CSSB 1(STA): "An Act relating to retirement incentive programs for the public employees' retirement system, the teachers' retirement system, and certain persons under the judicial retirement system; and providing for an effective date."
00CS FOR SENATE BILL NO. 1(STA) 01 "An Act relating to retirement incentive programs for the public employees' 02 retirement system, the teachers' retirement system, and certain persons under the 03 judicial retirement system; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. PURPOSE. Since it may be necessary for state agencies and other employers 06 who participate in the state retirement systems to reduce their personal services costs because 07 of declining state revenue, reimplementation of the retirement incentive programs established 08 by ch. 26, SLA 1986, as amended by ch. 76, SLA 1988, and ch. 89, SLA 1989, as amended 09 by ch. 18, SLA 1990, encouraging employees to retire voluntarily, will reduce the hardship 10 of layoffs. This program is intended to realize sufficient economies to offset the cost of 11 administration and benefits to state agencies and other employers resulting from the award of 12 retirement credits and to result in a net reduction in personal services costs to the state or 13 other public employers during a period of declining revenue. 14 * Sec. 2. RETIREMENT INCENTIVE PROGRAM. (a) An employer may adopt a
01 retirement incentive plan under secs. 3 - 6 of this Act, as appropriate, to designate organiza- 02 tional units of employees eligible to participate in the retirement incentive program. 03 (b) The organizational units of a plan must be selected so that implementation of the 04 plan results in maximum savings to the employer in personal services costs within four years 05 after the commencement of the plan. A plan that results in savings in personal services costs 06 in any amount that is in excess of all costs to the employer qualifies under this section. The 07 designation may include only representatives from job classifications whose inclusion 08 contributes to the overall cost savings. 09 (c) A member is eligible to participate in the retirement incentive program only if the 10 member is vested, is employed in a position in a designated organizational unit, and will be 11 qualified to retire under AS 14.25.110 or AS 39.35.370 after receipt of the retirement 12 incentive. To participate, a member shall apply on a form provided by the administrator. 13 (d) A participating employer shall prepare and file the retirement incentive plan with 14 the administrator. For state employees other than university employees, the administrator may 15 approve a designated organizational unit only if the office of management and budget certifies 16 that the unit's participation in the plan meets the requirements of (b) of this section. The 17 administrator shall approve the plan if it meets the requirements of this section. The plan must 18 (1) identify organizational units and employees eligible to participate in the 19 program; 20 (2) include a reimbursement agreement that 21 (A) requires the employer, for each employee who is retired under the 22 plan, to reimburse the system within three years after the end of the fiscal year in 23 which the employee is appointed to retirement in an amount equal to 24 (i) the actuarial equivalent of the difference between the benefits 25 the participant receives after the addition of the retirement incentive under this 26 section and the amount the participant would have received without the 27 incentive, less the total of the amount the participant has paid on the 28 indebtedness determined under (e) or (f) of this section and the amount paid 29 under (i) of this section, if any; and 30 (ii) an appropriate share of the administrative costs of the 31 program; and
01 (B) provides that contributions from the employer under this section 02 take priority over other obligations of the employer to the maximum extent permitted 03 by law. 04 (e) A member of the teachers' retirement system who participates in the retirement 05 incentive program is indebted to the system. The amount of indebtedness is equal to 25.95 06 percent of the member's actual compensation for the school year, or the calculated school year 07 compensation for a member who works less than the entire school year, for the school year 08 in which the member terminates employment to participate in the program. An outstanding 09 indebtedness at the time a participant is appointed to retirement will require an actuarial 10 adjustment to the benefits payable. 11 (f) A member of the public employees' retirement system who participates in the 12 retirement incentive program is indebted to the system. The amount of indebtedness is equal 13 to 22-1/2 percent for a peace officer or fire fighter, and 20-1/4 percent for other members, of 14 the member's actual annual compensation, or the calculated annual compensation for a 15 member who works fewer than 12 months, for the year in which the member terminates 16 employment to participate in the program. An outstanding indebtedness at the time a 17 participant is appointed to retirement will require an actuarial adjustment to the benefits 18 payable. 19 (g) A participant in the retirement incentive program receives a credit of three years. 20 The three years must be applied in the following order until exhausted: 21 (1) to meet the age or service required for eligibility for normal retirement 22 under AS 14.25.110 or AS 39.35.370, as appropriate; 23 (2) to meet the age required for early retirement under AS 14.25.110 or 24 AS 39.35.370, as appropriate; 25 (3) to reduce the actuarial adjustment required for early retirement under 26 AS 14.25.110 or AS 39.35.370, as appropriate; 27 (4) as years of credited service for calculating retirement benefits. 28 (h) Except as provided in sec. 7 of this Act, in the determination of whether a member 29 will qualify to retire under this section, credited service may include only, 30 (1) for members of the teachers' retirement system, service credit for 31 employment rendered to an employer, territorial service under AS 14.25.105, outside service
