CSHB 270(L&C): "An Act relating to retirement incentive programs for the public employees' retirement system, the judicial retirement system, and the teachers' retirement system; relating to separation incentives for certain state employees; and providing for an effective date."
00CS FOR HOUSE BILL NO. 270(L&C) 01 "An Act relating to retirement incentive programs for the public employees' 02 retirement system, the judicial retirement system, and the teachers' retirement 03 system; relating to separation incentives for certain state employees; and providing 04 for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. FINDINGS AND PURPOSE. The State of Alaska and many local 07 governments and school districts are facing the need to restructure their operations and their 08 work forces in order to reduce expenditures and balance budgets. Retirement and separation 09 incentives are management tools that have been used extensively by the private sector, the 10 federal government, and other state and local governments across the country. The purpose 11 of this Act is to make these management tools temporarily available to the state and to the 12 municipalities and school districts of the state. This Act will enable these entities to be more 13 efficient and cost-effective by eliminating certain nonessential positions, and producing a net 14 reduction in personnel costs.
01 * Sec. 2. RETIREMENT INCENTIVE PROGRAM. (a) An employer may adopt a 02 retirement incentive plan under secs. 3 - 6 of this Act, as appropriate, and designate categories 03 of employees eligible to participate in that plan. An employer need not extend the incentive 04 plan to all employees who would otherwise be eligible, but may choose to extend the plan 05 only to employees 06 (1) in specific budget or administrative components of the employer; 07 (2) in specific job classifications; 08 (3) in specific geographic locations; or 09 (4) on the basis of any combination of factors under (1) - (3) of this 10 subsection. 11 (b) An employee is eligible to participate in a retirement incentive plan under this Act 12 only if the 13 (1) employee is a vested member of the public employees' retirement system 14 or the teachers' retirement system; 15 (2) employee will be qualified to retire under AS 14.25.110 or AS 39.35.370 16 after receipt of the credit described in (f) of this section; 17 (3) savings to the employer in personal services costs for the employee's 18 position will exceed the costs to the employer for that position within three years after the 19 employee is appointed to retirement. 20 (c) An employer shall file its proposed retirement incentive plan with the 21 commissioner of administration. The commissioner shall approve the plan if the plan meets 22 the requirements of this Act, except that the commissioner may approve a state agency's 23 retirement incentive plan only if the office of management and budget approves the calculation 24 of savings under (b)(3) of this section. A proposed plan filed under this section must 25 (1) identify job classifications of employees, and specific budget or 26 administrative components, eligible to participate in the plan; 27 (2) include a reimbursement agreement that 28 (A) requires the employer, for each employee who retires under the 29 plan, to reimburse the appropriate retirement system, within three years after the end 30 of the fiscal year in which the employee is appointed to retirement, in an amount equal 31 to
01 (i) the actuarial equivalent of the difference between the benefits 02 the participant receives after the addition of the credit under (f) of this section 03 and the amount the participant would have received without the credit, less the 04 amount the participant has paid on the indebtedness determined under (d) or (e) 05 of this section; and 06 (ii) an appropriate share of the administrative costs of the 07 program; and 08 (B) provides that contributions from the employer under this section 09 take priority over other obligations of the employer to the maximum extent permitted 10 by law. 11 (d) A member of the teachers' retirement system who participates in an approved 12 retirement incentive plan under this Act is indebted to that system for an amount calculated 13 under this subsection. The indebtedness is 25.95 percent of the member's actual compensation 14 for the school year in which the member terminates employment, or the calculated school year 15 compensation for a member who works less than the entire school year. An outstanding 16 indebtedness at the time a member is appointed to retirement under an approved retirement 17 incentive plan requires an actuarial adjustment to the benefits payable to that member. 18 (e) A member of the public employees' retirement system who participates in an 19 approved retirement incentive plan under this Act is indebted to that system for an amount 20 calculated under this subsection. The indebtedness is 22-1/2 percent for a peace officer or fire 21 fighter, and 20-1/4 percent for other members, of the member's actual annual compensation 22 for the year in which the member terminates employment, or the calculated annual 23 compensation for a member who works fewer than 12 months. An outstanding indebtedness 24 at the time a member is appointed to retirement under an approved retirement incentive plan 25 requires an actuarial adjustment to the benefits payable to that member. 26 (f) An employee who participates in an approved retirement incentive plan under this 27 Act receives a credit of three years. The three years must be applied in the following order 28 until exhausted: 29 (1) to meet the age or service required for eligibility for normal retirement 30 under AS 14.25.110 or AS 39.35.370, as appropriate; 31 (2) to meet the age required for early retirement under AS 14.25.110 or
