00 CS FOR HOUSE BILL NO. 329(L&C) 01 "An Act relating to retirement incentive programs for the public employees' retirement 02 system and the teachers' retirement system; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04  * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 FINDINGS AND PURPOSE. The State of Alaska and many local governments and 07 school districts are facing the need to restructure their operations and their work forces in 08 order to reduce expenditures and balance budgets. Retirement incentives are management 09 tools that have been used extensively by the private sector, the federal government, and other 10 state and local governments across the country. The purpose of this Act is to make these 11 management tools temporarily available to the state and to the municipalities and school 12 districts of the state. This Act will enable these entities to be more efficient and cost-effective 13 by eliminating certain positions, and producing a net reduction in personnel costs. 14  * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 01 read: 02 RETIREMENT INCENTIVE PROGRAM. (a) An employer may adopt a retirement 03 incentive plan under secs. 3 - 6 of this Act, as appropriate, subject to the requirements of sec. 04 15 of this Act, and designate categories of employees eligible to participate in that plan. An 05 employer need not extend the incentive plan to all employees who would otherwise be 06 eligible, but may choose to extend the plan only to employees 07 (1) in specific budget or administrative components of the employer; 08 (2) in specific job classifications; 09 (3) in specific geographic locations; or 10 (4) on the basis of any combination of factors under (1) - (3) of this 11 subsection. 12 (b) An employee is eligible to participate in a retirement incentive plan under this Act 13 only if the 14 (1) employee is a vested member of the public employees' retirement system 15 or the teachers' retirement system; 16 (2) employee has credit for service under AS 14.25.110 that occurred before 17 July 1, 1990, or under AS 39.35.370 that occurred before July 1, 1986; 18 (3) employee is at least 50 years of age, and, before application of credit 19 described in (f) of this section, has 20 (A) at least 17 years of credited service as a peace officer or fire 21 fighter, as those terms are defined in AS 39.35.680; or 22 (B) at least 20 years of credited service as an employee other than an 23 employee described in (A) of this paragraph; 24 (4) employee will be qualified to retire under AS 14.25.110 or AS 39.35.370 25 after receipt of the credit described in (f) of this section; and 26 (5) savings to the employer in personal services costs for the employee's 27 position will exceed the costs to the employer for that position within three years after the 28 employee is appointed to retirement. 29 (c) An employer shall file its proposed retirement incentive plan with the 30 commissioner of administration. The commissioner shall approve the plan if the plan meets 31 the requirements of this Act, except that the commissioner may approve a state agency's 01 retirement incentive plan only if the office of management and budget approves the 02 calculation of savings under (b)(5) of this section. A proposed plan filed under this section 03 must 04 (1) identify job classifications of employees, and specific budget or 05 administrative components, eligible to participate in the plan; 06 (2) include a reimbursement agreement that 07 (A) requires the employer, for each employee who retires under the 08 plan, to reimburse the appropriate retirement system, within three years after the end 09 of the fiscal year in which the employee is appointed to retirement, in an amount equal 10 to the actuarial equivalent of the difference between the benefits the participant 11 receives after the addition of the credit under (f) of this section and the amount the 12 participant would have received without the credit, less the amount the participant has 13 paid on the indebtedness determined under (d) or (e) of this section; and 14 (B) provides that contributions from the employer under this section 15 take priority over other obligations of the employer to the maximum extent permitted 16 by law. 17 (d) A member of the teachers' retirement system who participates in an approved 18 retirement incentive plan under this Act is indebted to that system for an amount calculated 19 under this subsection. The indebtedness is 25.95 percent of the member's actual 20 compensation for the school year in which the member terminates employment, or the 21 calculated school year compensation for a member who works less than the entire school year, 22 plus an appropriate share of the administrative costs of the program. A member may apply 23 annual or personal leave to the indebtedness before appointment to retirement. An 24 outstanding indebtedness at the time a member is appointed to retirement under an approved 25 retirement incentive plan requires an actuarial adjustment to the benefits payable to that 26 member. 27 (e) A member of the public employees' retirement system who participates in an 28 approved retirement incentive plan under this Act is indebted to that system for an amount 29 calculated under this subsection. The indebtedness is 22-1/2 percent for a peace officer or fire 30 fighter, and 20-1/4 percent for other members, of the member's actual annual compensation 31 for the year in which the member terminates employment, or the calculated annual 01 compensation for a member who works fewer than 12 months, plus an appropriate share of 02 the administrative costs of the program. A member may apply annual or personal leave to the 03 indebtedness before appointment to retirement. An outstanding indebtedness at the time a 04 member is appointed to retirement under an approved retirement incentive plan requires an 05 actuarial adjustment to the benefits payable to that member. 