appropriates funds for the purpose of decreasing an 22
305	305	employer's contribution, the employer's contribution under (a) of this section shall 23
306	306	decrease by that amount. 24
307	307	* Sec. 12. AS 14.25.075(a) is amended to read: 25
308	308	(a) An employee who is eligible to purchase credited service under 26
309	309	AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 27
310	310	under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 28
311	311	[14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligible to purchase credited 29
312	312	service under AS 14.20.345, AS 14.25.044, 14.25.050 [AS 14.25.050], or 14.25.105, 30
313	313	in lieu of making payments directly to the plan, may elect to have the member's 31 34-LS0280\A
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316	316
317	317	employer make payments as provided in this section. 1
318	318	* Sec. 13. AS 14.25.075(b) is amended to read: 2
319	319	(b) A member may elect to have the employer make payments for all or any 3
320	320	portion of the amounts payable for the member's purchase of credited service through 4
321	321	a salary reduction program as follows: 5
322	322	(1) the amounts paid under a salary reduction program are in lieu of 6
323	323	contributions by the member making the election; the electing member's salary or 7
324	324	other compensation shall be reduced by the amount paid by the employer under this 8
325	325	subsection; 9
326	326	(2) the member shall make an irrevocable election under this 10
327	327	subsection to purchase credited service as permitted in former AS 14.25.061 or in 11
328	328	AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 12
329	329	14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107 before the member's 13
330	330	termination of employment; the irrevocable election must specify the number of 14
331	331	payroll periods that deductions will be made from the member's compensation and the 15
332	332	dollar amount of deductions for each payroll period during the specified number of 16
333	333	payroll periods; the deductions made under this paragraph cease upon the earlier of the 17
334	334	member's termination of employment with the employer or the member's death; 18
335	335	amounts paid by an employer under (f) of this section may not be applied toward the 19
336	336	payment of the dollar amount of the deductions representing the portion of the credited 20
337	337	service that is being purchased by the member through payroll deduction in 21
338	338	accordance with the member's irrevocable election under this paragraph; 22
339	339	(3) amounts paid by an employer under this subsection shall be treated 23
340	340	as employer contributions for the purpose of determining tax treatment under 26 24
341	341	U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 25
342	342	may not be included in the member's gross income for income tax purposes until those 26
343	343	amounts are distributed by refund or retirement benefit payments. 27
344	344	* Sec. 14. AS 14.25.075(i) is amended to read: 28
345	345	(i) On satisfaction of the eligibility requirements of former AS 14.25.061 or 29
346	346	of AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 30
347	347	14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107, the requirements of this 31 34-LS0280\A
348	348	SB0028A -11- SB 28
349	349	New Text Underlined [DELETED TEXT BRACKETED]
350	350
351	351	section, and the administrative filing requirements specified by the administrator, the 1
352	352	plan shall adjust the member's credited service history and add any additional service 2
353	353	credits acquired. 3
354	354	* Sec. 15. AS 14.25 is amended by adding a new section to read: 4
355	355	Sec. 14.25.086. Sub-trust for members who first became members after 5
356	356	June 30, 2006. The administrator shall deposit a portion of employer contributions 6
357	357	under AS 14.25.070 and 14.25.085 in a sub-trust of the retirement fund established by 7
358	358	the board for members who first became members after June 30, 2006. The amount 8
359	359	deposited, when combined with the amount separately computed for medical benefits 9
360	360	under AS 14.25.087, must be sufficient to pay the actuarially determined employer 10
361	361	normal cost and past service cost for members of the system who first became 11
362	362	members after June 30, 2006. When the amount sufficient to pay the actuarially 12
363	363	determined employer normal cost, all contributions required under AS 14.25.350 and 13
364	364	AS 39.30.370, and past service cost for members of the system is less than 12 percent 14
365	365	of all base salaries paid to active members of the system and to members who are 15
366	366	retired from the plan and reemployed under AS 14.20.136, including any adjustments 16
367	367	to contributions required by AS 14.25.173(a), the administrator shall deposit the 17
368	368	difference in the sub-trust established under this section. 18
369	369	* Sec. 16. AS 14.25.087 is amended to read: 19
370	370	Sec. 14.25.087. Contributions for medical benefits. Contributions made by 20
371	371	an employer under AS 14.25.070 and 14.25.085 must [SHALL] be separately 21
372	372	computed for benefits provided by AS 14.25.168 and retiree major medical 22
373	373	insurance plan benefits provided under AS 14.25.171, and must [SHALL] be 23
374	374	deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 24
375	375	* Sec. 17. AS 14.25.110(a) is amended to read: 25
376	376	(a) Subject to AS 14.25.167, 26
377	377	(1) a member who first became a member of the plan before July 1, 27
378	378	2006, is eligible for a normal retirement benefit if the member 28
379	379	(A) [(1)] was first hired before July 1, 1975, has attained the 29
380	380	age of 55 years, and has at least 15 years of credited service, the last five of 30
381	381	which have been membership service, or is otherwise vested in the plan; 31 34-LS0280\A
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384	384
385	385	(B) [(2)] has attained the age of 60 years and has at least eight 1
386	386	years of membership service; 2
387	387	(C) [(3)] has attained the age of 60 years, has at least five years 3
388	388	of membership service, and has Alaska BIA service which, when added to the 4
389	389	membership service, will equal at least eight years; 5
390	390	(D) [(4)] has at least 25 years of credited service, the last five 6
391	391	of which have been membership service; 7
392	392	(E) [(5)] has at least 20 years of membership service; 8
393	393	(F) [(6)] has at least 20 years of combined membership service 9
394	394	and Alaska BIA service, the last five of which have been membership service; 10
395	395	or 11
396	396	(G) [(7)] has, for each of 20 school years, 12
397	397	(i) [(A)] at least one-half year of membership service as 13
398	398	a part-time teacher; 14
399	399	(ii) [(B)] one full year of membership service as a full-15
400	400	time teacher; or 16
401	401	(iii) [(C)] any combination of service qualified under 17
402	402	this subparagraph; 18
403	403	(2) a member who first became a member of the plan after 19
404	404	June 30, 2006, is eligible for a normal retirement benefit if the member 20
405	405	(A) has attained the age of 60 years and has at least five 21
406	406	years of membership service; or 22
407	407	(B) has at least 30 years of membership service 23
408	408	[PARAGRAPH]. 24
409	409	* Sec. 18. AS 14.25.110(b) is amended to read: 25
410	410	(b) Subject to AS 14.25.167, a member is eligible for an early retirement 26
411	411	benefit upon completing the service requirements in (a)(1)(A) [(a)(1)] of this section 27
412	412	and attaining the age of 50 years or upon completing the service requirements in 28
413	413	(a)(1)(B) or (C) [(a)(2) OR (3)] of this section and attaining the age of 55 years. 29
414	414	* Sec. 19. AS 14.25.110(d) is amended to read: 30
415	415	(d) The monthly amount of a retirement benefit 31 34-LS0280\A
416	416	SB0028A -13- SB 28
417	417	New Text Underlined [DELETED TEXT BRACKETED]
418	418
419	419	(1) for a member who first became a member of the plan before 1
420	420	July 1, 2006, and who has paid the full amount of any indebtedness is one-twelfth of 2
421	421	the member's average base salary during any three school years of membership service 3
422	422	multiplied by 4
423	423	(A) [(1)] two percent of the years of credited service earned 5
424	424	before June 30, 1990, including credited fractional years, and the years of 6
425	425	credited service through a total of 20 years; plus 7
426	426	(B) [(2)] two and one-half percent of the years of credited 8
427	427	service earned after June 30, 1990, that are more than 20 years of total credited 9
428	428	service; 10
429	429	(2) for a member who first became a member of the plan after 11
430	430	June 30, 2006, and who has paid the full amount of any indebtedness is one-12
431	431	twelfth of the member's average base salary during any five school years of 13
432	432	membership service multiplied by 14
433	433	(A) two percent of the years of credited service through a 15
434	434	total of 10 years; plus 16
435	435	(B) two and one-quarter percent of the years over 10 years 17
436	436	of total credited service through 20 years; plus 18
437	437	(C) two and one-half percent of the years of credited service 19
438	438	that are more than 20 years of total credited service. 20
439	439	* Sec. 20. AS 14.25.142(a) is amended to read: 21
440	440	(a) While residing in the state, a person who first became a member of the 22
441	441	plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220, 23
442	442	and who is at least 65 years of age or a person who first became a member of the 24
443	443	plan before July 1, 2006, and who is receiving a disability benefit under 25
444	444	AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost-of-living allowance in 26
445	445	addition to the basic benefit. The amount of this allowance is 10 percent of the basic 27
446	446	benefit. 28
447	447	* Sec. 21. AS 14.25.143(a) is amended to read: 29
448	448	(a) Once each year, the administrator shall increase benefit payments to 30
449	449	eligible disabled members, to persons age 60 or older receiving benefits under this 31 34-LS0280\A
450	450	SB 28 -14- SB0028A
451	451	New Text Underlined [DELETED TEXT BRACKETED]
452	452
453	453	plan in the preceding calendar year, and to persons who have received benefits under 1
454	454	this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 2
455	455	under this section. 3
456	456	* Sec. 22. AS 14.25.143(b) is amended to read: 4
457	457	(b) Subject to (g) and (h) of this section, the [THE] increase in benefit 5
458	458	payments applies to total benefit payments except for the cost-of-living allowance 6
459	459	under AS 14.25.142. The amount of the increase is a percentage of the current benefit 7
460	460	equal to 8
461	461	(1) the lesser of 75 percent of the increase in the cost of living in the 9
462	462	preceding calendar year or nine percent, for recipients who on July 1 are at least 65 10
463	463	years old and for members receiving disability benefits; and 11
464	464	(2) the lesser of 50 percent of the increase in the cost of living in the 12
465	465	preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 13
466	466	less than 65 years old or for recipients who on July 1 are less than 60 years old but 14
467	467	who have received benefits from the plan for at least five [EIGHT] years. 15
468	468	* Sec. 23. AS 14.25.143 is amended by adding new subsections to read: 16
469	469	(g) Subject to (h) of this section, the amount of an increase for members who 17
470	470	first became members of the plan after June 30, 2006, and do not meet the eligibility 18
471	471	requirements for a permanent fund dividend in effect on July 1, 2025, under 19
472	472	AS 43.23.005(a) is equal to one-half of the applicable percentage under (b) of this 20
473	473	section. 21
474	474	(h) If the board determines that the portion of the liability of the plan that is 22
475	475	attributable to all members who first became members of the plan after June 30, 2006, 23
476	476	is funded below 90 percent, the board may reduce the amount of the increase 24
477	477	determined under (b) or (g) of this section that is payable to a member who first 25
478	478	became a member after June 30, 2006. At any time, the board may terminate a 26
479	479	reduction made under this subsection. 27
480	480	* Sec. 24. AS 14.25.168(a) is amended to read: 28
481	481	(a) Except as provided in AS 14.25.171 and (c) of this section, the following 29
482	482	persons are entitled to major medical insurance coverage under this section: 30
483	483	(1) for teachers first hired before July 1, 1990, 31 34-LS0280\A
484	484	SB0028A -15- SB 28
485	485	New Text Underlined [DELETED TEXT BRACKETED]
486	486
487	487	(A) a teacher who is receiving a monthly benefit from the plan 1
488	488	and who has elected coverage; 2
489	489	(B) the spouse and dependent children of the teacher described 3
