HB 354: "An Act relating to a retirement incentive program for certain employees of school districts under the teachers' retirement system and the public employees' retirement system; and providing for an effective date."
00HOUSE BILL NO. 354 01 "An Act relating to a retirement incentive program for certain employees of 02 school districts under the teachers' retirement system and the public employees' 03 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 school districts who participate in 06 the state retirement systems to reduce their personal services costs because of declining state 07 revenue, reimplementation of the retirement incentive programs established by ch. 26, SLA 08 1986, as amended by ch. 76, SLA 1988, and by sec. 7, ch. 104, SLA 1989, and ch. 89, SLA 09 1989, as amended by sec. 8, ch. 104, SLA 1989, and by ch. 18, SLA 1990, encouraging 10 school district employees to retire voluntarily, will reduce the hardship of layoffs. This 11 program is intended to realize sufficient economies to offset the cost of administration and 12 benefits to school districts resulting from the award of retirement credits and to result in a net 13 reduction in personal services costs to school districts during a period of declining revenue. 14 * Sec. 2. RETIREMENT INCENTIVE PROGRAM. (a) A school district may adopt a
01 retirement incentive plan under sec. 3 of this Act to designate organizational units of 02 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 school district in personal services costs within five 05 years after the commencement of the plan. A plan that results in savings in personal services 06 costs in any amount that is in excess of all costs to the school district qualifies under this 07 subsection. The designation may include only representatives from job classifications whose 08 inclusion 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 school district shall prepare and file the retirement incentive plan 14 with the administrator. The administrator shall approve the plan if it meets the requirements 15 of this section. The plan must 16 (1) identify organizational units and employees eligible to participate in the 17 program; 18 (2) include a reimbursement agreement that 19 (A) requires the school district, for each employee who is retired under 20 the plan, to reimburse the system within three years after the end of the fiscal year in 21 which the employee is appointed to retirement in an amount equal to 22 (i) the actuarial equivalent of the difference between the benefits 23 the participant receives after the addition of the retirement incentive under this 24 section and the amount the participant would have received without the 25 incentive, less the total of the amount the participant has paid on the 26 indebtedness determined under (e) or (f) of this section and the amount paid 27 under (i) of this section, if any; and 28 (ii) an appropriate share of the administrative costs of the 29 program; and 30 (B) provides that contributions from the school district under this 31 section take priority over other obligations of the school district to the maximum extent
01 permitted by law. 02 (e) A member of the teachers' retirement system who participates in the retirement 03 incentive program is indebted to the system. The amount of indebtedness is equal to 25.95 04 percent of the member's actual compensation for the school year, or the calculated school year 05 compensation for a member who works less than the entire school year, for the school year 06 in which the member terminates employment to participate in the program. An outstanding 07 indebtedness at the time a participant is appointed to retirement will require an actuarial 08 adjustment to the benefits payable. 09 (f) A member of the public employees' retirement system who participates in the 10 retirement incentive program is indebted to the system. The amount of indebtedness is equal 11 to 20.25 percent of the member's actual annual compensation, or the calculated annual 12 compensation for a member who works fewer than 12 months, for the year in which the 13 member terminates employment to participate in the program. An outstanding indebtedness 14 at the time a participant is appointed to retirement will require an actuarial adjustment to the 15 benefits payable. 16 (g) A participant in the retirement incentive program receives a credit of three years. 17 The three years must be applied in the following order until exhausted: 18 (1) to meet the age or service required for eligibility for normal retirement 19 under AS 14.25.110 or AS 39.35.370, as appropriate; 20 (2) to meet the age required for early retirement under AS 14.25.110 or 21 AS 39.35.370, as appropriate; 22 (3) to reduce the actuarial adjustment required for early retirement under 23 AS 14.25.110 or AS 39.35.370, as appropriate; 24 (4) as years of credited service for calculating retirement benefits. 25 (h) In the determination of whether a member will qualify to retire under this section, 26 credited service may include only, 27 (1) for members of the teachers' retirement system, service credit for 28 employment rendered to an employer, territorial service under AS 14.25.105, outside service 29 and military service under AS 14.25.060, and Alaska BIA service under AS 14.25.107; 30 (2) for members of the public employees' retirement system, service credit for 31 employment rendered to an employer.