01 and military service under AS 14.25.060, and Alaska BIA service under AS 14.25.107; 02 (2) for members of the public employees' retirement system, service credit for 03 employment rendered to an employer. 04 (i) In order to establish eligibility for participation under (b) of this section, and in 05 addition to the employee indebtedness under (e) or (f) of this section, an employee may elect 06 to assume a portion of the employer liability calculated under (d) of this section. An 07 outstanding indebtedness at the time the employee is appointed to retirement will require an 08 actuarial adjustment to the employee's benefits. 09 * Sec. 3. AUTHORIZATION FOR STATE EMPLOYEE RETIREMENT INCENTIVE. 10 (a) A state agency is authorized to adopt a retirement incentive plan for its employees. A 11 plan adopted under this section must permit a designated employee to apply to the retirement 12 incentive program under sec. 2 of this Act only from July 31, 1993, through no later than 13 October 31, 1993. 14 (b) The plan may not permit an employee who is the commissioner, a deputy 15 commissioner, or assistant commissioner of a state department to participate. 16 (c) A plan adopted under this section may only permit participation by an employee 17 who is otherwise qualified and who 18 (1) has been continuously employed by the state since November 1, 1992; 19 (2) is a permanent seasonal employee continuously employed by the state in 20 the permanent seasonal position during all of the time since November 1, 1992, in which the 21 position normally was filled; 22 (3) has a job sharing agreement with a state agency in which two or more 23 employees share a single position identified by a single position control number and in which 24 the employee choosing to participate was continuously employed by the agency during all of 25 the time since November 1, 1992, in which the employee normally worked under the job 26 sharing agreement; or 27 (4) meets a combination of the requirements of this subsection. 28 (d) Under a plan adopted under this section, the administrator may not accept the 29 application of an employee unless the employee will be appointed to retirement on or before 30 July 1, 1994. 31 (e) An agency in the executive branch of state government that adopts a retirement
01 incentive plan under this section may not, after the plan has been implemented, employ 02 employees in more than one-half of the positions held by employees who participated in the 03 plan. The agency shall delete the position control numbers for at least one-half of the 04 positions of participants in the plan from the list of positions in the agency. 05 (f) In this section, "state agency" does not include the University of Alaska or an 06 entity covered by sec. 4 of this Act. 07 * Sec. 4. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER 08 EMPLOYEES IN THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM. (a) The 09 governing body of a political subdivision of the state or a public organization that has elected 10 to participate in the public employees' retirement system under AS 39.35.550 - 39.35.650 is 11 authorized to adopt a retirement incentive plan for its employees under sec. 2 of this Act. A 12 plan adopted under this subsection must permit designated employees to apply to the 13 retirement incentive program under sec. 2 of this Act only from December 31, 1993, through 14 no later than June 30, 1994. 15 (b) Under a plan adopted under (a) of this section, the administrator may not accept 16 the application of an employee unless the employee will be appointed to retirement on or 17 before February 1, 1995. The employer may set an earlier date by which employees of the 18 employer must be appointed to retirement in order to participate. 19 (c) In addition to the authorization contained in (a) of this section, a municipality that 20 has elected to participate in the public employees' retirement system under AS 39.35.550 - 21 39.35.650 is authorized to adopt a retirement incentive plan for its employees under sec. 2 of 22 this Act. A plan adopted under this subsection must permit designated employees to apply 23 to the retirement incentive program under sec. 2 of this Act only from June 1, 1993, through 24 no later than July 31, 1993. Under a plan adopted under this subsection, the administrator 25 may not accept the application of an employee unless the employee will be appointed to 26 retirement on or before August 31, 1993. The employer may set an earlier date by which 27 employees of the employer must be appointed to retirement in order to participate. 28 * Sec. 5. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR EMPLOYEES OF 29 THE UNIVERSITY OF ALASKA. (a) The Board of Regents of the University of Alaska 30 is authorized to adopt a retirement incentive plan for its employees. A plan adopted under this 31 section must permit designated employees to apply to the retirement incentive program under
