Alaska State Legislature

txt

SCS CSHB 335(FIN)(TITLE AM S): "An Act relating to information contained in retirement system records; relating to retirement boards; relating to procedures and hearings under state retirement systems; relating to benefits for reemployed retired members of retirement systems; relating to eligibility for normal retirement for members of the teachers' retirement system who have Alaska BIA credited service; relating to disability benefits for members of state retirement systems; relating to deduction of premiums from retirement benefits; relating to protection of, and assignment and transfer of, amounts held in retirement systems; relating to retirement benefits for certain employees earning high salaries; relating to qualified domestic relations orders in state retirement systems; relating to the definition of 'retirement fund' in the teachers' retirement system; relating to membership of state employees in the teachers' retirement system; relating to refund of contributions made to the judicial retirement system and repayment of refunded contributions in that system; relating to self-insurance and excess loss insurance for persons receiving benefits from a state retirement system; relating to participation of elected officials in the public employees' retirement system; relating to the level income option benefit under the public employees' retirement system; relating to participation of employees of political subdivisions and public organizations in the public employees' retirement system; relating to crimes for defrauding a state retirement system; relating to the definition of 'pension fund' in the public employees' retirement system; and relating to calculation of years of service and of benefits under the public employees' retirement system for noncertificated employees of certain educational employers."

00SENATE CS FOR CS FOR HOUSE BILL NO. 335(FIN)(title am S) 01 "An Act relating to information contained in retirement system records; relating 02 to retirement boards; relating to procedures and hearings under state retirement 03 systems; relating to benefits for reemployed retired members of retirement 04 systems; relating to eligibility for normal retirement for members of the 05 teachers' retirement system who have Alaska BIA credited service; relating to 06 disability benefits for members of state retirement systems; relating to deduction 07 of premiums from retirement benefits; relating to protection of, and assignment 08 and transfer of, amounts held in retirement systems; relating to retirement 09 benefits for certain employees earning high salaries; relating to qualified domestic 10 relations orders in state retirement systems; relating to the definition of 11 'retirement fund' in the teachers' retirement system; relating to membership of 12 state employees in the teachers' retirement system; relating to refund of 13 contributions made to the judicial retirement system and repayment of refunded 14 contributions in that system; relating to self-insurance and excess loss insurance

01 for persons receiving benefits from a state retirement system; relating to 02 participation of elected officials in the public employees' retirement system; 03 relating to the level income option benefit under the public employees' 04 retirement system; relating to participation of employees of political subdivisions 05 and public organizations in the public employees' retirement system; relating to 06 crimes for defrauding a state retirement system; relating to the definition of 07 'pension fund' in the public employees' retirement system; and relating to 08 calculation of years of service and of benefits under the public employees' 09 retirement system for noncertificated employees of certain educational employers." 10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 11 * Section 1. AS 09.25 is amended by adding a new section to read: 12 Sec. 09.25.151. Confidentiality of retirement records. (a) Except as 13 provided in (b) - (d) of this section, public records, including electronic services and 14 products involving public records, containing information about a person and 15 maintained under AS 14.25, AS 22.25, AS 26.05.222 - 26.05.229, AS 39.35, or former 16 AS 39.37 shall be kept confidential and are not subject to inspection or copying under 17 AS 09.25.110 - 09.25.120. 18 (b) Records described in (a) of this section concerning a person who is a 19 member or former member of a state retirement system who is still living may only 20 be released to 21 (1) the person or the person's guardian; 22 (2) the person's employer or former employer; 23 (3) a state agency authorized to obtain confidential information; 24 (4) another person if the person has 25 (A) written authorization for release from the affected member 26 or former member or the member's or former member's guardian; or 27 (B) a court order or subpoena to obtain the information. 28 (c) Records described in (a) of this section concerning a member or former 29 member of a state retirement system who is deceased or a deceased member's named 30 beneficiary may only be released to 31 (1) the member's named beneficiary or the beneficiary's guardian;

01 (2) the member's or former member's former employer; 02 (3) a state agency authorized to obtain confidential information; 03 (4) the personal representative of the member's or former member's 04 estate; 05 (5) another person if the person has 06 (A) written authorization for release from the member or former 07 member, the member's named beneficiary, or the personal representative of the 08 member's or former member's estate; or 09 (B) a court order or subpoena to secure the information. 10 (d) The name and address of a living person who is a member or former 11 member of a state retirement system may be released to a retirement organization 12 representing persons receiving benefits under a state retirement system if the retirement 13 organization is affiliated with an organization representing employees of the employer 14 under AS 23.40.070 - 23.40.260 (Public Employment Relations Act). 15 (e) In this section, "state retirement system" means the teachers' retirement 16 system under AS 14.25, the judicial retirement system under AS 22.25, the retirement 17 system for members of the national guard under AS 26.05.222 - 26.05.229, the public 18 employees' retirement system under AS 39.35, or the elected public officers retirement 19 system under former AS 39.37. 20 * Sec. 2. AS 14.25.035(a) is amended to read: 21 (a) There is established the Alaska Teachers' Retirement Board as follows: 22 (1) the governor shall appoint five members for overlapping three-year 23 terms; one member must be a resident who is receiving retirement benefits under this 24 chapter; statewide teacher organizations may submit to the governor a list of 25 recommended nominees to serve on the board; 26 (2) the governor shall appoint two physicians authorized to practice 27 medicine in the state to serve as members of the board and two physicians 28 authorized to practice medicine in the state to serve as alternate members to the 29 physician members of the board; the physicians are members of the board only 30 for the purpose of hearing appeals to determine medical eligibility for disability 31 benefits under AS 14.25.130; [THE GOVERNOR SHALL APPOINT TWO

01 PHYSICIANS EACH FROM AT LEAST TWO OF THE STATE'S FOUR JUDICIAL 02 DISTRICTS;] the Public Employees' Retirement Board and the Teachers' Retirement 03 Board may submit to the governor a list of recommended physicians to serve on the 04 board; if the administrator, after making a reasonable effort to secure the 05 participation of two physicians to serve on a disability appeal, is unable to do so, 06 the board may hear the appeal with the participation of only one physician or 07 alternate, in which case, for purposes of a quorum, the board shall be considered 08 to have only one physician as a member; [THE TWO PHYSICIAN MEMBERS 09 FROM THE JUDICIAL DISTRICT IN WHICH A DISABILITY APPEAL HEARING 10 IS CONDUCTED SHALL SERVE ON THE BOARD DURING THE HEARING; IF 11 ONE OR MORE OF THE PHYSICIANS IN THE JUDICIAL DISTRICT IN WHICH 12 A DISABILITY HEARING IS CONDUCTED IS UNABLE TO SERVE AT THE 13 HEARING, OR IF THERE IS NO PHYSICIAN MEMBER FROM THAT JUDICIAL 14 DISTRICT, OTHER PHYSICIAN MEMBERS SHALL SERVE AT THE HEARING, 15 SELECTED FOR SUCH HEARINGS ON A ROTATING BASIS, IN ACCORDANCE 16 WITH REGULATIONS ADOPTED BY THE BOARD;] physician members and 17 alternates serve at the pleasure of the governor. 18 * Sec. 3. AS 14.25.035(b) is amended to read: 19 (b) Members of the board appointed under (a)(1) of this section are entitled 20 to receive [DO NOT RECEIVE COMPENSATION] for their services on the 21 retirement board an honorarium equal to the honorarium provided to trustees of 22 the Alaska State Pension Investment Board under AS 37.10.250 . Physician 23 members of the board are entitled to hourly compensation for their services at a rate 24 to be determined by the commissioner of administration. The rate of compensation 25 shall be consistent with the physicians' normal hourly earnings. All members of the 26 board are entitled to travel expenses and per diem authorized for boards and 27 commissions under AS 39.20.180 [WHEN IT IS NECESSARY TO TRAVEL]. 28 * Sec. 4. AS 14.25.035(f) is amended to read: 29 (f) The board shall meet at the call of the chair [CHAIRMAN], any three 30 members, or at the request of the commissioner of administration. The board may 31 adopt regulations defining a quorum for the conduct of its business, including

