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CSHB 329(L&C): "An Act relating to retirement incentive programs for the public employees' retirement system and the teachers' retirement system; and providing for an effective date."

00                       CS FOR HOUSE BILL NO. 329(L&C)                                                                    
01 "An Act relating to retirement incentive programs for the public employees' retirement                                  
02 system and the teachers' retirement system; and providing for an effective date."                                       
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1.  The uncodified law of the State of Alaska is amended by adding a new section                         
05 to read:                                                                                                                
06       FINDINGS AND PURPOSE.  The State of Alaska and many local governments and                                         
07 school districts are facing the need to restructure their operations and their work forces in                           
08 order to reduce expenditures and balance budgets.  Retirement incentives are management                                 
09 tools that have been used extensively by the private sector, the federal government, and other                          
10 state and local governments across the country.  The purpose of this Act is to make these                               
11 management tools temporarily available to the state and to the municipalities and school                                
12 districts of the state.  This Act will enable these entities to be more efficient and cost-effective                    
13 by eliminating certain positions, and producing a net reduction in personnel costs.                                     
14    * Sec. 2.  The uncodified law of the State of Alaska is amended by adding a new section to                         
01 read:                                                                                                                   
02       RETIREMENT INCENTIVE PROGRAM.  (a)  An employer may adopt a retirement                                            
03 incentive plan under secs. 3 - 6 of this Act, as appropriate, subject to the requirements of sec.                       
04 15 of this Act, and designate categories of employees eligible to participate in that plan.  An                         
05 employer need not extend the incentive plan to all employees who would otherwise be                                     
06 eligible, but may choose to extend the plan only to employees                                                           
07            (1)  in specific budget or administrative components of the employer;                                        
08            (2)  in specific job classifications;                                                                        
09            (3)  in specific geographic locations; or                                                                    
10            (4)  on the basis of any combination of factors under (1) - (3) of this                                      
11 subsection.                                                                                                             
12       (b)  An employee is eligible to participate in a retirement incentive plan under this Act                         
13 only if the                                                                                                             
14            (1)  employee is a vested member of the public employees' retirement system                                  
15 or the teachers' retirement system;                                                                                     
16            (2)  employee has credit for service under AS 14.25.110 that occurred before                                 
17 July 1, 1990, or under AS 39.35.370 that occurred before July 1, 1986;                                                  
18            (3)  employee is at least 50 years of age, and, before application of credit                                 
19 described in (f) of this section, has                                                                                   
20                 (A)  at least 17 years of credited service as a peace officer or fire                                   
21       fighter, as those terms are defined in AS 39.35.680; or                                                           
22                 (B)  at least 20 years of credited service as an employee other than an                                 
23       employee described in (A) of this paragraph;                                                                      
24            (4)  employee will be qualified to retire under AS 14.25.110 or AS 39.35.370                                 
25 after receipt of the credit described in (f) of this section; and                                                       
26            (5)  savings to the employer in personal services costs for the employee's                                   
27 position will exceed the costs to the employer for that position within three years after the                           
28 employee is appointed to retirement.                                                                                    
29       (c)  An employer shall file its proposed retirement incentive plan with the                                       
30 commissioner of administration.  The commissioner shall approve the plan if the plan meets                              
31 the requirements of this Act, except that the commissioner may approve a state agency's                                 
01 retirement incentive plan only if the office of management and budget approves the                                      
02 calculation of savings under (b)(5) of this section.  A proposed plan filed under this section                          
03 must                                                                                                                    
04            (1)  identify job classifications of employees, and specific budget or                                       
05 administrative components, eligible to participate in the plan;                                                         
06            (2)  include a reimbursement agreement that                                                                  
07                 (A)  requires the employer, for each employee who retires under the                                     
08       plan, to reimburse the appropriate retirement system, within three years after the end                            
09       of the fiscal year in which the employee is appointed to retirement, in an amount equal                           
10       to the actuarial equivalent of the difference between the benefits the participant                                
11       receives after the addition of the credit under (f) of this section and the amount the                            
12       participant would have received without the credit, less the amount the participant has                           