01 sec. 2 of this Act only from June 30, 1993, through no later than December 31, 1993. 02 (b) Under a plan adopted under this section, the administrator may not accept the 03 application of an employee unless the employee will be appointed to retirement on or before 04 August 1, 1994. The Board of Regents may set an earlier date by which employees of the 05 university must be appointed to retirement in order to participate. 06 (c) Notwithstanding the exclusion of members of the optional university retirement 07 program from participation in the teachers' retirement system under AS 14.25.040(a), 08 14.25.220(40), and AS 14.40, or in the public employees' retirement system under AS 14.40, 09 AS 39.35.120, and 39.35.680(21), a participant in the optional university retirement program 10 who is vested in one of those retirement systems may participate in the retirement incentive 11 program if the individual meets the other qualifications of this Act. 12 * Sec. 6. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER 13 EMPLOYEES IN THE TEACHERS' RETIREMENT SYSTEM. (a) An employer under the 14 teachers' retirement system who is not otherwise covered by secs. 3 or 5 of this Act is 15 authorized to adopt a retirement incentive plan for its employees under sec. 2 of this Act. A 16 plan adopted under this section must permit designated employees to apply to the retirement 17 incentive program under sec. 2 of this Act only from June 30, 1993, through no later than 18 December 31, 1993. 19 (b) Under a plan adopted under this section, the administrator may not accept the 20 application of an employee unless the employee will be appointed to retirement on or before 21 August 1, 1994. The employer may set an earlier date by which employees of the employer 22 must be appointed to retirement in order to participate. 23 * Sec. 7. POLITICAL SUBDIVISION OR PUBLIC ORGANIZATION EMPLOYMENT. 24 Notwithstanding other provisions of law, a vested member who is a state employee and is 25 participating in the retirement incentive program may receive credit for employment with a 26 political subdivision or public organization before the political subdivision or organization 27 became an employer under the system for purposes of determining the years of service 28 requirements for retirement under AS 14.25.110 or AS 39.35.370, as appropriate. The 29 member may not receive credit for those years under this subsection for purposes of 30 determining benefits. In order for a state employee to receive credit under this subsection, the 31 employee's participation in the program must contribute to the overall cost savings of the
01 agency. 02 * Sec. 8. PROVISION AND AUTHORIZATION FOR ADMINISTRATIVE DIRECTOR 03 OF COURT. (a) The chief justice of the state supreme court may adopt a retirement 04 incentive plan for an administrative director of the Alaska Court System who is a member of 05 the judicial retirement system under AS 22.25.012 if participation in the plan will result in 06 savings to the court system in personal services costs within five years after the 07 commencement of the plan. The administrative director may participate only if the 08 administrative director is vested in the judicial retirement system and will be qualified to retire 09 under AS 22.25.010 after receipt of the retirement incentive. To participate, the administrative 10 director shall apply on a form provided by the administrator of the public employees' 11 retirement system. 12 (b) The court system shall include in the retirement incentive plan a reimbursement 13 agreement that requires the court system, for each administrative director of the Alaska Court 14 System who is retired under the plan, to reimburse the judicial retirement system within three 15 years after the end of the fiscal year in which the administrative director is appointed to 16 retirement in an amount equal to 17 (1) the actuarial equivalent of the difference between the benefits the 18 administrative director receives after the addition of the retirement incentive under this section 19 and the amount the participant would have received without the incentive, less the total of the 20 amount the participant has paid on the indebtedness determined under (d) of this section and 21 the amount paid under (f) of this section, if any; and 22 (2) an appropriate share of the administrative costs of the program. 23 (c) A retirement incentive plan adopted under this section must provide that 24 contributions from the court system under (b) of this section take priority over other 25 obligations of the court system to the maximum extent permitted by law. 26 (d) An administrative director of the Alaska Court System who participates in the 27 retirement incentive program is indebted to the system. The amount of indebtedness is equal 28 to 21 percent of the director's actual annual compensation, or the calculated annual 29 compensation for a member who works fewer than 12 months, for the year in which the 30 director terminates employment to participate in the program. An outstanding indebtedness 31 at the time the administrative director is appointed to retirement will require an actuarial
01 adjustment to the benefits payable. 02 (e) Notwithstanding sec. 2(g) of this Act, an administrative director of the Alaska 03 Court System who participates in the retirement incentive program receives a credit of three 04 years which may only be used to meet the age requirements for normal or early retirement 05 under AS 22.25.010(d). 06 (f) In order to establish eligibility for participation under (a) of this section, and in 07 addition to the employee indebtedness under (d) of this section, an administrative director may 08 elect to assume a portion of the employer liability calculated under (b) of this section. An 09 outstanding indebtedness at the time the employee is appointed to retirement will require an 10 actuarial adjustment to the employee's benefits. 11 (g) The chief justice of the Alaska Court System is authorized to adopt a retirement 12 incentive plan for the administrative director of the court system. A plan adopted under this 13 subsection must permit an administrative director to apply to the retirement incentive program 14 only from December 31, 1993, through June 30, 1994. The administrator of the public 15 employees' retirement system may not accept the application of the administrative director of 16 the Alaska Court System unless the administrative director will be appointed to retirement on 17 or before February 1, 1995. 