00                            HOUSE BILL NO. 238                                                                          
01 "An Act relating to contribution rates for employers and members in the defined benefit                                 
02 plans of the teachers' retirement system and the public employees' retirement system                                    
03 and to the ad-hoc post-retirement pension adjustment in the teachers' retirement                                        
04 system; requiring insurance plans provided to members of the teachers' retirement                                       
05 system, the judicial retirement system, the public employees' retirement system, and the                                
06 former elected public officials retirement system to provide a list of preferred drugs;                                 
07 relating to defined contribution plans for members of the teachers' retirement system                                   
08 and the public employees' retirement system; and providing for an effective date."                                      
09 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
10    * Section 1.  AS 14.25 is amended by adding a new section to read:                                                 
11               Article 1.  Teachers First Hired before July 1, 2005.                                                 
12            Sec. 14.25.005.  Applicability of AS 14.25.005 - 14.25.012, 14.25.040 -                                    

01       14.25.169, 14.25.173, 14.25.175, and 14.25.220.  The provisions of AS 14.25.005 -                               
02       14.25.012, 14.25.040 - 14.25.169, 14.25.173, 14.25.175, and 14.25.220 apply only to                               
03       members first hired before July 1, 2005.                                                                          
04    * Sec. 2.  AS 14.25.050(a) is amended to read:                                                                     
05            (a)  Except as provided in (c) of this section, beginning January 1, 1991, each                              
06       member shall contribute to the plan [SYSTEM] an amount equal to the percentage                            
07       [8.65 PERCENT] of the member's base salary accrued from July 1 to the following                                   
08       June 30 as determined under AS 14.25.072.  The employer shall deduct the                                      
09       contribution from the member's salary at the end of each payroll period, and the                                  
10       contribution shall be credited by the plan [SYSTEM] to the member contribution                                
11       account.  The contributions shall be deducted from employee compensation before the                               
12       computation of applicable federal taxes and shall be treated as employer contributions                            
13       under 26 U.S.C. 414(h)(2).  A member may not have the option of making the payroll                                
14       deduction directly in cash instead of having the contribution picked up by the                                    
15       employer.                                                                                                         
16    * Sec. 3.  AS 14.25.070 is amended to read:                                                                        
17            Sec. 14.25.070.  Contributions by employer.  An employer shall contribute to                               
18       the plan [SYSTEM] an amount equal to the percentage, as certified by the                                      
19       administrator under AS 14.25.072 [, OF THE SUM TOTAL OF THE BASE                                              
20       SALARIES OF ALL MEMBERS THAT IS REQUIRED IN ADDITION TO                                                           
21       MEMBER CONTRIBUTIONS TO PROVIDE THE BENEFITS OF THIS CHAPTER                                                      
22       TIMES THE SUM TOTAL OF THE BASE SALARIES PAID TO MEMBERS,                                                         
23       INCLUDING ANY ADJUSTMENTS TO CONTRIBUTIONS REQUIRED BY                                                            
24       AS 14.25.173(a), BY THE EMPLOYER].                                                                                
25    * Sec. 4.  AS 14.25 is amended by adding a new section to read:                                                    
26            Sec. 14.25.072.  Contribution rates.  (a)  The board shall annually establish                              
27       the employer and member contribution rates under this section.  The employer and                                  
28       member contribution rates shall be established with the goal of fully funding the                                 
29       normal cost of the plan and paying as much of the past service cost as possible within                            
30       the limitations imposed in this section.  The sum of the employer and member                                      
31       contribution rates may not be less than the normal cost rate.                                                     

01            (b)  Employer and member contribution rates must be equal, subject to (c) of                                 
02       this section.                                                                                                     
03            (c)  Notwithstanding (a) and (b) of this section,                                                            
04                 (1)  the maximum member contribution rate is 14 percent, and the                                        
05       minimum rate is zero percent;                                                                                     
06                 (2)  the minimum employer contribution rate is 11 percent, regardless                                   
07       of the member contribution rate; and                                                                              
08                 (3)  neither the employer contribution rate nor the member contribution                                 
09       rate may increase more than five percentage points annually.                                                      
10            (d)  In this section,                                                                                        
11                 (1)  "accrued liability" means the present value of all member benefits                                 
12       accrued by member service before the valuation date;                                                              
13                 (2)  "actuarially computed rate" is the sum of the normal cost rate and                                 
14       the past service cost rate;                                                                                       
15                 (3)  "employer contribution rate" is that portion of the actuarially                                    
16       computed rate to be contributed by employers;                                                                     
17                 (4)  "member contribution rate" is that portion of the actuarially                                      
18       computed rate to be contributed by members;                                                                       
19                 (5)  "normal cost" means the value of member benefits expected to be                                    
20       earned by active members during the fiscal year following the valuation date;                                     
21                 (6)  "normal cost rate" means the percentage of member salaries                                         
22       required to pay the normal cost during the fiscal year following the valuation date;                              
23                 (7)  "past service cost" means the annual payment to be made over a                                     
24       stipulated number of years to amortize the unfunded liability; in this paragraph,                                 
25       "unfunded liability" means the amount by which the accrued liability exceeds the                                  
26       assets of the fund;                                                                                               
27                 (8)  "past service cost rate" means the percentage of member salaries                                   
28       required to fully pay the annual past service cost;                                                               
29                 (9)  "valuation date" means the beginning of the fiscal year for which                                  
30       the normal cost is determined.                                                                                    
31    * Sec. 5.  AS 14.25.143(a), as that subsection read following amendment by sec. 3, ch. 146,                        

01 SLA 1980, until amended by sec. 12, ch. 106, SLA 1988, is amended to read:                                              
02            (a)  When the administrator determines that the cost of living has increased and                             
03       that the financial condition of the retirement fund permits, the administrator shall                              
04       increase benefit payments to persons receiving benefits under this system.  The value                         
05       of assets of the retirement fund must be equal to or exceed the accrued liability of                          
06       the retirement fund before benefit payments are increased.  In this subsection,                               
07       "accrued liability" means the present value of all member benefits accrued by                                 
08       member service in this system.                                                                                
09    * Sec. 6.  AS 14.25.143(a), as that subsection read following amendment by sec. 12, ch.                            
10 106, SLA 1988, until amended by sec. 12, ch. 97, SLA 1990, is amended to read:                                          
11            (a)  When the administrator determines that the cost of living has increased and                             
12       that the financial condition of the system permits, the administrator shall increase                              
13       benefit payments to persons receiving benefits under this system.  The value of assets                        
14       of the system must be equal or exceed the accrued liability of the system before                              
15       benefit payments are increased.  In this subsection, "accrued liability" means the                            
16       present value of all member benefits accrued by member service in this system.                                
17    * Sec. 7.  AS 14.25.220(37) is amended to read:                                                                    
18                 (37)  "retirement fund" or "fund" means the fund in which the assets of                                 
19       the defined benefit retirement plans [SYSTEM], including income and interest                                  
20       derived from the investment of money, are deposited and held;                                                     
21    * Sec. 8.  AS 14.25.220(41) is amended to read:                                                                    
22                 (41)  "system" means the Teachers' Retirement System of Alaska,                                     
23       which includes all retirement plans in this chapter;                                                          
24    * Sec. 9.  AS 14.25.220 is amended by adding a new paragraph to read:                                              
25                 (46)  "defined benefit retirement plans" means the retirement plans                                     
26       provided to members in AS 14.25.005 - 14.25.012, 14.25.040 - 14.25.169, 14.25.173,                                
27       14.25.175, and 14.25.220.                                                                                         
28    * Sec. 10.  AS 14.25 is amended by adding new sections to read:                                                    
29              Article 2.  Teachers First Hired on or after July 1, 2005.                                             
30            Sec. 14.25.310.  Applicability of AS 14.25.310 - 14.25.495.  The provisions of                             
31       AS 14.25.310 - 14.25.495 apply only to members first hired on or after July 1, 2005.                              

01       For purposes of AS 14.25.310 - 14.25.495, a teacher is considered to be first hired on                            
02       the first day of employment as a teacher.                                                                         
03            Sec. 14.25.320.  Defined contribution retirement plan established; federal                                 
04       qualification requirements.  (a)  A defined contribution retirement plan for teachers                           
05       of the state is created.                                                                                          
06            (b)  The retirement plan established by AS 14.25.310 - 14.25.495 is intended to                              
07       qualify under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified                                  
08       retirement plan established and maintained by the state for its employees, for the                                
09       employees of school districts and regional educational attendance areas in the state,                             
10       and for the employees of other employers whose participation is authorized by                                     
11       AS 14.25.310 - 14.25.495 and who participate in this plan.                                                        
12            (c)  An amendment to AS 14.25.310 - 14.25.495 does not provide a person                                      
13       with a vested right to a benefit if the Internal Revenue Service determines that the                              
14       amendment will result in disqualification of the plan under the Internal Revenue Code.                            
15            Sec. 14.25.330.  Purpose and effective date.  (a)  The purpose of                                          
16       AS 14.25.310 - 14.25.495 is to encourage qualified teachers to enter and remain in                                
17       service with participating employers by establishing a defined contribution retirement                            
18       plan on behalf of the members.                                                                                    
19            (b)  All eligible employees first hired on or after July 1, 2005, shall participate                          
20       in the plan set out in AS 14.25.310 - 14.25.495.                                                                  
21            Sec. 14.25.340.  Contributions by members.  (a)  Each member shall                                         
22       contribute to the plan an amount equal to 11 percent of the member's salary base                                  
23       accrued from July 1 to the following June 30.  The employer shall deduct the                                      
24       contribution from the member's salary at the end of each payroll period, and the                                  
25       contribution shall be credited by the plan to the member contribution account.  The                               
26       contributions shall be deducted from employee compensation before the computation                                 
27       of applicable federal taxes and shall be treated as employer contributions under 26                               
28       U.S.C. 414(h)(2).  A member may not have the option of making the payroll deduction                               
29       directly in cash instead of having the contribution picked up by the employer.                                    
30            (b)  Each member shall make an election within the first 30 days of                                          
31       employment with an employer regarding the salary base upon which the member and                                   