13       paid on the indebtedness determined under (d) or (e) of this section; and                                         
14                 (B)  provides that contributions from the employer under this section                                   
15       take priority over other obligations of the employer to the maximum extent permitted                              
16       by law.                                                                                                           
17       (d)  A member of the teachers' retirement system who participates in an approved                                  
18 retirement incentive plan under this Act is indebted to that system for an amount calculated                            
19 under this subsection.  The indebtedness is 25.95 percent of the member's actual                                        
20 compensation for the school year in which the member terminates employment, or the                                      
21 calculated school year compensation for a member who works less than the entire school year,                            
22 plus an appropriate share of the administrative costs of the program.  A member may apply                               
23 annual or personal leave to the indebtedness before appointment to retirement.  An                                      
24 outstanding indebtedness at the time a member is appointed to retirement under an approved                              
25 retirement incentive plan requires an actuarial adjustment to the benefits payable to that                              
26 member.                                                                                                                 
27       (e)  A member of the public employees' retirement system who participates in an                                   
28 approved retirement incentive plan under this Act is indebted to that system for an amount                              
29 calculated under this subsection.  The indebtedness is 22-1/2 percent for a peace officer or fire                       
30 fighter, and 20-1/4 percent for other members, of the member's actual annual compensation                               
31 for the year in which the member terminates employment, or the calculated annual                                        
01 compensation for a member who works fewer than 12 months, plus an appropriate share of                                  
02 the administrative costs of the program.  A member may apply annual or personal leave to the                            
03 indebtedness before appointment to retirement.  An outstanding indebtedness at the time a                               
04 member is appointed to retirement under an approved retirement incentive plan requires  an                              
05 actuarial adjustment to the benefits payable to that member.                                                            
06       (f)  An employee who participates in an approved retirement incentive plan under this                             
07 Act receives a credit of three years.  The three years must be applied in the following order                           
08 until exhausted:                                                                                                        
09            (1)  to meet the age or service required for eligibility for normal retirement                               
10 under AS 14.25.110 or AS 39.35.370, as appropriate;                                                                     
11            (2)  to meet the age required for early retirement under AS 14.25.110 or                                     
12 AS 39.35.370, as appropriate;                                                                                           
13            (3)  to reduce the actuarial adjustment required for early retirement under                                  
14 AS 14.25.110 or AS 39.35.370, as appropriate;                                                                           
15            (4)  as years of credited service for calculating retirement benefits.                                       
16       (g)  In this section,                                                                                             
17            (1)  "department" means                                                                                      
18                 (A)  a principal department of the executive branch of state                                            
19       government; an independent state entity that is attached to a principal department of                             
20       the executive branch for administrative purposes but that is not a public organization                            
21       as defined in AS 39.35.680 is part of that department for purposes of this paragraph;                             
22       and                                                                                                               
23                 (B)  the Office of the Governor;                                                                        
24            (2)  "employer" has the meaning given in AS 14.25.220 and AS 39.35.680 and                                   
25 includes a department.                                                                                                  
26    * Sec. 3.  The uncodified law of the State of Alaska is amended by adding a new section to                         
27 read:                                                                                                                   
28       AUTHORIZATION FOR STATE EMPLOYEE RETIREMENT INCENTIVE.  (a)  A                                                    
29 state agency may adopt, and file with the commissioner of administration for approval, a                                
30 proposed retirement incentive plan for its employees.                                                                   
31       (b)  Upon the request of a state agency, the commissioner of administration shall                                 
01 establish one or more periods during which the employees of that state agency who are                                   
02 eligible under sec. 2(b) of this Act to participate in a retirement incentive plan may apply to                         
03 the commissioner of administration to participate in the state agency's approved plan.  The                             
04 periods shall begin not earlier than July 1, 2004, and end not later than June 30, 2007.  The                           
05 periods shall be not less than 30 days and not more than 60 days in duration, and may not                               
06 begin less than 30 days after their establishment.  A state agency is not required to request an                        
07 application period, and may request more than one application period.                                                   
08       (c)  A proposed retirement incentive plan adopted under this section may not permit an                            
09 employee who is the governor, the lieutenant governor, or a commissioner, deputy                                        