01 appeals and disability appeals. 02 * Sec. 5. AS 14.25 is amended by adding a new section to read: 03 Sec. 14.25.037. Hearings. (a) The board shall adopt regulations establishing 04 procedures for the conduct of hearings and appeals under this chapter. 05 (b) In the conduct of a hearing under this chapter, the board may issue 06 subpoenas, administer oaths, compel the attendance and testimony of witnesses, compel 07 the taking of depositions and the submission of affidavits, and compel the production 08 of documents and records. The board's powers under this subsection do not extend 09 to prehearing discovery. However, upon good cause shown, the board may permit the 10 preservation of witness testimony if the board cannot successfully compel the witness 11 to attend a hearing. The board may authorize hearing officers to conduct hearings 12 under this chapter and issue decisions; the decision of a hearing officer may be 13 appealed to the board. The board shall adopt procedures for appeals from a hearing 14 officer's decision. 15 (c) A majority of a quorum of the board may issue a ruling or modification 16 of a ruling. If the board's vote on an appeal under this chapter is a tie vote of those 17 members present and voting, the decision being appealed is affirmed. The board, by 18 regulation, shall establish procedures for the reconsideration of a ruling issued under 19 this chapter. A request for reconsideration is timely if it is received within 30 days 20 after the initial ruling was issued. 21 (d) An aggrieved party may appeal a final decision to the superior court. 22 * Sec. 6. AS 14.25.043 is amended to read: 23 Sec. 14.25.043. Reemployment of retired members. If a retired member 24 again becomes an active member, benefit payments may not be made during the period 25 of reemployment. The retirement benefit must be suspended for the entire school year 26 if the teacher is reemployed as an active teacher for a period equivalent to a year of 27 service. During the period of reemployment, deductions from the member's salary will 28 be made in accordance with AS 14.25.050. Upon subsequent retirement, the retired 29 member is entitled to receive an additional benefit based on the credited service and 30 the average base salary during the period of reemployment in accordance with 31 AS 14.25.110. If the initial benefit payments to which the retired member is

01 eligible have been actuarially reduced because the member retired early under 02 AS 14.25.110(b), the member shall also receive an incremental benefit based on 03 the amount of the actuarial reduction imposed by AS 14.25.110(j) on the first 04 benefit and the length of time that the employee was reemployed and not 05 receiving retirement benefits. The amount of the incremental benefit is equal to 06 the difference between the normal retirement benefit to which the member would 07 have been entitled had the member taken a normal retirement and the early 08 retirement benefit that the member has been receiving based on the member's 09 initial period of employment multiplied by the total number of months that the 10 member did not receive retirement benefits because of reemployment and that 11 amount actuarially adjusted to be paid over the expected lifetime of the member. 12 * Sec. 7. AS 14.25.110(a) is amended to read: 13 (a) Subject to AS 14.25.167, a member is eligible for a normal retirement 14 benefit if the member 15 (1) was first hired before July 1, 1975, has attained the age of 55 years, 16 and has at least 15 years of credited service, the last five of which have been 17 membership service or is otherwise vested in the system; 18 (2) has attained the age of 60 years and has at least eight years of 19 membership service; 20 (3) has attained the age of 60 years, has at least five years of 21 membership service, and has [AT LEAST THREE YEARS OF] Alaska BIA service 22 which, when added to the membership service, will equal at least eight years ; 23 (4) has at least 25 years of credited service, the last five of which have 24 been membership service; 25 (5) has at least 20 years of membership service; 26 (6) has at least 20 years of combined membership service and Alaska 27 BIA service, the last five of which have been membership service; or 28 (7) has, for each of 20 school years, 29 (A) at least one-half year of membership service as a part-time 30 teacher; 31 (B) one full year of membership service as a full-time teacher;

01 or 02 (C) any combination of service qualified under this paragraph. 03 * Sec. 8. AS 14.25.130(d) is amended to read: 04 (d) The amount of the disability benefit is equal to 50 percent of the member's 05 base salary immediately before becoming disabled. The disability benefit is increased 06 by 10 percent of the member's base salary immediately before becoming disabled 07 for each dependent child, up to a maximum of four dependent children. 08 * Sec. 9. AS 14.25.130 is amended by adding a new subsection to read: 09 (f) A member is not entitled to a disability benefit under this section unless 10 the member files a timely application for the benefit with the administrator. The 11 application is timely if it is filed by the later of six months after the date that the 12 member's disability began or 90 days after the termination of the member's 13 employment. The board may waive a filing deadline under this subsection if there are 14 extraordinary circumstances that resulted in the inability to meet the filing deadline. 15 The board may delegate the authority to waive a filing deadline under this subsection 16 to the administrator. 17 * Sec. 10. AS 14.25.168(b) is amended to read: 18 (b) After an election of coverage under this section, major medical insurance 19 coverage takes effect on the same date as retirement benefits begin and stops when the 20 member or survivor is no longer eligible to receive a monthly benefit. The coverage 21 for persons age 65 or older is the same as that available for persons under age 65. 22 The benefits payable to those persons age 65 or older supplement any benefits 23 provided under the federal old age, survivors and disability insurance program. The 24 medical premium and optional insurance premiums owed by a member or 25 survivor shall be deducted from the benefit owed to the member or survivor 26 before payment of the benefit. 27 * Sec. 11. AS 14.25.175(b) is amended to read: 28 (b) In order to obtain consideration of a waiver under this section, the affected 29 member or beneficiary must appeal to the board in writing within 30 days after receipt 30 of notice that the records have been adjusted. [THE BOARD SHALL RULE ON AN 31 APPEAL WITHIN 120 DAYS AFTER ITS RECEIPT.] The ruling of the board shall

01 be in writing. 02 * Sec. 12. AS 14.25.175(c) is amended to read: 03 (c) The board may [, AT ITS DISCRETION,] conduct a hearing on an appeal 04 under this section. [IN REACHING A DECISION ON AN APPEAL, THE BOARD 05 MAY ISSUE SUBPOENAS, ADMINISTER OATHS, AND COMPEL THE 06 ATTENDANCE AND TESTIMONY OF WITNESSES, THE TAKING OF 07 DEPOSITIONS, THE SUBMISSION OF AFFIDAVITS, AND THE PRODUCTION 08 OF DOCUMENTS AND RECORDS.] 09 * Sec. 13. AS 14.25.200(a) is amended to read: 10 (a) Except as provided in AS 29.45.030(a)(1) or in (c) of this section , member 11 contributions and other amounts held in the system on behalf of a member or other 12 person who is or may become eligible for benefits under the system are exempt from 13 Alaska state and municipal taxes and are not subject to anticipation, alienation, sale, 14 transfer, assignment, pledge, encumbrance, or charge of any kind, either voluntary or 15 involuntary, before they are received by the person entitled to the amount under the 16 terms of the system . Any [, AND ANY] attempt to anticipate, alienate, sell, transfer, 17 assign, pledge, encumber, charge, or otherwise dispose of any right to amounts accrued 18 in the system is void. However, a member's right to receive benefits or the member 19 contribution account may be assigned 20 (1) under a qualified domestic relations order; [OR] 21 (2) to a trust or similar legal device that meets the requirements for a 22 Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4) ; or 23 (3) as provided in (c) of this section . 24 * Sec. 14. AS 14.25.200 is amended by adding a new subsection to read: 25 (c) An inactive member may elect to have the taxable portion of the member 26 contribution account transferred directly to another plan or an individual retirement 27 arrangement that is qualified under the federal Internal Revenue Code and that accepts 28 the transfer. 29 * Sec. 15. AS 14.25.210 is amended to read: 30 Sec. 14.25.210. Penalty for false statements. A person who [WILFULLY 31 OR] knowingly makes a false statement, or falsifies or permits to be falsified any