490	490	in (A) of this paragraph; 4
491	491	(C) the surviving spouse of a deceased teacher who is receiving 5
492	492	a monthly benefit from the plan and who has elected coverage; 6
493	493	(D) the dependent children of a deceased teacher who are 7
494	494	dependent on the surviving spouse described in (C) of this paragraph; 8
495	495	(2) for teachers first hired [ON OR] after June 30 [JULY 1], 1990, 9
496	496	(A) a teacher who is receiving a monthly benefit from the plan 10
497	497	and who has elected coverage for the teacher; 11
498	498	(B) the spouse of the teacher described in (A) of this paragraph 12
499	499	if the teacher elected coverage for the spouse; 13
500	500	(C) the dependent children of the teacher described in (A) of 14
501	501	this paragraph if the teacher elected coverage for the dependent children; 15
502	502	(D) the surviving spouse of a deceased teacher who is receiving 16
503	503	a monthly benefit from the plan and who has elected coverage; 17
504	504	(E) the dependent children of a deceased teacher who are 18
505	505	dependent on the surviving spouse described in (D) of this paragraph if the 19
506	506	surviving spouse has elected coverage for the dependent children. 20
507	507	* Sec. 25. AS 14.25 is amended by adding a new section to read: 21
508	508	Sec. 14.25.171. Medical benefit; eligibility of employees first hired after 22
509	509	June 30, 2006; surviving spouses and dependents. (a) A teacher who first became a 23
510	510	member of the plan after June 30, 2006, receives a monthly benefit from the plan, 24
511	511	retired directly from the plan, and has elected benefits under this section is entitled to 25
512	512	medical benefits under this section. A member who applies for medical benefits under 26
513	513	this section shall apply on the forms and in the manner prescribed by the 27
514	514	administrator. A member is eligible to retire from the plan if the member has been an 28
515	515	active member for at least 12 months before application for retirement and the member 29
516	516	(1) has at least 30 years of service; or 30
517	517	(2) reaches the age set for Medicare eligibility and has at least 10 years 31 34-LS0280\A
518	518	SB 28 -16- SB0028A
519	519	New Text Underlined [DELETED TEXT BRACKETED]
520	520
521	521	of service. 1
522	522	(b) The member's surviving spouse is eligible to elect medical benefits if the 2
523	523	member had retired or was eligible for retirement and medical benefits at the time of 3
524	524	the member's death. 4
525	525	(c) The medical benefits available to eligible persons are access to the retiree 5
526	526	major medical insurance plan and access to the health reimbursement arrangement 6
527	527	plan under AS 39.30.300. Access to the retiree major medical insurance plan means 7
528	528	that an eligible person may not be denied insurance coverage except for failure to pay 8
529	529	the required premium. 9
530	530	(d) Retiree major medical insurance plan coverage elected by an eligible 10
531	531	member under this section covers the eligible member, the spouse of the eligible 11
532	532	member, and the dependent children of the eligible member. 12
533	533	(e) Retiree major medical insurance plan coverage elected by a surviving 13
534	534	spouse of an eligible member under this section covers the surviving spouse and the 14
535	535	dependent children of the eligible member who are dependent on the surviving spouse. 15
536	536	(f) Participation in the retiree major medical insurance plan is not required in 16
537	537	order to participate in the health reimbursement arrangement plan. 17
538	538	(g) A person eligible for medical benefits under this section is not required to 18
539	539	participate in the health reimbursement arrangement plan in order to participate in the 19
540	540	retiree major medical insurance plan. 20
541	541	(h) A person who is eligible for medical benefits under this section must make 21
542	542	the irrevocable election to participate or not participate in the retiree major medical 22
543	543	insurance plan on or before the date the person reaches 70 1/2 years of age or when the 23
544	544	person applies for retirement and medical benefits, whichever is later. 24
545	545	(i) Major medical insurance coverage takes effect on the first day of the month 25
546	546	following the date of the administrator's approval of the election and stops when the 26
547	547	person who elects coverage dies or fails to make a required premium payment. 27
548	548	(j) The coverage for persons 65 years of age or older is the same as that 28
549	549	available for persons under 65 years of age. The benefits payable to those persons 65 29
550	550	years of age or older supplement any benefits provided under the federal old age, 30
551	551	survivors, and disability insurance program. 31 34-LS0280\A
552	552	SB0028A -17- SB 28
553	553	New Text Underlined [DELETED TEXT BRACKETED]
554	554
555	555	(k) The medical and optional insurance premiums owed by the person who 1
556	556	elects coverage may be deducted from the health reimbursement arrangement plan. If 2
557	557	the amount of the health reimbursement arrangement plan becomes insufficient to pay 3
558	558	the premiums, the person who elects coverage under (a) of this section shall pay the 4
559	559	premiums directly. 5
560	560	(l) The cost of premiums for retiree major medical insurance coverage under 6
561	561	this section for an eligible member or surviving spouse who is 7
562	562	(1) not eligible for Medicare is an amount equal to the full monthly 8
563	563	group premiums for retiree major medical insurance coverage; 9
564	564	(2) eligible for Medicare is the following percentage of the premium 10
565	565	amounts established for retirees who are eligible for Medicare: 11
566	566	(A) 30 percent if the member had 10 or more, but less than 15, 12
567	567	years of service; 13
568	568	(B) 25 percent if the member had 15 or more, but less than 20, 14
569	569	years of service; 15
570	570	(C) 20 percent if the member had 20 or more, but less than 25, 16
571	571	years of service; 17
572	572	(D) 15 percent if the member had 25 or more, but less than 30, 18
573	573	years of service; 19
574	574	(E) 10 percent if the member had 30 or more years of service. 20
575	575	(m) The eligibility for retiree major medical insurance coverage for an 21
576	576	alternate payee under a qualified domestic relations order shall be determined based 22
577	577	on the eligibility of the member to elect coverage. The alternate payee shall pay the 23
578	578	full monthly premium for retiree major medical insurance coverage. 24
579	579	(n) The administrator shall 25
580	580	(1) inform a person entitled to retiree major medical insurance 26
581	581	coverage under this section in writing 27
582	582	(A) that the health insurance coverage available to retired 28
583	583	members may be different from the health insurance coverage provided to 29
584	584	employees; 30
585	585	(B) of time limits for selecting optional health insurance 31 34-LS0280\A
586	586	SB 28 -18- SB0028A
587	587	New Text Underlined [DELETED TEXT BRACKETED]
588	588
589	589	coverage; and 1
590	590	(C) whether the election is irrevocable; and 2
591	591	(2) require that a person entitled to retiree major medical insurance 3
592	592	coverage under this section indicate in writing on a form provided by the administrator 4
593	593	whether the person has chosen to receive optional health insurance coverage. 5
594	594	(o) The monthly group premiums for retiree major medical insurance coverage 6
595	595	under this section are established by the administrator in accordance with 7
596	596	AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 8
597	597	(a) of this section a monthly group premium rate for retiree major medical insurance 9
598	598	coverage other than the premium in effect for the month in which the premium is due 10
599	599	for coverage for that month. 11
600	600	(p) In this section, "health reimbursement arrangement plan" means the State 12
601	601	of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 13
602	602	Arrangement Plan established in AS 39.30.300. 14
603	603	* Sec. 26. AS 14.25.220(5) is amended to read: 15
604	604	(5) "average base salary" means, 16
605	605	(A) for a teacher who first became a member before July 1, 17
606	606	2006, the result obtained by dividing the sum of the member's three highest 18
607	607	years' base salary by three, or if a member does not have three years base 19
608	608	salary, then by dividing the sum of all base salaries by the number of years of 20
609	609	base salary; the base salary for a year in which credit is granted for disability 21
610	610	totaling more than one-third of a year may not be used in the computation of 22
611	611	the average base salary; the base salary in a school year for which the member 23
612	612	receives compensation for less than two-thirds of a year may not be used in the 24
613	613	computation of the average base salary; if compensation is received for more 25
614	614	than two-thirds of a year, the full base salary for that school year shall be used 26
615	615	in the computation of the average base salary; 27
616	616	(B) for a teacher who first became a member after June 30, 28
617	617	2006, the result obtained by dividing the sum of the member's five highest 29
618	618	years' base salary by five, or if a member does not have five years' base 30
619	619	salary, then by dividing the sum of all base salaries by the number of 31 34-LS0280\A
620	620	SB0028A -19- SB 28
621	621	New Text Underlined [DELETED TEXT BRACKETED]
622	622
623	623	years of base salary; the base salary for a year in which credit is granted 1
624	624	for disability totaling more than one-third of a year may not be used in the 2
625	625	computation of the average base salary; the base salary in a school year 3
626	626	for which the member receives compensation for less than two-thirds of a 4
627	627	year may not be used in the computation of the average base salary; if 5
628	628	compensation is received for more than two-thirds of a year, the full base 6
629	629	salary for that school year shall be used in the computation of the average 7
630	630	base salary; 8
631	631	* Sec. 27. AS 14.25.220(6) is amended to read: 9
632	632	(6) "base salary" 10
633	633	(A) means the total remuneration payable under contract for a 11
634	634	full year of membership service, including addenda to the contract and, for a 12
635	635	member who elects to participate solely in this plan under AS 14.25.040(f), 13
636	636	remuneration paid by the public employees' retirement plan employer, 14
637	637	but, for a member first hired on or after July 1, 1996, does not include 15
638	638	remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17); 16
639	639	(B) has the same meaning as "compensation" under 17
640	640	AS 39.35.680(9) when applied to a state legislator who elects membership 18
641	641	under AS 14.25.040(b); 19
642	642	* Sec. 28. AS 14.25.220(46) is amended to read: 20
643	643	(46) "vested member" or "vested teacher" means an active member 21
644	644	who [HAS COMPLETED EITHER] 22
645	645	(A) first became a member before July 1, 2006, and has 23
646	646	completed 24
647	647	(i) 15 years of service, the last five of which have been 25
648	648	membership service, for a member first hired before July 1, 1975; 26
649	649	(ii) [(B)] eight years of membership service; 27
650	650	(iii) [(C)] five years of membership and three years of 28
651	651	BIA service; or 29
652	652	(iv) [(D)] 12 school years of part-time membership 30
653	653	service or 12 school years in each of which the member earned either 31 34-LS0280\A
654	654	SB 28 -20- SB0028A
655	655	New Text Underlined [DELETED TEXT BRACKETED]
656	656
657	657	part-time or full-time membership service; 1
658	658	(B) first became a member after June 30, 2006, and has 2
659	659	completed five years of membership service; 3
660	660	* Sec. 29. AS 14.25.220 is amended by adding a new paragraph to read: 4
661	661	(48) "first became a member after June 30, 2006" and "first became a 5
662	662	member of the plan after June 30, 2006" include a member who elected under former 6
663	663	AS 14.25.540 to participate in the defined contribution retirement plan under 7
664	664	AS 14.25.310 - 14.25.590 and who elects to participate in the defined benefit 8
665	665	retirement plan under AS 14.25.009 - 14.25.220. 9
666	666	* Sec. 30. AS 14.25.310 is amended to read: 10
667	667	Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 11
668	668	AS 14.25.310 - 14.25.590 apply only to 12
669	669	(1) teachers who first become members [ON OR] after June 30, 2006, 13
670	670	and before July 1, 2025, and who are eligible but do not elect to participate in a 14
671	671	defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 15
672	672	39.35.680; and 16
673	673	(2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 17
674	674	EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 18