01       employer contribution to the member's contribution account will be calculated.  A                                 
02       member must choose as a salary base for purposes of this section either the member's                              
03       basic salary or the member's total salary.  If a member fails to make an election a                               
04       member's basic salary shall be used as the salary base to calculate member and                                    
05       employer contributions.  A member's salary base may not be changed during the                                     
06       member's employment with the employer.                                                                            
07            (c)  In this section,                                                                                        
08                 (1)  "basic salary" means the total remuneration payable under contract                                 
09       for a full year of membership service, including addenda to the contract;                                         
10                 (2)  "salary base" means either the member's basic salary or total salary                               
11       as determined under (b) of this section; and                                                                      
12                 (3)  "total salary" means the total remuneration paid under contract to a                               
13       member for services rendered during a school year, including cost-of-living                                       
14       differentials, payments for leave that is actually used by the member, the amount by                              
15       which the member's wages are reduced under AS 39.30.150(c), and the amount                                        
16       deferred under an employer-sponsored deferred compensation plan or the tax shelter                                
17       annuity plan approved by the Department of Education and Early Development, but                                   
18       does not include retirement benefits, welfare benefits, per diem, expense allowances,                             
19       workers' compensation payments, or payments for leave not used by the member,                                     
20       whether those leave payments are scheduled payments, lump-sum payments,                                           
21       donations, or cash-ins; compensation paid includes any payment made after June 30 of                              
22       a school year for services rendered before the end of the school year.                                            
23            Sec. 14.25.350.  Contributions by employer.  (a)  An employer shall                                      
24       contribute an amount equal to 11 percent of each member's salary base as provided in                              
25       (b) - (d) of this section.                                                                                        
26            (b)  An employer shall contribute to the member contribution account an                                      
27       amount equal to 5.75 percent of each member's salary base determined under                                        
28       AS 14.25.340 from July 1 to the following June 30.                                                                
29            (c)  An employer shall also contribute an amount equal to 3.75 percent of each                               
30       member's salary base determined under AS 14.25.340 from July 1 to the following                                   
31       June 30 to pay for retiree major medical insurance.  This contribution shall be paid                              

01       into the group health and life benefits fund established by the commissioner of                                   
02       administration under AS 39.30.095 and shall be accounted for in accordance with                                   
03       regulations established by the commissioner.                                                                      
04            (d)  An employer shall also contribute an amount equal to 1.5 percent of each                                
05       member's salary base determined under AS 14.25.340 to each member's health                                        
06       reimbursement account plan under AS 39.30.300.                                                                    
07            Sec. 14.25.360.  Transmittal of contributions.  (a)  All contributions                                     
08       deducted in accordance with AS 14.25.340(a) shall be transmitted to the plan for                                  
09       deposit in the retirement fund not later than 15 days following the close of the payroll                          
10       period, with the final contributions due for any school year transmitted not later than                           
11       July 15.                                                                                                          
12            (b)  The contributions of employers under AS 14.25.350 must be transmitted to                                
13       the plan for deposit in the appropriate fund at the close of each pay period.  If the                             
14       contributions are not submitted within 15 days after the close of each payroll period,                            
15       interest must be assessed on the outstanding contributions at one and one-half times                              
16       the most recent actuarially determined rate of earnings for the plan from the date that                           
17       contributions were originally due.  In addition, the amount of the contributions and                              
18       interest may be deducted by the Department of Education and Early Development                                     
19       from the state funds due the school district and the amount so deducted transmitted to                            
20       the plan for deposit in the retirement fund.  Amounts due from the University of                                  
21       Alaska and interest as prescribed in this section may be deducted by the commissioner                             
22       of administration from any state funds due the University of Alaska and the amount                                
23       deducted transmitted to the administrator for deposit in the retirement fund.                                     
24            Sec. 14.25.370.  Retirement benefits and vesting.  A participating member is                               
25       immediately and fully vested in that member's contributions and in the employer                                   
26       contributions made on that member's behalf to an account under AS 14.25.310 -                                     
27       14.25.495.                                                                                                        
28            Sec. 14.25.380.  Investment of individual accounts.  (a)  The Alaska State                                 
29       Pension Investment Board shall provide a range of investment options and permit a                                 
30       participant to exercise investment control over the participant's assets in the member                            
31       contribution account as provided in this section.  If a participant exercises control over                        

01       the assets in the account, the participant is not considered a fiduciary for any reason on                        
02       the basis of exercising that control.                                                                             
03            (b)  A participant may direct investment of plan funds held in an account                                    
04       among available investment funds in accordance with rules established by the board.                               
05            (c)  To the extent that a member contribution account has been divided as                                    
06       provided in a qualified domestic relations order between participants, each participant                           
07       shall be treated as the holder of a separate individual account for purposes of                                   
08       investment yields, decisions, and transfers under this section.                                                   
09            Sec. 14.25.390.  Distributions.  (a)  A participating member is eligible to                                
10       receive distribution of that person's accumulated balance in the plan upon becoming a                             
11       former participating member.                                                                                      
12            (b)  Upon the death of a participating member or former participating member,                                
13       the accumulated balance of that deceased participant is considered to belong to the                               
14       refund beneficiary, if any, of that deceased participant.  If a valid nomination of refund                        
15       beneficiary is not on file with the board, the board, in a lump sum distribution, shall                           
16       distribute the accumulated balance to a legal representative, if any, of the deceased                             
17       participant's estate.                                                                                             
18            (c)  A former participating member or refund beneficiary may elect one or a                                  
19       combination of several of the following methods of distribution of the accumulated                                
20       balance:                                                                                                          
21                 (1)  a lump sum distribution to the recipient;                                                          
22                 (2)  a lump sum direct rollover to another qualified plan, to the extent                                
23       allowed by federal law;                                                                                           
24                 (3)  periodic distributions, as authorized by the board;                                                
25                 (4)  no current distribution, in which case the accumulated balance                                     
26       must remain in the plan until the former participating member or refund beneficiary                               
27       elects a method or methods of distribution under this section, to the extent allowed by                           
28       federal law.                                                                                                      
29            (d)  If the former participating member's vested account balance is less than                                
30       $5,000, the board shall automatically refund the member's vested account balance                                  
31       upon termination of employment.  The member may waive the refund if the member                                    

01       submits a written statement to the board, within 120 days after termination, requesting                           
02       that the member's vested account balance remain in the plan.                                                      
03            Sec. 14.25.400.  Refund upon termination.  (a)  Except as provided in (b) of                               
04       this section, a terminated member is entitled to a refund of the balance of the member                            
05       contribution account.                                                                                             
06            (b)  A member who is terminated and who is married at the time of application                                
07       for a refund or whose rights to a refund are subject to a qualified domestic relations                            
08       order is entitled to receive a refund of the balance of the member contribution account                           
09       only if the member's present spouse and each person entitled under the order consent                              
10       to the refund in writing on a form provided by the administrator.  The administrator                              
11       may waive written consent from the person entitled under the order if the                                         
12       administrator determines that the person cannot be located or for other reasons                                   
13       established by regulation.  The administrator may waive written consent from the                                  
14       spouse if the administrator determines that                                                                       
15                 (1)  the member was not married to the spouse during any period of the                                  
16       member's employment with an employer;                                                                             
17                 (2)  the spouse has no rights to benefits under AS 14.25.310 -                                          
18       14.25.495 because of the terms of a qualified domestic relations order;                                           
19                 (3)  the spouse cannot be located;                                                                      
20                 (4)  the member and spouse have been married for less than one year                                     
21       and the member establishes that they are not cohabiting; or                                                       
22                 (5)  another reason established by regulation exists.                                                   
23            Sec. 14.25.410.  Rights under qualified domestic relations order.  A former                                
24       spouse shall be treated as a spouse or surviving spouse under AS 14.25.310 -                                      
25       14.25.495 to the extent required by a qualified domestic relations order.  Rights under                           
26       the order do not take effect until the order is filed with the administrator.                                     
27            Sec. 14.25.420.  Rollover distributions and rollover contributions.  (a)  A                                
28       teacher entering the plan may elect, at the time and in the manner prescribed by the                              
29       administrator, to have all or part of a direct rollover distribution from an eligible                             
30       retirement plan owned by the member paid directly into the member's contribution                                  
31       account.                                                                                                          

01            (b)  Rollover contributions do not count as a purchase of membership service                                 
02       for the purpose of determining years of service.                                                                  
03            (c)  A distributee may elect, at the time and in the manner prescribed by the                                
04       administrator, to have all or part of an eligible rollover distribution paid directly to an                       
05       eligible retirement plan specified by the distributee in the direct rollover.                                     
06            (d)  In this section,                                                                                        
07                 (1)  "direct rollover" means the payment of an eligible rollover                                        
08       distribution by the plan to an eligible retirement plan specified by a distributee who is                         
09       eligible to elect a direct rollover;                                                                              
10                 (2)  "distributee" means a member or a beneficiary who is the surviving                                 
11       spouse of the member;                                                                                             
12                 (3)  "eligible retirement plan" means                                                                   
13                      (A)  an individual retirement account described in 26 U.S.C.                                       
14            408(a);                                                                                                      
15                      (B)  an individual retirement annuity defined in 26 U.S.C.                                         
16            408(b);                                                                                                      
17                      (C)  an annuity plan described in 26 U.S.C. 403(a);                                                
18                      (D)  a qualified trust described in 26 U.S.C. 401(a);                                              
19                      (E)  an annuity plan described in 26 U.S.C. 403(b); or                                             
20                      (F)  a governmental plan described in 26 U.S.C. 457(b);                                            
21                 (4)  "eligible rollover distribution" means a distribution of all or part of                            
22       a total account to a distributee, except for                                                                      
23                      (A)  a distribution that is one of a series of substantially equal                                 
24            installments payable not less frequently than annually over the life expectancy                              
25            of the distributee or the joint and last survivor life expectancy of the distributee                         
26            and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9);                             
27                      (B)  a distribution that is one of a series of substantially equal                                 
28            installments payable not less frequently than annually over a specified period                               
29            of 10 years or more;                                                                                         
30                      (C)  a distribution that is required under 26 U.S.C. 401(a)(9);                                    
31                      (D)  the portion of any distribution that is not includable in                                     

01            gross income;                                                                                                
02                      (E)  a distribution that is on account of hardship; and                                            
03                      (F)  other distributions that are reasonably expected to total less                                
04            than $200 during a year.                                                                                     
05            Sec. 14.25.430.  Distribution requirements.  (a)  The entire interest of a                                 
06       member must be distributed or must begin to be distributed not later than the member's                            
07       required beginning date.                                                                                          
08            (b)  If a member dies after the distribution of the member's interest has begun                              
09       but before the distribution has been completed, the remaining portion of the interest                             
10       shall continue to be distributed at least as rapidly as under the method of distribution                          
11       being used before the member's death.                                                                             
12            (c)  If a member has made a distribution election and dies before the                                        
13       distribution of the member's interest begins, distribution of the member's entire interest                        
14       shall be completed by December 31 of the calendar year containing the fifth                                       
15       anniversary of the member's death.  However, if any portion of the member's interest                              
16       is payable to a designated beneficiary, distributions may be made over the life of the                            
17       designated beneficiary or over a period certain not greater than the life expectancy of                           
18       the designated beneficiary, commencing on or before December 31 of the calendar                                   
19       year immediately following the calendar year in which the member died, and, if the                                
20       designated beneficiary is the member's surviving spouse, the date distributions are                               
21       required to begin may not be earlier than the later of December 31 of the calendar year                           
22       (1) immediately following the calendar year in which the member died, or (2) in which                             
23       the member would have attained 70 1/2 years of age, whichever is earlier.  If the                                 
24       surviving spouse dies after the member but before payments to the spouse have begun,                              
25       the provisions of this subsection apply as if the surviving spouse were the member.                               
26       An amount paid to a child of the member will be treated as if it were paid to the                                 
27       surviving spouse if the amount becomes payable to the surviving spouse when the                                   
28       child reaches the age of majority.                                                                                
29            (d)  If a member has not made a distribution election before the member's                                    
30       death, the member's designated beneficiary must elect the method of distribution not                              
31       later than December 31 of the calendar year (1) in which distributions would be                                   