01 record of this [THE RETIREMENT] system , in an attempt to defraud this system , 02 is guilty of a class A misdemeanor and [, UPON CONVICTION, IS PUNISHABLE 03 BY A FINE OF NOT MORE THAN $500 OR BY IMPRISONMENT FOR NOT 04 MORE THAN SIX MONTHS, OR BY BOTH, AND] forfeits all rights under this 05 chapter. 06 * Sec. 16. AS 14.25.210 is amended by adding a new subsection to read: 07 (b) In this section, "knowingly" has the meaning given in AS 11.81.900(a). 08 * Sec. 17. AS 14.25.220(6) is amended to read: 09 (6) "base salary" 10 (A) means the total remuneration payable under contract for a 11 full year of membership service, including addenda to the contract but, for a 12 member first hired on or after July 1, 1996, does not include remuneration 13 in excess of the limitations set out in 26 U.S.C. 401(a)(17) ; 14 (B) has the same meaning as "compensation" under 15 AS 39.35.680(8) when applied to a state legislator who elects membership 16 under AS 14.25.040(b); 17 * Sec. 18. AS 14.25.220(31) is amended to read: 18 (31) "qualified domestic relations order" means a divorce or dissolution 19 judgment under AS 25.24, including an order approving a property settlement, that 20 (A) creates or recognizes the existence of an alternate payee's 21 right to, or assigns to an alternate payee the right to, receive all or a portion of 22 the member contribution account or benefits payable with respect to a 23 member; 24 (B) sets out the name and last known mailing address, if any, 25 of the member and of each alternate payee covered by the order; 26 (C) sets out the amount or percentage of the member's benefit, 27 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 28 manner in which that amount or percentage is to be determined; 29 (D) sets out the number of payments or period to which the 30 order applies; 31 (E) does not require any type or form of benefit or any option

01 not otherwise provided by this chapter; 02 (F) does not require an increase of benefits in excess of the 03 amount provided by this chapter, determined on the basis of actuarial value; 04 and 05 (G) does not require the payment, to an alternate payee, of 06 benefits that are required to be paid to another alternate payee under another 07 order previously determined to be a qualified domestic relations order; 08 * Sec. 19. AS 14.25.220(35) is amended to read: 09 (35) "retirement fund" or "fund" means the fund in which the assets of 10 the system , including income and interest derived from the investment of money, 11 are deposited and held; 12 * Sec. 20. AS 14.25.220(40) is amended to read: 13 (40) "teacher" or "member" means a person eligible to participate in 14 the system and who is covered by the system, limited to 15 (A) a certificated full-time or part-time elementary or secondary 16 teacher, a certificated school nurse, or a certificated person in a position 17 requiring a teaching certificate as a condition of employment in a public school 18 of the state or in the Department of Education and Early Development ; 19 (B) [THE COMMISSIONER OF EDUCATION AND EARLY 20 DEVELOPMENT AND ALL SUPERVISORY POSITIONS IN THE 21 DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT; 22 (C)] a full-time or part-time teacher of the University of Alaska 23 or a person occupying a full-time administrative position at the University of 24 Alaska that requires academic standing; the approval of the administrator must 25 be obtained before an administrative position qualifies for membership in the 26 system; however, a teacher or administrative person at the university who is 27 participating in the optional university retirement program under AS 14.40.661 28 - 14.40.799 is not a member under this system; 29 (C) [(D)] a state legislator who elects membership under 30 AS 14.25.040(b); 31 * Sec. 21. AS 22.25.020 is amended to read:

01 Sec. 22.25.020. Retirement pay. A retired justice or judge eligible for 02 retirement pay shall receive from the date of eligibility until death monthly 03 compensation equal to five percent per year of service, to a maximum of 75 percent, 04 of the monthly salary authorized for justices and judges, respectively, at the time each 05 retirement payment is made. For a justice or judge who was first employed in this 06 retirement system on or after July 1, 1996, base annual salary does not include 07 remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17) (Internal 08 Revenue Code). 09 * Sec. 22. AS 22.25.041 is amended to read: 10 Sec. 22.25.041. Refund of contributions. (a) Except as provided in (c) of 11 this section, a [A] justice or judge who vacates office for any reason and who has not 12 then accrued five years of creditable service under this chapter is entitled to receive 13 a refund of the total amount of contributions, including principal and interest 14 payments on indebtedness, together with interest credited on the amount. To receive 15 credit for an earlier period of service under AS 22.25.010(f), [IF] a justice or judge 16 who has received a refund of contributions and who returns to active service [, THE 17 JUSTICE OR JUDGE] shall repay in full, before appointment to retirement, 18 [WITHIN ONE YEAR] the refunded contributions with interest at the prevailing rate 19 [TO RECEIVE CREDIT FOR THE EARLIER PERIOD OF SERVICE UNDER 20 AS 22.25.010(f)]. 21 (b) A justice or judge whose contributions have been involuntarily refunded 22 because of a levy under AS 09.38.065 or because of a federal tax levy may repay 23 the amount levied together with accrued interest whether or not the justice or judge is 24 on active service. Repayments shall be made under (a) of this section. 25 * Sec. 23. AS 22.25.041 is amended by adding new subsections to read: 26 (c) A justice or judge whose rights to a refund are subject to a qualified 27 domestic relations order is entitled to receive a refund of the total amount of 28 contributions, together with interest credited on the amount, only if the present spouse 29 of the justice or judge, if any, and each person entitled under the order consent to the 30 refund in writing on a form provided by the administrator. The administrator may 31 waive written consent from the person entitled to benefits under the order if the

01 administrator determines that the person cannot be located or for other reasons 02 established by regulation. The administrator may waive written consent from the 03 spouse if the administrator determines that 04 (1) the justice or judge was not married to the spouse during any period 05 of the justice's or judge's employment under this chapter; 06 (2) the spouse has no right to benefits under this chapter because of the 07 terms of a qualified domestic relations order; 08 (3) the spouse cannot be located; 09 (4) the justice or judge and spouse have been married for less than two 10 years and the justice or judge establishes that they are not cohabiting; or 11 (5) another reason established by regulation exists. 12 (d) Except as provided in this subsection and in AS 29.45.030(a)(1), amounts 13 held in the system on behalf of a justice or judge or other person who is or may 14 become eligible for benefits under the system are exempt from Alaska state and 15 municipal taxes and are not subject to anticipation, alienation, sale, transfer, 16 assignment, pledge, encumbrance, or charge of any kind, either voluntary or 17 involuntary, before they are received by the person entitled to the amount under the 18 terms of the system, and any attempt to anticipate, alienate, sell, transfer, assign, 19 pledge, encumber, charge, or otherwise dispose of any right to amounts accrued in the 20 system is void. However, 21 (1) the right of a justice or judge to receive benefits or the contributions 22 and interest may be assigned 23 (A) under a qualified domestic relations order; or 24 (B) to a trust or similar legal device that meets the requirements 25 for a Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4); 26 (2) a justice or judge may elect to have the taxable portion of the 27 qualifying distributions transferred directly to another qualified plan or an individual 28 retirement account that accepts the transfer. 29 * Sec. 24. AS 22.25.090(b) is amended to read: 30 (b) Except as provided in (d) of this section, major medical insurance coverage 31 takes effect on the same date as retirement benefits begin [,] and stops when the retired

