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HB 329: "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."

00                             HOUSE BILL NO. 329                                                                          
01 "An Act relating to retirement incentive programs for the public employees' retirement                                  
02 system, the judicial retirement system, and the teachers' retirement system; relating to                                
03 separation incentives for certain state employees; and providing for an effective date."                                
04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
05    * Section 1.  The uncodified law of the State of Alaska is amended by adding a new section                         
06 to read:                                                                                                                
07       FINDINGS AND PURPOSE.  The State of Alaska and many local governments and                                         
08 school districts are facing the need to restructure their operations and their work forces in                           
09 order to reduce expenditures and balance budgets.  Retirement and separation incentives are                             
10 management tools that have been used extensively by the private sector, the federal                                     
11 government, and other state and local governments across the country.  The purpose of this                              
12 Act is to make these management tools temporarily available to the state and to the                                     
13 municipalities and school districts of the state.  This Act will enable these entities to be more                       
14 efficient and cost-effective by eliminating certain nonessential positions, and producing a net                         
01 reduction in personnel costs.                                                                                           
02    * Sec. 2.  The uncodified law of the State of Alaska is amended by adding a new section to                         
03 read:                                                                                                                   
04       RETIREMENT INCENTIVE PROGRAM.  (a)  An employer may adopt a retirement                                            
05 incentive plan under secs. 3 - 6 of this Act, as appropriate, and designate categories of                               
06 employees eligible to participate in that plan.  An employer need not extend the incentive plan                         
07 to all employees who would otherwise be eligible, but may choose to extend the plan only to                             
08 employees                                                                                                               
09            (1)  in specific budget or administrative components of the employer;                                        
10            (2)  in specific job classifications;                                                                        
11            (3)  in specific geographic locations; or                                                                    
12            (4)  on the basis of any combination of factors under (1) - (3) of this                                      
13 subsection.                                                                                                             
14       (b)  An employee is eligible to participate in a retirement incentive plan under this Act                         
15 only if the                                                                                                             
16            (1)  employee is a vested member of the public employees' retirement system                                  
17 or the teachers' retirement system;                                                                                     
18            (2)  employee will be qualified to retire under AS 14.25.110 or AS 39.35.370                                 
19 after receipt of the credit described in (f) of this section;                                                           
20            (3)  savings to the employer in personal services costs for the employee's                                   
21 position will exceed the costs to the employer for that position within three years after the                           
22 employee is appointed to retirement.                                                                                    
23       (c)  An employer shall file its proposed retirement incentive plan with the                                       
24 commissioner of administration.  The commissioner shall approve the plan if the plan meets                              
25 the requirements of this Act, except that the commissioner may approve a state agency's                                 
26 retirement incentive plan only if the office of management and budget approves the                                      
27 calculation of savings under (b)(3) of this section.  A proposed plan filed under this section                          
28 must                                                                                                                    
29            (1)  identify job classifications of employees, and specific budget or                                       
30 administrative components, eligible to participate in the plan;                                                         
31            (2)  include a reimbursement agreement that                                                                  
01                 (A)  requires the employer, for each employee who retires under the                                     
02       plan, to reimburse the appropriate retirement system, within three years after the end                            
03       of the fiscal year in which the employee is appointed to retirement, in an amount equal                           
04       to                                                                                                                
05                      (i)  the actuarial equivalent of the difference between the                                        
06            benefits the participant receives after the addition of the credit under (f) of this                         
07            section and the amount the participant would have received without the credit,                               
08            less the amount the participant has paid on the indebtedness determined under                                
09            (d) or (e) of this section; and                                                                              
10                      (ii)  an appropriate share of the administrative costs of the                                      
11            program; and                                                                                                 
12                 (B)  provides that contributions from the employer under this section                                   
13       take priority over other obligations of the employer to the maximum extent permitted                              
14       by law.                                                                                                           
15       (d)  A member of the teachers' retirement system who participates in an approved                                  
16 retirement incentive plan under this Act is indebted to that system for an amount calculated                            
17 under this subsection.  The indebtedness is 25.95 percent of the member's actual                                        
18 compensation for the school year in which the member terminates employment, or the                                      
19 calculated school year compensation for a member who works less than the entire school year.                            