675	675	DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 19
676	676	- 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBER S] 20
677	677	who transferred [TRANSFER] into the defined contribution retirement plan under 21
678	678	former AS 14.25.540 and do not elect to participate in the defined benefit 22
679	679	retirement plan under AS 14.25.009 - 14.25.220. 23
680	680	* Sec. 31. AS 14.25.310 is amended by adding a new subsection to read: 24
681	681	(b) An employer that participates in the plan shall also participate in the 25
682	682	defined benefit retirement plan under AS 14.25.009 - 14.25.220. 26
683	683	* Sec. 32. AS 14.25.330(a) is amended to read: 27
684	684	(a) A teacher who first becomes a member [ON OR] after June 30, 2006, and 28
685	685	before July 1, 2025, and who does not participate in a defined benefit retirement 29
686	686	plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, 30
687	687	SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contribution 31 34-LS0280\A
688	688	SB0028A -21- SB 28
689	689	New Text Underlined [DELETED TEXT BRACKETED]
690	690
691	691	retirement plan. 1
692	692	* Sec. 33. AS 14.25.490(a) is amended to read: 2
693	693	(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 3
694	694	[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 4
695	695	time, in whole or in part, including the right to make retroactive amendments referred 5
696	696	to in 26 U.S.C. 401(b). 6
697	697	* Sec. 34. AS 14.25.490(b) is amended to read: 7
698	698	(b) The plan administrator may not modify or amend the plan retroactively [IN 8
699	699	SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 9
700	700	[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 10
701	701	MADE] before the modification or amendment except to the extent that the reduction 11
702	702	is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 12
703	703	Revenue Code. 13
704	704	* Sec. 35. AS 14.25.490(c) is amended to read: 14
705	705	(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 15
706	706	Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 16
707	707	plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 17
708	708	is terminated, all investments at the time of termination remain in force until all 18
709	709	individual accounts have been completely distributed under the plan. After [, AND, 19
710	710	AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 20
711	711	employer. 21
712	712	* Sec. 36. AS 14.25.490(d) is repealed and reenacted to read: 22
713	713	(d) Within one year after determining that a contribution to the plan by an 23
714	714	employer was the result of a mistake of fact, the administrator shall return the 24
715	715	contribution to the employer. 25
716	716	* Sec. 37. AS 37.10.220(a) is amended to read: 26
717	717	(a) The board shall 27
718	718	(1) hold regular and special meetings at the call of the chair or of at 28
719	719	least five members; meetings are open to the public, and the board shall keep a full 29
720	720	record of all its proceedings; 30
721	721	(2) after reviewing recommendations from the Department of 31 34-LS0280\A
722	722	SB 28 -22- SB0028A
723	723	New Text Underlined [DELETED TEXT BRACKETED]
724	724
725	725	Revenue, adopt investment policies for each of the funds entrusted to the board; 1
726	726	(3) determine the appropriate investment objectives for the defined 2
727	727	benefit plans established under the teachers' retirement system under AS 14.25 and the 3
728	728	public employees' retirement system under AS 39.35; 4
729	729	(4) assist in prescribing the policies for the proper operation of the 5
730	730	systems and take other actions necessary to carry out the intent and purpose of the 6
731	731	systems in accordance with AS 37.10.210 - 37.10.390; 7
732	732	(5) provide a range of investment options and establish the rules by 8
733	733	which participants can direct their investments among those options with respect to 9
734	734	accounts established under 10
735	735	(A) AS 14.25.340 - 14.25.350 (teachers' retirement system 11
736	736	defined contribution individual accounts); 12
737	737	(B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 13
738	738	Annuity Plan); 14
739	739	(C) AS 39.35.730 - 39.35.750 (public employees' retirement 15
740	740	system defined contribution individual accounts); and 16
741	741	(D) AS 39.45.010 - 39.45.060 (public employees' deferred 17
742	742	compensation program); 18
743	743	(6) establish the rate of interest that shall be annually credited to each 19
744	744	member's individual contribution account in accordance with AS 14.25.145 and 20
745	745	AS 39.35.100 and the rate of interest that shall be annually credited to each member's 21
746	746	account in the health reimbursement arrangement plan under AS 39.30.300 - 22
747	747	39.30.495; the rate of interest shall be adopted on the basis of the probable effective 23
748	748	rate of interest on a long-term basis, and the rate may be changed from time to time; 24
749	749	(7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 25
750	750	(8) coordinate with the retirement system administrator to have an 26
751	751	annual actuarial valuation of each retirement system prepared to determine system 27
752	752	assets, accrued liabilities, and funding ratios and to certify to the appropriate 28
753	753	budgetary authority of each employer in the system 29
754	754	(A) an appropriate contribution rate for normal costs; [AND] 30
755	755	(B) an appropriate contribution rate for liquidating any past 31 34-LS0280\A
756	756	SB0028A -23- SB 28
757	757	New Text Underlined [DELETED TEXT BRACKETED]
758	758
759	759	service liability; in this subparagraph, the appropriate contribution rate for 1
760	760	liquidating the past service liability of the defined benefit retirement plan under 2
761	761	AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 3
762	762	retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level 4
763	763	percent of pay method based on amortization of the past service liability for a 5
764	764	closed term of 25 years; 6
765	765	(C) an appropriate monthly employer contribution under 7
766	766	AS 14.25.070 and AS 39.35.255; and 8
767	767	(D) appropriate adjustments, if any, under AS 14.25.050(e) 9
768	768	and AS 39.35.160(e); 10
769	769	(9) review actuarial assumptions prepared and certified by a member 11
770	770	of the American Academy of Actuaries and conduct experience analyses of the 12
771	771	retirement systems not less than once every four years, except for health cost 13
772	772	assumptions, which shall be reviewed annually; the results of all actuarial assumptions 14
773	773	prepared under this paragraph shall be reviewed and certified by a second member of 15
774	774	the American Academy of Actuaries before presentation to the board; 16
775	775	(10) contract for an independent audit of the state's actuary not less 17
776	776	than once every four years; 18
777	777	(11) contract for an independent audit of the state's performance 19
778	778	consultant not less than once every four years; 20
779	779	(12) obtain an external performance review to evaluate the investment 21
780	780	policies of each fund entrusted to the board and report the results of the review to the 22
781	781	appropriate fund fiduciary; 23
782	782	(13) by the first day of each regular legislative session, report to the 24
783	783	governor, the legislature, and the individual employers participating in the state's 25
784	784	retirement systems on the financial condition of the systems in regard to 26
785	785	(A) the valuation of trust fund assets and liabilities; 27
786	786	(B) current investment policies adopted by the board; 28
787	787	(C) a summary of assets held in trust listed by the categories of 29
788	788	investment; 30
789	789	(D) the income and expenditures for the previous fiscal year; 31 34-LS0280\A
790	790	SB 28 -24- SB0028A
791	791	New Text Underlined [DELETED TEXT BRACKETED]
792	792
793	793	(E) the return projections for the next calendar year; 1
794	794	(F) one-year, three-year, five-year, and 10-year investment 2
795	795	performance for each of the funds entrusted to the board; and 3
796	796	(G) other statistical data necessary for a proper understanding 4
797	797	of the financial status of the systems; 5
798	798	(14) submit quarterly updates of the investment performance reports to 6
799	799	the Legislative Budget and Audit Committee; 7
800	800	(15) develop an annual operating budget; [AND] 8
801	801	(16) administer pension forfeitures required under AS 37.10.310 using 9
802	802	the procedures of AS 44.62 (Administrative Procedure Act); 10
803	803	(17) establish one or more sub-trusts of the pension fund to hold 11
804	804	employer contributions deposited under AS 14.25.086 and AS 39.35.281, 12
805	805	employee contributions, assets, and earnings attributable to members of the 13
806	806	defined benefit retirement plan under AS 14.25.009 - 14.25.220 or the defined 14
807	807	benefit retirement plan under AS 39.35.095 - 39.35.680 who first became 15
808	808	members of the respective plan after June 30, 2006; and 16
809	809	(18) account for and track employer contributions, employee 17
810	810	contributions, assets, and earnings in each trust fund or sub-trust attributable to 18
811	811	members who first became members after June 30, 2006, of the defined benefit 19
812	812	retirement plan under AS 14.25.009 - 14.25.220 and members who first became 20
813	813	members after June 30, 2006, of the defined benefit retirement plan under 21
814	814	AS 39.35.095 - 39.35.680; employer contributions that exceed those assigned to 22
815	815	members who first became members after June 30, 2006, of the defined benefit 23
816	816	retirement plan under AS 14.25.009 - 14.25.220 and members who first became 24
817	817	members after June 30, 2006, of the defined benefit retirement plan under 25
818	818	AS 39.35.095 - 39.35.680 shall be transferred or retained in trusts or sub-trusts 26
819	819	with liability allocated toward employer normal costs for members who became 27
820	820	members of the respective defined benefit retirement plan before July 1, 2025, 28
821	821	past service costs, the State of Alaska Teachers' and Public Employees' Retiree 29
822	822	Health Reimbursement Arrangement Plan under AS 39.30.300 - 39.30.495, and 30
823	823	employer contributions under AS 14.25.350 and AS 39.35.750. 31 34-LS0280\A
824	824	SB0028A -25- SB 28
825	825	New Text Underlined [DELETED TEXT BRACKETED]
826	826
827	827	* Sec. 38. AS 37.10.220(b) is amended to read: 1
828	828	(b) The board may 2
829	829	(1) employ outside investment advisors to review investment policies; 3
830	830	(2) enter into an agreement with the fiduciary of another state fund in 4
831	831	order to assume the management and investment of those assets; 5
832	832	(3) contract for other services necessary to execute the board's powers 6
833	833	and duties; 7
834	834	(4) enter into confidentiality agreements that would exempt records 8
835	835	from AS 40.25.110 and 40.25.120 if the records contain information that could affect 9
836	836	the value of investment by the board or that could impair the ability of the board to 10
837	837	acquire, maintain, or dispose of investments; 11
838	838	(5) adjust the amount of the increase in benefits payable to a 12
839	839	member who first became a member after June 30, 2006, as provided under 13
840	840	AS 14.25.143 and AS 39.35.475; 14
841	841	(6) adjust contributions under AS 14.25.050(e) and 15
842	842	AS 39.35.160(e). 16
843	843	* Sec. 39. AS 39.30.090(a) is amended to read: 17
844	844	(a) The Department of Administration may obtain a policy or policies of group 18
845	845	insurance covering state employees, persons entitled to coverage under AS 14.25.168, 19
846	846	14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 20
847	847	AS 39.37.145, employees of other participating governmental units, or persons 21
848	848	entitled to coverage under AS 23.15.136, subject to the following conditions: 22
849	849	(1) a group insurance policy shall provide one or more of the following 23
850	850	benefits: life insurance, accidental death and dismemberment insurance, weekly 24
851	851	indemnity insurance, hospital expense insurance, surgical expense insurance, dental 25
852	852	expense insurance, audiovisual insurance, or other medical care insurance; 26
853	853	(2) each eligible employee of the state, the spouse and the unmarried 27
854	854	children chiefly dependent on the eligible employee for support, and each eligible 28
855	855	employee of another participating governmental unit shall be covered by the group 29
856	856	policy, unless exempt under regulations adopted by the commissioner of 30
857	857	administration; 31 34-LS0280\A
858	858	SB 28 -26- SB0028A
859	859	New Text Underlined [DELETED TEXT BRACKETED]
860	860
861	861	(3) a governmental unit may participate under a group policy if 1
862	862	(A) its governing body adopts a resolution authorizing 2