01 person or survivor is no longer eligible to receive a monthly benefit. The coverage for 02 persons age 65 or older is the same as that available for persons under 65 years of 03 age . The benefits payable to those persons age 65 or older supplement any benefits 04 provided under the federal old age, survivors, and disability insurance program. The 05 medical premium and optional insurance premiums owed by a retired person or 06 survivor shall be deducted from the benefit payable to the retired person or 07 survivor before payment of the benefit. 08 * Sec. 25. AS 22.25.900 is amended to read: 09 Sec. 22.25.900. Definition. In this chapter, "qualified domestic relations 10 order" means a divorce or dissolution judgment under AS 25.24, including an order 11 approving a property settlement, that 12 (1) creates or recognizes the existence of an alternate payee's right to, 13 or assigns to an alternate payee the right to, receive all or a portion of the member 14 contributions and interest or benefits payable with respect to a justice or judge; 15 (2) sets out the name and last known mailing address, if any, of the 16 justice or judge and of each alternate payee covered by the order; 17 (3) sets out the amount or percentage of the justice's or judge's benefit, 18 or of any survivor's benefit, to be paid to the alternate payee, or sets out the manner 19 in which that amount or percentage is to be determined; 20 (4) sets out the number of payments or period to which the order 21 applies; 22 (5) does not require any type or form of benefit or any option not 23 otherwise provided by this chapter; 24 (6) does not require an increase of benefits in excess of the amount 25 provided by this chapter, determined on the basis of actuarial value; 26 (7) does not require the payment, to an alternate payee, of benefits that 27 are required to be paid to another alternate payee under another order previously 28 determined to be a qualified domestic relations order. 29 * Sec. 26. AS 26.05.224 is amended by adding new subsections to read: 30 (g) Except as provided in this subsection or AS 29.45.030(a)(1), amounts held 31 in the system on behalf of a member or other person who is or may become eligible

01 for benefits under the system are exempt from Alaska state and municipal taxes and 02 are not subject to anticipation, alienation, sale, transfer, assignment, pledge, 03 encumbrance, or charge of any kind, either voluntary or involuntary, before they are 04 received by the person entitled to the amount under the terms of the system, and any 05 attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, or 06 otherwise dispose of any right to amounts accrued in the system is void. However, 07 (1) a member's right to receive benefits or the member contribution 08 account may be assigned 09 (A) under a qualified domestic relations order; or 10 (B) to a trust or similar legal device that meets the requirements 11 for a Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 12 1396p(d)(4); 13 (2) a member may elect to have the taxable portion of the qualifying 14 distributions transferred directly to another plan or individual retirement arrangement 15 qualified under the federal Internal Revenue Code. 16 (h) Amounts held in the system and benefits payable under this section are 17 exempt from garnishment, execution, or levy as provided in AS 09.38 (Alaska 18 Exemptions Act). 19 * Sec. 27. AS 39.30.091 is amended to read: 20 Sec. 39.30.091. Authorization for self-insurance and excess loss insurance. 21 Notwithstanding AS 21.86.310 or AS 39.30.090, the Department of Administration 22 may provide, by means of self-insurance, one or more of the benefits listed in 23 AS 39.30.090(a)(1) for state employees eligible for the benefits by law or under a 24 collective bargaining agreement and for persons receiving benefits under AS 14.25, 25 AS 22.25, AS 39.35, or former AS 39.37, and their dependents . The department 26 shall procure any necessary excess loss insurance under AS 39.30.090. 27 * Sec. 28. AS 39.35.030(b) is repealed and reenacted to read: 28 (b) Three public members are appointed by the governor to serve at the 29 pleasure of the governor for six-year staggered terms. One of the public members 30 must be or have been employed by an employer other than the State of Alaska. The 31 governor shall fill a vacancy in an unexpired appointive term by appointment for the

01 remainder of the term. 02 * Sec. 29. AS 39.35.030(c) is amended to read: 03 (c) Two members of the board must be members of the system elected by [A 04 MAJORITY OF THE VOTES CAST BY] members of the system. Elections shall be 05 conducted by the board. The candidate who receives the most votes cast in the 06 election is elected to the seat. If two seats are to be filled at the election, the 07 candidate who receives the most votes cast and the candidate who receives the 08 next most votes cast are elected to the seats. The term of office of an elected 09 member is six years. The governor shall fill a [A] vacancy in an unexpired elective 10 term by appointment for the period remaining before the next regularly scheduled 11 election held under this subsection [SHALL BE FILLED BY ELECTION FOR A 12 NEW SIX-YEAR TERM]. 13 * Sec. 30. AS 39.35.030(d) is amended to read: 14 (d) The governor shall appoint two physicians authorized to practice medicine 15 in the state to serve as members of the board and two physicians authorized to 16 practice medicine in the state to serve as alternate members to the physician 17 members of the board. The physicians are members of the board only for the 18 purpose of hearing appeals to determine medical eligibility for disability benefits under 19 AS 39.35.400 and 39.35.410. If the administrator, after making a reasonable effort 20 to secure the participation of two physician members or alternates to serve on a 21 disability appeal, is unable to do so, the board may hear the appeal with the 22 participation of only one physician member or alternate, in which case, for 23 purposes of a quorum, the board shall be considered to have only one physician 24 as a member [THE GOVERNOR SHALL APPOINT TWO PHYSICIANS EACH 25 FROM AT LEAST TWO OF THE STATE'S FOUR JUDICIAL DISTRICTS]. The 26 Public Employees' Retirement Board and the Teachers' Retirement Board may submit 27 to the governor a list of recommended physicians to serve on the board. [THE TWO 28 PHYSICIAN MEMBERS FROM THE JUDICIAL DISTRICT IN WHICH A 29 DISABILITY APPEAL HEARING IS CONDUCTED SHALL SERVE ON THE 30 BOARD DURING THE HEARING. IF ONE OR MORE OF THE PHYSICIANS IN 31 THE JUDICIAL DISTRICT IN WHICH A DISABILITY HEARING IS