18 * Sec. 9. RECOVERY OF EMPLOYER DELINQUENCIES. To recover a delinquency 19 owed by an employer other than the state under an agreement entered under sec. 2(d)(2) of 20 this Act, the Department of Administration may 21 (1) bring an action against the employer; or 22 (2) direct that the amount of the delinquency or a lesser amount be withheld 23 from any money payable to the employer by a state department or agency and that the amount 24 withheld be credited to the delinquency. 25 * Sec. 10. REEMPLOYMENT INDEBTEDNESS. (a) If a participant in the retirement 26 incentive program is reemployed after appointment to retirement under the program as a 27 member of the public employees' retirement system under AS 39.35, the teachers' retirement 28 system under AS 14.25, or the judicial retirement system under AS 22.25, the participant loses 29 the incentive credit received under sec. 2(g) or sec. 8(e) of this Act and is indebted to the 30 system. The amount of the indebtedness is equal to 110 percent of the amount the participant 31 received as a result of participation in the program to which the participant was not otherwise
01 entitled, including the cost of health insurance. The participant is entitled to a credit to be 02 applied against the reemployment indebtedness in the amount the participant has paid under 03 sec. 2(e), (f), and (i) or sec. 8(d) and (f) of this Act. Interest accrues on the indebtedness at 04 the rate established by regulation from the date of reemployment until the member is 05 appointed to retirement and accepts an actuarial adjustment to the member's future benefits 06 or until the amount is paid in full. 07 (b) Except as provided in this subsection, for three years after the date on which an 08 employee who participated in the program retired, the participant may not be employed by or 09 enter into a contract for personal services with a state department or agency. This subsection 10 does not prohibit 11 (1) the University of Alaska, during the three years immediately following the 12 employee's retirement, from entering into a personal services contract for the performance of 13 teaching or research duties with an employee who has participated in the program; or 14 (2) a participant in the program from accepting employment with the 15 legislature during the legislative session if the employment is on an hourly basis and if the 16 employment does not entitle the employee to receive retirement, health, or leave benefits. 17 (c) Notwithstanding the prohibition in (b) of this section, an employer may enter into 18 a personal services contract with an employee who has participated in the program if the 19 employer establishes to the satisfaction of the Board of Regents for the University of Alaska 20 or the commissioner of administration for all other employers that the employer has a 21 compelling reason to do so because of the employee's specialized or extensive experience that 22 relates to a particular program or project of the employer. 23 * Sec. 11. OFFICE OF MANAGEMENT AND BUDGET. (a) When designating an 24 organizational unit for participation in the retirement incentive program, the executive head 25 of a state agency shall describe in detail the expected effect of the program on the agency's 26 personal services cost and operation. This report shall be filed with the office of management 27 and budget. For each employee who will receive credit for employment under sec. 7 of this 28 Act, the agency head shall establish to the satisfaction of the office that the proposed 29 participation contributes to the overall agency cost savings. The agency shall report as 30 required by the office of management and budget on the cost of each member's participation 31 and the effect on the agency's personal services cost and operation.
01 (b) The office of management and budget shall develop and implement a method to 02 document in the governor's annual budget request the net reduction in personal services costs 03 for each agency that adopts a retirement incentive plan. 04 (c) The office of management and budget shall submit to the legislature annual reports 05 on the retirement incentive program beginning on January 15, 1995, and continuing through 06 January 15, 1997, and shall submit a final report on January 15, 1998. Each report must 07 provide the information necessary for the legislature to evaluate the effectiveness of the 08 program in achieving its objectives. The report must include information on the designated 09 organizational units under the retirement incentive plans including the cost of the retirement 10 incentive program per participant, the cost to the state, the cost to the employee, the annual 11 budgeted amount by agency for the retirement incentive, and the projected or actual net 12 savings over the five-year period. 13 * Sec. 12. PROGRAM CHANGES. An employee does not have a vested or contractual 14 right to a benefit under this Act until an agreement is executed with the administrator that 15 permits the benefits to be offered to an organizational unit of which the employee is a 16 member. The legislature reserves the right to change any aspect of the incentive program as 17 it relates to members of organizational units for which participation agreements are executed 18 by the administrator after the effective date of the changes. 19 * Sec. 13. DEFINITIONS. The definitions set out in AS 14.25.220 apply to secs. 2 - 13 20 of this Act for members of the teachers' retirement system. The definitions set out in 21 AS 39.35.680 apply to secs. 2 - 13 of this Act for members of the public employees' 22 retirement system. 23 * Sec. 14. Sections 2 - 8 of this Act are repealed July 1, 1995. 24 * Sec. 15. This Act takes effect immediately under AS 01.10.070(c).