863	863	participation and payment of required premiums; 3
864	864	(B) a certified copy of the resolution is filed with the 4
865	865	Department of Administration; and 5
866	866	(C) the commissioner of administration approves the 6
867	867	participation in writing; 7
868	868	(4) in procuring a policy of group health or group life insurance as 8
869	869	provided under this section or excess loss insurance as provided in AS 39.30.091, the 9
870	870	Department of Administration shall comply with the dual choice requirements of 10
871	871	AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 11
872	872	transact business in the state under AS 21.09, a hospital or medical service corporation 12
873	873	authorized to transact business in this state under AS 21.87, or a health maintenance 13
874	874	organization authorized to operate in this state under AS 21.86; an excess loss 14
875	875	insurance policy may be obtained from a life or health insurer authorized to transact 15
876	876	business in this state under AS 21.09 or from a hospital or medical service corporation 16
877	877	authorized to transact business in this state under AS 21.87; 17
878	878	(5) the Department of Administration shall make available bid 18
879	879	specifications for desired insurance benefits or for administration of benefit claims and 19
880	880	payments to (A) all insurance carriers authorized to transact business in this state 20
881	881	under AS 21.09 and all hospital or medical service corporations authorized to transact 21
882	882	business under AS 21.87 who are qualified to provide the desired benefits; and (B) 22
883	883	insurance carriers authorized to transact business in this state under AS 21.09, hospital 23
884	884	or medical service corporations authorized to transact business under AS 21.87, and 24
885	885	third-party administrators licensed to transact business in this state and qualified to 25
886	886	provide administrative services; the specifications shall be made available at least once 26
887	887	every five years; the lowest responsible bid submitted by an insurance carrier, hospital 27
888	888	or medical service corporation, or third-party administrator with adequate servicing 28
889	889	facilities shall govern selection of a carrier, hospital or medical service corporation, or 29
890	890	third-party administrator under this section or the selection of an insurance carrier or a 30
891	891	hospital or medical service corporation to provide excess loss insurance as provided in
892	892	31 34-LS0280\A
893	893	SB0028A -27- SB 28
894	894	New Text Underlined [DELETED TEXT BRACKETED]
895	895
896	896	AS 39.30.091; 1
897	897	(6) if the aggregate of dividends payable under the group insurance 2
898	898	policy exceeds the governmental unit's share of the premium, the excess shall be 3
899	899	applied by the governmental unit for the sole benefit of the employees; 4
900	900	(7) a person receiving benefits under AS 14.25.110, AS 22.25, 5
901	901	AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 6
902	902	effect under this section at the time of termination of employment with the state or 7
903	903	participating governmental unit; 8
904	904	(8) a person electing to have insurance under (7) of this subsection 9
905	905	shall pay the cost of this insurance; 10
906	906	(9) for each permanent part-time employee electing coverage under 11
907	907	this section, the state shall contribute one-half the state contribution rate for permanent 12
908	908	full-time state employees, and the permanent part-time employee shall contribute the 13
909	909	other one-half; 14
910	910	(10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 15
911	911	or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 16
912	912	and eligible dependents under this section; the level of coverage for persons over 65 17
913	913	shall be the same as that available before reaching age 65 except that the benefits 18
914	914	payable shall be supplemental to any benefits provided under the federal old age, 19
915	915	survivors, and disability insurance program; a person electing to have insurance under 20
916	916	this paragraph shall pay the cost of the insurance; the commissioner of administration 21
917	917	shall adopt regulations implementing this paragraph; 22
918	918	(11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 23
919	919	or former AS 39.37 may obtain long-term care insurance for that person and eligible 24
920	920	dependents under this section; a person who elects insurance under this paragraph 25
921	921	shall pay the cost of the insurance premium; the commissioner of administration shall 26
922	922	adopt regulations to implement this paragraph; 27
923	923	(12) each licensee holding a current operating agreement for a vending 28
924	924	facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 29
925	925	applies to governmental units other than the state. 30
926	926	* Sec. 40. AS 39.30.097(a) is amended to read: 31 34-LS0280\A
927	927	SB 28 -28- SB0028A
928	928	New Text Underlined [DELETED TEXT BRACKETED]
929	929
930	930	(a) The commissioner of administration is authorized to prefund medical 1
931	931	benefits provided by AS 14.25.168, 14.25.171, AS 22.25.090, [AND] AS 39.35.535, 2
932	932	and 39.35.537 by establishing an irrevocable trust that is exempt from federal income 3
933	933	tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 4
934	934	and actuarial requirements of the Governmental Accounting Standards Board. 5
935	935	* Sec. 41. AS 39.30.097(b) is amended to read: 6
936	936	(b) The commissioner of administration is authorized to prefund medical 7
937	937	benefits provided by AS 14.25.480 [, AS 39.30.300,] and AS 39.35.880 by 8
938	938	establishing an irrevocable trust that is exempt from federal income tax under 26 9
939	939	U.S.C. 115 and subject to the applicable financial reporting, disclosure, and actuarial 10
940	940	requirements of the Governmental Accounting Standards Board. 11
941	941	* Sec. 42. AS 39.30.097 is amended by adding a new subsection to read: 12
942	942	(f) The commissioner of administration is authorized to prefund medical 13
943	943	benefits provided by AS 39.30.300 by establishing an irrevocable trust that is exempt 14
944	944	from federal income tax under 26 U.S.C. 115 and subject to the applicable financial 15
945	945	reporting, disclosure, and actuarial requirements of the Governmental Accounting 16
946	946	Standards Board. 17
947	947	* Sec. 43. AS 39.30.300 is amended to read: 18
948	948	Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 19
949	949	Health Reimbursement Arrangement Plan established. The State of Alaska 20
950	950	Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 21
951	951	established for 22
952	952	(1) teachers who first become members of the [DEFINED 23
953	953	CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 - 24
954	954	14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], 25
955	955	and teachers who elected under former AS 14.25.540 to participate in the plan 26
956	956	under AS 14.25.310 - 14.25.590; and 27
957	957	(2) employees of the state, political subdivisions of the state, and 28
958	958	public organizations of the state who first become members [OF THE DEFINED 29
959	959	CONTRIBUTION PLAN] of the Public Employees' Retirement System of Alaska 30
960	960	(AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER 31 34-LS0280\A
961	961	SB0028A -29- SB 28
962	962	New Text Underlined [DELETED TEXT BRACKETED]
963	963
964	964	AS 39.35.700 - 39.35.990 ON OR] after June 30, 2006, and employees of the state, 1
965	965	political subdivisions of the state, and public organizations of the state who 2
966	966	elected under former AS 39.35.940 to participate in the plan established under 3
967	967	AS 39.35.700 - 39.35.990 [JULY 1, 2006]. 4
968	968	* Sec. 44. AS 39.30.340 is amended to read: 5
969	969	Sec. 39.30.340. Powers and duties of the administrator. The administrator 6
970	970	shall establish a teachers' and public employees' retiree health reimbursement 7
971	971	arrangement plan trust fund under AS 39.30.097(f) in which the assets of the plan 8
972	972	shall be deposited and held. [THE RETIREE HEALTH REIMBURSEMENT 9
973	973	ARRANGEMENT PLAN TRUST FUND MAY BE A SUB-TRUST OF THE 10
974	974	ALASKA RETIREE HEALTH CARE TRUST ESTABLISHED UNDER 11
975	975	AS 39.30.097(b).] The administrator has the same powers and duties with regard to 12
976	976	the plan and the trust fund as provided in AS 14.25.003 and 14.25.004. 13
977	977	* Sec. 45. AS 39.30.380 is amended to read: 14
978	978	Sec. 39.30.380. Termination of employment. A person who terminates 15
979	979	employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470, 16
980	980	AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 17
981	981	contributions made on behalf of the person to the teachers' and public employees' 18
982	982	retiree health reimbursement arrangement trust fund. If a person returns to 19
983	983	employment with a participating employer by December 31 of the year in which the 20
984	984	person reaches 65 years of age, the person's account balance shall be restored in the 21
985	985	amount recorded on the date of termination from the trust, adjusted for inflation at the 22
986	986	rate of the Consumer Price Index for Anchorage, Alaska. The earlier period of 23
987	987	employment with a participating employer shall be credited toward eligibility for 24
988	988	medical benefits. 25
989	989	* Sec. 46. AS 39.30.390 is amended to read: 26
990	990	Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 27
991	991	eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 28
992	992	[AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the 29
993	993	individual account established for a member under the plan, except members do not 30
994	994	have to retire directly from the system. A person who is the dependent child of an 31 34-LS0280\A
995	995	SB 28 -30- SB0028A
996	996	New Text Underlined [DELETED TEXT BRACKETED]
997	997
998	998	eligible member is eligible for reimbursements if the eligible member and surviving 1
999	999	spouse have both died so long as the person meets the definition of dependent child. 2
1000	1000	* Sec. 47. AS 39.30.400(a) is amended to read: 3
1001	1001	(a) The administrator may deduct the cost of monthly premiums from the 4
1002	1002	individual account for retiree major medical insurance on behalf of an eligible person 5
1003	1003	who elected retiree major medical insurance under AS 14.25.171, 14.25.480, 6
1004	1004	AS 39.35.537, or 39.35.880 [AS 14.25.480 OR AS 39.35.880]. 7
1005	1005	* Sec. 48. AS 39.30.420(a) is amended to read: 8
1006	1006	(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 9
1007	1007	[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 10
1008	1008	time, in whole or in part, including the right to make retroactive amendments referred 11
1009	1009	to in 26 U.S.C. 401(b). 12
1010	1010	* Sec. 49. AS 39.30.420(b) is amended to read: 13
1011	1011	(b) The plan administrator may not modify or amend the plan retroactively [IN 14
1012	1012	SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 15
1013	1013	[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 16
1014	1014	MADE] before the modification or amendment except to the extent that the reduction 17
1015	1015	is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 18
1016	1016	Revenue Code. 19
1017	1017	* Sec. 50. AS 39.30.420(c) is amended to read: 20
1018	1018	(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 21
1019	1019	Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 22
1020	1020	plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 23
1021	1021	is terminated, all investments at the time of termination remain in force until all 24
1022	1022	individual accounts have been completely distributed under the plan. After [, AND, 25
1023	1023	AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 26
1024	1024	employer. 27
1025	1025	* Sec. 51. AS 39.30.420(d) is repealed and reenacted to read: 28
1026	1026	(d) Within one year after determining that a contribution to the plan by an 29
1027	1027	employer was the result of a mistake of fact, the administrator shall return the 30
1028	1028	contribution to the employer. 31 34-LS0280\A
1029	1029	SB0028A -31- SB 28
1030	1030	New Text Underlined [DELETED TEXT BRACKETED]
1031	1031
1032	1032	* Sec. 52. AS 39.30.495(5) is amended to read: 1
1033	1033	(5) "eligible person" means a person who meets the eligibility 2
1034	1034	requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 3
1035	1035	OR AS 39.35.870]; 4
1036	1036	* Sec. 53. AS 39.30.495(6) is amended to read: 5
1037	1037	(6) "employer" has the meaning given in AS 14.25.220 for employers 6
1038	1038	of teachers in the defined benefit retirement plan established in AS 14.25.009 - 7
1039	1039	14.25.220, has the meaning given in AS 14.25.590 for employers of teachers in the 8
1040	1040	defined contribution plan established in AS 14.25.310 - 14.25.590, has the meaning 9