01 CONDUCTED IS UNABLE TO SERVE AT THE HEARING, OR IF THERE IS NO 02 PHYSICIAN MEMBER FROM THAT JUDICIAL DISTRICT, OTHER PHYSICIAN 03 MEMBERS SHALL SERVE AT THE HEARING, SELECTED FOR SUCH 04 HEARINGS ON A ROTATING BASIS, IN ACCORDANCE WITH REGULATIONS 05 ADOPTED BY THE BOARD.] Physician members serve at the pleasure of the 06 governor. 07 * Sec. 31. AS 39.35.030(e) is amended to read: 08 (e) Members of the board appointed under [IDENTIFIED IN] (b) of this 09 section or elected under (c) of this section are entitled to [DO NOT] receive 10 [COMPENSATION] for their services on the retirement board an honorarium equal 11 to the honorarium provided to trustees of the Alaska State Pension Investment 12 Board under AS 37.10.250 . Physician members of the board are entitled to hourly 13 compensation for their services at a rate to be determined by the commissioner of 14 administration. The rate of compensation shall be consistent with the physicians' 15 normal hourly earnings. All members of the board are entitled to travel expenses and 16 per diem when it is necessary to travel. 17 * Sec. 32. AS 39.35.040 is amended to read: 18 Sec. 39.35.040. Powers and duties of board. The Public Employees 19 Retirement Board has the following powers and duties: 20 (1) to hold regular meetings and special meetings considered necessary; 21 all meetings are open to the public , and the board keeps a full record of all its 22 proceedings; the board may, by regulation, define a quorum for the conduct of its 23 business, including appeals and disability appeals; 24 (2) to adopt, with modifications it considers proper, regulations 25 recommended by the administrator for carrying out this chapter; 26 (3) to consider and adopt resolutions on matters referred to it by the 27 administrator in connection with changes in policy and revisions of this chapter; 28 (4) to act as an appeals board, hold hearings at the request of an 29 employer, employee, surviving spouse , or a beneficiary on decisions made by the 30 administrator, and submit its findings to the administrator; 31 (5) to have prepared, at least biennially, an actuarial valuation of the

01 total obligations under the system of each employer and, on the basis of the valuation 02 and in time for incorporation of the results in the state budget, to certify to the 03 appropriate budgetary authorities of each employer: 04 (A) an appropriate contribution rate for all employers; and 05 (B) an amount appropriate for each employer to liquidate the 06 employee's past service liability; the board shall have an actuarial and financial 07 experience analysis of the system conducted at appropriate intervals, but no less 08 frequently than once every six years; the actuarial valuations and the actuarial 09 and financial experience analysis shall be prepared and certified by a member 10 of the American Academy of Actuaries; 11 (6) to prescribe the policies for the proper operation of the system and 12 carry on other activities that are considered necessary to carry out the intent and 13 purpose of the system in accordance with this chapter; 14 (7) to prescribe the rate of interest that shall be credited to the 15 employee accounts each year; 16 (8) to waive the requirements of AS 39.35.520 in accordance with 17 AS 39.35.522; 18 (9) to exercise the duties set out in AS 39.30.155 with respect to the 19 supplemental employee benefit program under AS 39.30.150 - 39.30.180; 20 (10) to exercise the duties set out in AS 39.45.025 with respect to the 21 deferred compensation program for state employees; 22 (11) to adopt regulations for the election of trustees to the Alaska State 23 Pension Investment Board and for removal from the investment board of trustees 24 elected from the system ; 25 (12) to adopt a contribution surcharge under AS 39.35.160(c) . 26 * Sec. 33. AS 39.35 is amended by adding a new section to read: 27 Sec. 39.35.077. Hearings. (a) The board shall adopt regulations establishing 28 procedures for the conduct of hearings and appeals under this chapter. 29 (b) In the conduct of a hearing under this chapter, the board may issue 30 subpoenas, administer oaths, compel the attendance and testimony of witnesses, compel 31 the taking of depositions and the submission of affidavits, and compel the production

01 of documents and records. The board's powers under this subsection do not extend 02 to prehearing discovery. However, upon good cause shown, the board may permit the 03 preservation of witness testimony if the board cannot successfully compel the witness 04 to attend a hearing. The board may authorize hearing officers to conduct hearings 05 under this chapter and issue decisions; the decision of a hearing officer may be 06 appealed to the board. The board shall adopt procedures for appeals from a hearing 07 officer's decision. 08 (c) A majority of a quorum of the board may issue a ruling or modification 09 of a ruling. If the board's vote on an appeal under this chapter is a tie vote of those 10 members present and voting, the decision being appealed is affirmed. The board, by 11 regulation, shall establish procedures for the reconsideration of a ruling issued under 12 this chapter. A request for reconsideration is timely if it is received within 30 days 13 after the initial ruling was issued. 14 (d) An aggrieved party may appeal a final decision to the superior court. 15 * Sec. 34. AS 39.35.125(a) is amended to read: 16 (a) An elected official of the state or of a political subdivision of the state 17 if the political subdivision has elected under AS 39.35.550 - 39.35.650 to designate 18 elected officials in the classifications of employees entitled to participate in the 19 system is included in the system unless the official files a written waiver of coverage 20 with the administrator. A waiver under this subsection waives coverage of future 21 employment as an elected official, regardless of any change of employer. An elected 22 official may file a waiver under this subsection at any time after election to office, 23 including the period before taking the oath of office. An elected official may revoke 24 a waiver under this subsection by filing a written revocation with the administrator. 25 A revocation under this subsection operates prospectively only, and the elected official 26 may not receive credited service for service as an elected official while the waiver was 27 in effect. There is no limit on the number of times an elected official may file a 28 waiver or revocation under this subsection. 29 * Sec. 35. AS 39.35.150 is amended to read: 30 Sec. 39.35.150. Re-employment of retired employees. If a retired employee 31 subsequently becomes an active member, benefit payments may not be made during

01 the period of re-employment. During the period of re-employment, deductions from 02 the employee's salary shall be made in accordance with AS 39.35.160. Upon 03 subsequent retirement, the retired employee is entitled to receive an additional pension 04 based on the credited service and the average monthly compensation earned during the 05 period of re-employment in accordance with AS 39.35.370. If the initial benefit 06 payments to which the retired member is eligible have been reduced because the 07 member retired early under AS 39.35.370(b) or increased because the member 08 elected to receive a level income option benefit under former AS 39.35.460, the 09 member shall also receive an incremental benefit based on the amount of the 10 reduction imposed by AS 39.35.370(b) or the increase under former AS 39.35.460 11 on the first benefit and the length of time that the employee was reemployed and 12 not receiving retirement benefits. The amount of the incremental benefit is equal 13 to the difference between the normal retirement benefit to which the member 14 would have been entitled had the member taken a normal retirement and the 15 early retirement benefit or benefit under the level income option that the member 16 has been receiving based on the member's initial period of employment multiplied 17 by the total number of months that the member did not receive retirement 18 benefits because of reemployment and that amount actuarially adjusted to be paid 19 over the expected lifetime of the member. In the case of a member who selected 20 benefits under the level income option, the total number of months may not 21 include any month in which the member was 65 years of age or older. 22 * Sec. 36. AS 39.35.160(c) is amended to read: 23 (c) An employee who has made an [IRREVOCABLE] election under 24 AS 39.35.300(c) or 39.35.310(c) to have the employee's years of service as a 25 noncertificated employee of a state boarding school, of a school district or regional 26 educational attendance area, of the special education service agency, or of the Alaska 27 Vocational Technical Center determined by reference to AS 14.25.220 shall pay a 28 contribution surcharge for that service. The amount of the surcharge is the difference 29 between the amount the employer would have had to contribute under AS 39.35.250 - 30 39.35.290 for the employee when treating the employee's credited service as service 31 earned under AS 39.35.300(c) or 39.35.310(c) less the amount the employer would