01 AS 39.35.370, as appropriate; 02 (3) to reduce the actuarial adjustment required for early retirement under 03 AS 14.25.110 or AS 39.35.370, as appropriate; 04 (4) as years of credited service for calculating retirement benefits. 05 (g) In this section, 06 (1) "department" means 07 (A) a principal department of the executive branch of state government; 08 an independent state entity that is attached to a principal department of the executive 09 branch for administrative purposes but that is not a public organization as defined in 10 AS 39.35.680 is part of that department for purposes of this paragraph; and 11 (B) the Office of the Governor; 12 (2) "employer" has the meaning given in AS 14.25.220 and AS 39.35.680 and 13 includes a department. 14 * Sec. 3. AUTHORIZATION FOR STATE EMPLOYEE RETIREMENT INCENTIVE. 15 (a) A state agency may adopt, and file with the commissioner of administration for approval, 16 a proposed retirement incentive plan for its employees. 17 (b) Upon the request of a state agency, the commissioner of administration shall 18 establish one or more periods during which the employees of that state agency who are 19 eligible under sec. 2(b) of this Act to participate in a retirement incentive plan may apply to 20 the commissioner of administration to participate in the state agency's approved plan. The 21 periods shall begin no earlier than June 30, 1995, and end no later than June 30, 1998. The 22 periods shall be no less than 30 days and no more than 60 days in duration, and may not 23 begin less than 30 days after their establishment. A state agency is not required to request an 24 application period, and may request more than one application period. 25 (c) A proposed retirement incentive plan adopted under this section may not permit 26 an employee who is the governor, the lieutenant governor, or a commissioner, deputy 27 commissioner, or assistant commissioner of a principal department of the executive branch to 28 participate in the plan. 29 (d) A proposed retirement incentive plan adopted under this section may permit 30 participation only by an employee who is eligible to participate under sec. 2(b) of this Act and 31 who
01 (1) has been continuously employed by the state for at least one year before 02 the employee applies to participate in the state agency's approved plan; 03 (2) is a permanent seasonal employee who has been continuously employed 04 by the state in a permanent seasonal position during all of the time in the one year before the 05 employee's application to participate in which the position normally is filled; 06 (3) has a job sharing agreement with a state agency in which two or more 07 employees share a single position identified by a single position control number and in which 08 the employee who applies to participate in the plan was continuously employed by the agency 09 during the portion of the one year before the employee's application in which the employee 10 normally worked under the job sharing agreement; or 11 (4) meets a combination of the requirements of this subsection. 12 (e) The commissioner of administration may not accept the application of an employee 13 to participate in an approved retirement incentive plan adopted under this section unless the 14 employee will be appointed to retirement not later than the first day of the month that is six 15 months after the last day of the application period established by the commissioner under (b) 16 of this section. A state agency, in a plan adopted under this section, may set an earlier date 17 by which an employee must be appointed to retirement in order to participate in the plan. 18 * Sec. 4. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR EMPLOYEES OF 19 THE UNIVERSITY OF ALASKA. (a) The Board of Regents of the University of Alaska 20 may adopt, and file with the commissioner of administration for approval, a proposed 21 retirement incentive plan for university employees. 22 (b) Upon the request of the Board of Regents, the commissioner of administration 23 shall establish one or more periods during which the employees of the university who are 24 eligible under sec. 2(b) of this Act to participate in a retirement incentive plan may apply to 25 the commissioner of administration to participate in the university's approved plan. The 26 periods shall begin no earlier than June 30, 1995, and end no later than June 30, 1998. The 27 periods shall be no less than 30 days and no more than 60 days in duration, and may not 28 begin less than 30 days after their establishment. The Board of Regents is not required to 29 request an application period, and may request more than one application period. 30 (c) The commissioner of administration may not accept the application of an employee 31 to participate in an approved retirement incentive plan adopted under this section unless the