20 An outstanding indebtedness at the time a member is appointed to retirement under an                                    
21 approved retirement incentive plan requires an actuarial adjustment to the benefits payable to                          
22 that member.                                                                                                            
23       (e)  A member of the public employees' retirement system who participates in an                                   
24 approved retirement incentive plan under this Act is indebted to that system for an amount                              
25 calculated under this subsection.  The indebtedness is 22-1/2 percent for a peace officer or fire                       
26 fighter, and 20-1/4 percent for other members, of the member's actual annual compensation                               
27 for the year in which the member terminates employment, or the calculated annual                                        
28 compensation for a member who works fewer than 12 months.  An outstanding indebtedness                                  
29 at the time a member is appointed to retirement under an approved retirement incentive plan                             
30 requires  an actuarial adjustment to the benefits payable to that member.                                               
31       (f)  An employee who participates in an approved retirement incentive plan under this                             
01 Act receives a credit of three years.  The three years must be applied in the following order                           
02 until exhausted:                                                                                                        
03            (1)  to meet the age or service required for eligibility for normal retirement                               
04 under AS 14.25.110 or AS 39.35.370, as appropriate;                                                                     
05            (2)  to meet the age required for early retirement under AS 14.25.110 or                                     
06 AS 39.35.370, as appropriate;                                                                                           
07            (3)  to reduce the actuarial adjustment required for early retirement under                                  
08 AS 14.25.110 or AS 39.35.370, as appropriate;                                                                           
09            (4)  as years of credited service for calculating retirement benefits.                                       
10       (g)  In this section,                                                                                             
11            (1)  "department" means                                                                                      
12                 (A)  a principal department of the executive branch of state                                            
13       government; an independent state entity that is attached to a principal department of                             
14       the executive branch for administrative purposes but that is not a public organization                            
15       as defined in AS 39.35.680 is part of that department for purposes of this paragraph;                             
16       and                                                                                                               
17                 (B)  the Office of the Governor;                                                                        
18            (2)  "employer" has the meaning given in AS 14.25.220 and AS 39.35.680 and                                   
19 includes a department.                                                                                                  
20    * Sec. 3.  The uncodified law of the State of Alaska is amended by adding a new section to                         
21 read:                                                                                                                   
22       AUTHORIZATION FOR STATE EMPLOYEE RETIREMENT INCENTIVE.  (a)  A                                                    
23 state agency may adopt, and file with the commissioner of administration for approval, a                                
24 proposed retirement incentive plan for its employees.                                                                   
25       (b)  Upon the request of a state agency, the commissioner of administration shall                                 
26 establish one or more periods during which the employees of that state agency who are                                   
27 eligible under sec. 2(b) of this Act to participate in a retirement incentive plan may apply to                         
28 the commissioner of administration to participate in the state agency's approved plan.  The                             
29 periods shall begin no earlier than July 1, 2003, and end no later than June 30, 2006.  The                             
30 periods shall be no less than 30 days and no more than 60 days in duration, and may not begin                           
31 less than 30 days after their establishment.  A state agency is not required to request an                              
01 application period, and may request more than one application period.                                                   
02       (c)  A proposed retirement incentive plan adopted under this section may not permit an                            
03 employee who is the governor, the lieutenant governor, or a commissioner, deputy                                        
04 commissioner, or assistant commissioner of a principal department of the executive branch to                            
05 participate in the plan.                                                                                                
06       (d)  A proposed retirement incentive plan adopted under this section may permit                                   
07 participation only by an employee who is eligible to participate under sec. 2(b) of this Act and                        
08 who                                                                                                                     
09            (1)  has been continuously employed by the state for at least one year before                                
10 the employee applies to participate in the state agency's approved plan;                                                
11            (2)  is a permanent seasonal employee who has been continuously employed                                     
12 by the state in a permanent seasonal position during all of the time in the one year before the                         
13 employee's application to participate in which the position normally is filled;                                         
14            (3)  has a job sharing agreement with a state agency in which two or more                                    
15 employees share a single position identified by a single position control number and in which                           
16 the employee who applies to participate in the plan was continuously employed by the agency                             
17 during the portion of the one year before the employee's application in which the employee                              
18 normally worked under the job sharing agreement; or                                                                     
19            (4)  meets a combination of the requirements of this subsection.                                             
20       (e)  The commissioner of administration may not accept the application of an                                      