01 have had to contribute under AS 39.35.250 - 39.35.290 without treating the employee's 02 credited service as service earned under AS 39.35.300(c) or 39.35.310(c). 03 * Sec. 37. AS 39.35.300(c) is amended to read: 04 (c) A noncertificated employee of the Alaska Vocational Technical Center or 05 a state boarding school who first becomes a member of the system on or after July 1, 06 1999, may, within 90 days after the employee first joins the system, make an 07 [IRREVOCABLE] election under this subsection to have the years of service that the 08 employee earns as a noncertificated employee determined using the table for service 09 on or after July 1, 1969, that is set out in the definition of "year of service" in 10 AS 14.25.220. A noncertificated employee of the Alaska Vocational Technical Center 11 or a state boarding school who is an active member of the system on July 1, 1999, 12 may, within 180 days after July 1, 1999, make the [IRREVOCABLE] election. A 13 member of the system who is an inactive member on July 1, 1999, and who is later 14 employed as a noncertificated employee of the Alaska Vocational Technical Center or 15 a state boarding school may, within 90 days after beginning the subsequent 16 employment, make the [IRREVOCABLE] election. An election under this subsection 17 is irrevocable except as provided in (d) of this section and shall be made in writing 18 on a form provided by the administrator. The election applies to the employee's 19 service earned for the school year in which the election is accepted by the 20 administrator and applies to all subsequent employment as a noncertificated employee 21 of a state boarding school, a school district or regional educational attendance area, the 22 special education service agency, or the Alaska Vocational Technical Center. An 23 employee who makes an election under this subsection shall pay the contribution 24 surcharge as set out in AS 39.35.160(c). 25 * Sec. 38. AS 39.35.300 is amended by adding new subsections to read: 26 (d) A noncertificated employee who has made an election under (c) of this 27 section and who thereafter changes employment status from working for less than a 28 full year, whether part-time or full time, to working for a full year, whether part-time 29 or full-time, may, between July 1 and September 30, revoke the election and cease 30 payment of the contribution surcharge. A revocation under this subsection is 31 retroactive to July 1 of the school year, as defined in AS 14.25.220, in which the

01 revocation is made. 02 (e) A noncertificated employee who has not made an election under (c) of this 03 section who changes employment status from working for a full year, whether part- 04 time or full-time, to working for less than a full year, whether part-time or full-time, may, 05 between July 1 and September 30, make the election and begin paying the contribution 06 surcharge. The election is retroactive to July 1 of the school year, as defined in AS 14.25.220, 07 in which the election is made. 08 * Sec. 39. AS 39.35.310(c) is amended to read: 09 (c) A noncertificated employee of a school district, a regional educational 10 attendance area, or the special education service agency who first becomes a member 11 of the system on or after July 1, 1999, may, within 90 days after the employee first 12 joins the system, make an [IRREVOCABLE] election under this subsection to have 13 the years of service that the employee earns as a noncertificated employee determined 14 using the table for service on or after July 1, 1969, that is set out in the definition of 15 "year of service" in AS 14.25.220. A noncertificated employee of a school district, a 16 regional educational attendance area, or the special education service agency who is 17 an active member of the system on July 1, 1999, may, within 180 days after July 1, 18 1999, make the [IRREVOCABLE] election. A member of the system who is an 19 inactive member on July 1, 1999, and who later is employed as a noncertificated 20 employee of a school district, a regional educational attendance area, or the special 21 education service agency may, within 90 days after beginning the subsequent 22 employment, make the [IRREVOCABLE] election. An election under this subsection 23 is irrevocable except as provided in (d) of this section and shall be made in writing 24 on a form provided by the administrator. The election applies to the employee's 25 service earned for the school year in which the election is accepted by the 26 administrator and applies to all subsequent employment as a noncertificated employee 27 of a state boarding school, a school district or regional educational attendance area, the 28 special education service agency, or the Alaska Vocational Technical Center. An 29 employee who makes an election under this subsection shall pay the contribution 30 surcharge as set out in AS 39.35.160(c). 31 * Sec. 40. AS 39.35.310 is amended by adding new subsections to read:

01 (d) A noncertificated employee who has made an election under (c) of this 02 section and who thereafter changes employment status from working for less than a 03 full year, whether part-time or full-time, to working for a full year, whether part-time 04 or full-time, may, between July 1 and September 30, revoke the election and cease 05 payment of the contribution surcharge. A revocation under this subsection is 06 retroactive to the beginning of the school year, as defined in AS 14.25.220, in which 07 the revocation was made. 08 (e) A noncertificated employee who has not made an election under (c) of this 09 section who changes employment status from working for a full year, whether part- 10 time or full-time, to working for less than a full year may, between July 1 and September 30, 11 make the election and begin paying the contribution surcharge. The election is retroactive to 12 July 1 of the school year, as defined in AS 14.25.220, in which the election was made. 13 * Sec. 41. AS 39.35.400(a) is amended to read: 14 (a) An employee is eligible for a nonoccupational disability benefit if the 15 employee's employment is terminated because of a total and apparently permanent 16 nonoccupational disability, as defined in AS 39.35.680, before the employee's normal 17 retirement date and after five or more years of credited service. A member is not 18 entitled to a nonoccupational disability benefit under this section unless the 19 member files an application for the benefit with the administrator within 90 days 20 after the member terminated employment. The board may waive a filing deadline 21 if there are extraordinary circumstances that resulted in the inability to meet the 22 deadline. The board may delegate the authority to waive a filing deadline under 23 this subsection to the administrator. 24 * Sec. 42. AS 39.35.410(f) is amended to read: 25 (f) An employee is not entitled to an occupational disability benefit unless the 26 employee files an application for it with the administrator [WITHIN SIX MONTHS 27 AFTER THE DATE OF THE ACCIDENT, IF DISABILITY IS ATTRIBUTABLE TO 28 AN ACCIDENT, WITHIN SIX MONTHS AFTER THE DATE THE DISABILITY 29 BEGINS IF THE DISABILITY IS CAUSED BY AN OCCUPATIONAL DISEASE, 30 OR] within 90 [30] days of the date of terminating employment [, WHICHEVER IS 31 LATER. IF THE DISABILITY IS ATTRIBUTABLE TO AN ACCIDENT, THE

01 EMPLOYEE SHALL FILE A NOTICE OF THE ACCIDENT WITH THE 02 ADMINISTRATOR WITHIN 30 DAYS FOLLOWING THE DATE IT OCCURRED. 03 THIS 30-DAY FILING PERIOD IS SUSPENDED FOR THE TIME THE 04 EMPLOYEE'S CONDITION PREVENTS FILING]. If the employee is unable to meet 05 a filing requirement of this subsection, it may be waived by the Public Employees' 06 Retirement Board if there are extraordinary circumstances that resulted in the 07 employee's inability to meet the filing requirement. The board may delegate the 08 authority to waive a filing deadline under this subsection to the administrator 09 [FOR CAUSE]. 10 * Sec. 43. AS 39.35.450(a) is amended to read: 11 (a) Benefits payable under this section are in place of benefits payable under 12 AS 39.35.370, 39.35.385, and former AS 39.35.460. Upon filing an application with 13 the administrator or when a disabled employee first attains eligibility for normal 14 retirement under AS 39.35.400(f) or 39.35.410(h), the employee shall designate the 15 person who is the employee's spouse at the time of appointment to retirement as the 16 contingent beneficiary. However, if the designation of the spouse is revoked under (c) 17 of this section, the employee may designate a dependent approved by the administrator 18 as the contingent beneficiary or may take normal or early retirement under 19 AS 39.35.370 or 39.35.385 or, if the employee was first hired before July 1, 1996, 20 benefit payments under the level income option under former AS 39.35.460 . The 21 administrator shall pay benefits under the option elected by the employee. The 22 employee may elect an option that provides that [(1)] the employee is entitled to 23 receive a reduced benefit payable for life, and, after the employee's death, the 24 contingent beneficiary is entitled to payments in the amount of 25 (1) 75 percent of the reduced benefit payable for life; or 26 (2) [THE EMPLOYEE IS ENTITLED TO RECEIVE A REDUCED 27 BENEFIT PAYABLE FOR LIFE, AND, AFTER THE EMPLOYEE'S DEATH, THE 28 CONTINGENT BENEFICIARY IS ENTITLED TO RECEIVE PAYMENTS IN THE 29 AMOUNT OF] 50 percent of the reduced benefit payable for life. 30 * Sec. 44. AS 39.35.500 is amended to read: 31 Sec. 39.35.500. Safeguard of employee funds held by the system. Except