10 commissioner, or assistant commissioner of a principal department of the executive branch to                            
11 participate in the plan.                                                                                                
12       (d)  A proposed retirement incentive plan adopted under this section may permit                                   
13 participation only by an employee who is eligible to participate under sec. 2(b) of this Act and                        
14 who                                                                                                                     
15            (1)  has been continuously employed by the state for at least one year before                                
16 the employee applies to participate in the state agency's approved plan;                                                
17            (2)  is a permanent seasonal employee who has been continuously employed                                     
18 by the state in a permanent seasonal position during all of the time in the one year before the                         
19 employee's application to participate in which the position normally is filled;                                         
20            (3)  has a job sharing agreement with a state agency in which two or more                                    
21 employees share a single position identified by a single position control number and in which                           
22 the employee who applies to participate in the plan was continuously employed by the agency                             
23 during the portion of the one year before the employee's application in which the employee                              
24 normally worked under the job sharing agreement; or                                                                     
25            (4)  meets a combination of the requirements of this subsection.                                             
26       (e)  The commissioner of administration may not accept the application of an                                      
27 employee to participate in an approved retirement incentive plan adopted under this section                             
28 unless the employee will be appointed to retirement not later than the first day of the month                           
29 that is six months after the last day of the application period established by the commissioner                         
30 under (b) of this section.  A state agency, in a plan adopted under this section, may set an                            
31 earlier date by which an employee must be appointed to retirement in order to participate in                            
01 the plan.                                                                                                               
02    * Sec. 4.  The uncodified law of the State of Alaska is amended by adding a new section to                         
03 read:                                                                                                                   
04       AUTHORIZATION FOR RETIREMENT INCENTIVE FOR EMPLOYEES OF THE                                                       
05 UNIVERSITY OF ALASKA.  (a)  The Board of Regents of the University of Alaska may                                        
06 adopt, and file with the commissioner of administration for approval, a proposed retirement                             
07 incentive plan for university employees.                                                                                
08       (b)  Upon the request of the Board of Regents, the commissioner of administration                                 
09 shall establish one or more periods during which the employees of the university who are                                
10 eligible under sec. 2(b) of this Act to participate in a retirement incentive plan may apply to                         
11 the commissioner of administration to participate in the university's approved plan.  The                               
12 periods shall begin not earlier than July 1, 2004, and end not later than June 30, 2007.  The                           
13 periods shall be not less than 30 days and not more than 60 days in duration, and may not                               
14 begin less than 30 days after their establishment.  The Board of Regents is not required to                             
15 request an application period, and may request more than one application period.                                        
16       (c)  The commissioner of administration may not accept the application of an                                      
17 employee to participate in an approved retirement incentive plan adopted under this section                             
18 unless the employee will be appointed to retirement not later than the first day of the month                           
19 that is six months after the last day of the application period established by the commissioner                         
20 under (b) of this section.  The Board of Regents, in a plan adopted under this section, may set                         
21 an earlier date by which an employee of the University of Alaska must be appointed to                                   
22 retirement in order to participate in the plan.                                                                         
23       (d)  A participant in the optional university retirement program under AS 14.40.661 -                             
24 14.40.799 who is vested in the public employees' retirement system or the teachers' retirement                          
25 system may participate in a retirement incentive plan for that system if the participant meets                          
26 the other qualifications of this Act.  If a provision of this subsection is inconsistent with                           
27 another provision of law, the provision of this subsection governs.                                                     
28    * Sec. 5.  The uncodified law of the State of Alaska is amended by adding a new section to                         
29 read:                                                                                                                   
30       AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER EMPLOYEES                                                        
31 IN THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM.  (a)  The governing body of a                                               
01 political subdivision of the state or public organization that has elected to participate in the                        
02 public employees' retirement system under AS 39.35.550 - 39.35.650 may adopt, and file with                             
03 the commissioner of administration for approval, a proposed retirement incentive plan for its                           
04 employees.  Upon the request of the governing body, the commissioner of administration shall                            
05 establish one or more periods during which the employees of a political subdivision or public                           