21 employee to participate in an approved retirement incentive plan adopted under this section                             
22 unless the employee will be appointed to retirement not later than the first day of the month                           
23 that is six months after the last day of the application period established by the commissioner                         
24 under (b) of this section.  A state agency, in a plan adopted under this section, may set an                            
25 earlier date by which an employee must be appointed to retirement in order to participate in                            
26 the plan.                                                                                                               
27    * Sec. 4.  The uncodified law of the State of Alaska is amended by adding a new section to                         
28 read:                                                                                                                   
29       AUTHORIZATION FOR RETIREMENT INCENTIVE FOR EMPLOYEES OF THE                                                       
30 UNIVERSITY OF ALASKA.  (a)  The Board of Regents of the University of Alaska may                                        
31 adopt, and file with the commissioner of administration for approval, a proposed retirement                             
01 incentive plan for university employees.                                                                                
02       (b)  Upon the request of the Board of Regents, the commissioner of administration                                 
03 shall establish one or more periods during which the employees of the university who are                                
04 eligible under sec. 2(b) of this Act to participate in a retirement incentive plan may apply to                         
05 the commissioner of administration to participate in the university's approved plan.  The                               
06 periods shall begin no earlier than July 1, 2003, and end no later than June 30, 2004.  The                             
07 periods shall be no less than 30 days and no more than 60 days in duration, and may not begin                           
08 less than 30 days after their establishment.  The Board of Regents is not required to request an                        
09 application period, and may request more than one application period.                                                   
10       (c)  The commissioner of administration may not accept the application of an                                      
11 employee to participate in an approved retirement incentive plan adopted under this section                             
12 unless the employee will be appointed to retirement not later than the first day of the month                           
13 that is six months after the last day of the application period established by the commissioner                         
14 under (b) of this section.  The Board of Regents, in a plan adopted under this section, may set                         
15 an earlier date by which an employee of the University of Alaska must be appointed to                                   
16 retirement in order to participate in the plan.                                                                         
17       (d)  A participant in the optional university retirement program under AS 14.40.661 -                             
18 14.40.799 who is vested in the public employees' retirement system or the teachers' retirement                          
19 system may participate in a retirement incentive plan for that system if the participant meets                          
20 the other qualifications of this Act.  If a provision of this subsection is inconsistent with                           
21 another provision of law, the provision of this subsection governs.                                                     
22    * Sec. 5.  The uncodified law of the State of Alaska is amended by adding a new section to                         
23 read:                                                                                                                   
24       AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER EMPLOYEES                                                        
25 IN THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM.  (a)  The governing body of a                                               
26 political subdivision of the state or public organization that has elected to participate in the                        
27 public employees' retirement system under AS 39.35.550 - 39.35.650 may adopt, and file with                             
28 the commissioner of administration for approval, a proposed retirement incentive plan for its                           
29 employees.  Upon the request of the governing body, the commissioner of administration shall                            
30 establish one or more periods during which the employees of a political subdivision or public                           
31 organization who are eligible to participate in a retirement incentive plan may apply to the                            
01 commissioner of administration to participate in the approved plan.  The periods shall begin                            
02 no earlier than October 31, 2003, and end no later than June 30, 2004.  The periods shall be no                         
03 less than 30 days and no more than 60 days in duration, and may not begin less than 60 days                             
04 after their establishment.  The governing body is not required to request an application period,                        
05 and may request more than one application period.                                                                       
06       (b)  The commissioner of administration may not accept the application of an                                      
07 employee to participate in an approved retirement incentive plan adopted under this section                             
08 unless the employee will be appointed to retirement not later than the first day of the month                           
09 that is six months after the last day of the application period established by the commissioner                         
10 under (a) of this section.  The governing body of the political subdivision or public                                   
11 organization, in a plan adopted under this section, may set an earlier date by which an                                 
12 employee must be appointed to retirement in order to participate in the plan.                                           
13    * Sec. 6.  The uncodified law of the State of Alaska is amended by adding a new section to                         
14 read:                                                                                                                   
15       AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER EMPLOYEES                                                        
16 IN THE TEACHERS' RETIREMENT SYSTEM.  (a)  An employer under the teachers'                                               
17 retirement system who is not otherwise covered by secs. 3 or 4 of this Act may adopt, and file                          
18 with the commissioner of administration for approval, a proposed retirement incentive plan                              
19 for its employees.  A plan adopted under this section must provide that the application period                          
20 for participation in the retirement incentive plan is July 1, 2003, through June 30, 2004.                              