06 (f) An employee who participates in an approved retirement incentive plan under this 07 Act receives a credit of three years. The three years must be applied in the following order 08 until exhausted: 09 (1) to meet the age or service required for eligibility for normal retirement 10 under AS 14.25.110 or AS 39.35.370, as appropriate; 11 (2) to meet the age required for early retirement under AS 14.25.110 or 12 AS 39.35.370, as appropriate; 13 (3) to reduce the actuarial adjustment required for early retirement under 14 AS 14.25.110 or AS 39.35.370, as appropriate; 15 (4) as years of credited service for calculating retirement benefits. 16 (g) In this section, 17 (1) "department" means 18 (A) a principal department of the executive branch of state 19 government; an independent state entity that is attached to a principal department of 20 the executive branch for administrative purposes but that is not a public organization 21 as defined in AS 39.35.680 is part of that department for purposes of this paragraph; 22 and 23 (B) the Office of the Governor; 24 (2) "employer" has the meaning given in AS 14.25.220 and AS 39.35.680 and 25 includes a department. 26  * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 AUTHORIZATION FOR STATE EMPLOYEE RETIREMENT INCENTIVE. (a) A 29 state agency may adopt, and file with the commissioner of administration for approval, a 30 proposed retirement incentive plan for its employees. 31 (b) Upon the request of a state agency, the commissioner of administration shall 01 establish one or more periods during which the employees of that state agency who are 02 eligible under sec. 2(b) of this Act to participate in a retirement incentive plan may apply to 03 the commissioner of administration to participate in the state agency's approved plan. The 04 periods shall begin not earlier than July 1, 2004, and end not later than June 30, 2007. The 05 periods shall be not less than 30 days and not more than 60 days in duration, and may not 06 begin less than 30 days after their establishment. A state agency is not required to request an 07 application period, and may request more than one application period. 08 (c) A proposed retirement incentive plan adopted under this section may not permit an 09 employee who is the governor, the lieutenant governor, or a commissioner, deputy 10 commissioner, or assistant commissioner of a principal department of the executive branch to 11 participate in the plan. 12 (d) A proposed retirement incentive plan adopted under this section may permit 13 participation only by an employee who is eligible to participate under sec. 2(b) of this Act and 14 who 15 (1) has been continuously employed by the state for at least one year before 16 the employee applies to participate in the state agency's approved plan; 17 (2) is a permanent seasonal employee who has been continuously employed 18 by the state in a permanent seasonal position during all of the time in the one year before the 19 employee's application to participate in which the position normally is filled; 20 (3) has a job sharing agreement with a state agency in which two or more 21 employees share a single position identified by a single position control number and in which 22 the employee who applies to participate in the plan was continuously employed by the agency 23 during the portion of the one year before the employee's application in which the employee 24 normally worked under the job sharing agreement; or 25 (4) meets a combination of the requirements of this subsection. 26 (e) The commissioner of administration may not accept the application of an 27 employee to participate in an approved retirement incentive plan adopted under this section 28 unless the employee will be appointed to retirement not later than the first day of the month 29 that is six months after the last day of the application period established by the commissioner 30 under (b) of this section. A state agency, in a plan adopted under this section, may set an 31 earlier date by which an employee must be appointed to retirement in order to participate in 01 the plan. 02  * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 AUTHORIZATION FOR RETIREMENT INCENTIVE FOR EMPLOYEES OF THE 05 UNIVERSITY OF ALASKA. (a) The Board of Regents of the University of Alaska may 06 adopt, and file with the commissioner of administration for approval, a proposed retirement 07 incentive plan for university employees. 08 (b) Upon the request of the Board of Regents, the commissioner of administration 09 shall establish one or more periods during which the employees of the university who are 10 eligible under sec. 2(b) of this Act to participate in a retirement incentive plan may apply to 11 the commissioner of administration to participate in the university's approved plan. The 12 periods shall begin not earlier than July 1, 2004, and end not later than June 30, 2007. The 13 periods shall be not less than 30 days and not more than 60 days in duration, and may not 14 begin less than 30 days after their establishment. The Board of Regents is not required to 15 request an application period, and may request more than one application period. 16 (c) The commissioner of administration may not accept the application of an 17 employee to participate in an approved retirement incentive plan adopted under this section 18 unless the employee will be appointed to retirement not later than the first day of the month 19 that is six months after the last day of the application period established by the commissioner 20 under (b) of this section. The Board of Regents, in a plan adopted under this section, may set 21 an earlier date by which an employee of the University of Alaska must be appointed to 22 retirement in order to participate in the plan. 23 (d) A participant in the optional university retirement program under AS 14.40.661 - 24 14.40.799 who is vested in the public employees' retirement system or the teachers' retirement 25 system may participate in a retirement incentive plan for that system if the participant meets 26 the other qualifications of this Act. If a provision of this subsection is inconsistent with 27 another provision of law, the provision of this subsection governs. 