01 employee will be appointed to retirement not later than the first day of the month that is six 02 months after the last day of the application period established by the commissioner under (b) 03 of this section. The Board of Regents, in a plan adopted under this section, may set an earlier 04 date by which an employee of the University of Alaska must be appointed to retirement in 05 order to participate in the plan. 06 (d) A participant in the optional university retirement program under AS 14.40.661 - 07 14.40.799 who is vested in the public employees' retirement system or the teachers' retirement 08 system may participate in a retirement incentive plan for that system if the participant meets 09 the other qualifications of this Act. If a provision of this subsection is inconsistent with 10 another provision of law, the provision of this subsection governs. 11 * Sec. 5. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER 12 EMPLOYEES IN THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM. (a) The 13 governing body of a political subdivision of the state or public organization that has elected 14 to participate in the public employees' retirement system under AS 39.35.550 - 39.35.650 may 15 adopt, and file with the commissioner of administration for approval, a proposed retirement 16 incentive plan for its employees. Upon the request of the governing body, the commissioner 17 of administration shall establish one or more periods during which the employees of a political 18 subdivision or public organization who are eligible to participate in a retirement incentive plan 19 may apply to the commissioner of administration to participate in the approved plan. The 20 periods shall begin no earlier than October 31, 1995, and end no later than October 31, 1998. 21 The periods shall be no less than 30 days and no more than 60 days in duration, and may not 22 begin less than 60 days after their establishment. The governing body is not required to 23 request an application period, and may request more than one application period. 24 (b) The commissioner of administration may not accept the application of an employee 25 to participate in an approved retirement incentive plan adopted under this section unless the 26 employee will be appointed to retirement not later than the first day of the month that is six 27 months after the last day of the application period established by the commissioner under (a) 28 of this section. The governing body of the political subdivision or public organization, in a 29 plan adopted under this section, may set an earlier date by which an employee must be 30 appointed to retirement in order to participate in the plan. 31 * Sec. 6. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER
01 EMPLOYEES IN THE TEACHERS' RETIREMENT SYSTEM. (a) An employer under the 02 teachers' retirement system who is not otherwise covered by secs. 3 or 4 of this Act may 03 adopt, and file with the commissioner of administration for approval, a proposed retirement 04 incentive plan for its employees. A plan adopted under this section must provide that the 05 application period for participation in the retirement incentive plan is June 30, 1995, through 06 December 31, 1995. 07 (b) The commissioner of administration may not accept the application of an employee 08 to participate in an approved retirement incentive plan adopted under this section unless the 09 employee will be appointed to retirement on or before August 1, 1996. The employer, in a 10 plan adopted under this section, may set an earlier date by which an employee must be 11 appointed to retirement in order to participate in the plan. 12 * Sec. 7. POLITICAL SUBDIVISION OR PUBLIC ORGANIZATION EMPLOYMENT. 13 For purposes of determining the years of service requirements for retirement under 14 AS 14.25.110 or AS 39.35.370, as appropriate, a vested member who is a state employee and 15 who applies to participate in a retirement incentive plan approved under this Act may receive 16 credit for employment with a political subdivision or public organization before the political 17 subdivision or organization became an employer under the public employees' retirement 18 system. The member may not receive credit for those years under this subsection for purposes 19 of determining benefits. If a provision of this section is inconsistent with any other provision 20 of law, the provision of this section governs. 21 * Sec. 8. PROVISION AND AUTHORIZATION FOR ADMINISTRATIVE DIRECTOR 22 OF COURT. (a) The chief justice of the state supreme court may adopt a retirement 23 incentive plan for an administrative director of the Alaska Court System who is a member of 24 the judicial retirement system under AS 22.25.012 if participation in the plan will result in 25 savings to the court system in personal services costs within three years after the 26 commencement of the plan. The administrative director may participate only if the 27 administrative director is vested in the judicial retirement system and will be qualified to retire 28 under AS 22.25.010 after receipt of the retirement incentive. To participate, the administrative 29 director shall apply to the commissioner of administration to participate in the approved court 30 system plan. 31 (b) The court system shall include in the retirement incentive plan a reimbursement