1041	1041	given in AS 39.35.680 for employers of public employees in the defined benefit 10
1042	1042	retirement plan established in AS 39.35.095 - 39.35.680, and has the meaning given 11
1043	1043	in AS 39.35.990 for employers of public employees in the defined contribution plan 12
1044	1044	established in AS 39.35.700 - 39.35.990; 13
1045	1045	* Sec. 54. AS 39.30.495(9) is amended to read: 14
1046	1046	(9) "member" means a member of the State of Alaska Teachers' and 15
1047	1047	Public Employees' Retiree Health Reimbursement Arrangement Plan established 16
1048	1048	in AS 39.30.300 - 39.30.495 [DEFINED CONTRIBUTION PLAN OF THE 17
1049	1049	TEACHERS' RETIREMENT SYSTEM IN AS 14.25.310 - 14.25.590 OR A 18
1050	1050	MEMBER OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM IN 19
1051	1051	AS 39.35.700 - 39.35.990]; 20
1052	1052	* Sec. 55. AS 39.35.095 is amended to read: 21
1053	1053	Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 22
1054	1054	[FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 23
1055	1055	only to members first hired 24
1056	1056	(1) before July 1, 2006, who have 25
1057	1057	(A) not elected under former AS 39.35.940 to participate in 26
1058	1058	the defined contribution retirement plan under AS 39.35.700 - 39.35.990; 27
1059	1059	or 28
1060	1060	(B) elected under former AS 39.35.940 to participate in the 29
1061	1061	defined contribution retirement plan under AS 39.35.700 - 39.35.990 and 30
1062	1062	are former members of the defined contribution retirement plan under 31 34-LS0280\A
1063	1063	SB 28 -32- SB0028A
1064	1064	New Text Underlined [DELETED TEXT BRACKETED]
1065	1065
1066	1066	AS 39.35.700 - 39.35.990; 1
1067	1067	(2) after June 30, 2006, and before July 1, 2025, who are former 2
1068	1068	members of the defined contribution retirement plan under AS 39.35.700 - 3
1069	1069	39.35.990; or 4
1070	1070	(3) on or after July 1, 2025 [: AS 39.35.095 - 39.35.680]. 5
1071	1071	* Sec. 56. AS 39.35.095 is amended by adding a new subsection to read: 6
1072	1072	(b) An employee who became a member of the system after June 30, 2006, 7
1073	1073	and before July 1, 2025, or who has elected under former AS 39.35.940 to participate 8
1074	1074	in the defined contribution retirement plan under AS 39.35.700 - 39.35.990, is subject 9
1075	1075	to AS 39.35.095 - 39.35.680 if the employee 10
1076	1076	(1) is not employed by an employer on July 1, 2025; 11
1077	1077	(2) is reemployed by an employer after July 1, 2025; and 12
1078	1078	(3) has, before the date of reemployment, received 13
1079	1079	(A) a distribution, other than a rollover distribution, of the 14
1080	1080	entire balance in the member's individual account in the defined contribution 15
1081	1081	retirement plan; or 16
1082	1082	(B) a rollover distribution of the entire balance in the member's 17
1083	1083	individual account in the defined contribution retirement plan and has not 18
1084	1084	within 180 days of reemployment had all or part of a direct rollover 19
1085	1085	distribution from an eligible retirement plan owned by the member paid 20
1086	1086	directly into the member's individual account. 21
1087	1087	* Sec. 57. AS 39.35.100(b) is amended to read: 22
1088	1088	(b) An individual account shall be maintained for each employee to record the 23
1089	1089	amount of the employee's mandatory contributions collected under AS 39.35.160 24
1090	1090	[AS 39.35.160(a)]. As of the last day of each calendar year and of each fiscal year, this 25
1091	1091	account shall be credited with interest by applying the prescribed rate of interest, as 26
1092	1092	determined by the board, to the balance in the account as of that date. When the 27
1093	1093	employee is appointed to retirement, the amount held in the individual account shall 28
1094	1094	be used first to fully finance the benefits paid. Once this account has been exhausted, 29
1095	1095	the plan shall fully finance the benefits paid that were not financed by the employee's 30
1096	1096	individual account. 31 34-LS0280\A
1097	1097	SB0028A -33- SB 28
1098	1098	New Text Underlined [DELETED TEXT BRACKETED]
1099	1099
1100	1100	* Sec. 58. AS 39.35 is amended by adding a new section to article 3 to read: 1
1101	1101	Sec. 39.35.159. Election of defined benefit retirement plan by reemployed 2
1102	1102	employees. (a) An employee may make a one-time election to participate in the plan 3
1103	1103	under AS 39.35.095 - 39.35.680 if the employee 4
1104	1104	(1) became a member of the defined contribution retirement plan under 5
1105	1105	AS 39.35.700 - 39.35.990 after June 30, 2006, and before July 1, 2025; 6
1106	1106	(2) is not employed by an employer on July 1, 2025; 7
1107	1107	(3) is reemployed by an employer after July 1, 2025; and 8
1108	1108	(4) before the date of reemployment, 9
1109	1109	(A) has not received a distribution of the entire balance in the 10
1110	1110	employee's individual account under the defined contribution retirement plan 11
1111	1111	established in AS 39.35.700 - 39.35.990; or 12
1112	1112	(B) has received a rollover distribution of the entire balance in 13
1113	1113	the member's individual account in the defined contribution retirement plan 14
1114	1114	and has within 180 days of reemployment had all or part of a direct rollover 15
1115	1115	distribution from an eligible retirement plan owned by the member paid 16
1116	1116	directly into the member's individual account. 17
1117	1117	(b) An election under (a) of this section may be made not more than 180 days 18
1118	1118	after the date of reemployment. A reemployed employee electing to participate under 19
1119	1119	(a) of this section shall use the balance of the employee's individual account in the 20
1120	1120	plan under AS 39.35.700 - 39.35.990, including any rollover contributions, to 21
1121	1121	purchase credited service in the plan under AS 39.35.095 - 39.35.680. An election 22
1122	1122	made under (a) of this section must be made in writing in the manner prescribed by the 23
1123	1123	administrator. An election made by an employee who is married is not effective unless 24
1124	1124	the election is signed by the employee's spouse. The administrator shall provide an 25
1125	1125	employee who is eligible to make an election under (a) of this section with 26
1126	1126	information about the potential consequences of the employee's election, including 27
1127	1127	calculations to illustrate the effect of moving the employee's retirement plan from a 28
1128	1128	defined contribution retirement plan to a defined benefit retirement plan. 29
1129	1129	(c) An election made under (a) of this section to participate in the plan under 30
1130	1130	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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1133	1133
1134	1134	eligible employee shall be enrolled as a member of the plan, and the employee's 1
1135	1135	participation in the plan shall be governed by the applicable provisions of the plan. 2
1136	1136	The employee's enrollment in the plan is retroactive to the date of hire. 3
1137	1137	(d) When an eligible employee makes an election under this section, the 4
1138	1138	administrator shall cause the total amount of the employee's employee and employer 5
1139	1139	contributions to the plan under AS 39.35.700 - 39.35.990, with investment earnings 6
1140	1140	and losses through the day of the employee's election to participate as a member in the 7
1141	1141	plan under AS 39.35.095 - 39.35.680, to be actuarially calculated and, subject to (f) of 8
1142	1142	this section, transferred to the pension fund in the plan under AS 39.35.095 - 9
1143	1143	39.35.680. On the effective date of the employee's participation in the plan under 10
1144	1144	AS 39.35.095 - 39.35.680, the employee shall be credited with service in the plan. The 11
1145	1145	board shall determine the cost of the employee's actual service time based on the 12
1146	1146	employee's accrued actuarial liability of pension benefits in the plan, and credit the 13
1147	1147	employee with service time equal to the value actuarially calculated and transferred to 14
1148	1148	the pension fund in the plan under AS 39.35.095 - 39.35.680. The board shall adopt 15
1149	1149	regulations establishing transfer procedures. The transfer may not occur later than 60 16
1150	1150	days after the date the administrator receives the employee's election, unless the major 17
1151	1151	financial markets for securities available for a transfer are seriously disrupted by an 18
1152	1152	unforeseen event that also causes the suspension of trading on a national securities 19
1153	1153	exchange in the country where the securities were issued; in that event, the 60-day 20
1154	1154	period may be extended by a resolution of the board. A transfer is not commissionable 21
1155	1155	or subject to a fee and may be in the form of cash or a security as determined by the 22
1156	1156	board. The value of a security shall be assessed on the date the security is received in 23
1157	1157	the employee's account. 24
1158	1158	(e) When making a transfer under (d) of this section or a transfer for a 25
1159	1159	reemployed employee subject to the plan under AS 39.35.095(b), the administrator 26
1160	1160	shall transfer 27
1161	1161	(1) an amount equal to the decrease in the accrued actuarial liability of 28
1162	1162	the death and disability trust in the plan under AS 39.35.700 - 39.35.990 resulting 29
1163	1163	from the transfer as of the date of transfer, based on the most recent actuarial valuation 30
1164	1164	of the death and disability trust, from the death and disability trust in the plan under 31 34-LS0280\A
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1167	1167
1168	1168	AS 39.35.700 - 39.35.990 to the pension fund in the plan under AS 39.35.095 - 1
1169	1169	39.35.680; and 2
1170	1170	(2) an amount equal to the increase in the accrued actuarial liability of 3
1171	1171	the health care trust in the plan under AS 39.35.095 - 39.35.680 resulting from the 4
1172	1172	transfer as of the date of transfer, based on the actuarial assumptions set out in (g) of 5
1173	1173	this section, from the trust established under AS 39.30.097(b) for the prefunding of 6
1174	1174	medical benefits provided by AS 39.35.880 to the trust established under 7
1175	1175	AS 39.30.097(a) for the prefunding of medical benefits provided by AS 39.35.537. 8
1176	1176	(f) If the value actuarially calculated under (d) of this section is insufficient to 9
1177	1177	pay for service credit equal to the employee's actual service, the administrator shall 10
1178	1178	allow the employee the option of purchasing service credit in an amount up to the 11
1179	1179	amount needed to eliminate the insufficiency; however, if that value exceeds the 12
1180	1180	amount needed to pay for service credit equal to the employee's actual service, the 13
1181	1181	administrator shall cause the excess to be paid to the employee as a rollover transfer to 14
1182	1182	either an individual employee annuity account in the Department of Administration 15
1183	1183	under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 16
1184	1184	Plan) or, if the member's employer does not participate in the State of Alaska 17
1185	1185	Supplemental Annuity Plan, to an eligible retirement plan as defined in 18
1186	1186	AS 39.35.760(d). An excess may not be used to purchase additional service credit in 19
1187	1187	the plan under AS 39.35.095 - 39.35.680. When a reemployed employee enters the 20
1188	1188	plan under AS 39.35.095(b), the administrator shall allow the employee to pay for a 21
1189	1189	period of service credit up to the employee's actual service. When an employee elects 22
1190	1190	to purchase service credit under this section and does not immediately pay for the 23
1191	1191	service credit purchased, an indebtedness is established. Interest as prescribed by 24
1192	1192	regulation accrues on an employee's indebtedness. If the indebtedness exists when the 25
1193	1193	employee is appointed to retirement, the administrator shall make a corresponding 26
1194	1194	actuarial adjustment to the benefit payable to the employee for service in the defined 27
1195	1195	contribution retirement plan. 28
1196	1196	(g) Actuarial assumptions about the plan under AS 39.35.095 - 39.35.680 29
1197	1197	must be based on the most recent actuarial valuation of the plan, except that the 30
1198	1198	retirement rates are computed at 25 percent of the retirement rates used in the most 31 34-LS0280\A
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1201	1201
1202	1202	recent actuarial valuation of the pension fund for the plan plus 75 percent of the 1
1203	1203	retirement rates used in the most recent actuarial valuation of the plan under 2
1204	1204	AS 39.35.700 - 39.35.990. 3
1205	1205	(h) The provisions of this section are subject to the requirements of the 4
1206	1206	Internal Revenue Code and the limitations under AS 39.35.115, 39.35.678, 5