21       (b)  The commissioner of administration may not accept the application of an                                      
22 employee to participate in an approved retirement incentive plan adopted under this section                             
23 unless the employee will be appointed to retirement on or before August 1, 2004.  The                                   
24 employer, in a plan adopted under this section, may set an earlier date by which an employee                            
25 must be appointed to retirement in order to participate in the plan.                                                    
26    * Sec. 7.  The uncodified law of the State of Alaska is amended by adding a new section to                         
27 read:                                                                                                                   
28       POLITICAL SUBDIVISION OR PUBLIC ORGANIZATION EMPLOYMENT.  For                                                     
29 purposes of determining the years of service requirements for retirement under AS 14.25.110                             
30 or AS 39.35.370, as appropriate, a vested member who is a state employee and who applies to                             
31 participate in a retirement incentive plan approved under this Act may receive credit for                               
01 employment with a political subdivision or public organization before the political                                     
02 subdivision or organization became an employer under the public employees' retirement                                   
03 system.  The member may not receive credit for those years under this subsection for                                    
04 purposes of determining benefits.  If a provision of this section is inconsistent with any other                        
05 provision of law, the provision of this section governs.                                                                
06    * Sec. 8.  The uncodified law of the State of Alaska is amended by adding a new section to                         
07 read:                                                                                                                   
08       PROVISION AND AUTHORIZATION FOR ADMINISTRATIVE DIRECTOR OF                                                        
09 COURT.  (a)  The chief justice of the state supreme court may adopt a retirement incentive                              
10 plan for an administrative director of the Alaska Court System who is a member of the                                   
11 judicial retirement system under AS 22.25.012 if participation in the plan will result in                               
12 savings to the court system in personal services costs within three years after the                                     
13 commencement of the plan.  The administrative director may participate only if the                                      
14 administrative director is vested in the judicial retirement system and will be qualified to                            
15 retire under AS 22.25.010 after receipt of the retirement incentive.  To participate, the                               
16 administrative director shall apply to the commissioner of administration to participate in the                         
17 approved court system plan.                                                                                             
18       (b)  The court system shall include in the retirement incentive plan a reimbursement                              
19 agreement that requires the court system, for each administrative director of the Alaska Court                          
20 System who is retired under the plan, to reimburse the judicial retirement system within three                          
21 years after the end of the fiscal year in which the administrative director is appointed to                             
22 retirement in an amount equal to                                                                                        
23            (1)  the actuarial equivalent of the difference between the benefits the                                     
24 administrative director receives after the addition of the credit under (e) of this section and the                     
25 amount the participant would have received without the credit, less the total of the amount the                         
26 participant has paid on the indebtedness determined under (d) of this section; and                                      
27            (2)  an appropriate share of the administrative costs of the program.                                        
28       (c)  A retirement incentive plan adopted under this section must provide that                                     
29 contributions from the court system under (b) of this section take priority over other                                  
30 obligations of the court system to the maximum extent permitted by law.                                                 
31       (d)  An administrative director of the Alaska Court System who participates in an                                 
01 approved retirement incentive plan is indebted to the system.  The amount of indebtedness is                            
02 equal to 21 percent of the director's actual annual compensation for the year in which the                              
03 director terminates employment to participate in the program, or the calculated annual                                  
04 compensation for an administrative director who works fewer than 12 months.  An                                         
05 outstanding indebtedness at the time the administrative director is appointed to retirement                             
06 under an approved retirement incentive plan will require an actuarial adjustment to the                                 
07 benefits payable to the director.                                                                                       
08       (e)  An administrative director of the Alaska Court System who participates in an                                 
09 approved retirement incentive plan receives a credit of three years that may only be used to                            
10 meet the age requirements for normal or early retirement under AS 22.25.010(d).                                         
11       (f)  The chief justice of the Alaska Court System may adopt, and file with the                                    
12 commissioner of administration for approval, a proposed retirement incentive plan for the                               
13 administrative director of the court system who is a member of the judicial retirement system.                          