28  * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER EMPLOYEES 31 IN THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM. (a) The governing body of a 01 political subdivision of the state or public organization that has elected to participate in the 02 public employees' retirement system under AS 39.35.550 - 39.35.650 may adopt, and file with 03 the commissioner of administration for approval, a proposed retirement incentive plan for its 04 employees. Upon the request of the governing body, the commissioner of administration shall 05 establish one or more periods during which the employees of a political subdivision or public 06 organization who are eligible to participate in a retirement incentive plan may apply to the 07 commissioner of administration to participate in the approved plan. The periods shall begin 08 not earlier than October 31, 2004, and end not later than June 30, 2007. The periods shall be 09 not less than 30 days and not more than 60 days in duration, and may not begin less than 60 10 days after their establishment. The governing body is not required to request an application 11 period, and may request more than one application period. 12 (b) The commissioner of administration may not accept the application of an 13 employee to participate in an approved retirement incentive plan adopted under this section 14 unless the employee will be appointed to retirement not later than the first day of the month 15 that is six months after the last day of the application period established by the commissioner 16 under (a) of this section. The governing body of the political subdivision or public 17 organization, in a plan adopted under this section, may set an earlier date by which an 18 employee must be appointed to retirement in order to participate in the plan. 19  * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 20 read: 21 AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER EMPLOYEES 22 IN THE TEACHERS' RETIREMENT SYSTEM. (a) An employer under the teachers' 23 retirement system who is not otherwise covered by secs. 3 or 4 of this Act may adopt, and file 24 with the commissioner of administration for approval, a proposed retirement incentive plan 25 for its employees. A plan adopted under this section must provide that the application period 26 for participation in the retirement incentive plan is July 1, 2004, through June 30, 2007. 27 (b) The commissioner of administration may not accept the application of an 28 employee to participate in an approved retirement incentive plan adopted under this section 29 unless the employee will be appointed to retirement on or before August 1, 2007. The 30 employer, in a plan adopted under this section, may set an earlier date by which an employee 31 must be appointed to retirement in order to participate in the plan. 01  * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 POLITICAL SUBDIVISION OR PUBLIC ORGANIZATION EMPLOYMENT. For 04 purposes of determining the years of service requirements for retirement under AS 14.25.110 05 or AS 39.35.370, as appropriate, a vested member who is a state employee and who applies to 06 participate in a retirement incentive plan approved under this Act may receive credit for 07 employment with a political subdivision or public organization before the political 08 subdivision or organization became an employer under the public employees' retirement 09 system. The member may not receive credit for those years under this subsection for 10 purposes of determining benefits. If a provision of this section is inconsistent with any other 11 provision of law, the provision of this section governs. 12  * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 RECOVERY OF EMPLOYER DELINQUENCIES. To recover a delinquency owed 15 by an employer other than the state under an agreement entered into under sec. 2(c)(2) of this 16 Act, the Department of Administration may 17 (1) direct that the amount of the delinquency or a lesser amount be withheld 18 from any money payable to the employer by a state department or agency and that the amount 19 withheld be credited to the delinquency; and 20 (2) bring an action against the employer. 21  * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 STOPPING ENROLLMENT FOR ACTUARIAL REASONS. The commissioner of 24 administration may halt further enrollment in any one of the retirement incentive plans 25 approved under sections 3 - 6 of this Act if the commissioner finds that further enrollment in 26 any one of the approved plans would have a significant negative effect on the actuarial 27 soundness of the retirement plan of that employer. 28  * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 REEMPLOYMENT INDEBTEDNESS; PROHIBITION ON REEMPLOYMENT. 31 (a) If an individual is reemployed as a member of the public employees' retirement system 01 under AS 39.35, the teachers' retirement system under AS 14.25, the judicial retirement 02 system under AS 22.25, or the optional university retirement program under AS 14.40.661 - 03 14.40.799 after appointment to retirement under this Act, that individual forfeits the incentive 04 credit received under sec. 2(f) of this Act and is indebted to the system under which the 05 individual took retirement. The indebtedness is 110 percent of the amount the individual 06 received as a result of participation in a retirement incentive plan under this Act and to which 07 the individual would not otherwise have been entitled, including the cost of health insurance. 08 The amount that the individual has paid under sec. 2(d) or (e) of this Act will be applied as a 09 credit toward the reemployment indebtedness. Interest on the reemployment indebtedness 10 accrues from the date of reemployment until the date that the individual either is appointed to 11 retirement and accepts an actuarial adjustment to the individual's future benefits or repays the 12 indebtedness in full. The rate of interest is that established by regulation for the public 13 employees' retirement system by the public employees' retirement board and for the teachers' 14 retirement system by the teachers' retirement board. 