06 organization who are eligible to participate in a retirement incentive plan may apply to the                            
07 commissioner of administration to participate in the approved plan.  The periods shall begin                            
08 not earlier than October 31, 2004, and end not later than June 30, 2007.  The periods shall be                          
09 not less than 30 days and not more than 60 days in duration, and may not begin less than 60                             
10 days after their establishment.  The governing body is not required to request an application                           
11 period, and may request more than one application period.                                                               
12       (b)  The commissioner of administration may not accept the application of an                                      
13 employee to participate in an approved retirement incentive plan adopted under this section                             
14 unless the employee will be appointed to retirement not later than the first day of the month                           
15 that is six months after the last day of the application period established by the commissioner                         
16 under (a) of this section.  The governing body of the political subdivision or public                                   
17 organization, in a plan adopted under this section, may set an earlier date by which an                                 
18 employee must be appointed to retirement in order to participate in the plan.                                           
19    * Sec. 6.  The uncodified law of the State of Alaska is amended by adding a new section to                         
20 read:                                                                                                                   
21       AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER EMPLOYEES                                                        
22 IN THE TEACHERS' RETIREMENT SYSTEM.  (a)  An employer under the teachers'                                               
23 retirement system who is not otherwise covered by secs. 3 or 4 of this Act may adopt, and file                          
24 with the commissioner of administration for approval, a proposed retirement incentive plan                              
25 for its employees.  A plan adopted under this section must provide that the application period                          
26 for participation in the retirement incentive plan is July 1, 2004, through June 30, 2007.                              
27       (b)  The commissioner of administration may not accept the application of an                                      
28 employee to participate in an approved retirement incentive plan adopted under this section                             
29 unless the employee will be appointed to retirement on or before August 1, 2007.  The                                   
30 employer, in a plan adopted under this section, may set an earlier date by which an employee                            
31 must be appointed to retirement in order to participate in the plan.                                                    
01    * Sec. 7.  The uncodified law of the State of Alaska is amended by adding a new section to                         
02 read:                                                                                                                   
03       POLITICAL SUBDIVISION OR PUBLIC ORGANIZATION EMPLOYMENT.  For                                                     
04 purposes of determining the years of service requirements for retirement under AS 14.25.110                             
05 or AS 39.35.370, as appropriate, a vested member who is a state employee and who applies to                             
06 participate in a retirement incentive plan approved under this Act may receive credit for                               
07 employment with a political subdivision or public organization before the political                                     
08 subdivision or organization became an employer under the public employees' retirement                                   
09 system.  The member may not receive credit for those years under this subsection for                                    
10 purposes of determining benefits.  If a provision of this section is inconsistent with any other                        
11 provision of law, the provision of this section governs.                                                                
12    * Sec. 8.  The uncodified law of the State of Alaska is amended by adding a new section to                         
13 read:                                                                                                                   
14       RECOVERY OF EMPLOYER DELINQUENCIES.  To recover a delinquency owed                                                
15 by an employer other than the state under an agreement entered into under sec. 2(c)(2) of this                          
16 Act, the Department of Administration may                                                                               
17            (1)  direct that the amount of the delinquency or a lesser amount be withheld                                
18 from any money payable to the employer by a state department or agency and that the amount                              
19 withheld be credited to the delinquency; and                                                                            
20            (2)  bring an action against the employer.                                                                   
21    * Sec. 9.  The uncodified law of the State of Alaska is amended by adding a new section to                         
22 read:                                                                                                                   
23       STOPPING ENROLLMENT FOR ACTUARIAL REASONS.  The commissioner of                                                   
24 administration may halt further enrollment in any one of the retirement incentive plans                                 
25 approved under sections 3 - 6 of this Act if the commissioner finds that further enrollment in                          
26 any one of the approved plans would have a significant negative effect on the actuarial                                 
27 soundness of the retirement plan of that employer.                                                                      
28    * Sec. 10.  The uncodified law of the State of Alaska is amended by adding a new section to                        
29 read:                                                                                                                   
30       REEMPLOYMENT INDEBTEDNESS; PROHIBITION ON REEMPLOYMENT.                                                           
31 (a) If an individual is reemployed as a member of the public employees' retirement system                               
01 under AS 39.35, the teachers' retirement system under AS 14.25, the judicial retirement                                 
02 system under AS 22.25, or the optional university retirement program under AS 14.40.661 -                               