01 as provided in AS 29.45.030(a)(1) or in (b) of this section , employee contributions 02 and other amounts held in the system are exempt from Alaska state and local taxes. 03 Except as provided in this subsection and in (b) of this section, amounts 04 [AMOUNTS] held on behalf of, or payable to, any employee or other person who is 05 or may become eligible for benefits under the system are not subject to anticipation, 06 alienation, sale, transfer, assignment, pledge, encumbrance, or charge of any kind, 07 either voluntary or involuntary, before being received by the person entitled to the 08 amount under the terms of the system. An attempt to anticipate, alienate, sell, transfer, 09 assign, pledge, encumber, charge, or otherwise dispose of a right to amounts held 10 under the system is void. However, an employee's right to receive benefits or the 11 member's employee contribution account may be assigned 12 (1) under a qualified domestic relations order; or 13 (2) to a trust or similar legal device that meets the requirements for a 14 Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4). 15 * Sec. 45. AS 39.35.500 is amended by adding a new subsection to read: 16 (b) An inactive member may elect to have the taxable portion of an inactive 17 employee contribution account transferred directly to another plan or an individual 18 retirement arrangement qualified under the federal Internal Revenue Code that accepts 19 the transfer. 20 * Sec. 46. AS 39.35.522(b) is amended to read: 21 (b) In order to obtain consideration of a waiver under this section, the affected 22 member or beneficiary must appeal to the board in writing within 30 days after receipt 23 of notice that the records have been adjusted. [THE BOARD SHALL RULE ON THE 24 APPEAL IN WRITING WITHIN 120 DAYS AFTER ITS RECEIPT.] 25 * Sec. 47. AS 39.35.522(c) is amended to read: 26 (c) The board may [, AT ITS DISCRETION,] conduct a hearing on an appeal 27 under this section. [IN REACHING A DECISION ON AN APPEAL, THE BOARD 28 MAY ISSUE SUBPOENAS, ADMINISTER OATHS, COMPEL THE ATTENDANCE 29 AND TESTIMONY OF WITNESSES, COMPEL THE TAKING OF DEPOSITIONS 30 AND THE SUBMISSION OF AFFIDAVITS, AND COMPEL THE PRODUCTION 31 OF DOCUMENTS AND RECORDS.]

01 * Sec. 48. AS 39.35.522(e) is amended to read: 02 (e) The board may reconsider a ruling under this section under 03 AS 39.35.077(c) [UPON REQUEST OF THE MEMBER OR BENEFICIARY OR THE 04 ADMINISTRATOR IF THE REQUEST IS RECEIVED WITHIN 30 DAYS AFTER 05 THE INITIAL RULING.] Any modification of the initial ruling must be made within 06 30 days after receipt of a request for reconsideration. 07 * Sec. 49. AS 39.35.535(b) is amended to read: 08 (b) Except as provided in (d) of this section, after an election of coverage 09 under this section, major medical insurance coverage takes effect on the same date that 10 benefits begin, and stops when the member or survivor is no longer eligible to receive 11 a monthly benefit. The coverage for persons age 65 or older is the same coverage 12 available for a person under 65 years of age . The benefits payable to persons age 65 13 or older supplement any benefits provided under the federal old age, survivors and 14 disability insurance program. The medical premium and optional insurance 15 premiums owed by a member or survivor shall be deducted from the benefit owed 16 to the member or survivor before payment of the benefit. 17 * Sec. 50. AS 39.35.615(a) is amended to read: 18 (a) A political subdivision or public organization may request that its 19 participation agreement be amended. The request may be made only after adoption 20 of a resolution by the legislative body of the political subdivision and approval of the 21 resolution by the person required by law to approve the resolution, or, in the case of 22 a public organization, after adoption of a resolution by the governing body of that 23 public organization. A certified copy of the resolution shall be filed with the 24 administrator. If a political subdivision or public organization amends its participation 25 agreement so as to terminate coverage of a department, group, or other classification 26 of employees, each employee whose coverage is so terminated, regardless of the 27 employee's employment status at the date of termination, shall be considered fully 28 vested in actuarially adjusted accrued retirement benefits as of the date of termination, 29 unless 30 (1) the employee's contributions have been refunded ; or 31 (2) the political subdivision or public organization amended its

01 participation agreement to exclude coverage for the affected department, group, 02 or other classification of employees at the written request of a majority of the 03 employees employed in that department, group, or other classification at the time 04 the request was made . 05 * Sec. 51. AS 39.35.670 is amended to read: 06 Sec. 39.35.670. Fraud. A person who knowingly makes a false statement, or 07 falsifies or permits to be falsified a record of this system, in an attempt to defraud the 08 system [,] is guilty of a class A misdemeanor [, AND UPON CONVICTION IS 09 PUNISHABLE BY A FINE OF NOT MORE THAN $500, OR BY IMPRISONMENT 10 FOR NOT MORE THAN TWELVE MONTHS, OR BY BOTH]. 11 * Sec. 52. AS 39.35.680(4) is amended to read: 12 (4) "average monthly compensation" means the result obtained by 13 dividing the compensation earned by an employee during a considered period by the 14 number of months, including fractional months, for which compensation was earned; 15 an employee must have at least 115 days of credited service in the last payroll 16 year in order for that year to be used as part of the consecutive payroll years; the 17 considered period consists of 18 (A) for employees first hired before July 1, 1996, the three 19 consecutive payroll years during the period of credited service that yield 20 [YIELDS] the highest average ; [,] and 21 (B) for employees first hired on or after July 1, 1996, the five 22 consecutive payroll years during the period of credited service that yield the 23 highest average ; 24 (C) [, OR] if the employee does not have the [REQUIRED] 25 number of consecutive payroll years required by (A) or (B) of this 26 paragraph , the actual number of months, including fractional months, that 27 the employee worked [EMPLOYEE'S PERIOD OF CREDITED SERVICE]; 28 (D) for an employee who has made an election under 29 AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 30 fractional months, that the employee worked [AN EMPLOYEE MUST 31 HAVE AT LEAST 115 DAYS OF CREDITED SERVICE IN THE LAST