1207	1207	39.35.710(c) and (d), and 39.35.895. In this subsection, "Internal Revenue Code" has 6
1208	1208	the meaning given in AS 39.35.990. 7
1209	1209	* Sec. 59. AS 39.35.160(a) is amended to read: 8
1210	1210	(a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 9
1211	1211	each peace officer or firefighter shall contribute to the plan an amount equal to seven 10
1212	1212	and one-half percent of the peace officer's or firefighter's compensation, and, except [. 11
1213	1213	EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, 12
1214	1214	each other employee shall contribute to the plan an amount equal to six and three-13
1215	1215	quarters percent of the employee's compensation. [THE CONTRIBUTIONS SHALL 14
1216	1216	BE DEDUCTED BY THE EMPLOYER AT THE END OF EACH PAYROLL 15
1217	1217	PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 16
1218	1218	COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 17
1219	1219	TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 18
1220	1220	CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 19
1221	1221	THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 20
1222	1222	OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 21
1223	1223	* Sec. 60. AS 39.35.160 is amended by adding new subsections to read: 22
1224	1224	(e) An employee who first participates in the plan after June 30, 2006, shall 23
1225	1225	contribute to the plan an amount equal to eight percent of the employee's 24
1226	1226	compensation. The board may, from time to time, adjust the employee contribution 25
1227	1227	under this subsection to an amount that, 26
1228	1228	(1) if decreased, is not less than eight percent of the employee's 27
1229	1229	compensation; and 28
1230	1230	(2) if increased, is not more than 12 percent of the employee's 29
1231	1231	compensation. 30
1232	1232	(f) Contributions under (a) and (e) of this section shall be deducted by the 31 34-LS0280\A
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1234	1234	New Text Underlined [DELETED TEXT BRACKETED]
1235	1235
1236	1236	employer at the end of each payroll period. The contributions shall be deducted from 1
1237	1237	employee compensation before computation of applicable federal taxes, and the 2
1238	1238	contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 3
1239	1239	member may not have the option of making the payroll deduction directly instead of 4
1240	1240	having the contribution picked up by the employer. 5
1241	1241	(g) The board shall increase the employee contribution under (e) of this 6
1242	1242	section if the board determines that, unless the contribution is increased, the portion of 7
1243	1243	the liability of the plan that is attributable to employees who first participate in the 8
1244	1244	plan after June 30, 2006, will be funded below 90 percent. The board may not increase 9
1245	1245	the employee contribution unless the board increases the employer contribution under 10
1246	1246	AS 39.35.255(a)(2) by an equal amount. The board may decrease the contribution 11
1247	1247	under (e) of this section if the board determines that, after the contribution is 12
1248	1248	decreased, the portion of the liability of the plan that is attributable to all members 13
1249	1249	who first became members of the plan after June 30, 2006, will be funded above 90 14
1250	1250	percent. The board may not decrease the employee contribution unless the board 15
1251	1251	decreases the employer contribution under AS 39.35.255(a)(2) by an equal amount. 16
1252	1252	* Sec. 61. AS 39.35.165(a) is amended to read: 17
1253	1253	(a) An employee who is eligible to purchase credited service under 18
1254	1254	AS 39.35.159, 39.35.310 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 19
1255	1255	39.35.360, or 39.35.370, a member who is eligible to purchase credited service under 20
1256	1256	AS 39.35.375, or an elected public official who is eligible to purchase credited service 21
1257	1257	under AS 39.35.381 is an employee for purposes of this section. An employee may, in 22
1258	1258	lieu of making payments directly to the plan, elect to have the employee's employer 23
1259	1259	make payments as provided in this section. 24
1260	1260	* Sec. 62. AS 39.35.165(b) is amended to read: 25
1261	1261	(b) An employee may elect to have the employer make payments for all or any 26
1262	1262	portion of the amounts payable for the employee's purchase of credited service 27
1263	1263	through a salary reduction program as follows: 28
1264	1264	(1) the amounts paid under a salary reduction program are in lieu of 29
1265	1265	contributions by the employee making the election; the electing employee's salary or 30
1266	1266	other compensation shall be reduced by the amount paid by the employer under this 31 34-LS0280\A
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1269	1269
1270	1270	subsection; 1
1271	1271	(2) the employee shall make an irrevocable election under this section 2
1272	1272	to purchase credited service as permitted in AS 39.35.159, 39.35.310 [AS 39.35.310], 3
1273	1273	39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 39.35.375, or 4
1274	1274	39.35.381 and before the employee's termination of employment; the irrevocable 5
1275	1275	election must specify the number of payroll periods that deductions will be made from 6
1276	1276	the employee's compensation and the dollar amount of deductions for each payroll 7
1277	1277	period during the specified number of payroll periods; the deductions made under this 8
1278	1278	paragraph cease upon the earlier of the member's termination of employment with the 9
1279	1279	employer or the member's death; amounts paid by an employer under (f) of this 10
1280	1280	section may not be applied toward the payment of the dollar amount of the deductions 11
1281	1281	representing the portion of the credited service that is being purchased by the member 12
1282	1282	through payroll deduction in accordance with the member's irrevocable election under 13
1283	1283	this subsection; 14
1284	1284	(3) amounts paid by an employer under this subsection shall be treated 15
1285	1285	as employer contributions for the purpose of determining tax treatment under the 16
1286	1286	Internal Revenue Code; the amounts paid by the employer under this section may not 17
1287	1287	be included in the member's gross income for income tax purposes until those amounts 18
1288	1288	are distributed by refund or retirement benefit payments. 19
1289	1289	* Sec. 63. AS 39.35.165(g) is amended to read: 20
1290	1290	(g) Payments made under this section shall be applied to reduce the 21
1291	1291	employee's outstanding indebtedness described in AS 39.35.159, 39.35.310 22
1292	1292	[AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 23
1293	1293	39.35.375, or 39.35.381 at the time that the contributions are received by the plan. 24
1294	1294	* Sec. 64. AS 39.35.165(i) is amended to read: 25
1295	1295	(i) On satisfaction of the eligibility requirements of AS 39.35.159, 39.35.310 26
1296	1296	[AS 39.35.310], 39.35.330, 39.35.340, 39.35.341, 39.35.345, 39.35.360, 39.35.370, 27
1297	1297	39.35.375, or 39.35.381, the requirements of this section, and the administrative filing 28
1298	1298	requirements specified by the commissioner, the plan shall adjust the employee's 29
1299	1299	credited service history and add any additional service credits acquired. 30
1300	1300	* Sec. 65. AS 39.35.255(a) is amended to read: 31 34-LS0280\A
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1303	1303
1304	1304	(a) Each employer, except as provided in (h) of this section, shall contribute to 1
1305	1305	the system every payroll period the lesser of 2
1306	1306	(1) an amount calculated by applying a rate of 22 percent of the greater 3
1307	1307	of the total of all base salaries 4
1308	1308	(A) [(1)] paid by the employer to employees who are active 5
1309	1309	members of the system, including any adjustments to contributions required by 6
1310	1310	AS 39.35.520; or 7
1311	1311	(B) [(2)] paid by the employer to employees who were active 8
1312	1312	members of the system during the corresponding payroll period for the fiscal 9
1313	1313	year ending 10
1314	1314	(i) [(A)] June 30, 2008; or 11
1315	1315	(ii) [(B)] June 30, 2012, if that total is less than the total 12
1316	1316	under (i) of this subparagraph [(A) OF THIS PARAGRAPH], and the 13
1317	1317	employer is a municipality in which the population decreased by more 14
1318	1318	than 25 percent between 2000 and 2010, according to the decennial 15
1319	1319	census conducted by the United States Bureau of the Census; or 16
1320	1320	(2) an amount calculated by applying a rate established by the 17
1321	1321	board under AS 37.10.220 to the total of all base salaries paid by the employer to 18
1322	1322	active members of the system; the rate must be at least 12 percent and be 19
1323	1323	sufficient to pay the actuarially determined employer normal cost, all 20
1324	1324	contributions required under AS 39.30.370 and AS 39.35.750, and past service 21
1325	1325	cost for members of the system. 22
1326	1326	* Sec. 66. AS 39.35.255 is amended by adding a new subsection to read: 23
1327	1327	(j) If the legislature appropriates funds for the purpose of decreasing an 24
1328	1328	employer's contribution, the employer's contribution under (a) of this section shall 25
1329	1329	decrease by that amount. 26
1330	1330	* Sec. 67. AS 39.35 is amended by adding a new section to read: 27
1331	1331	Sec. 39.35.281. Sub-trust for members who first became members after 28
1332	1332	June 30, 2006. The administrator shall deposit a portion of employer contributions 29
1333	1333	under AS 39.35.255 and 39.35.280 in a sub-trust of the retirement fund established by 30
1334	1334	the board for members who first became members after June 30, 2006. The amount 31 34-LS0280\A
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1337	1337
1338	1338	deposited, when combined with the amount separately computed for medical benefits 1
1339	1339	under AS 39.35.282, must be sufficient to pay the actuarially determined employer 2
1340	1340	normal cost and past service cost for members of the system who first became 3
1341	1341	members after June 30, 2006. When the amount sufficient to pay the actuarially 4
1342	1342	determined employer normal cost, all contributions required under AS 39.30.370 and 5
1343	1343	AS 39.35.750, and past service cost for members of the system is less than 12 percent 6
1344	1344	of all base salaries paid to active members of the system, the administrator shall 7
1345	1345	deposit the difference in the sub-trust established under this section. 8
1346	1346	* Sec. 68. AS 39.35.282 is amended to read: 9
1347	1347	Sec. 39.35.282. Contributions for medical benefits. Contributions made by 10
1348	1348	an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 11
1349	1349	computed for benefits provided by AS 39.35.535 and retiree major medical 12
1350	1350	insurance plan benefits provided under AS 39.35.537, and must [SHALL] be 13
1351	1351	deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 14
1352	1352	* Sec. 69. AS 39.35.340(i) is amended to read: 15
1353	1353	(i) Notwithstanding (d) of this section, a member who retires as a peace officer 16
1354	1354	or firefighter may elect to use five or fewer years of credited service granted under this 17
1355	1355	section in computing years of credited service under AS 39.35.535(c) or 39.35.537. 18
1356	1356	When eligibility for credited service for military service has been established and an 19
1357	1357	election under this subsection has been made, an indebtedness in addition to the 20
1358	1358	indebtedness determined under (b) of this section shall be determined for each year of 21
1359	1359	military service used under this subsection, in an amount based on the increase, if any, 22
1360	1360	in the present value of future benefits for that year as determined by the department. 23
1361	1361	* Sec. 70. AS 39.35.345(d) is amended to read: 24
1362	1362	(d) An employee may choose whether the credited service granted under this 25
1363	1363	section is used to satisfy the credited service requirements for normal retirement under 26
1364	1364	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
1365	1365	OR (3)] or 39.35.385(f) or is only used for the calculation of benefits. An election 28
1366	1366	under this subsection is irrevocable and applies to all temporary credited service that 29
1367	1367	the employee has accrued when the employee retires. An election under this 30
1368	1368	subsection does not change the date that an employee is considered to have 31 34-LS0280\A
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1371	1371
1372	1372	commenced participation in the plan under AS 39.35.120. 1
1373	1373	* Sec. 71. AS 39.35.370(a) is amended to read: 2
1374	1374	(a) Subject to AS 39.35.450, a terminated employee 3
1375	1375	(1) who first became a member before July 1, 2006, is eligible for a 4