01       required to begin under this section, or (2) that contains the fifth anniversary of the                           
02       date of death of the member, whichever is earlier.  If the member does not have a                                 
03       designated beneficiary or if the designated beneficiary does not elect a method of                                
04       distribution, distribution of the member's entire interest must be completed by                                   
05       December 31 of the calendar year containing the fifth anniversary of the member's                                 
06       death.                                                                                                            
07            (e)  For purposes of (c) of this section, distribution of a member's interest is                             
08       considered to begin (1) on the member's required beginning date, or (2) if the                                    
09       designated beneficiary is the member's surviving spouse and the surviving spouse dies                             
10       after the member but before payments to the spouse have begun, on the date                                        
11       distribution is required to begin to the surviving spouse.  If distribution in the form of                        
12       an annuity irrevocably commences to the member before the required beginning date,                                
13       the date distribution is considered to begin is the date that the distribution actually                           
14       commences.                                                                                                        
15            (f)  Notwithstanding any contrary provisions of AS 14.25.310 - 14.25.495, the                                
16       requirements of this section apply to all distributions of a member's interest and take                           
17       precedence over any inconsistent provisions of AS 14.25.310 - 14.25.495.                                          
18            (g)  All distributions required under this section are determined and made in                                
19       accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute,                                   
20       including any minimum distribution incidental benefit requirement.                                                
21            (h)  In this section,                                                                                        
22                 (1)  "designated beneficiary" means the individual who is designated as                                 
23       the beneficiary under the plan in accordance with 26 U.S.C. 401(a)(9) and regulations                             
24       adopted under that statute;                                                                                       
25                 (2)  "required beginning date" means the first day of April of the                                      
26       calendar year following the calendar year in which the member either attains 70 1/2                               
27       years of age or actually retires, whichever is later.                                                             
28            Sec. 14.25.440.  Designation of beneficiary.  (a)  Each member shall                                       
29       designate the beneficiary or beneficiaries to whom the administrator shall distribute                             
30       benefits payable under AS 14.25.310 - 14.25.495 as a consequence of the member's                                  
31       death. Notwithstanding a previous designation of beneficiary, a person who is the                                 

01       spouse of a member at the time of the member's death automatically becomes the                                    
02       designated beneficiary if the spouse was married to the member during part of the                                 
03       member's employment for an employer                                                                               
04                 (1)  except to the extent a qualified domestic relations order filed with                               
05       the administrator provides for payment to a former spouse or other dependent of the                               
06       member; or                                                                                                        
07                 (2)  unless the member filed a revocation of beneficiary accompanied                                    
08       by a written consent to the revocation from the present spouse and each person entitled                           
09       under the order; however, consent of the present spouse is not required if the member                             
10       and the present spouse had been married for less than one year on the date of the                                 
11       member's death and if the member established when filing the revocation that the                                  
12       member and the present spouse were not cohabiting.                                                                
13            (b)  Except as provided in (a) of this section, the member may change or                                     
14       revoke the designation without notice to the beneficiary or beneficiaries at any time.                            
15       If a member designates more than one beneficiary, each shares equally unless the                                  
16       member specifies a different allocation or preference.  The designation of a                                      
17       beneficiary, a change or revocation of a beneficiary, and a consent to revocation of a                            
18       beneficiary shall be made on a form provided by the administrator and is not effective                            
19       until filed with the administrator.                                                                               
20            (c)  If a member fails to designate a beneficiary, or if no designated beneficiary                           
21       survives the member, the death benefit shall be paid                                                              
22                 (1)  to the surviving spouse or, if there is none surviving;                                            
23                 (2)  to the surviving children in equal parts or, if there are none                                     
24       surviving;                                                                                                        
25                 (3)  to the surviving parents in equal parts or, if there are none                                      
26       surviving;                                                                                                        
27                 (4)  to the estate.                                                                                     
28            (d)  A person claiming entitlement to benefits payable under AS 14.25.310 -                                  
29       14.25.495 as a consequence of a member's death shall provide the administrator with a                             
30       marriage certificate, divorce or dissolution judgment, or other evidence of entitlement.                          
31       Documents establishing entitlement may be filed with the administrator immediately                                

01       after a change in the member's marital status.  If the administrator does not receive                             
02       notification of a claim before the date 60 days after the member's death, the person                              
03       claiming entitlement is not entitled to receive from the division of retirement and                               
04       benefits any benefit already paid by the administrator.                                                           
05            Sec. 14.25.450.  Adjustments.  (a)  When a change or error is made in the                                  
06       records maintained by the plan or in the contributions made on behalf of an employee                              
07       or an error is made in computing a benefit, and, as a result, a teacher or member or                              
08       beneficiary is entitled to receive from the plan more or less than the teacher or member                          
09       or beneficiary would have been entitled to receive had the records or contributions                               
10       been correct or had the error not been made, the records, contributions, or error shall                           
11       be corrected.  An adjustment to contributions shall be picked up by the employer in                               
12       accordance with AS 14.25.360 or treated as an adjustment to the employer's                                        
13       contributions in accordance with this section, depending upon the nature of the                                   
14       adjustment.  If no future benefit payments are due, a person who was paid any amount                              
15       to which the person was not entitled is liable for repayment of that amount, and a                                
16       person who was not paid the full amount to which the person was entitled shall be paid                            
17       that amount.                                                                                                      
18            (b)  An adjustment that requires the recovery of benefits may not be made                                    
19       under this section if                                                                                             
20                 (1)  the incorrect benefit was first paid two years or more before the                                  
21       member or beneficiary was notified of the error;                                                                  
22                 (2)  the error was not the result of erroneous information supplied by                                  
23       the member or beneficiary; and                                                                                    
24                 (3)  the member or beneficiary did not have reasonable grounds to                                       
25       believe that the amount of the benefit was in error.                                                              
26            (c)  At each regularly scheduled meeting of the Alaska Teachers' Retirement                                  
27       Board, the administrator shall report to the board on all situations since the                                    
28       administrator's last report in which an adjustment has been prohibited under (b) of this                          
29       section.  If the board finds that there is reason to believe that one or more of the                              
30       conditions set out in (b) of this section have not been met, the administrator shall                              
31       notify the member or beneficiary that an adjustment will be made to recover the                                   

01       overpayment.  A member or beneficiary who receives notice of adjustment under this                                
02       subsection may appeal to the board for a waiver of the adjustment under                                           
03       AS 14.25.460.  An adjustment that requires the repayment of benefits may not be                                   
04       required while the appeal is pending.                                                                             
05            (d)  The plan shall pay interest on amounts owed to a member or beneficiary.                                 
06       Interest shall be charged on amounts owed to the plan by a member or beneficiary if                               
07       the amount owed is the result of erroneous information supplied by the member or                                  
08       beneficiary, or the member or beneficiary had reasonable grounds to believe the                                   
09       amount of the benefit was in error.  The interest paid under this subsection is at the                            
10       rate established by regulation for indebtedness contributions owed.  Interest accrues                             
11       from the date on which the correct payment was due and continues until an actuarial                               
12       adjustment to the benefit is effective or the amount owed is paid.  Accrued interest for                          
13       periods less than 60 days or in amounts less than the limit established in regulation for                         
14       writing off small indebtedness and refund balances may not be collected or paid under                             
15       this subsection.                                                                                                  
16            Sec. 14.25.460.  Waiver of adjustments.  (a)  Upon appeal by an affected                                   
17       member or beneficiary under (b) of this section, the board may waive an adjustment or                             
18       a portion of an adjustment made under AS 14.25.450 if, in the opinion of the board,                               
19                 (1)  the adjustment or portion of the adjustment will cause undue                                       
20       hardship to the member or beneficiary;                                                                            
21                 (2)  the adjustment was not the result of erroneous information supplied                                
22       by the member or beneficiary;                                                                                     
23                 (3)  before the adjustment was made, the member or beneficiary                                          
24       received confirmation from the administrator that the member's or beneficiary's                                   
25       records were correct; and                                                                                         
26                 (4)  the member or beneficiary had no reasonable grounds to believe                                     
27       the records were incorrect before the adjustment was made.                                                        
28            (b)  In order to obtain consideration of a waiver under this section, the affected                           
29       member or beneficiary must appeal to the board in writing within 30 days after receipt                            
30       of notice that the records have been adjusted.  The ruling of the board shall be in                               
31       writing.                                                                                                          

01            (c)  The board may conduct a hearing on an appeal under this section.                                        
02            (d)  The board may impose conditions on granting a waiver that it considers                                  
03       equitable.  These conditions may include requiring the member or beneficiary to make                              
04       additional contributions to the plan.                                                                             
05            (e)  The board may reconsider a ruling under this section upon request of the                                
06       member or beneficiary or the administrator if the request is received within 30 days                              
07       after the initial ruling.  Any modification of the initial ruling must be made within 30                          
08       days after receipt of a request for reconsideration.                                                              
09            Sec. 14.25.470.  Retirement.  (a)  In order to obtain medical benefits under                               
10       AS 14.25.480 and access to the health reimbursement account plan under                                            
11       AS 39.30.300, a member must retire directly from the plan.  A member is eligible to                               
12       retire from the plan if the member has been an active member for at least 12 months                               
13       before application for retirement and                                                                             
14                 (1)  the member has at least 30 years of service; or                                                    
15                 (2)  the member reaches the normal retirement age and has at least 10                                   
16       years of service.                                                                                                 
17            (b)  The normal retirement age is 60 years of age; however, whenever the                                     
18       board adopts a new table of actuarial factors, if those factors include an increase in life                       
19       expectancy, the normal retirement age shall be increased by the same number of years                              
20       or portions of years as the increase in life expectancy from the previously adopted                               
21       table of actuarial factors.                                                                                       
22            (c)  A member must apply to the administrator for appointment to retirement.                                 
23       Application shall be made on forms and in the manner prescribed by the administrator.                             
24            (d)  A member who continues in the employ of the employer after reaching                                     
25       normal retirement age shall continue to participate in the plan and to have                                       
26       contributions allocated to the member's account.                                                                  
27            Sec. 14.25.480.  Medical benefits.  (a)  The medical benefits available to                                 
28       eligible persons are access to the retiree major medical insurance plan and to the                                
29       health reimbursement account.  Access to the retiree major medical insurance plan                                 
30       means that an eligible person may not be denied insurance coverage except for failure                             
31       to pay the required premium.                                                                                      