01 PAYROLL YEAR IN ORDER FOR THAT YEAR TO BE USED AS PART 02 OF THE CONSECUTIVE PAYROLL YEARS]; 03 * Sec. 53. AS 39.35.680(8) is amended to read: 04 (8) "compensation" means the [TOTAL] remuneration earned by an 05 employee for personal services rendered to an employer, including employee 06 contributions under AS 39.35.160, cost-of-living differentials only as provided in 07 AS 39.35.675, payments for leave that is actually used by the employee, the amount 08 by which the employee's wages are reduced under AS 39.30.150(c), and any amount 09 deferred under an employer-sponsored deferred compensation plan, but does not 10 include retirement benefits, severance pay or other separation bonuses, welfare 11 benefits, per diem, expense allowances, workers' compensation payments, or payments 12 for leave not used by the employee whether those leave payments are scheduled 13 payments, lump-sum payments, donations, or cash-ins; for a member first hired on 14 or after July 1, 1996, compensation does not include remuneration in excess of the 15 limitations set out in 26 U.S.C. 401(a)(17) (Internal Revenue Code); 16 * Sec. 54. AS 39.35.680(29) is amended to read: 17 (29) "pension fund" or "fund" means the fund in which the assets of 18 the system , including income and interest derived from the investment of money, 19 are deposited and held; 20 * Sec. 55. AS 39.35.680(34) is amended to read: 21 (34) "qualified domestic relations order" means a divorce or dissolution 22 judgment under AS 25.24, including an order approving a property settlement, that 23 (A) creates or recognizes the existence of an alternate payee's 24 right to, or assigns to an alternate payee the right to, receive all or a portion of 25 employee contribution account or the benefits payable with respect to an 26 employee; 27 (B) sets out the name and last known mailing address, if any, 28 of the employee and of each alternate payee covered by the order; 29 (C) sets out the amount or percentage of the employee's benefit, 30 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 31 manner in which that amount or percentage is to be determined;

01 (D) sets out the number of payments or period to which the 02 order applies; 03 (E) does not require any type or form of benefit or any option 04 not otherwise provided by this chapter; 05 (F) does not require an increase of benefits in excess of the 06 amount provided by this chapter, determined on the basis of actuarial value; 07 and 08 (G) does not require the payment to an alternate payee of 09 benefits that are required to be paid to another alternate payee under another 10 order previously determined to be a qualified domestic relations order ; [.] 11 * Sec. 56. AS 39.50.200(a)(8) is amended to read: 12 (8) "public official" means 13 (A) a judicial officer; 14 (B) the governor or the lieutenant governor; 15 (C) a person hired or appointed in a department in the executive 16 branch as 17 (i) the head or deputy head of the department; 18 (ii) the director or deputy director of a division; 19 (iii) a special assistant to the head of the department; 20 (iv) a person serving as the legislative liaison for the 21 department; 22 (D) an assistant to the governor or the lieutenant governor; 23 (E) the chair or a member of a state commission or board other 24 than physician members or alternates of the Alaska Teachers' Retirement 25 Board appointed under AS 14.25.035(a)(2) or of the Public Employees' 26 Retirement Board appointed under AS 39.35.030(d) ; 27 (F) state investment officers and the state comptroller in the 28 Department of Revenue; 29 (G) the executive director of the Alaska Tourism Marketing 30 Council; 31 (H) the chief procurement officer appointed under

01 AS 36.30.010; 02 (I) the executive director of the Alaska Human Resource 03 Investment Council; and 04 (J) each appointed or elected municipal officer; 05 * Sec. 57. AS 14.25.175(f), 14.25.175(g); AS 39.35.522(f), and 39.35.522(g) are repealed. 06 * Sec. 58. The uncodified law of the State of Alaska is amended by adding a new section 07 to read: 08 ELECTED PUBLIC OFFICERS RETIREMENT SYSTEM QUALIFIED DOMESTIC 09 RELATIONS ORDER PROVISIONS. (a) Notwithstanding former AS 39.37.060, a former 10 spouse who was married for at least one year to an elected public officer who is a member 11 of the retirement system under former AS 39.37 shall be treated as a spouse or surviving 12 spouse to the extent required by a qualified domestic relations order. Rights under the order 13 do not take effect until the order is filed with the administrator. 14 (b) Notwithstanding former AS 39.37.130, an elected public officer who is a member 15 of the retirement system under former AS 39.37 and whose rights to a refund are subject to 16 a qualified domestic relations order is entitled to receive a refund of the total amount of 17 contributions together with interest credited on the amount only if the elected public officer's 18 present spouse, if any, and each person entitled under the order consent to the refund in 19 writing on a form provided by the administrator. The administrator may waive written 20 consent from the person entitled to benefits under the order if the administrator determines that 21 the person cannot be located or for other reasons established by regulation. The administrator 22 may waive written consent from the spouse if the administrator determines that 23 (1) the elected public officer was not married to the spouse during any period 24 of the public officer's membership in the system; 25 (2) the spouse has no right to benefits under former AS 39.37 because of the 26 terms of a qualified domestic relations order; 27 (3) the spouse cannot be located; 28 (4) the elected public officer and spouse have been married for less than two 29 years and the elected public officer establishes that they are not cohabiting; or 30 (5) another reason established by regulation exists. 31 (c) Except as provided in this subsection, amounts held in the retirement system under

01 former AS 39.37 on behalf of an elected public officer or other person who is or may become 02 eligible for benefits under the system are exempt from Alaska state and municipal taxes and 03 are not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or 04 charge of any kind, either voluntary or involuntary, before they are received by the person 05 entitled to the amount under the terms of the system, and any attempt to anticipate, alienate, 06 sell, transfer, assign, pledge, encumber, charge, or otherwise dispose of any right to amounts 07 accrued in the system is void. Amounts held in the system and benefits payable under former 08 AS 39.37 are exempt from garnishment, execution, or levy as provided in AS 09.38 (Alaska 09 Exemptions Act). However, 10 (1) the right of an elected public officer who is a member of the retirement 11 system under former AS 39.37 to receive benefits or the contributions and interest may be 12 assigned 13 (A) under a qualified domestic relations order; or 14 (B) to a trust or similar legal device that meets the requirements for a 15 Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4) (Title 16 XIX, Social Security Act); 17 (2) an elected public officer who is a member of the retirement system under 18 former AS 39.37 may elect to have the taxable portion of the qualifying distributions 19 transferred directly to another qualified plan or an individual retirement account that accepts 20 the transfer. 21 (d) Notwithstanding former AS 39.37.145, receipt under a qualified domestic relations 22 order of a monthly benefit under former AS 39.37 (elected public officer retirement system) 23 does not entitle a person or the person's spouse or child to insurance coverage. However, an 24 elected public officer's former spouse who receives a monthly benefit from the former elected 25 public officer retirement system under a qualified domestic relations order is entitled to 26 receive major medical insurance coverage if the former spouse 27 (1) elects the coverage within 60 days after the first monthly benefit paid under 28 the order is mailed first class or otherwise delivered; and 29 (2) pays the premium established by the administrator for the coverage. 30 (e) In this section, "qualified domestic relations order" has the same meaning given 31 in AS 39.35.680.

01 * Sec. 59. The uncodified law of the State of Alaska is amended by adding a new section 02 to read: 03 INITIAL APPOINTMENT OF PUBLIC MEMBERS OF THE PUBLIC EMPLOYEES' 04 RETIREMENT BOARD. Notwithstanding AS 39.35.030(b), as repealed and reenacted by 05 sec. 28 of this Act, persons serving on the Public Employees' Retirement Board under 06 AS 39.35.030(b) on the day before the effective date of this Act shall continue to serve on the 07 board until the expiration of their current terms on the board. When a vacancy on the board 08 occurs, it shall be filled as provided in AS 39.35.030(b), as repealed and reenacted by sec. 28 09 of this Act.