01 agreement that requires the court system, for each administrative director of the Alaska Court 02 System who is retired under the plan, to reimburse the judicial retirement system within three 03 years after the end of the fiscal year in which the administrative director is appointed to 04 retirement in an amount equal to 05 (1) the actuarial equivalent of the difference between the benefits the 06 administrative director receives after the addition of the credit under (e) of this section and 07 the amount the participant would have received without the credit, less the total of the amount 08 the participant has paid on the indebtedness determined under (d) of this section; and 09 (2) an appropriate share of the administrative costs of the program. 10 (c) A retirement incentive plan adopted under this section must provide that 11 contributions from the court system under (b) of this section take priority over other 12 obligations of the court system to the maximum extent permitted by law. 13 (d) An administrative director of the Alaska Court System who participates in an 14 approved retirement incentive plan is indebted to the system. The amount of indebtedness is 15 equal to 21 percent of the director's actual annual compensation for the year in which the 16 director terminates employment to participate in the program, or the calculated annual 17 compensation for an administrative director who works fewer than 12 months. An outstanding 18 indebtedness at the time the administrative director is appointed to retirement under an 19 approved retirement incentive plan will require an actuarial adjustment to the benefits payable 20 to the director. 21 (e) An administrative director of the Alaska Court System who participates in an 22 approved retirement incentive plan receives a credit of three years that may only be used to 23 meet the age requirements for normal or early retirement under AS 22.25.010(d). 24 (f) The chief justice of the Alaska Court System may adopt, and file with the 25 commissioner of administration for approval, a proposed retirement incentive plan for the 26 administrative director of the court system who is a member of the judicial retirement system. 27 Upon the request of the chief justice, the commissioner of administration shall establish a 28 period during which an administrative director eligible to participate in the retirement incentive 29 plan of the court system may apply to the commissioner of administration to participate in the 30 court system's approved plan. The period shall begin no earlier than July 1, 1995, and end 31 no later than June 30, 1998. The period shall be no less than 30 days and no more than 60
01 days in duration and may not begin less than 30 days after establishment. The chief justice 02 is not required to request an application period. 03 (g) The commissioner of administration may not accept the application of an 04 administrative director of the court system to participate in an approved retirement incentive 05 plan adopted under this section unless the administrative director will be appointed to 06 retirement not later than the first day of the month that is six months after the last day of the 07 application period established by the commissioner under (f) of this section. The chief justice, 08 in a plan adopted under this section, may set an earlier date by which an administrative 09 director must be appointed to retirement in order to participate in the plan. 10 * Sec. 9. RECOVERY OF EMPLOYER DELINQUENCIES. To recover a delinquency 11 owed by an employer other than the state under an agreement entered into under sec. 2(c)(2) 12 of this Act, the Department of Administration may 13 (1) direct that the amount of the delinquency or a lesser amount be withheld 14 from any money payable to the employer by a state department or agency and that the amount 15 withheld be credited to the delinquency; and 16 (2) bring an action against the employer. 17 * Sec. 10. REEMPLOYMENT INDEBTEDNESS; PROHIBITION ON REEMPLOYMENT. 18 (a) If an individual is reemployed as a member of the public employees' retirement system 19 under AS 39.35, the teachers' retirement system under AS 14.25, the judicial retirement system 20 under AS 22.25, or the optional university retirement program under AS 14.40.661 - 14.40.799 21 after appointment to retirement under this Act, that individual forfeits the incentive credit 22 received under sec. 2(f) of this Act and is indebted to the system under which the individual 23 took retirement. The indebtedness is 110 percent of the amount the individual received as a 24 result of participation in a retirement incentive plan under this Act and to which the individual 25 would not otherwise have been entitled, including the cost of health insurance. The amount 26 that the individual has paid under sec. 2(d) or (e) of this Act will be applied as a credit toward 27 the reemployment indebtedness. Interest on the reemployment indebtedness accrues from the 28 date of reemployment until the date that the individual either is appointed to retirement and 29 accepts an actuarial adjustment to the individual's future benefits or repays the indebtedness 30 in full. The rate of interest is that established by regulation for the public employees' 31 retirement system by the public employees' retirement board and for the teachers' retirement