01            (b)  The following persons are eligible for the retiree major medical insurance                              
02       plan provided under this section and the health reimbursement account:                                            
03                 (1)  a member with at least 30 years of service and who retires directly                                
04       from the plan;                                                                                                    
05                 (2)  the surviving spouse of a member who elected coverage under (1)                                    
06       of this subsection;                                                                                               
07                 (3)  a member who reaches the normal retirement age as provided in                                      
08       AS 14.25.470, has at least 10 years of service, and retires directly from the plan;                               
09                 (4)  the surviving spouse of a member who elected coverage under (3)                                    
10       of this subsection.                                                                                               
11            (c)  Retiree major medical insurance plan coverage elected by an eligible                                    
12       member under this section covers the eligible member, the spouse of the eligible                                  
13       member, and the dependent children of the eligible member.                                                        
14            (d)  Retiree major medical insurance plan coverage elected by a surviving                                    
15       spouse of a eligible member under this section covers the surviving spouse and the                                
16       dependent children of the surviving spouse.                                                                       
17            (e)  Major medical insurance coverage takes effect on the first day of the                                   
18       month following the date of the election and stops when the person who elects                                     
19       coverage under (b) of this section dies or fails to make a required premium payment.                              
20            (f)  The coverage for persons who are eligible for Medicare is the same as that                              
21       available for persons who are not yet eligible for Medicare.  The benefits payable to                             
22       those Medicare eligible persons supplement any benefits provided under the Medicare                               
23       program.                                                                                                          
24            (g)  The medical and optional insurance premiums owed by the person who                                      
25       elects coverage under (b) of this section shall be deducted from the health                                       
26       reimbursement account.  If the amount of the health reimbursement account becomes                                 
27       insufficient to pay the premiums, the person who elects coverage under (a) of this                                
28       section shall pay the premiums directly.                                                                          
29            (h)  The portion of the cost of premiums payable by the employee for retiree                                 
30       major medical insurance coverage for an eligible member or surviving spouse who is                                
31                 (1)  younger than the normal retirement age set in AS 14.25.470 is the                                  

01       amount equal to the full monthly group premium for retiree major medical insurance                                
02       coverage;                                                                                                         
03                 (2)  the normal retirement age set in AS 14.25.470 or older is the                                      
04       following percentage of the premium amount established for retirees who are the                                   
05       normal retirement age or older:  70 percent if the member had 10 years of service; for                            
06       each additional year of service after the member's tenth year of service, the cost of                             
07       premiums decreases by three percentage points; however, the minimum employee                                      
08       portion of the premiums is 10 percent if the member had 30 or more years of service.                              
09            (i)  The eligibility for and cost of premiums for retiree major medical insurance                            
10       coverage for an alternate payee under a qualified domestic relations order shall be                               
11       determined based on the years of service of the member to which the alternate payee is                            
12       entitled under the order.                                                                                         
13            (j)  The monthly group premiums for retiree major medical insurance coverage                                 
14       are established by the administrator in accordance with AS 39.30.095.  Nothing in                                 
15       AS 14.25.310 - 14.25.495 guarantees a person who elects coverage under (a) of this                                
16       section a monthly group premium rate for retiree major medical insurance coverage                                 
17       other than the premium in effect for the month in which the premium is due for                                    
18       coverage for that month.                                                                                          
19            (k)  In this section,                                                                                        
20                 (1)  "health reimbursement account" means the plan established in                                       
21       AS 39.30.300;                                                                                                     
22                 (2)  "retires directly from the plan" means that the member is an active                                
23       member at the time that the member applies to the administrator for appointment to                                
24       retirement and that the member continues as an active member up through the day                                   
25       before the day the member is appointed to retirement.                                                             
26            Sec. 14.25.495.  Definitions.  In AS 14.25.310 - 14.25.495, unless the context                             
27       requires otherwise,                                                                                               
28                 (1)  "administrator" has the meaning given in AS 14.25.220;                                             
29                 (2)  "beneficiary" has the meaning given in AS 14.25.220;                                               
30                 (3)  "board" has the meaning given in AS 14.25.220;                                                     
31                 (4)  "compensation" has the meaning given in AS 14.25.220;                                              

01                 (5)  "employer" has the meaning given in AS 14.25.220;                                                  
02                 (6)  "former participating member" means a terminated member;                                           
03                 (7)  "fund" or "retirement fund" means the assets of the defined                                        
04       contribution plan established in AS 14.25.310 - 14.25.495;                                                        
05                 (8)  "Internal Revenue Code" has the meaning given in AS 14.25.220;                                     
06                 (9)  "member" has the meaning given "teacher" in AS 14.25.220;                                          
07                 (10)  "member contribution account" means the total maintained by the                                   
08       plan of the member's mandatory contributions, employer contributions on behalf of the                             
09       employee, indebtedness principal and interest payments, interest credited to each of                              
10       those accounts, and adjustments to the account in accordance with AS 14.25.450;                                   
11                 (11)  "qualified domestic relations order" has the meaning given in                                     
12       AS 14.25.220;                                                                                                     
13                 (12)  "school year" has the meaning given in AS 14.25.220;                                              
14                 (13)  "teacher" has the meaning given in AS 14.25.220;                                                  
15                 (14)  "terminated" means a person no longer employed by an employer                                     
16       participating in the plan;                                                                                        
17                 (15)  "year of service" has the meaning given in AS 14.25.220.                                          
18    * Sec. 11.  AS 14.40.671(e) is amended to read:                                                                    
19            (e)  An employee whose rights to transfer assets out of a state retirement                                   
20       system are subject to a qualified domestic relations order is entitled to transfer assets                         
21       from the state retirement system to the program only if the requirements for receiving                            
22       a refund under AS 14.25.150(b), 14.25.400, [OR] AS 39.35.200(c), or 39.35.790, as                         
23       appropriate, are met.                                                                                             
24    * Sec. 12.  AS 39.30.090(a) is amended to read:                                                                    
25            (a)  The Department of Administration may obtain a policy or policies of group                               
26       insurance covering state employees, persons entitled to coverage under AS 14.25.168,                              
27       14.25.480, AS 22.25.090, AS 39.35.535, 39.35.870, or former AS 39.37.145,                                 
28       employees of other participating governmental units, or persons entitled to coverage                              
29       under AS 23.15.136, subject to the following conditions:                                                          
30                 (1)  A group insurance policy must                                                                  
31                      (A)  [SHALL] provide one or more of the following benefits:                                    

01            life insurance, accidental death and dismemberment insurance, weekly                                         
02            indemnity insurance, hospital expense insurance, surgical expense insurance,                                 
03            dental expense insurance, audiovisual insurance, or other medical care                                       
04            insurance; and                                                                                           
05                      (B)  require the insurance plan to provide a preferred drug                                    
06            list or formulary and must provide that beneficiaries use the appropriate                                
07            medication on the preferred drug list or pay the difference in cost between                              
08            the medication listed on the preferred drug list and the cost of a                                       
09            nonformulary medication; however, if a medication is not on the                                          
10            preferred drug list as a generic or nongeneric drug, the insurance plan                                  
11            shall cover the cost of the medication.  For purposes of this subparagraph,                              
12            a nonformulary medication is one that is not listed on the formulary, such                               
13            as a nongeneric form of the medication when a generic form of the                                        
14            medication is in the formulary.                                                                          
15                 (2)  Each eligible employee of the state, the spouse and the unmarried                                  
16       children chiefly dependent on the eligible employee for support, and each eligible                                
17       employee of another participating governmental unit shall be covered by the group                                 
18       policy, unless exempt under regulations adopted by the commissioner of                                            
19       administration.                                                                                                   
20                 (3)  A governmental unit may participate under a group policy if                                        
21                      (A)  its governing body adopts a resolution authorizing                                            
22            participation, and payment of required premiums;                                                             
23                      (B)  a certified copy of the resolution is filed with the                                          
24            Department of Administration; and                                                                            
25                      (C)  the commissioner of administration approves the                                               
26            participation in writing.                                                                                    
27                 (4)  In procuring a policy of group health or group life insurance as                                   
28       provided under this section or excess loss insurance as provided in AS 39.30.091, the                             
29       Department of Administration shall comply with the dual choice requirements of                                    
30       AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to                                 
31       transact business in the state under AS 21.09, a hospital or medical service corporation                          

01       authorized to transact business in this state under AS 21.87, or a health maintenance                             
02       organization authorized to operate in this state under AS 21.86.  An excess loss                                  
03       insurance policy may be obtained from a life or health insurer authorized to transact                             
04       business in this state under AS 21.09 or from a hospital or medical service corporation                           
05       authorized to transact business in this state under AS 21.87.                                                     
06                 (5)  The Department of Administration shall make available bid                                          
07       specifications for desired insurance benefits or for administration of benefit claims and                         
08       payments to (A) all insurance carriers authorized to transact business in this state                              
09       under AS 21.09 and all hospital or medical service corporations authorized to transact                            
10       business under AS 21.87 who are qualified to provide the desired benefits; and (B) to                             
11       insurance carriers authorized to transact business in this state under AS 21.09, hospital                         
12       or medical service corporations authorized to transact business under AS 21.87, and                               
13       third-party administrators licensed to transact business in this state and qualified to                           
14       provide administrative services.  The specifications shall be made available at least                             
15       once every five years.  The lowest responsible bid submitted by an insurance carrier,                             
16       hospital or medical service corporation, or third-party administrator with adequate                               
17       servicing facilities shall govern selection of a carrier, hospital or medical service                             
18       corporation, or third-party administrator under this section or the selection of an                               
19       insurance carrier or a hospital or medical service corporation to provide excess loss                             
20       insurance as provided in AS 39.30.091.                                                                            
21                 (6)  If the aggregate of dividends payable under the group insurance                                    
22       policy exceeds the governmental unit's share of the premium, the excess shall be                                  
23       applied by the governmental unit for the sole benefit of the employees.                                           
24                 (7)  A person receiving benefits under AS 14.25.110, AS 22.25,                                          
25       AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in                                 
26       effect under this section at the time of termination of employment with the state or                              
27       participating governmental unit.                                                                                  
28                 (8)  A person electing to have insurance under (7) of this subsection                                   
29       shall pay the cost of this insurance.                                                                             
30                 (9)  For each permanent part-time employee electing coverage under                                      
31       this section, the state shall contribute one-half the state contribution rate for permanent                       