14 Upon the request of the chief justice, the commissioner of administration shall establish a                             
15 period during which an administrative director eligible to participate in the retirement                                
16 incentive plan of the court system may apply to the commissioner of administration to                                   
17 participate in the court system's approved plan.  The period shall begin no earlier than July 1,                        
18 2003, and end no later than June 30, 2004.  The period shall be no less than 30 days and no                             
19 more than 60 days in duration and may not begin less than 30 days after establishment.  The                             
20 chief justice is not required to request an application period.                                                         
21       (g)  The commissioner of administration may not accept the application of an                                      
22 administrative director of the court system to participate in an approved retirement incentive                          
23 plan adopted under this section unless the administrative director will be appointed to                                 
24 retirement not later than the first day of the month that is six months after the last day of the                       
25 application period established by the commissioner under (f) of this section.  The chief                                
26 justice, in a plan adopted under this section, may set an earlier date by which an                                      
27 administrative director must be appointed to retirement in order to participate in the plan.                            
28    * Sec. 9.  The uncodified law of the State of Alaska is amended by adding a new section to                         
29 read:                                                                                                                   
30       RECOVERY OF EMPLOYER DELINQUENCIES.  To recover a delinquency owed                                                
31 by an employer other than the state under an agreement entered into under sec. 2(c)(2) of this                          
01 Act, the Department of Administration may                                                                               
02            (1)  direct that the amount of the delinquency or a lesser amount be withheld                                
03 from any money payable to the employer by a state department or agency and that the amount                              
04 withheld be credited to the delinquency; and                                                                            
05            (2)  bring an action against the employer.                                                                   
06    * Sec. 10.  The uncodified law of the State of Alaska is amended by adding a new section to                        
07 read:                                                                                                                   
08       REEMPLOYMENT INDEBTEDNESS; PROHIBITION ON REEMPLOYMENT.                                                           
09 (a) If an individual is reemployed as a member of the public employees' retirement system                               
10 under AS 39.35, the teachers' retirement system under AS 14.25, the judicial retirement                                 
11 system under AS 22.25, or the optional university retirement program under AS 14.40.661 -                               
12 14.40.799 after appointment to retirement under this Act, that individual forfeits the incentive                        
13 credit received under sec. 2(f) of this Act and is indebted to the system under which the                               
14 individual took retirement.  The indebtedness is 110 percent of the amount the individual                               
15 received as a result of participation in a retirement incentive plan under this Act and to which                        
16 the individual would not otherwise have been entitled, including the cost of health insurance.                          
17 The amount that the individual has paid under sec. 2(d) or (e) of this Act will be applied as a                         
18 credit toward the reemployment indebtedness.  Interest on the reemployment indebtedness                                 
19 accrues from the date of reemployment until the date that the individual either is appointed to                         
20 retirement and accepts an actuarial adjustment to the individual's future benefits or repays the                        
21 indebtedness in full.  The rate of interest is that established by regulation for the public                            
22 employees' retirement system by the public employees' retirement board and for the teachers'                            
23 retirement system by the teachers' retirement board.                                                                    
24       (b)  An individual who was appointed to retirement under this Act may not be                                      
25 employed by, or enter into a contract for personal services with, a state agency or the                                 
26 University of Alaska within the three years after the date of appointment to retirement, except                         
27 that                                                                                                                    
28            (1)  the University of Alaska may enter into a personal services contract with                               
29 the individual for teaching or research; and                                                                            
30            (2)  the individual may accept employment with the legislature during a                                      
31 legislative session if the employment is on an hourly basis and does not entitle the individual                         
01 to receive retirement, health, or leave benefits.                                                                       
02       (c)  Notwithstanding the prohibition in (b) of this section, a state agency or the                                
03 University of Alaska may enter into a personal services contract with an individual who was                             
04 appointed to retirement under this Act if the Board of Regents, for the University of Alaska,                           
05 or the commissioner of administration, for a state agency, determines that there is a                                   
06 compelling reason to do so because of the individual's specialized or extensive experience that                         
07 relates to a particular program or project of the state agency or university.  However, a state                         
08 agency may not enter into a contract with an individual under this subsection if the individual                         
09 was employed by that state agency at the time of the individual's appointment to retirement.                            