1376	1376	normal retirement benefit 5
1377	1377	(A) [(1)] at age 60 with at least five years of credited service; 6
1378	1378	(B) [(2)] with at least 20 years of credited service as a peace 7
1379	1379	officer or firefighter; or 8
1380	1380	(C) [(3)] with at least 30 years of credited service; 9
1381	1381	(2) who first became a member after June 30, 2006, is eligible for a 10
1382	1382	normal retirement benefit 11
1383	1383	(A) at age 60 with at least five years of credited service; 12
1384	1384	(B) at age 55 with at least 20 years of credited service as a 13
1385	1385	peace officer or firefighter; 14
1386	1386	(C) at age 50 with at least 25 years of credited service as a 15
1387	1387	peace officer or firefighter; or 16
1388	1388	(D) with at least 30 years of credited service [FOR ALL 17
1389	1389	OTHER EMPLOYEES]. 18
1390	1390	* Sec. 72. AS 39.35.381(e) is amended to read: 19
1391	1391	(e) A person who retires under this section is not entitled to disability or death 20
1392	1392	benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 21
1393	1393	to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 22
1394	1394	section may not be used for vesting under AS 39.35.095 - 39.35.680. 23
1395	1395	* Sec. 73. AS 39.35.475(b) is amended to read: 24
1396	1396	(b) Subject to (g) and (h) of this section, the [THE] increase in benefit 25
1397	1397	payments applies to total benefit payments except for the cost-of-living allowance 26
1398	1398	under AS 39.35.480. The amount of the increase is a percentage of the current benefit 27
1399	1399	equal to 28
1400	1400	(1) the lesser of 75 percent of the increase in the cost of living in the 29
1401	1401	preceding calendar year or nine percent, for recipients who on July 1 are at least 65 30
1402	1402	years old and for members receiving disability benefits; and 31 34-LS0280\A
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1405	1405
1406	1406	(2) the lesser of 50 percent of the increase in the cost of living in the 1
1407	1407	preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 2
1408	1408	less than 65 years old or for recipients who are less than 60 years old on July 1 but 3
1409	1409	who have received benefits from the plan for at least five years. 4
1410	1410	* Sec. 74. AS 39.35.475 is amended by adding new subsections to read: 5
1411	1411	(g) Subject to (h) of this section, the amount of an increase for members who 6
1412	1412	first became members of the plan after June 30, 2006, and do not meet the eligibility 7
1413	1413	requirements for a permanent fund dividend in effect on July 1, 2025, under 8
1414	1414	AS 43.23.005(a) is equal to one-half of the applicable percentage under (b) of this 9
1415	1415	section. 10
1416	1416	(h) If the board determines that the portion of the liability of the plan that is 11
1417	1417	attributable to all members who first became members of the plan after June 30, 2006, 12
1418	1418	is funded below 90 percent, the board may reduce the amount of the increase 13
1419	1419	determined under (b) or (g) of this section that is payable to a member who first 14
1420	1420	became a member after June 30, 2006. At any time, the board may terminate a 15
1421	1421	reduction made under this subsection. 16
1422	1422	* Sec. 75. AS 39.35.480(a) is amended to read: 17
1423	1423	(a) While residing in the state, a person who first became a member of the 18
1424	1424	plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680, 19
1425	1425	and who is 65 years of age or older or a person who first became a member of the 20
1426	1426	plan before July 1, 2006, and who is receiving a disability benefit is entitled to 21
1427	1427	receive a monthly cost-of-living allowance in addition to the basic benefit. The 22
1428	1428	amount of this allowance shall be $50 or 10 percent of the basic benefit, whichever is 23
1429	1429	greater. 24
1430	1430	* Sec. 76. AS 39.35.535(a) is amended to read: 25
1431	1431	(a) Except as provided in (d) and (g) of this section, the following persons are 26
1432	1432	entitled to major medical insurance coverage under this section: 27
1433	1433	(1) for employees first hired before July 1, 1986, 28
1434	1434	(A) an employee who is receiving a monthly benefit from the 29
1435	1435	plan and who has elected coverage; 30
1436	1436	(B) the spouse and dependent children of the employee 31 34-LS0280\A
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1439	1439
1440	1440	described in (A) of this paragraph; 1
1441	1441	(C) the surviving spouse of a deceased employee who is 2
1442	1442	receiving a monthly benefit from the plan and who has elected coverage; 3
1443	1443	(D) the dependent children of a deceased employee who are 4
1444	1444	dependent on the surviving spouse described in (C) of this paragraph; 5
1445	1445	(2) for members first hired [ON OR] after June 30 [JULY 1], 1986, 6
1446	1446	(A) an employee who is receiving a monthly benefit from the 7
1447	1447	plan and who has elected coverage for the employee; 8
1448	1448	(B) the spouse of the employee described in (A) of this 9
1449	1449	paragraph if the employee elected coverage for the spouse; 10
1450	1450	(C) the dependent children of the employee described in (A) of 11
1451	1451	this paragraph if the employee elected coverage for the dependent children; 12
1452	1452	(D) the surviving spouse of a deceased employee who is 13
1453	1453	receiving a monthly benefit from the plan and who has elected coverage; 14
1454	1454	(E) the dependent children of a deceased employee who are 15
1455	1455	dependent on the surviving spouse described in (D) of this paragraph if the 16
1456	1456	surviving spouse has elected coverage for the dependent children. 17
1457	1457	* Sec. 77. AS 39.35.535(c) is amended to read: 18
1458	1458	(c) A benefit recipient who became a member before July 1, 2006, or the 19
1459	1459	surviving spouse of the member may elect major medical insurance coverage in 20
1460	1460	accordance with regulations and under the following conditions: 21
1461	1461	(1) a person, other than a disabled member or a disabled member who 22
1462	1462	is appointed to normal retirement, shall [MUST] pay an amount equal to the full 23
1463	1463	monthly group premium for retiree major medical insurance coverage if the person is 24
1464	1464	(A) younger than 60 years of age and has less than 25
1465	1465	(i) 25 years of credited service as a peace officer under 26
1466	1466	AS 39.35.360 and 39.35.370; or 27
1467	1467	(ii) 30 years of credited service under AS 39.35.360 and 28
1468	1468	39.35.370 that is not service as a peace officer; or 29
1469	1469	(B) of any age and has less than 10 years of credited service; 30
1470	1470	(2) a person is not required to make premium payments for retiree 31 34-LS0280\A
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1473	1473
1474	1474	major medical coverage if the person 1
1475	1475	(A) is a disabled member; 2
1476	1476	(B) is a disabled member who is appointed to normal 3
1477	1477	retirement; 4
1478	1478	(C) is 60 years of age or older and has at least 10 years of 5
1479	1479	credited service; or 6
1480	1480	(D) has at least 7
1481	1481	(i) 25 years of credited service as a peace officer under 8
1482	1482	AS 39.35.360 and 39.35.370; or 9
1483	1483	(ii) 30 years of credited service under AS 39.35.360 and 10
1484	1484	39.35.370 not as a peace officer. 11
1485	1485	* Sec. 78. AS 39.35.535 is amended by adding a new subsection to read: 12
1486	1486	(g) A benefit recipient who first became a member after June 30, 2006, or a 13
1487	1487	surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 14
1488	1488	under this section but may elect medical benefits under AS 39.35.537. 15
1489	1489	* Sec. 79. AS 39.35 is amended by adding a new section to read: 16
1490	1490	Sec. 39.35.537. Medical benefit; eligibility of employees first hired after 17
1491	1491	June 30, 2006; surviving spouses and dependents. (a) An employee who first 18
1492	1492	became a member of the plan after June 30, 2006, receives a monthly benefit from the 19
1493	1493	plan, retired directly from the plan, and has elected benefits under this section is 20
1494	1494	entitled to medical benefits under this section. A member who applies for medical 21
1495	1495	benefits under this section shall apply on the forms and in the manner prescribed by 22
1496	1496	the administrator. A member is eligible to retire from the plan if the member has been 23
1497	1497	an active member for at least 12 months before application for retirement and the 24
1498	1498	member 25
1499	1499	(1) is at least 26
1500	1500	(A) 50 years of age and has at least 25 years of membership 27
1501	1501	service as a peace officer or firefighter; 28
1502	1502	(B) 55 years of age and has at least 20 years of membership 29
1503	1503	service as a peace officer or firefighter; 30
1504	1504	(2) has at least 30 years of membership; or 31 34-LS0280\A
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1507	1507
1508	1508	(3) reaches the age set for Medicare eligibility and has at least 10 years 1
1509	1509	of membership service. 2
1510	1510	(b) The member's surviving spouse is eligible to elect medical benefits if the 3
1511	1511	member had retired or was eligible for retirement and medical benefits at the time of 4
1512	1512	the member's death. 5
1513	1513	(c) The medical benefits available to eligible persons are access to the retiree 6
1514	1514	major medical insurance plan and access to the health reimbursement arrangement 7
1515	1515	plan under AS 39.30.300. Access to the retiree major medical insurance plan means 8
1516	1516	that an eligible person may not be denied insurance coverage except for failure to pay 9
1517	1517	the required premium. 10
1518	1518	(d) Retiree major medical insurance plan coverage elected by an eligible 11
1519	1519	member under this section covers the eligible member, the spouse of the eligible 12
1520	1520	member, and the dependent children of the eligible member. 13
1521	1521	(e) Retiree major medical insurance plan coverage elected by a surviving 14
1522	1522	spouse of an eligible member under this section covers the surviving spouse and the 15
1523	1523	dependent children of the eligible member who are dependent on the surviving spouse. 16
1524	1524	(f) Participation in the retiree major medical insurance plan is not required in 17
1525	1525	order to participate in the health reimbursement arrangement plan. 18
1526	1526	(g) A person eligible for medical benefits under this section is not required to 19
1527	1527	participate in the health reimbursement arrangement plan in order to participate in the 20
1528	1528	retiree major medical insurance plan. 21
1529	1529	(h) A person who is eligible for medical benefits under this section must make 22
1530	1530	the irrevocable election to participate or not participate in the retiree major medical 23
1531	1531	insurance plan on or before the date the person reaches 70 1/2 years of age or when the 24
1532	1532	person applies for retirement and medical benefits, whichever is later. 25
1533	1533	(i) Major medical insurance coverage takes effect on the first day of the month 26
1534	1534	following the date of the administrator's approval of the election and stops when the 27
1535	1535	person who elects coverage dies or fails to make a required premium payment. 28
1536	1536	(j) The coverage for persons 65 years of age or older is the same as that 29
1537	1537	available for persons under 65 years of age. The benefits payable to those persons 65 30
1538	1538	years of age or older supplement any benefits provided under the federal old age, 31 34-LS0280\A
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1541	1541
1542	1542	survivors, and disability insurance program. 1
1543	1543	(k) The medical and optional insurance premiums owed by the person who 2
1544	1544	elects coverage may be deducted from the health reimbursement arrangement plan. If 3
1545	1545	the amount of the health reimbursement arrangement plan becomes insufficient to pay 4
1546	1546	the premiums, the person who elects coverage under (a) of this section shall pay the 5
1547	1547	premiums directly. 6
1548	1548	(l) The cost of premiums for retiree major medical insurance coverage under 7
1549	1549	this section for an eligible member or surviving spouse who is 8
1550	1550	(1) not eligible for Medicare is an amount equal to the full monthly 9
1551	1551	group premiums for retiree major medical insurance coverage; 10
1552	1552	(2) eligible for Medicare is the following percentage of the premium 11
1553	1553	amounts established for retirees who are eligible for Medicare: 12
1554	1554	(A) 30 percent if the member had 10 or more, but less than 15, 13
1555	1555	years of service; 14
1556	1556	(B) 25 percent if the member had 15 or more, but less than 20, 15
1557	1557	years of service; 16
1558	1558	(C) 20 percent if the member had 20 or more, but less than 25, 17
1559	1559	years of service; 18
1560	1560	(D) 15 percent if the member had 25 or more, but less than 30, 19