01       full-time state employees, and the permanent part-time employee shall contribute the                              
02       other one-half.                                                                                                   
03                 (10)  A person receiving benefits under AS 14.25, AS 22.25, AS 39.35,                                   
04       or former AS 39.37 may obtain auditory, visual, and dental insurance for that person                              
05       and eligible dependents under this section.  The level of coverage for persons over 65                            
06       shall be the same as that available before reaching age 65 except that the benefits                               
07       payable shall be supplemental to any benefits provided under the federal old age,                                 
08       survivors, and disability insurance program.  A person electing to have insurance                                 
09       under this paragraph shall pay the cost of the insurance.  The commissioner of                                    
10       administration shall adopt regulations implementing this paragraph.                                               
11                 (11)  A person receiving benefits under AS 14.25, AS 22.25, AS 39.35,                                   
12       or former AS  39.37 may obtain long-term care insurance for that person and eligible                              
13       dependents under this section.  A person who elects insurance under this paragraph                                
14       shall pay the cost of the insurance premium.  The commissioner of administration                                  
15       shall adopt regulations to implement this paragraph.                                                              
16                 (12)  Each licensee holding a current operating agreement for a vending                                 
17       facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that                                 
18       applies to governmental units other than the state.                                                               
19    * Sec. 13.  AS 39.30 is amended by adding new sections to read:                                                    
20       Article 5.  State of Alaska Teachers' and Public Employees' Retiree Health                                      
21                       Reimbursement Account Plan.                                                                     
22            Sec. 39.30.300.  State of Alaska Teachers' and Public Employees' Retiree                                   
23       Health Reimbursement Account Plan established.  The State of Alaska Teachers'                                   
24       and Public Employees' Retiree Health Reimbursement Account Plan is established for                              
25       teachers and teachers' spouses and dependants who first become members of the                                     
26       defined contribution plan under AS 14.25.310 - 14.25.495 on or after July 1, 2005, and                            
27       members and spouses and dependents of members of the state, political subdivisions                                
28       of the state, and public organizations of the state who first become members of the                               
29       defined contribution plan under AS 39.35.700 - 39.35.895 on or after July 1, 2005.                                
30            Sec. 39.30.310.  Purpose and effective date.  (a)  The purpose of the plan is to                           
31       allow medical care expenses to be reimbursed from individual savings accounts                                   

01       established for qualified participants.                                                                           
02            (b)  The plan becomes effective July 1, 2005, at which time contributions by                                 
03       employers begin.                                                                                                  
04            Sec. 39.30.320.  Attorney general.  The attorney general of the state is the                               
05       legal counsel for the plan and shall advise the administrator and represent the plan in a                         
06       legal proceeding.                                                                                                 
07            Sec. 39.30.330.  Administrator.  The commissioner of administration or the                                 
08       commissioner's designee is the administrator of the plan.                                                         
09            Sec. 39.30.340.  Powers and duties of the administrator; fund.  The                                        
10       administrator shall establish a teachers' and public employees' retiree health                                    
11       reimbursement account plan trust fund in which the assets of the plan shall be                                    
12       deposited and held.  The administrator has the same powers and duties with regard to                              
13       the plan and the trust fund as provided in AS 14.25.020.                                                        
14            Sec. 39.30.350.  Employer contribution fund.  The fund established under                                   
15       AS 39.30.340 is an employer contribution fund.  The value of the fund reflects                                    
16       employer contributions, expenses, and investment gains and losses.  Employee                                      
17       contributions to the fund are not permitted.                                                                    
18            Sec. 39.30.360.  Management and investment of the fund.  The Alaska State                                  
19       Pension Investment Board is the fiduciary of the fund and has the same powers and                                 
20       duties under this section in regard to the fund as are provided under AS 37.10.220.                               
21            Sec. 39.30.370.  Termination of employment.  A person who terminates                                       
22       employment before appointment to normal retirement loses any right to the                                         
23       contributions made on behalf of the person to the teachers' and public employees'                                 
24       retiree health reimbursement account trust fund.  If a person returns to employment                               
25       with a participating employer, the person's account balance shall be restored in the                              
26       amount recorded on the date of termination from the trust, without interest or other                              
27       adjustment.                                                                                                       
28            Sec. 39.30.380.  Eligibility and enrollment.  A qualified participant is eligible                          
29       for reimbursement from the appropriate individual account established for a member                                
30       under the plan when the member becomes eligible for medical benefits under                                        
31       AS 14.25.480 or AS 39.35.870.  The administrator shall enroll a participant in the plan                           

01       upon receipt of the member's request for appointment to retirement.                                               
02            Sec. 39.30.390.  Benefits payable from the individual account.  (a)  The                                   
03       administrator shall pay the cost of monthly premiums for retiree major medical                                    
04       insurance on behalf of a participant if the participant elected retiree major medical                             
05       insurance under AS 14.25.480 or AS 39.35.870.                                                                     
06            (b)  Upon application of a participant, the administrator shall reimburse to a                               
07       participant the costs for medical care expenses as defined in 26 U.S.C. 213(d).                                   
08            (c)  When the member's individual account balance is exhausted, the insurance                                
09       premium payments under (a) of this section and the reimbursement of medical care                                  
10       expenses under (b) of this section end.                                                                           
11            (d)  If a participant dies before exhausting the participant's individual account,                           
12       the surviving spouse and the surviving spouse's dependent children are eligible to be                             
13       reimbursed for medical care expenses as defined in 26 U.S.C. 213(d) until the                                     
14       individual account is exhausted.  If any amount remains in an individual account after                            
15       the death of the surviving spouse and the death or nondependency of the surviving                                 
16       spouse's dependent children, the account balance shall revert to the trust.                                       
17            Sec. 39.30.400.  Exemption from taxation and process.  (a)  Contributions                                  
18       and other amounts held in the plan on behalf of a member or other person who is or                                
19       may become eligible for benefits under the plan may be used only to reimburse                                     
20       eligible medical expenses, are exempt from Alaska state and municipal taxes, and are                              
21       not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,                         
22       or charge of any kind, either voluntary or involuntary, before they are received by the                           
23       person entitled to the amount under the terms of the plan.  Any attempt to anticipate,                            
24       alienate, sell, transfer, assign, pledge, encumber, charge, or otherwise dispose of any                           
25       right to amounts accrued in the plan is void.  However, a member's right to receive                               
26       benefits may be assigned                                                                                          
27                 (1)  under a qualified domestic relations order; or                                                     
28                 (2)  to a trust or similar legal device that meets the requirements for a                               
29       Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4).                                        
30            (b)  Notwithstanding AS 09.38.065, contributions and other amounts held in                                   
31       the plan and benefits payable under this plan are exempt from garnishment, execution,                             

01       or levy.                                                                                                          
02            Sec. 39.30.410.  Amendment and termination of plan.  (a)  The state has the                              
03       right to amend the plan at any time and from time to time, in whole or in part,                                   
04       including the right to make retroactive amendments referred to in 26 U.S.C. 401(b).                               
05            (b)  The plan administrator may not modify or amend the plan retroactively in                                
06       such a manner as to reduce the benefits of any member accrued to date under the plan                              
07       by reason of contributions made before the modification or amendment except to the                                
08       extent that the reduction is permitted by the Internal Revenue Code.                                              
09            (c)  The state may, in its discretion, terminate the plan in whole or part at any                            
10       time without liability for the termination.  If the plan is terminated, all investments                           
11       remain in force until all individual accounts have been completely distributed under                              
12       the plan, and, after all plan liabilities are satisfied, excess assets revert to the employer.                    
13            (d)  Any contribution made by an employer to the plan because of a mistake of                                
14       fact must be returned to the employer by the administrator within one year after the                              
15       contribution or discovery, whichever is later.                                                                    
16            Sec. 39.30.420.  Exclusive benefit.  (a)  The corpus or income of the assets                               
17       held in trust as required by the plan may not be diverted or used for other than the                              
18       exclusive benefit of the participants.                                                                            
19            (b)  If plan benefits are provided through the distribution of annuity or                                    
20       insurance contracts, any refunds or credits in excess of plan benefits due to dividends,                          
21       earnings, or other experience rating credits, or surrender or cancellation credits, shall                         
22       be paid to the trust fund.                                                                                        
23            (c)  The assets of the plan may not be used to pay premiums or contributions of                              
24       the employer under another plan maintained by the employer.                                                       
25            Sec. 39.30.495.  Definitions.  Unless the context requires otherwise, in                                   
26       AS 39.30.300 - 39.30.495,                                                                                         
27                 (1)  "administrator" means the commissioner of administration or the                                  
28       commissioner's designee;                                                                                          
29                 (2)  "board" means the Alaska State Pension Investment Board                                            
30       established under AS 37.10.210;                                                                                   
31                 (3)  "dependent child" has the meaning given in AS 14.25.220;                                           

01                 (4)  "employer" has the meaning given in AS 14.25.495 for employers                                     
02       of teachers in the defined contribution plan established in AS 14.25.310 - 14.25.495                              
03       and has the meaning given in AS 39.35.895 for employers of public employees in the                                
04       defined contribution plan established in AS 39.35.700 - 39.35.895;                                                
05                 (5)  "fund" means the assets of the teachers' and public employees'                                     
06       retiree health reimbursement account plan trust fund;                                                             
07                 (6)  "individual account" means the record established by the                                           
08       administrator for individual employees under the teachers' and public employees'                                  
09       retiree health reimbursement account plan;                                                                        
10                 (7)  "member" means a member of the teachers' retirement system                                       
11       defined contribution plan in AS 14.25.310 - 14.25.495 or a member of the public                                   
12       employees' retirement plan in AS 39.35.700 - 39.35.895;                                                           
13                 (8)  "participant" means a member, spouse of a member, dependent                                        
14       child of a member, dependent child of a spouse of a member, or former spouse under a                              
15       qualified domestic relations order;                                                                               
16                 (9)  "qualified domestic relations order" has the meaning given in                                      
17       AS 14.25.495.                                                                                                     
18    * Sec. 14.  AS 39.30 is amended by adding new sections to read:                                                    
19                  Article 6.  Past Service Cost Offset Account.                                                        
20            Sec. 39.30.500.  Past service cost offset account established.  The past                                   
21       service cost offset account is established for employers in the defined contribution                              
22       plans established in AS 14.25.310 - 14.25.495 and employers in the defined                                        
23       contribution plans established in AS 39.35.700 - 39.35.895.                                                       
24            Sec. 39.30.510.  Purpose and effective date.  (a)  The purpose of the account                              
25       is to assist employers in paying past service cost obligations to each employer's                                 
26       respective retirement plan.  The account consists of legislative appropriations and                               
27       investment gains and losses.                                                                                      
28            (b)  The plan becomes effective July 1, 2005, at which time contributions from                               
29       the account into the appropriate retirement fund on behalf of an employer shall begin.                            
30            Sec. 39.30.520.  Attorney general.  The attorney general of the state is the                               
31       legal counsel for the account and shall advise the administrator and represent the plan                           

01       in a legal proceeding.                                                                                            
02            Sec. 39.30.530.  Administrator.  The commissioner of administration or the                                 
03       commissioner's designee is the administrator of the account.                                                      
04            Sec. 39.30.540.  Powers and duties of the administrator.  The administrator                                
05       has the same powers and duties with regard to the plan and the trust fund as provided                             
06       in AS 14.25.020.                                                                                                
07            Sec. 39.30.550.  Management and investment of the fund.  The Alaska State                                  
08       Pension Investment Board is the fiduciary of the fund and has the same powers and                                 
09       duties under this section in regard to the fund as are provided under AS 37.10.220.                               
10            Sec. 39.30.560.  Contributions on behalf of employers in the teachers'                                     
11       retirement plan.  The administrator shall pay into the teachers' retirement fund on the                         
12       employer's behalf the employer's past service cost for each member in the employer's                              
13       defined contribution plan.                                                                                        
14            Sec. 39.30.570.  Contributions on behalf of employers in the public                                        
15       employees' retirement plan.  The administrator shall pay into the public employees'                             
16       retirement fund on each employer's behalf, that employer's past service cost for each                             
17       member in the employer's defined contribution plan, up to the blended past service                                
18       cost rate for all employers in the plan.                                                                          
19            Sec. 39.30.595.  Definitions.  Unless the context requires otherwise, in                                   
20       AS 39.30.500 - 39.30.595,                                                                                         
21                 (1)  "accrued liability" means the present value of all member benefits                                 
22       in all plans accrued by member service;                                                                           
23                 (2)  "administrator" means the commissioner of administration or the                                  
24       commissioner's designee;                                                                                          
25                 (3)  "blended employer past service cost rate" means the average past                                   
26       service cost rate of all employers in the public employees' retirement plan established                           
27       in AS 39.35.010 - 39.35.690;                                                                                      
28                 (4)  "member" means a member of the defined contribution plan in                                      
29       AS 14.25.310 - 14.25.495 or a member of the defined contribution plan in                                          
30       AS 39.35.700 - 39.35.895;                                                                                         
31                 (5)  "past service cost" means the annual payment amount needed to                                      