03 14.40.799 after appointment to retirement under this Act, that individual forfeits the incentive                        
04 credit received under sec. 2(f) of this Act and is indebted to the system under which the                               
05 individual took retirement.  The indebtedness is 110 percent of the amount the individual                               
06 received as a result of participation in a retirement incentive plan under this Act and to which                        
07 the individual would not otherwise have been entitled, including the cost of health insurance.                          
08 The amount that the individual has paid under sec. 2(d) or (e) of this Act will be applied as a                         
09 credit toward the reemployment indebtedness.  Interest on the reemployment indebtedness                                 
10 accrues from the date of reemployment until the date that the individual either is appointed to                         
11 retirement and accepts an actuarial adjustment to the individual's future benefits or repays the                        
12 indebtedness in full.  The rate of interest is that established by regulation for the public                            
13 employees' retirement system by the public employees' retirement board and for the teachers'                            
14 retirement system by the teachers' retirement board.                                                                    
15       (b)  An individual who was appointed to retirement under this Act may not be                                      
16 employed by, or enter into a contract for personal services with, a state agency or the                                 
17 University of Alaska within the three years after the date of appointment to retirement, except                         
18 that                                                                                                                    
19            (1)  the University of Alaska may enter into a personal services contract with                               
20 the individual for teaching or research;                                                                                
21            (2)  the individual may accept employment with the legislature during a                                      
22 legislative session if the employment is on an hourly basis and does not entitle the individual                         
23 to receive retirement, health, or leave benefits;                                                                       
24            (3)  the individual may accept employment with a school district as a substitute                             
25 teacher; and                                                                                                            
26            (4)  an individual who participated in the teachers' retirement system may                                   
27 accept employment with a school district if the employment is on an hourly basis and does not                           
28 entitle the individual to receive retirement, health, or leave benefits.                                                
29       (c)  Notwithstanding the prohibition in (b) of this section, a state agency or the                                
30 University of Alaska may enter into a personal services contract with an individual who was                             
31 appointed to retirement under this Act if the Board of Regents, for the University of Alaska,                           
01 or the commissioner of administration, for a state agency, determines that there is a                                   
02 compelling reason to do so because of the individual's specialized or extensive experience that                         
03 relates to a particular program or project of the state agency or university.                                           
04    * Sec. 11.  The uncodified law of the State of Alaska is amended by adding a new section to                        
05 read:                                                                                                                   
06       OFFICE OF MANAGEMENT AND BUDGET.  (a)  When designating an employee                                               
07 category for participation in a retirement incentive plan under this Act, the executive head of                         
08 the relevant state agency shall describe in detail the expected effect of the plan on the agency's                      
09 personal services cost and operation.  This financial report must be approved by the director                           
10 of the office of management and budget before the commissioner of administration may                                    
11 approve the proposed plan.  The state agency shall report each year to the office of                                    
12 management and budget on the cost of each employee's participation and the effect on the                                
13 agency's personal services cost and operation.                                                                          
14       (b)  The office of management and budget shall submit to the legislature annual                                   
15 reports on the retirement incentive under this Act beginning January 15, 2005, and continuing                           
16 through January 15, 2007, and shall submit a final report January 15, 2008.  Each report must                           
17 provide the information necessary for the legislature to evaluate the effectiveness of the plans                        
18 in achieving their objectives.  The report must include information on the designated                                   
19 employee categories under the plans, including the cost of each plan per participant, the cost                          
20 to the state, the cost to the employee, the annual budgeted amount, by state agency, for the                            
21 incentives, the number of positions deleted or left vacant, and the projected or actual net                             
22 savings over the three-year period.                                                                                     
23    * Sec. 12.  The uncodified law of the State of Alaska is amended by adding a new section to                        
24 read:                                                                                                                   
25       PROGRAM CHANGES.  (a)  An individual employee does not have a vested or                                           
26 contractual right to a benefit under this Act until an agreement is executed with the                                   
27 administrator that specifically authorizes that employee to participate in the retirement                               
28 incentive program under this Act.  The legislature reserves the right to change any aspect of                           
29 the retirement incentive plan as it relates to employees for whom participation agreements                              
30 have not yet been executed with the administrator or with the commissioner of administration.                           