01 system by the teachers' retirement board. 02 (b) An individual who was appointed to retirement under this Act may not be 03 employed by, or enter into a contract for personal services with, a state agency or the 04 University of Alaska within the three years after the date of appointment to retirement, except 05 that 06 (1) the University of Alaska may enter into a personal services contract with 07 the individual for teaching or research; and 08 (2) the individual may accept employment with the legislature during a 09 legislative session if the employment is on an hourly basis and does not entitle the individual 10 to receive retirement, health, or leave benefits. 11 (c) Notwithstanding the prohibition in (b) of this section, a state agency or the 12 University of Alaska may enter into a personal services contract with an individual who was 13 appointed to retirement under this Act if the Board of Regents, for the University of Alaska, 14 or the commissioner of administration, for a state agency, determines that there is a 15 compelling reason to do so because of the individual's specialized or extensive experience that 16 relates to a particular program or project of the state agency or university. However, a state 17 agency may not enter into a contract with an individual under this subsection if the individual 18 was employed by that state agency at the time of the individual's appointment to retirement. 19 * Sec. 11. SEPARATION INCENTIVE PROGRAM. (a) A state agency may, with the 20 approval of the director of the office of management and budget, establish a separation 21 incentive program for its employees. The program may be offered in combination with an 22 approved retirement incentive plan adopted under sec. 3 of this Act, or may be offered 23 separately from such a plan. A state agency need not extend an incentive program under this 24 section to all employees who would otherwise be eligible to participate, but may choose to 25 extend the program only to employees 26 (1) in specific budget or administrative components of the state agency; 27 (2) in specific job classifications; 28 (3) on the basis of any combination of factors under (1) and (2) of this 29 subsection. 30 (b) A separation incentive payment under this section shall be paid in a lump sum 31 after the employee's separation from state service, and shall be equal to the lesser of an
01 amount equaling six months of the employee's base salary, or $25,000. However, a state 02 agency or the office of management and budget may set a lower separation incentive payment 03 in the state agency's separation incentive program. 04 (c) Upon the request of a state agency, the commissioner of administration shall 05 establish one or more periods during which the employees of that state agency may apply to 06 the commissioner of administration to participate in the state agency's approved separation 07 incentive program. The periods shall begin no earlier than July 1, 1995, and end no later than 08 June 30, 1998. The periods shall be no less than 30 days and no more than 60 days in 09 duration, and may not begin less than 30 days after their establishment. A state agency is not 10 required to request an application period, and may request more than one application period. 11 If the commissioner of administration has established one or more application periods for a 12 state agency under sec. 3(b) of this Act, the application period or periods established under 13 this subsection must coincide with the period or periods established under sec. 3(b) of this 14 Act. 15 (d) A separation incentive program established under this section must provide that 16 a separation incentive payment to an employee may be made only if 17 (1) the employee is a permanent full-time or permanent full-time seasonal 18 employee with at least five years of service with the state; and 19 (2) the savings to the state agency in personal services costs for the position 20 occupied by that employee would exceed, in the three years after the employee separates, the 21 amount of the separation incentive payment. 22 (e) If an individual who received a separation incentive payment under this section 23 subsequently is reemployed by a state agency or the University of Alaska within the three 24 years after the date that the individual received the separation incentive payment, the 25 individual is liable to the state in an amount equal to 110 percent of the amount of the 26 separation incentive payment, plus interest at the rate prescribed by AS 45.45.010, 27 commencing on the date that the individual received the separation incentive payment. 28 (f) If an employee is eligible to participate in an approved retirement incentive plan 29 adopted under sec. 3 of this Act, 30 (1) a separation incentive payment to that employee may not exceed the 31 amount that the state agency would be obligated to pay to the appropriate retirement system,