01       pay for benefits that were not funded by past contributions into the retirement plan, as                          
02       apportioned over a stipulated number of years;                                                                    
03                 (6)  "past service cost rate" means the annual payment as a percentage                                  
04       of employee salary required to pay the past service cost as an amortized contribution                             
05       in percentage over a stipulated number of years.                                                                  
06    * Sec. 15.  AS 39.35 is amended by adding a new section to article 1 to read:                                      
07            Sec. 39.35.005.  Applicability of AS 39.35.010 - 39.35.690 to employees first                              
08       hired before July 1, 2005.  The following provisions of this chapter apply only to the                          
09       defined benefit plans established for members first hired before July 1, 2005:                                    
10       AS 39.35.010, 39.35.120 - 39.35.165, 39.35.180 - 39.35.650, and 39.35.675 -                                       
11       39.35.680.                                                                                                        
12    * Sec. 16.  AS 39.35.010 is amended to read:                                                                       
13            Sec. 39.35.010.  Purpose and effective date; federal qualification                                         
14       requirements.  (a)  The purpose of AS 39.35.010 - 39.35.680 [THIS CHAPTER] is to                            
15       encourage qualified personnel to enter and remain in the service of the state or a                                
16       political subdivision or public organization of the state by establishing a plan                              
17       [SYSTEM] for the payment of retirement, disability, and death benefits to or on behalf                            
18       of the employees.                                                                                                 
19            (b)  [THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF ALASKA                                                      
20       IS HEREBY CREATED.] The plan [SYSTEM] created becomes effective as of                                         
21       January 1, 1961, at which time contributions by the state and its employees begin.                                
22            (c)  The retirement plan [SYSTEM] established by AS 39.35.010 - 39.35.680                            
23       [THIS CHAPTER] is intended to qualify under 26 U.S.C. 401(a) and 414(d) (Internal                                 
24       Revenue Code) as a qualified retirement plan established and maintained by the state                              
25       for its employees and for the employees of political subdivisions, public corporations,                           
26       and public organizations of the state, and for the employees of other employers whose                             
27       participation is authorized by AS 39.35.010 - 39.35.680 [THIS CHAPTER] and who                                
28       participate in this plan [SYSTEM].                                                                            
29            (d)  An amendment to AS 39.35.010 - 39.35.680 [THIS CHAPTER] does not                                    
30       provide a person with a vested right to a benefit if the Internal Revenue Service                                 
31       determines that the amendment will result in disqualification of the plan under the                               

01       Internal Revenue Code.                                                                                            
02    * Sec. 17.  AS 39.35.158 is amended to read:                                                                       
03            Sec. 39.35.158.  Administrative director of courts.  An administrative                                     
04       director of the Alaska court system who withdraws from the judicial retirement system                             
05       under AS 22.25.012 is eligible for membership in the plan [SYSTEM] and shall                                  
06       receive credited service in the plan [SYSTEM] for service rendered as administrative                          
07       director.  To be eligible for membership in the plan [SYSTEM] under this subsection,                          
08       the administrative director must contribute to the plan [SYSTEM]                                              
09                 (1)  the amount the director would have contributed if the director had                                 
10       been a member during the director's period of membership in the judicial retirement                               
11       system; and                                                                                                       
12                 (2)  any contributions for services as administrative director refunded                                 
13       by the plan [SYSTEM] at the time the director became a member of the judicial                                 
14       retirement system.                                                                                                
15    * Sec. 18.  AS 39.35.160(a) is amended to read:                                                                    
16            (a)  Each member shall contribute to the plan an amount equal to the                                     
17       percentage of the member's compensation as determined under AS 39.35.272                                      
18       [BEGINNING JANUARY 1, 1987, EACH PEACE OFFICER OR FIRE FIGHTER                                                    
19       SHALL CONTRIBUTE TO THE SYSTEM AN AMOUNT EQUAL TO SEVEN                                                           
20       AND ONE-HALF PERCENT OF THE PEACE OFFICER'S OR FIRE FIGHTER'S                                                     
21       COMPENSATION. EXCEPT AS PROVIDED IN (d) OF THIS SECTION,                                                          
22       BEGINNING JANUARY 1, 1987, EACH OTHER EMPLOYEE SHALL                                                              
23       CONTRIBUTE TO THE SYSTEM AN AMOUNT EQUAL TO SIX AND THREE-                                                        
24       QUARTERS PERCENT OF THE EMPLOYEE'S COMPENSATION].  The                                                            
25       contributions shall be deducted by the employer at the end of each payroll period.  The                           
26       contributions shall be deducted from employee compensation before computation of                                  
27       applicable federal taxes, and the contributions shall be treated as employer                                      
28       contributions under 26 U.S.C. 414(h)(2). A member may not have the option of                                      
29       making the payroll deduction directly instead of having the contribution picked up by                             
30       the employer.                                                                                                     
31    * Sec. 19.  AS 39.35.250 is repealed and reenacted to read:                                                        

01            Sec. 39.35.250.  Contributions by employer.  An employer shall contribute to                               
02       the plan an amount equal to the percentage, as certified by the board under                                       
03       AS 39.35.272.                                                                                                     
04    * Sec. 20.  AS 39.35 is amended by adding a new section to read:                                                   
05            Sec. 39.35.272.  Contribution rates.  (a)  The board shall annually establish                              
06       the employer and member contribution rates under this section.  The employer and                                  
07       member contribution rates shall be established with the goal of fully funding the                                 
08       normal cost of the plan and paying as much of the past service cost as possible within                            
09       the limitations imposed in this section.  The sum of the employer and member                                      
10       contribution rates may not be less than the normal cost rate.                                                     
11            (b)  Employer and member contribution rates must be equal, subject to (c) of                                 
12       this section.                                                                                                     
13            (c)  Notwithstanding (a) and (b) of this section,                                                            
14                 (1)  the maximum member contribution rate is 13 percent, and the                                        
15       minimum rate is zero percent;                                                                                     
16                 (2)  the minimum employer contribution rate is 10 percent, regardless                                   
17       of the member contribution rate; and                                                                              
18                 (3)  neither the employer contribution rate nor the member contribution                                 
19       rate may increase more than five percentage points annually.                                                      
20            (d)  In this section,                                                                                        
21                 (1)  "accrued liability" means the present value of all member benefits                                 
22       accrued by member service before the valuation date;                                                              
23                 (2)  "actuarially computed rate" is the sum of the normal cost rate and                                 
24       the past service cost rate;                                                                                       
25                 (3)  "employer contribution rate" is that portion of the actuarially                                    
26       computed rate to be contributed by employers;                                                                     
27                 (4)  "member contribution rate" is that portion of the actuarially                                      
28       computed rate to be contributed by members;                                                                       
29                 (5)  "normal cost" means the value of member benefits expected to be                                    
30       earned by active members during the fiscal year following the valuation date;                                     
31                 (6)  "normal cost rate" means the percentage of member salaries                                         

01       required to pay the normal cost during the fiscal year following the valuation date;                              
02                 (7)  "past service cost" means the annual payment to be made over a                                     
03       stipulated number of years to amortize the unfunded liability; in this paragraph,                                 
04       "unfunded liability" means the amount by which the accrued liability exceeds the                                  
05       assets of the fund;                                                                                               
06                 (8)  "past service cost rate" means the percentage of member salaries                                   
07       required to fully pay the annual past service cost;                                                               
08                 (9)  "valuation date" means the beginning of the fiscal year for which                                  
09       the normal cost is determined.                                                                                    
10    * Sec. 21.  AS 39.35.300(a) is amended to read:                                                                    
11            (a)  An active employee is entitled to credited service for periods of                                       
12       employment with the state after January 1, 1961, regardless of the office, department,                            
13       division, or agency of the state in which the person was employed.  For purposes of                               
14       AS 39.35.010 - 39.35.680 [THIS CHAPTER], the University of Alaska is not an                                   
15       office, department, division, or agency of the state.  Service credit may not be granted                          
16       under AS 39.35.010 - 39.35.680 [THIS CHAPTER] for service that is creditable under                            
17       the teachers' retirement plan under AS 14.25.010 - 14.25.220 [SYSTEM, AS 14.25].                              
18    * Sec. 22.  AS 39.35.360(i) is amended to read:                                                                    
19            (i)  An employee who completes three years of credited service with an                                       
20       employer, for which the employee makes contributions required by AS 39.35.010 -                               
21       39.35.680 [THIS CHAPTER], is entitled to credited service on a year-for-year basis                            
22       for service credited in the Civil Service Retirement System, rendered as an employee                              
23       of an Alaska Bureau of Indian Affairs (BIA) school, other than service as a teacher.                              
24       When eligibility for retroactive credited service under this subsection has been                                  
25       established, an indebtedness of the employee to the plan [SYSTEM] shall be                                    
26       determined as follows: (1) the employee's actual annual compensation, or the                                      
27       calculated annual compensation for an employee who works fewer than 12 months, for                                
28       the most recent calendar year in which service is rendered to an employer before the                              
29       calendar year in which the employee first becomes eligible to claim service under this                            
30       subsection, multiplied by (2) the number of years of service in Alaska BIA schools                                
31       that is credited under this subsection, and this product multiplied by (3) six percent for                        