31       (b)  In this section, "administrator" means the administrator of the public employees'                            
01 retirement system for employees who are members of that system, and the administrator of                                
02 the teachers' retirement system for employees who are members of that system.                                           
03    * Sec. 13.  The uncodified law of the State of Alaska is amended by adding a new section to                        
04 read:                                                                                                                   
05       REGULATIONS.  The commissioner of the Department of Administration may adopt                                      
06 regulations under AS 44.62 (Administrative Procedure Act) to implement and interpret this                               
07 Act.                                                                                                                    
08    * Sec. 14.  The uncodified law of the State of Alaska is amended by adding a new section to                        
09 read:                                                                                                                   
10       DEFINITIONS.  (a)  Unless provided otherwise in this Act, the definitions set out in                              
11 AS 14.25.220 apply to provisions in secs. 2 - 10 of this Act that relate to the teachers'                               
12 retirement system and members of the teachers' retirement system.                                                       
13       (b)  Unless provided otherwise in this Act, the definitions set out in AS 39.35.680                               
14 apply to provisions in secs. 2 - 10 of this Act that relate to the public employees' retirement                         
15 system and members of the public employees' retirement system.                                                          
16       (c)  In this Act,                                                                                                 
17            (1)  "office of management and budget" means the office of management and                                    
18 budget in the Office of the Governor;                                                                                   
19            (2)  "public employees' retirement system" means the Public Employees'                                       
20 Retirement System of Alaska (AS 39.35);                                                                                 
21            (3)  "state agency"                                                                                          
22                 (A)  means                                                                                              
23                      (i)  the legislative branch of state government;                                                   
24                      (ii)  a principal department of the executive branch of state                                      
25            government; an independent state entity that is attached to a principal                                      
26            department of the executive branch for administrative purposes but that is not a                             
27            public organization as defined in AS 39.35.680 is part of that department for                                
28            purposes of this clause; and                                                                                 
29                      (iii)  the Office of the Governor;                                                                 
30                 (B)  does not include                                                                                   
31                      (i)  the University of Alaska;                                                                     
01                      (ii)  a political subdivision of the state; or                                                     
02                      (iii)  a public organization as defined in AS 39.35.680;                                           
03            (4)  "teachers' retirement system" means the Teachers' Retirement System of                                  
04 Alaska (AS 14.25).                                                                                                      
05    * Sec. 15.  The uncodified law of the State of Alaska is amended by adding a new section to                        
06 read:                                                                                                                   
07       APPLICABILITY TO EXISTING BENEFICIARIES.  The implementation of a                                                 
08 retirement incentive program under this Act may not impair or diminish benefits to a member                             
09 appointed to retirement before the effective date of this Act.                                                          
10    * Sec. 16.  Sections 1 - 7 of this Act are repealed July 1, 2007.                                                  
11    * Sec. 17.  This Act takes effect immediately under AS 01.10.070(c).