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