01       employees first eligible to claim this service before January 1, 1987, or eight and one-                          
02       half percent for employees first eligible to claim this service on or after January 1,                            
03       1987.  Interest as prescribed by regulation accrues on the indebtedness beginning on                              
04       the date the employee may first claim the retroactive credited service. Any outstanding                           
05       indebtedness that exists at the time the employee retires requires an actuarial                                   
06       adjustment to the benefits that are based on retroactive credited service under this                              
07       subsection.  A retirement benefit payable under this subsection for Alaska BIA service                            
08       shall be reduced by an amount equal to the retirement benefits paid to the member by                              
09       the United States government for the same service.                                                                
10    * Sec. 23.  AS 39.35.360(l) is amended to read:                                                                    
11            (l)  An administrative director of the Alaska Court System who withdraws                                     
12       from the judicial retirement system under AS 22.25.012(b) is eligible for membership                              
13       in the public employees' retirement plan [SYSTEM] and shall receive credited service                          
14       in this plan [SYSTEM] for service rendered as administrative director. To be eligible                         
15       for membership in this plan [SYSTEM] under this subsection, the administrative                                
16       director must contribute to the  plan [SYSTEM]                                                                
17                 (1)  the amount that would have been contributed if the administrative                                  
18       director had been a member during the period of the membership in the judicial                                    
19       retirement system; and                                                                                            
20                 (2)  any contributions for service as administrative director refunded                                  
21       from the public employees' retirement plan [SYSTEM] at the time the administrative                            
22       director became a member of the judicial retirement system.                                                       
23    * Sec. 24.  AS 39.35.375(a) is amended to read:                                                                    
24            (a)  An active or inactive member who has never been vested in this plan                                 
25       [SYSTEM] or in the teachers' retirement plan under AS 14.25.010 - 14.25.220                                   
26       [SYSTEM UNDER AS 14.25], who has at least two years of credited service in this                                   
27       system, and who has membership service in the teachers' retirement plan [SYSTEM]                              
28       may claim credited service in this plan [SYSTEM] in an amount equal to the                                    
29       membership service the member has in the teachers' retirement plan [SYSTEM].  The                             
30       claimed credited service may be added to service earned under AS 39.35.010 -                                  
31       39.35.680 [THIS CHAPTER] to enable the member to qualify for a public service                                 

01       benefit under this section.  The member may not claim credited service for                                        
02       membership service for which the member has received a refund under AS 14.25.150                                  
03       unless the member fully pays the indebtedness as established under AS 14.25.063.                                  
04       The member may not claim credited service in this plan [SYSTEM] based on unused                               
05       sick leave under AS 14.25.115.                                                                                    
06    * Sec. 25.  AS 39.35.375(b) is amended to read:                                                                    
07            (b)  To claim credited service under this section, the member shall file a                                   
08       written request with the administrator when the member applies to retire.  The                                    
09       administrator shall determine the full actuarial cost of benefits based on the member's                           
10       total credited service and shall transfer from the teachers' retirement plan [SYSTEM]                         
11       to this plan [SYSTEM] an amount equal to the sum of the member contributions and                              
12       any indebtedness payments to the teachers' retirement plan [SYSTEM] and the                                   
13       employer contributions to the teachers' retirement plan [SYSTEM] made on behalf of                            
14       the employee together with interest earned on those contributions and indebtedness                                
15       payments.  If the amount to be transferred, when combined with the amount of                                      
16       employee contributions and indebtedness payments to this plan [SYSTEM] and the                                
17       amount of employer contributions on behalf of the employee in this plan [SYSTEM],                             
18       and interest earned on contributions and indebtedness payments for the employee, is                               
19       less than the full actuarial cost computed under this subsection, an indebtedness to the                          
20       plan [SYSTEM] equal to the amount of the difference is established. Interest as                               
21       prescribed by regulation accrues on the indebtedness.  The member must pay any                                    
22       outstanding indebtedness existing at the time the member applies for retirement in full                           
23       before the member is appointed to retirement under this section.                                                  
24    * Sec. 26.  AS 39.35.375(c) is amended to read:                                                                    
25            (c)  A member is entitled to receive a public service benefit under this section                             
26       if the member has at least a total of five years credited service under AS 39.35.010 -                        
27       39.35.680 [THIS CHAPTER] and credited service from the teachers' retirement plan                          
28       [SYSTEM] claimed under this section.  A public service benefit shall be calculated                                
29       using the higher of the average monthly compensation for service in this plan                                 
30       [SYSTEM] or the average base salary for service in the teachers' retirement plan                              
31       [SYSTEM].  The amount of the benefit shall be calculated in accordance with                                       

01       AS 39.35.370(c).                                                                                                  
02    * Sec. 27.  AS 39.35.375(d) is amended to read:                                                                    
03            (d)  Credited service earned under either this plan [SYSTEM] or the teachers'                            
04       retirement plan [SYSTEM] that has been claimed for a public service benefit under                             
05       this section may not be used for any other purpose.  A member who claims credited                                 
06       service under this section loses all rights to benefits under AS 14.25.010 - 14.25.220                        
07       [AS 14.25] based on the claimed credited service.  A member may not claim credited                                
08       service under this section unless the member claims all of the membership service the                             
09       member has in the teachers' retirement plan [SYSTEM].  A public service benefit                               
10       does not constitute a normal or early retirement benefit for purposes of qualifying for a                         
11       conditional service retirement benefit under AS 14.25.125 or AS 39.35.385.                                        
12    * Sec. 28.  AS 39.35.375(f) is amended to read:                                                                    
13            (f)  Notwithstanding AS 14.25.063 and AS 39.35.350, a former member of the                                   
14       teachers' retirement plan [SYSTEM] who is an active member or inactive member of                              
15       this plan [SYSTEM] may reinstate, under this section, membership service earned                               
16       under AS 14.25.010 - 14.25.220 [AS 14.25] for which the member received a refund                              
17       of contributions.                                                                                                 
18    * Sec. 29.  AS 39.35.375(g) is amended to read:                                                                    
19            (g)  If a member retires under this section and subsequently returns to work for                             
20       an employer under this plan [SYSTEM] or the teachers' retirement plan [SYSTEM],                           
21       benefits under this section shall cease during the period of reemployment and shall                               
22       recommence when the reemployment is ended.  The credited service earned during the                                
23       period of reemployment may not be added to the credited service claimed for a public                              
24       service benefit under this section.  If a member vests and meets the other eligibility                            
25       requirements under this plan [SYSTEM] or the teachers' retirement plan [SYSTEM]                           
26       during the reemployment, the member is entitled to a benefit under AS 14.25.010 -                             
27       14.25.220 [AS 14.25] or AS 39.35.010 - 39.35.680 [AS 39.35], as appropriate.                              
28    * Sec. 30.  AS 39.35.381(a) is amended to read:                                                                    
29            (a)  An elected public officer is eligible for a public officer benefit if the officer                       
30       is retired under AS 14.25.010 - 14.25.220 [AS 14.25] (teachers' retirement plan                           
31       [SYSTEM]).  Only fully paid credited service as an elected public officer of a                                    

01       municipality or other political subdivision, earned while the municipality or political                           
02       subdivision was an employer under this plan [SYSTEM] and while the person was                                 
03       employed full-time under AS 14.25, may be counted under this section.                                             
04    * Sec. 31.  AS 39.35.680(21) is amended to read:                                                                   
05                 (21)  "member" or "employee"                                                                            
06                      (A)  means a person eligible to participate in the plan                                        
07            [SYSTEM] and who is covered by the plan [SYSTEM];                                                        
08                      (B)  includes                                                                                      
09                           (i)  an active member;                                                                        
10                           (ii)  an inactive member;                                                                     
11                           (iii)  a vested member;                                                                       
12                           (iv)  a deferred vested member;                                                               
13                           (v)  a nonvested member;                                                                      
14                           (vi)  a disabled member;                                                                      
15                           (vii)  a retired member;                                                                      
16                           (viii)  an elected public officer under AS 39.35.381;                                         
17                      (C)  does not include                                                                              
18                           (i)  former members;                                                                          
19                           (ii)  persons compensated on a contractual or fee basis;                                      
20                           (iii)  casual or emergency workers or nonpermanent                                            
21                 employees as defined in AS 39.25.200;                                                                   
22                           (iv)  persons covered by the Alaska Teachers'                                                 
23                 Retirement System except as provided under AS 39.35.131 and                                             
24                 39.35.381, or persons covered by the optional university retirement                                     
25                 program;                                                                                                
26                           (v)  employees of the division of marine transportation                                       
27                 engaged in operating the state ferry system who are covered by a union                                  
28                 or group retirement system to which the state makes contributions;                                      
29                           (vi)  justices of the supreme court or judges of the court                                    
30                 of appeals or of the superior or district courts of Alaska;                                             
31                           (vii)  the administrative director of courts appointed                                        

01                 under art. IV, sec. 16 of the state constitution unless the director                                    
02                 becomes a member under AS 39.35.158;                                                                    
03                           (viii)  members of the elected public officers' retirement                                    
04                 system (former AS 39.37); and                                                                           
05                           (ix)  contractual employees of the legislative branch of                                      
06                 state government under AS 24.10.060(f);                                                                 
07                      (D)  may include employees of the division of marine                                               
08            transportation excluded under (C)(v) of this paragraph provided that                                         
09                           (i)  the State of Alaska formally agrees to their inclusion                                   
10                 through the process of collective bargaining; and                                                       
11                           (ii)  no collective bargaining agreement has the effect of                                    
12                 obligating contributions made by the state under AS 39.30.150 in the                                    
13                 event the state resumes participation in the federal social security                                    
14                 system;                                                                                                 
15    * Sec. 32.  AS 39.35.680 is amended by adding a new paragraph to read:                                             
16                 (41)  "plan" means the retirement plan established in AS 39.35.010 -                                    
17       39.35.680.                                                                                                        
18    * Sec. 33.  AS 39.35 is amended by adding new sections to read:                                                    
19             Article 9.  Employees First Hired on or after July 1, 2005.                                               
20            Sec. 39.35.700.  Applicability of AS 39.35.700 - 39.35.895.  The provisions of                             
21       AS 39.35.700 - 39.35.895 apply only to members first hired on or after July 1, 2005.                              
22            Sec. 39.35.710.  Defined contribution retirement plan established; federal                                 
23       qualification requirements.  (a)  A defined contribution retirement plan is established                         
24       for employees of the state or a political subdivision or public organization of the state.                        
25            (b)  The retirement plan established by AS 39.35.700 - 39.35.895 is intended to                              
26       qualify under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified                                  
27       retirement plan established and maintained by the state for its employees and for the                             
28       employees of political subdivisions, public corporations, and public organizations of                             
29       the state, and for the employees of other employers whose participation is authorized                             
30       by AS 39.35.700 - 39.35.895 and who participate in the plan set out in AS 39.35.700 -                             
31       39.35.895.                                                                                                        