01 notwithstanding (b) of this section; and 02 (2) the employee may participate in either the separation incentive program 03 under this section or the retirement incentive plan adopted under sec. 3 of this Act, but not 04 both. 05 (g) In this section, "base salary" means the monthly salary paid to an employee under 06 the applicable collective bargaining agreement, AS 39.27.011, or another applicable pay 07 schedule, and includes geographic differential; if an employee is paid on an hourly basis, the 08 employee's base salary is the employee's hourly rate, including geographic differential, 09 multiplied by the number of hours in the employee's regular work week, multiplied by 4.35. 10 * Sec. 12. OFFICE OF MANAGEMENT AND BUDGET. (a) When designating an 11 employee category for participation in a retirement incentive plan or a separation incentive 12 program under this Act, the executive head of the relevant state agency shall describe in detail 13 the expected effect of the plan or program on the agency's personal services cost and 14 operation. This financial report must be approved by the director of the office of management 15 and budget before the commissioner of administration may approve the proposed plan or 16 program. The state agency shall report each year to the office of management and budget on 17 the cost of each employee's participation and the effect on the agency's personal services cost 18 and operation. 19 (b) The office of management and budget shall submit to the legislature annual reports 20 on the retirement incentive and separation incentive programs under this Act beginning 21 January 15, 1997, and continuing through January 15, 1999, and shall submit a final report 22 January 15, 2000. Each report must provide the information necessary for the legislature to 23 evaluate the effectiveness of the programs in achieving their objectives. The report must 24 include information on the designated employee categories under the incentive programs, 25 including the cost of each incentive program per participant, the cost to the state, the cost to 26 the employee, the annual budgeted amount, by state agency, for the incentives, the number of 27 positions deleted or left vacant, and the projected or actual net savings over the three-year 28 period. 29 * Sec. 13. PROGRAM CHANGES. (a) An individual employee does not have a vested 30 or contractual right to a benefit under this Act until an agreement is executed with the 31 administrator that specifically authorizes that employee to participate in the retirement
01 incentive program under this Act or until an agreement is executed with the commissioner of 02 administration to participate in the separation incentive program under this Act. The legisla- 03 ture reserves the right to change any aspect of either incentive program as it relates to 04 employees for whom participation agreements have not yet been executed with the 05 administrator or with the commissioner of administration. 06 (b) In this section, "administrator" means the administrator of the public employees' 07 retirement system for employees who are members of that system, and the administrator of 08 the teachers' retirement system for employees who are members of that system. 09 * Sec. 14. REGULATIONS. The commissioner of the Department of Administration may 10 adopt regulations under AS 44.62 (Administrative Procedure Act) to implement and interpret 11 this Act. 12 * Sec. 15. DEFINITIONS. (a) Unless provided otherwise in this Act, the definitions set 13 out in AS 14.25.220 apply to provisions in secs. 2 - 10 of this Act that relate to the teachers' 14 retirement system and members of the teachers' retirement system. 15 (b) Unless provided otherwise in this Act, the definitions set out in AS 39.35.680 16 apply to provisions in secs. 2 - 10 of this Act that relate to the public employees' retirement 17 system and members of the public employees' retirement system. 18 (c) In this Act, 19 (1) "office of management and budget" means the office of management and 20 budget in the Office of the Governor; 21 (2) "public employees' retirement system" means the Public Employees' 22 Retirement System of Alaska (AS 39.35); 23 (3) "state agency" 24 (A) means 25 (i) the legislative branch of state government; 26 (ii) the judicial branch of state government; 27 (iii) a principal department of the executive branch of state 28 government; an independent state entity that is attached to a principal 29 department of the executive branch for administrative purposes but that is not 30 a public organization as defined in AS 39.35.680 is part of that department for 31 purposes of this clause; and
01 (iv) the Office of the Governor; 02 (B) does not include 03 (i) the University of Alaska; 04 (ii) a political subdivision of the state; or 05 (iii) a public organization as defined in AS 39.35.680; 06 (4) "teachers' retirement system" means the Teachers' Retirement System of 07 Alaska (AS 14.25). 08 * Sec. 16. Sections 2, 3, and 11 of this Act are repealed July 1, 1999. 09 * Sec. 17. Sections 4 - 8 of this Act are repealed July 1, 1997. 10 * Sec. 18. This Act takes effect immediately under AS 01.10.070(c).