1561	1561	years of service; 20
1562	1562	(E) 10 percent if the member had 30 or more years of service. 21
1563	1563	(m) The eligibility for retiree major medical insurance coverage for an 22
1564	1564	alternate payee under a qualified domestic relations order shall be determined based 23
1565	1565	on the eligibility of the member to elect coverage. The alternate payee shall pay the 24
1566	1566	full monthly premium for retiree major medical insurance coverage. 25
1567	1567	(n) The administrator shall 26
1568	1568	(1) inform a person entitled to retiree major medical insurance 27
1569	1569	coverage under this section in writing 28
1570	1570	(A) that the health insurance coverage available to retired 29
1571	1571	members may be different from the health insurance coverage provided to 30
1572	1572	employees; 31 34-LS0280\A
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1575	1575
1576	1576	(B) of time limits for selecting optional health insurance 1
1577	1577	coverage; and 2
1578	1578	(C) whether the election is irrevocable; and 3
1579	1579	(2) require that a person entitled to retiree major medical insurance 4
1580	1580	coverage under this section indicate in writing on a form provided by the administrator 5
1581	1581	whether the person has chosen to receive optional health insurance coverage. 6
1582	1582	(o) The monthly group premiums for retiree major medical insurance coverage 7
1583	1583	under this section are established by the administrator in accordance with 8
1584	1584	AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 9
1585	1585	(a) of this section a monthly group premium rate for retiree major medical insurance 10
1586	1586	coverage other than the premium in effect for the month in which the premium is due 11
1587	1587	for coverage for that month. 12
1588	1588	(p) In this section, "health reimbursement arrangement plan" means the State 13
1589	1589	of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 14
1590	1590	Arrangement Plan established in AS 39.30.300. 15
1591	1591	* Sec. 80. AS 39.35.610(a) is amended to read: 16
1592	1592	(a) The contributions of an employer and the contributions of its employees 17
1593	1593	shall be transmitted to the administrator as soon as practicable after the close of the 18
1594	1594	payroll period for which the contributions are made. Subject to (c) of this section, if an 19
1595	1595	employer is delinquent in transferring the contributions for more than 15 days, interest 20
1596	1596	shall be assessed on the outstanding contributions at [ONE AND ONE-HALF TIMES] 21
1597	1597	the most recent actuarially determined rate of earnings for the retirement plan from the 22
1598	1598	date that the contributions were originally due. 23
1599	1599	* Sec. 81. AS 39.35.680(4) is amended to read: 24
1600	1600	(4) "average monthly compensation" means the result obtained by 25
1601	1601	dividing the compensation earned by an employee during a considered period by the 26
1602	1602	number of months, including fractional months, for which compensation was earned; 27
1603	1603	an employee must have at least 115 days of credited service in the last payroll year in 28
1604	1604	order for that year to be used as part of the consecutive payroll years; the considered 29
1605	1605	period consists of 30
1606	1606	(A) for employees first hired before July 1, 1996, the three 31 34-LS0280\A
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1609	1609
1610	1610	consecutive payroll years during the period of credited service that yield the 1
1611	1611	highest average; 2
1612	1612	(B) for employees first hired [ON OR] after June 30 [JULY 1], 3
1613	1613	1996, the five consecutive payroll years during the period of credited service 4
1614	1614	that yield the highest average; 5
1615	1615	(C) if the employee does not have the number of consecutive 6
1616	1616	payroll years required by (A) or (B) of this paragraph, the actual number of 7
1617	1617	months, including fractional months, that the employee worked; 8
1618	1618	(D) for an employee who has made an election under 9
1619	1619	AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 10
1620	1620	fractional months, that the employee worked; 11
1621	1621	(E) for a peace officer or firefighter hired before July 1, 2006 12
1622	1622	[AT ANY TIME], the three consecutive payroll years during the period of 13
1623	1623	credited service that yield the highest average; 14
1624	1624	* Sec. 82. AS 39.35.680(18) is amended to read: 15
1625	1625	(18) "employer" means 16
1626	1626	(A) the State of Alaska; 17
1627	1627	(B) a political subdivision or public organization of the state 18
1628	1628	that participates in the plan based on a resolution to participate in the plan that 19
1629	1629	was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or 20
1630	1630	(C) a political subdivision or public organization of the state 21
1631	1631	that, as a result of consolidation or reorganization [THAT OCCURS ON OR 22
1632	1632	AFTER JULY 1, 2006], assumes liability under the plan of a political 23
1633	1633	subdivision or public organization described in (B) of this paragraph; 24
1634	1634	* Sec. 83. AS 39.35.680 is amended by adding a new paragraph to read: 25
1635	1635	(44) "first became a member after June 30, 2006" and "first became a 26
1636	1636	member of the plan after June 30, 2006" include a member who elected under former 27
1637	1637	AS 39.35.940 to participate in the plan under AS 39.35.700 - 39.35.990 and who 28
1638	1638	elects to participate in the defined benefit retirement plan under AS 39.35.095 - 29
1639	1639	39.35.680. 30
1640	1640	* Sec. 84. AS 39.35.700 is amended to read: 31 34-LS0280\A
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1643	1643
1644	1644	Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 1
1645	1645	AS 39.35.700 - 39.35.990 apply only to 2
1646	1646	(1) members first hired [ON OR] after June 30, 2006, and before 3
1647	1647	July 1, 2025, who do not participate in a defined benefit retirement plan under 4
1648	1648	AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; and 5
1649	1649	(2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 6
1650	1650	EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 7
1651	1651	RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 8
1652	1652	FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who 9
1653	1653	transferred [TRANSFER] into the defined contribution retirement plan under former 10
1654	1654	AS 39.35.940 and do not elect to participate in the defined benefit retirement plan 11
1655	1655	under AS 39.35.095 - 39.35.680. 12
1656	1656	* Sec. 85. AS 39.35.700 is amended by adding a new subsection to read: 13
1657	1657	(b) A public organization as defined in AS 39.35.680 or a municipality or 14
1658	1658	other political subdivision of the state that participates in the plan shall also participate 15
1659	1659	in the defined benefit retirement plan under AS 39.35.095 - 39.35.680. 16
1660	1660	* Sec. 86. AS 39.35.720 is amended to read: 17
1661	1661	Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 18
1662	1662	after June 30, 2006, and before July 1, 2025, who does not participate in a defined 19
1663	1663	benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 20
1664	1664	39.35.680 [JULY 1, 2006,] shall participate in the plan set out in AS 39.35.700 - 21
1665	1665	39.35.990. 22
1666	1666	* Sec. 87. AS 39.35.895(a) is amended to read: 23
1667	1667	(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 24
1668	1668	[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 25
1669	1669	time, in whole or in part, including the right to make retroactive amendments referred 26
1670	1670	to in 26 U.S.C. 401(b). 27
1671	1671	* Sec. 88. AS 39.35.895(b) is amended to read: 28
1672	1672	(b) The plan administrator may not modify or amend the plan retroactively [IN 29
1673	1673	SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 30
1674	1674	[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 31 34-LS0280\A
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1677	1677
1678	1678	MADE] before the modification or amendment except to the extent that the reduction 1
1679	1679	is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 2
1680	1680	Revenue Code. 3
1681	1681	* Sec. 89. AS 39.35.895(c) is amended to read: 4
1682	1682	(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 5
1683	1683	Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 6
1684	1684	plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 7
1685	1685	is terminated, all investments at the time of termination remain in force until all 8
1686	1686	individual accounts have been completely distributed under the plan. After [, AND, 9
1687	1687	AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 10
1688	1688	employer. 11
1689	1689	* Sec. 90. AS 39.35.895(d) is repealed and reenacted to read: 12
1690	1690	(d) Within one year after determining that a contribution to the plan by an 13
1691	1691	employer was the result of a mistake of fact, the administrator shall return the 14
1692	1692	contribution to the employer. 15
1693	1693	* Sec. 91. AS 14.25.012(c), 14.25.061, 14.25.540; and AS 39.35.940 are repealed. 16
1694	1694	* Sec. 92. The uncodified law of the State of Alaska is amended by adding a new section to 17
1695	1695	read: 18
1696	1696	TRANSITION: RETIREMENT PLAN ELECTION. (a) A teacher who became a 19
1697	1697	member of the defined contribution retirement plan of the teachers' retirement system after 20
1698	1698	June 30, 2006, and before July 1, 2025, and who, on July 1, 2025, is a member employed by 21
1699	1699	an employer in the defined contribution retirement plan of the teachers' retirement system 22
1700	1700	may, before January 1, 2026, make a one-time election to participate in the defined benefit 23
1701	1701	retirement plan and to transfer all contributions that have been made or should be made to the 24
1702	1702	defined contribution retirement plan for service the member completes before the effective 25
1703	1703	date of the member's participation in the defined benefit retirement plan. The transferred 26
1704	1704	contributions shall be used to purchase credited service in the defined benefit retirement plan 27
1705	1705	on an actuarial equivalent basis determined by the Alaska Retirement Management Board 28
1706	1706	established under AS 37.10.210. The provisions of AS 14.25.044 apply to an election made 29
1707	1707	under this subsection. 30
1708	1708	(b) An employee who became a member of the defined contribution retirement plan 31 34-LS0280\A
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1711	1711
1712	1712	of the public employees' retirement system after June 30, 2006, and before July 1, 2025, and 1
1713	1713	who, on July 1, 2025, is a member employed by an employer in the defined contribution 2
1714	1714	retirement plan of the public employees' retirement system may, before January 1, 2026, make 3
1715	1715	a one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 4
1716	1716	39.35.680 and to transfer all contributions that have been made or should be made to the 5
1717	1717	defined contribution retirement plan for service the member completes before the effective 6
1718	1718	date of the member's participation in the defined benefit retirement plan. The transferred 7
1719	1719	contributions shall be used to purchase credited service in the defined benefit retirement plan 8
1720	1720	on an actuarial equivalent basis determined by the Alaska Retirement Management Board 9
1721	1721	established under AS 37.10.210. The provisions of AS 39.35.159 apply to an election made 10
1722	1722	under this subsection. 11
1723	1723	* Sec. 93. The uncodified law of the State of Alaska is amended by adding a new section to 12
1724	1724	read: 13
1725	1725	ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 14
1726	1726	may adopt regulations necessary to implement secs. 37 and 38 of this Act. Regulations 15
1727	1727	adopted by the Alaska Retirement Management Board under this Act relate to the internal 16
1728	1728	management of a state agency and are not subject to AS 44.62 (Administrative Procedure Act) 17
1729	1729	under AS 37.10.240. 18
1730	1730	(b) The commissioner of administration may adopt regulations necessary to 19
1731	1731	implement secs. 1 - 36 and 39 - 92 of this Act. Regulations adopted by the commissioner of 20
1732	1732	administration under this Act relate to the internal management of a state agency and are not 21
1733	1733	subject to AS 44.62 (Administrative Procedure Act) under AS 14.25.005, AS 39.30.098, and 22
1734	1734	AS 39.35.005. 23
1735	1735	(c) Regulations adopted under this section may not take effect before the effective 24
1736	1736	date of the law being implemented by the regulation. 25
1737	1737	* Sec. 94. Section 93 of this Act takes effect immediately under AS 01.10.070(c). 26
1738	1738	* Sec. 95. Except as provided in sec. 94 of this Act, this Act takes effect July 1, 2025. 27