01 (i) In order to establish eligibility for participation under (b) of this section, and in 02 addition to the employee indebtedness under (e) or (f) of this section, an employee may elect 03 to assume a portion of the school district liability calculated under (d) of this section. An 04 outstanding indebtedness at the time the employee is appointed to retirement will require an 05 actuarial adjustment to the employee's benefits. 06 * Sec. 3. AUTHORIZATION FOR RETIREMENT INCENTIVE. (a) A school district 07 is authorized to adopt a retirement incentive plan for its employees under sec. 2 of this Act. 08 A plan adopted under this section must permit designated employees to apply to the retirement 09 incentive program under sec. 2 of this Act only from June 30, 1996, through no later than 10 December 31, 1996. 11 (b) Under a plan adopted under this section, the administrator may not accept the 12 application of an employee unless the employee will be appointed to retirement on or before 13 August 1, 1997. The school district may set an earlier date by which employees of the school 14 district must be appointed to retirement in order to participate. 15 * Sec. 4. RECOVERY OF SCHOOL DISTRICT DELINQUENCIES. To recover a 16 delinquency owed by a school district under an agreement entered under sec. 2(d)(2) of this 17 Act, the Department of Administration may 18 (1) bring an action against the school district; or 19 (2) direct that the amount of the delinquency or a lesser amount be withheld 20 from any money payable to the school district by a state department or agency and that the 21 amount withheld be credited to the delinquency. 22 * Sec. 5. REEMPLOYMENT INDEBTEDNESS. (a) If a participant in the retirement 23 incentive program is reemployed after appointment to retirement under the program as a 24 member of the public employees' retirement system under AS 39.35, the teachers' retirement 25 system under AS 14.25, or the judicial retirement system under AS 22.25, the participant loses 26 the incentive credit received under sec. 2(g) of this Act and is indebted to the system. The 27 amount of the indebtedness is equal to 110 percent of the amount the participant received as 28 a result of participation in the program to which the participant was not otherwise entitled, 29 including the cost of health insurance. The participant is entitled to a credit to be applied 30 against the reemployment indebtedness in the amount the participant has paid under sec. 2(e), 31 (f), and (i) of this Act. Interest accrues on the indebtedness at the rate established by
01 regulation from the date of reemployment until the member is appointed to retirement and 02 accepts an actuarial adjustment to the member's future benefits or until the amount is paid in 03 full. 04 (b) Except as provided in this subsection, for three years after the date on which an 05 employee who participated in the program retired, the participant may not be employed by or 06 enter into a contract for personal services with a state department or agency. This subsection 07 does not prohibit 08 (1) the University of Alaska, during the three years immediately following the 09 employee's retirement, from entering into a personal services contract for the performance of 10 teaching or research duties with an employee who has participated in the program; or 11 (2) a participant in the program from accepting employment with the 12 legislature during the legislative session if the employment is on an hourly basis and if the 13 employment does not entitle the employee to receive retirement, health, or leave benefits. 14 (c) Notwithstanding the prohibition in (b) of this section, a school district may enter 15 into a personal services contract with an employee who has participated in the program if the 16 school district establishes to the satisfaction of the commissioner of administration that the 17 school district has a compelling reason to do so because of the employee's specialized or 18 extensive experience that relates to a particular program or project of the school district. 19 * Sec. 6. 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 retirement incentive 23 program as it relates to members of organizational units for which agreements are executed 24 by the administrator after the effective date of the changes. 25 * Sec. 7. DEFINITIONS. The definitions set out in AS 14.25.220 apply to secs. 2 - 7 of 26 this Act for members of the teachers' retirement system. The definitions set out in 27 AS 39.35.680 apply to secs. 2 - 7 of this Act for members of the public employees' retirement 28 system. 29 * Sec. 8. Sections 2 - 3 of this Act are repealed July 1, 1998. 30 * Sec. 9. This Act takes effect immediately under AS 01.10.070(c).