10    * Sec. 11.  The uncodified law of the State of Alaska is amended by adding a new section to                        
11 read:                                                                                                                   
12       SEPARATION INCENTIVE PROGRAM.  (a)  A state agency may, with the approval                                         
13 of the director of the office of management and budget, establish a separation incentive                                
14 program for its employees.  The program may be offered in combination with an approved                                  
15 retirement incentive plan adopted under sec. 3 of this Act, or may be offered separately from                           
16 such a plan.  A state agency need not extend an incentive program under this section to all                             
17 employees who would otherwise be eligible to participate, but may choose to extend the                                  
18 program only to employees                                                                                               
19            (1)  in specific budget or administrative components of the state agency;                                    
20            (2)  in specific job classifications;                                                                        
21            (3)  on the basis of any combination of factors under (1) and (2) of this                                    
22 subsection.                                                                                                             
23       (b)  A separation incentive payment under this section shall be paid in a lump sum                                
24 after the employee's separation from state service, and shall be equal to the lesser of an                              
25 amount equaling six months of the employee's base salary, or $25,000.  However, a state                                 
26 agency or the office of management and budget may set a lower separation incentive payment                              
27 in the state agency's separation incentive program.                                                                     
28       (c)  Upon the request of a state agency, the commissioner of administration shall                                 
29 establish one or more periods during which the employees of that state agency may apply to                              
30 the commissioner of administration to participate in the state agency's approved  separation                            
31 incentive program.  The periods shall begin no earlier than July 1, 2003, and end no later than                         
01 June 30, 2006.  The periods shall be no less than 30 days and no more than 60 days in                                   
02 duration, and may not begin less than 30 days after their establishment.  A state agency is not                         
03 required to request an application period, and may request more than one application period.                            
04 If the commissioner of administration has established one or more application periods for a                             
05 state agency under sec. 3(b) of this Act, the application period or periods established under                           
06 this subsection must coincide with the period or periods established under sec. 3(b) of this                            
07 Act.                                                                                                                    
08       (d)  A separation incentive program established under this section must provide that a                            
09 separation incentive payment to an employee may be made only if                                                         
10            (1)  the employee is a permanent full-time or permanent full-time seasonal                                   
11 employee with at least five years of service with the state; and                                                        
12            (2)  the savings to the state agency in personal services costs for the position                             
13 occupied by that employee would exceed, in the three years after the employee separates, the                            
14 amount of the separation incentive payment.                                                                             
15       (e)  If an individual who received a separation incentive payment under this section                              
16 subsequently is reemployed by a state agency or the University of Alaska within the three                               
17 years after the date that the individual received the separation incentive payment, the                                 
18 individual is liable to the state in an amount equal to 110 percent of the amount of the                                
19 separation incentive payment, plus interest at the rate prescribed by AS 45.45.010,                                     
20 commencing on the date that the individual received the separation incentive payment.                                   
21       (f)  If an employee is eligible to participate in an approved retirement incentive plan                           
22 adopted under sec. 3 of this Act,                                                                                       
23            (1)  a separation incentive payment to that employee may not exceed the                                      
24 amount that the state agency would be obligated to pay to the appropriate retirement system,                            
25 notwithstanding (b) of this section; and                                                                                
26            (2)  the employee may participate in either the separation incentive program                                 
27 under this section or the retirement incentive plan adopted under sec. 3 of this Act, but not                           
28 both.                                                                                                                   
29       (g)  In this section, "base salary" means the monthly salary paid to an employee under                            
30 the applicable collective bargaining agreement, AS 39.27.011, or another applicable pay                                 
31 schedule, and includes geographic differential; if an employee is paid on an hourly basis, the                          
01 employee's base salary is the employee's hourly rate, including geographic differential,                                
02 multiplied by the number of hours in the employee's regular work week, multiplied by 4.35.                              
03    * Sec. 12.  The uncodified law of the State of Alaska is amended by adding a new section to                        
04 read:                                                                                                                   
05       OFFICE OF MANAGEMENT AND BUDGET.  (a)  When designating an employee                                               
06 category for participation in a retirement incentive plan or a separation incentive program                             
07 under this Act, the executive head of the relevant state agency shall describe in detail the                            
08 expected effect of the plan or program on the agency's personal services cost and operation.                            
09 This financial report must be approved by the director of the office of management and                                  
10 budget before the commissioner of administration may approve the proposed plan or program.                              