15 (b) An individual who was appointed to retirement under this Act may not be 16 employed by, or enter into a contract for personal services with, a state agency or the 17 University of Alaska within the three years after the date of appointment to retirement, except 18 that 19 (1) the University of Alaska may enter into a personal services contract with 20 the individual for teaching or research; 21 (2) the individual may accept employment with the legislature during a 22 legislative session if the employment is on an hourly basis and does not entitle the individual 23 to receive retirement, health, or leave benefits; 24 (3) the individual may accept employment with a school district as a substitute 25 teacher; and 26 (4) an individual who participated in the teachers' retirement system may 27 accept employment with a school district if the employment is on an hourly basis and does not 28 entitle the individual to receive retirement, health, or leave benefits. 29 (c) Notwithstanding the prohibition in (b) of this section, a state agency or the 30 University of Alaska may enter into a personal services contract with an individual who was 31 appointed to retirement under this Act if the Board of Regents, for the University of Alaska, 01 or the commissioner of administration, for a state agency, determines that there is a 02 compelling reason to do so because of the individual's specialized or extensive experience that 03 relates to a particular program or project of the state agency or university. 04  * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 05 read: 06 OFFICE OF MANAGEMENT AND BUDGET. (a) When designating an employee 07 category for participation in a retirement incentive plan under this Act, the executive head of 08 the relevant state agency shall describe in detail the expected effect of the plan on the agency's 09 personal services cost and operation. This financial report must be approved by the director 10 of the office of management and budget before the commissioner of administration may 11 approve the proposed plan. The state agency shall report each year to the office of 12 management and budget on the cost of each employee's participation and the effect on the 13 agency's personal services cost and operation. 14 (b) The office of management and budget shall submit to the legislature annual 15 reports on the retirement incentive under this Act beginning January 15, 2005, and continuing 16 through January 15, 2007, and shall submit a final report January 15, 2008. Each report must 17 provide the information necessary for the legislature to evaluate the effectiveness of the plans 18 in achieving their objectives. The report must include information on the designated 19 employee categories under the plans, including the cost of each plan per participant, the cost 20 to the state, the cost to the employee, the annual budgeted amount, by state agency, for the 21 incentives, the number of positions deleted or left vacant, and the projected or actual net 22 savings over the three-year period. 23  * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 PROGRAM CHANGES. (a) An individual employee does not have a vested or 26 contractual right to a benefit under this Act until an agreement is executed with the 27 administrator that specifically authorizes that employee to participate in the retirement 28 incentive program under this Act. The legislature reserves the right to change any aspect of 29 the retirement incentive plan as it relates to employees for whom participation agreements 30 have not yet been executed with the administrator or with the commissioner of administration. 31 (b) In this section, "administrator" means the administrator of the public employees' 01 retirement system for employees who are members of that system, and the administrator of 02 the teachers' retirement system for employees who are members of that system. 03  * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 REGULATIONS. The commissioner of the Department of Administration may adopt 06 regulations under AS 44.62 (Administrative Procedure Act) to implement and interpret this 07 Act. 08  * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 DEFINITIONS. (a) Unless provided otherwise in this Act, the definitions set out in 11 AS 14.25.220 apply to provisions in secs. 2 - 10 of this Act that relate to the teachers' 12 retirement system and members of the teachers' retirement system. 13 (b) Unless provided otherwise in this Act, the definitions set out in AS 39.35.680 14 apply to provisions in secs. 2 - 10 of this Act that relate to the public employees' retirement 15 system and members of the public employees' retirement system. 16 (c) In this Act, 17 (1) "office of management and budget" means the office of management and 18 budget in the Office of the Governor; 19 (2) "public employees' retirement system" means the Public Employees' 20 Retirement System of Alaska (AS 39.35); 21 (3) "state agency" 22 (A) means 23 (i) the legislative branch of state government; 24 (ii) a principal department of the executive branch of state 25 government; an independent state entity that is attached to a principal 26 department of the executive branch for administrative purposes but that is not a 27 public organization as defined in AS 39.35.680 is part of that department for 28 purposes of this clause; and 29 (iii) the Office of the Governor; 30 (B) does not include 31 (i) the University of Alaska; 01 (ii) a political subdivision of the state; or 02 (iii) a public organization as defined in AS 39.35.680; 03 (4) "teachers' retirement system" means the Teachers' Retirement System of 04 Alaska (AS 14.25). 05  * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 APPLICABILITY TO EXISTING BENEFICIARIES. The implementation of a 08 retirement incentive program under this Act may not impair or diminish benefits to a member 09 appointed to retirement before the effective date of this Act. 10 * Sec. 16. Sections 1 - 7 of this Act are repealed July 1, 2007. 11 * Sec. 17. This Act takes effect immediately under AS 01.10.070(c).