11 The state agency shall report each year to the office of management and budget on the cost of                           
12 each employee's participation and the effect on the agency's personal services cost and                                 
13 operation.                                                                                                              
14       (b)  The office of management and budget shall submit to the legislature annual                                   
15 reports on the retirement incentive and separation incentive programs under this Act                                    
16 beginning January 15, 2004, and continuing through January 15, 2006, and shall submit a                                 
17 final report January 15, 2007.  Each report must provide the information necessary for the                              
18 legislature to evaluate the effectiveness of the programs in achieving their objectives.  The                           
19 report must include information on the designated employee categories under the incentive                               
20 programs, including the cost of each incentive program per participant, the cost to the state,                          
21 the cost to the employee, the annual budgeted amount, by state agency, for the incentives, the                          
22 number of positions deleted or left vacant, and the projected or actual net savings over the                            
23 three-year period.                                                                                                      
24    * Sec. 13.  The uncodified law of the State of Alaska is amended by adding a new section to                        
25 read:                                                                                                                   
26       PROGRAM CHANGES.  (a)  An individual employee does not have a vested or                                           
27 contractual right to a benefit under this Act until an agreement is executed with the                                   
28 administrator that specifically authorizes that employee to participate in the retirement                               
29 incentive program under this Act or until an agreement is executed with the commissioner of                             
30 administration to participate in the separation incentive program under this Act.  The                                  
31 legislature reserves the right to change any aspect of either incentive program as it relates to                        
01 employees for whom participation agreements have not yet been executed with the                                         
02 administrator or with the commissioner of administration.                                                               
03       (b)  In this section, "administrator" means the administrator of the public employees'                            
04 retirement system for employees who are members of that system, and the administrator of                                
05 the teachers' retirement system for employees who are members of that system.                                           
06    * Sec. 14.  The uncodified law of the State of Alaska is amended by adding a new section to                        
07 read:                                                                                                                   
08       REGULATIONS.  The commissioner of the Department of Administration may adopt                                      
09 regulations under AS 44.62 (Administrative Procedure Act) to implement and interpret this                               
10 Act.                                                                                                                    
11    * Sec. 15.  The uncodified law of the State of Alaska is amended by adding a new section to                        
12 read:                                                                                                                   
13       DEFINITIONS.  (a)  Unless provided otherwise in this Act, the definitions set out in                              
14 AS 14.25.220 apply to provisions in secs. 2 - 10 of this Act that relate to the teachers'                               
15 retirement system and members of the teachers' retirement system.                                                       
16       (b)  Unless provided otherwise in this Act, the definitions set out in AS 39.35.680                               
17 apply to provisions in secs. 2 - 10 of this Act that relate to the public employees' retirement                         
18 system and members of the public employees' retirement system.                                                          
19       (c)  In this Act,                                                                                                 
20            (1)  "office of management and budget" means the office of management and                                    
21 budget in the Office of the Governor;                                                                                   
22            (2)  "public employees' retirement system" means the Public Employees'                                       
23 Retirement System of Alaska (AS 39.35);                                                                                 
24            (3)  "state agency"                                                                                          
25                 (A)  means                                                                                              
26                      (i)  the legislative branch of state government;                                                   
27                      (ii)  the judicial branch of state government;                                                     
28                      (iii)  a principal department of the executive branch of state                                     
29            government; an independent state entity that is attached to a principal                                      
30            department of the executive branch for administrative purposes but that is not a                             
31            public organization as defined in AS 39.35.680 is part of that department for                                
01            purposes of this clause; and                                                                                 
02                      (iv)  the Office of the Governor;                                                                  
03                 (B)  does not include                                                                                   
04                      (i)  the University of Alaska;                                                                     
05                      (ii)  a political subdivision of the state; or                                                     
06                      (iii)  a public organization as defined in AS 39.35.680;                                           
07            (4)  "teachers' retirement system" means the Teachers' Retirement System of                                  
08 Alaska (AS 14.25).                                                                                                      
09    * Sec. 16.  Sections 2, 3, and 11 of this Act are repealed July 1, 2006.                                           
10    * Sec. 17.  Sections 4 - 8 of this Act are repealed July 1, 2004.                                                  
11    * Sec. 18.  This Act takes effect immediately under AS 01.10.070(c).