01            (c)  An amendment to AS 39.35.700 - 39.35.895 does not provide a person                                      
02       with a vested right to a benefit if the Internal Revenue Service determines that the                              
03       amendment will result in disqualification of the plan under the Internal Revenue Code.                            
04            Sec. 39.35.720.  Purpose and effective date.  (a)  The purpose of                                          
05       AS 39.35.700 - 39.35.895 is to encourage qualified personnel to enter and remain in                               
06       the service of the state or a political subdivision or public organization of the state by                        
07       establishing a plan for the payment of defined contribution retirement benefits to or on                          
08       behalf of the employees.                                                                                          
09            (b)  All eligible employees first hired on or after July 1, 2005, shall participate                          
10       in the plan set out in AS 39.35.700 - 39.35.895.                                                                  
11            Sec. 39.35.730.  Contributions by members.  (a)  Each member shall                                         
12       contribute to the plan an amount equal to 10 percent of the member's salary base.  The                            
13       contributions shall be deducted by the employer at the end of each payroll period.  The                           
14       contributions shall be deducted from employee compensation before computation of                                  
15       applicable federal taxes, and the contributions shall be treated as employer                                      
16       contributions under 26 U.S.C. 414(h)(2).  A member may not have the option of                                     
17       making the payroll deduction directly instead of having the contribution picked up by                             
18       the employer.                                                                                                     
19            (b)  Each member shall make an election within the first 30 days of                                          
20       employment with an employer regarding the salary base upon which the member and                                   
21       employer contribution to the member's contribution account will be calculated.  A                                 
22       member must choose as a salary base for purposes of this section either the member's                              
23       basic salary or the member's total salary.  If a member fails to make an election, a                              
24       member's basic salary shall be used as the salary base to calculate member and                                    
25       employer contributions.  A member's salary base may not be changed during the                                     
26       member's employment with the employer.                                                                            
27            (c)  In this section,                                                                                        
28                 (1)  "basic salary" means the total remuneration payable under an                                       
29       employment contract but does not include extra payments;                                                          
30                 (2)  "extra payments" means cost-of-living differentials, payments for                                  
31       leave that is actually used by the member, the amount by which the member's wages                                 

01       are reduced under AS 39.30.150(c), and the amount deferred under an employer-                                     
02       sponsored deferred compensation plan;                                                                             
03                 (3)  "salary base" means either the member's basic salary or total salary                               
04       as determined under (b) of this section;                                                                          
05                 (4)  "total salary" means the total remuneration paid under contract to a                               
06       member for services, including extra payments, but does not include retirement                                    
07       benefits, welfare benefits, per diem, expense allowances, workers' compensation                                   
08       payments, or payments for leave not used by the member, whether those leave                                       
09       payments are scheduled payments, lump-sum payments, donations, or cash-ins.                                       
10            Sec. 39.35.740.  Contributions by employers.  (a)  An employer shall                                       
11       contribute an amount equal to 10 percent of each member's salary base as provided in                              
12       (b) - (d) of this section.                                                                                        
13            (b)  An employer shall contribute to each member contribution account an                                     
14       amount equal to 5.5 percent of the member's salary base from July 1 to the following                              
15       June 30.                                                                                                          
16            (c)  An employer shall also contribute an amount equal to 3.5 percent of each                                
17       member's salary base to pay for retiree major medical insurance.  This contribution                               
18       shall be paid into the group health and life benefits fund established by the                                     
19       commissioner of administration under AS 39.30.095 and shall be accounted for in                                   
20       accordance with regulations established by the commissioner.                                                      
21            (d)  An employer shall also contribute an amount equal to one percent of each                                
22       member's salary base to each member's health reimbursement account plan under                                     
23       AS 39.30.300.                                                                                                     
24            (e)  In this section, "salary base" is the salary base determined under                                      
25       AS 39.35.730.                                                                                                     
26            Sec. 39.35.750.  Transmittal of contributions.  The contributions of an                                    
27       employer and the contributions of its employees shall be transmitted to the                                       
28       administrator as soon as practicable after the close of the payroll period for which the                          
29       contributions are made.  If an employer is delinquent in transferring the contributions                           
30       for more than 15 days, interest shall be assessed on the outstanding contributions at                             
31       one and one-half times the most recent actuarially determined rate of earnings for the                            

01       retirement system from the date that the contributions were originally due.                                       
02            Sec. 39.35.760.  Retirement benefits and vesting.  A participating member is                               
03       immediately and fully vested in that member's contributions and in the employer                                   
04       contributions made on that member's behalf to an account under AS 39.35.700 -                                     
05       39.35.895.                                                                                                        
06            Sec. 39.35.770.  Investment of individual accounts.  (a)  The Alaska State                                 
07       Pension Investment Board shall provide a range of investment options and permit a                                 
08       participant to exercise investment control over the participant's assets in the member                            
09       contribution account as provided in this section.  If a participant exercises control over                        
10       the assets in the account, the participant is not considered a fiduciary for any reason on                        
11       the basis of exercising that control.                                                                             
12            (b)  A participant may direct investment of plan funds held in an account                                    
13       among available investment funds in accordance with rules established by the board.                               
14            (c)  A participant may elect to change or transfer all or a portion of the                                   
15       participant's existing account balance among available investment funds not more                                  
16       often than once each day in accordance with the rules established by the administrator.                           
17       Only the last election received by the administrator before the transmittal of                                    
18       contributions to the trust fund for allocation to the individual account will be used to                          
19       direct the investment of the contributions received.                                                              
20            (d)  Except to the extent clearly set out in the terms of the investment plans                               
21       offered by the employer to the employee, the employer is not liable to the participant                            
22       for investment losses if the prudent investment standard has been met.                                            
23            (e)  The employer, administrator, state, board, or a person or entity who is                                 
24       otherwise a fiduciary is not liable by reason for any participant's investment loss that                          
25       results from the participant's directing the investment of plan assets allocated to the                           
26       participant's account.                                                                                            
27            (f)  To the extent that a member contribution account has been divided as                                    
28       provided in a qualified domestic relations order between participants, each participant                           
29       shall be treated as the holder of a separate individual account for purposes of                                   
30       investment yields, decisions, transfers, and time limitations imposed by this section.                            
31            Sec. 39.35.780.  Distributions.  (a)  A member is eligible to receive                                      

01       distribution of that person's accumulated balance in the plan upon becoming a former                              
02       participating member.                                                                                             
03            (b)  Upon the death of a member or former member, the accumulated balance                                    
04       of that deceased member is considered to belong to the refund beneficiary, if any, of                             
05       that deceased participant.  If a valid nomination of refund beneficiary is not on file                            
06       with the board, the board, in a lump sum distribution, shall distribute the accumulated                           
07       balance to a legal representative, if any, of the deceased participant's estate.                                  
08            (c)  A former member or refund beneficiary may elect one or a combination of                                 
09       several of the following methods of distribution of the accumulated balance:                                      
10                 (1)  lump sum distribution to the recipient;                                                            
11                 (2)  lump sum direct rollover to another qualified plan, to the extent                                  
12       allowed by federal law;                                                                                           
13                 (3)  periodic distributions, as authorized by the board;                                                
14                 (4)  no current distribution, in which case the accumulated balance                                     
15       must remain in the plan until the former participating member or refund beneficiary                               
16       elects a method or methods of distribution under this section, to the extent allowed by                           
17       federal law.                                                                                                      
18            (d)  If the former member's vested account balance is less than $5,000, the                                  
19       board shall automatically refund the member's vested account balance upon                                         
20       termination of employment.  The member may waive the refund if the member                                         
21       submits a written statement to the board, within 120 days after termination, requesting                           
22       that the member's vested account balance remain in the plan.                                                      
23            Sec. 39.35.790.  Refund upon termination.  (a)  Except as provided in (b) of                               
24       this section, a terminated member is entitled to a refund of the balance of the member                            
25       contribution account.                                                                                             
26            (b)  A member who is terminated and who is married at the time of application                                
27       for a refund or whose rights to a refund are subject to a qualified domestic relations                            
28       order is entitled to receive a refund of the balance of the member contribution account                           
29       only if the member's present spouse and each person entitled under the order consent                              
30       to the refund in writing on a form provided by the administrator.  The administrator                              
31       may waive written consent from the person entitled under the order if the                                         

01       administrator determines that the person cannot be located or for other reasons                                   
02       established by regulation.  The administrator may waive written consent from the                                  
03       spouse if the administrator determines that                                                                       
04                 (1)  the member was not married to the spouse during any period of the                                  
05       member's employment with an employer;                                                                             
06                 (2)  the spouse has no rights to benefits under AS 39.35.700 -                                          
07       39.35.895 because of the terms of a qualified domestic relations order;                                           
08                 (3)  the spouse cannot be located;                                                                      
09                 (4)  the member and spouse have been married for less than one year                                     
10       and the member establishes that they are not cohabiting; or                                                       
11                 (5)  another reason established by regulation exists.                                                   
12            Sec. 39.35.800.  Rights under qualified domestic relations order.  A former                                
13       spouse shall be treated as a spouse or surviving spouse under AS 39.35.700 -                                      
14       39.35.895 to the extent required by a qualified domestic relations order.  Rights under                           
15       the order do not take effect until the order is filed with the administrator.                                     
16            Sec. 39.35.810.  Rollover distributions and rollover contributions.  (a)  An                               
17       employee may elect, at the time and in the manner prescribed by the administrator, to                             
18       have all or part of a direct rollover distribution from an eligible retirement plan owned                         
19       by the member paid directly into the member's contribution account established under                              
20       AS 39.35.770.                                                                                                     
21            (b)  Rollover contributions do not count as a purchase of membership service                                 
22       for the purpose of determining years of service.                                                                  
23            (c)  A distributee may elect, at the time and in the manner prescribed by the                                
24       administrator, to have all or part of an eligible rollover distribution paid directly to an                       
25       eligible retirement plan specified by the distributee in the direct rollover.                                     
26            (d)  In this section,                                                                                        
27                 (1)  "direct rollover" means the payment of an eligible rollover                                        
28       distribution by the plan to an eligible retirement plan specified by a distributee who is                         
29       eligible to elect a direct rollover;                                                                              
30                 (2)  "distributee" means a member or a beneficiary who is the surviving                                 
31       spouse of the member;                                                                                             

01                 (3)  "eligible retirement plan" means                                                                   
02                      (A)  an individual retirement account described in 26 U.S.C.                                       
03            408(a);                                                                                                      
04                      (B)  an individual retirement annuity defined in 26 U.S.C.                                         
05            408(b);                                                                                                      
06                      (C)  an annuity plan described in 26 U.S.C. 403(a);                                                
07                      (D)  a qualified trust described in 26 U.S.C. 401(a);                                              
08                      (E)  an annuity plan described in 26 U.S.C. 403(b); or                                             
09                      (F)  a governmental plan described in 26 U.S.C. 457(b);                                            
10                 (4)  "eligible rollover distribution" means a distribution of all or part of                            
11       a total account to a distributee, except for                                                                      
12                      (A)  a distribution that is one of a series of substantially equal                                 
13            installments payable not less frequently than annually over the life expectancy                              
14            of the distributee or the joint and last survivor life expectancy of the distributee                         
15            and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9);                             
16                      (B)  a distribution that is one of a series of substantially equal                                 
17            installments payable not less frequently than annually over a specified period                               
18            of 10 years or more;                                                                                         
19                      (C)  a distribution that is required under 26 U.S.C. 401(a)(9);                                    
20                      (D)  the portion of any distribution that is not includable in                                     
21            gross income;                                                                                                
22                      (E)  a distribution that is on account of hardship; and                                            
23                      (F)  other distributions that are reasonably expected to total less                                
24            than $200 during a year.                                                                                     
25            Sec. 39.35.820.  Distribution requirements.  (a)  The entire interest of a                                 
26       member must be distributed or must begin to be distributed not later than the member's                            
27       required beginning date.                                                                                          
28            (b)  If a member dies after the distribution of the member's interest has begun                              
29       but before the distribution has been completed, the remaining portion of the interest                             
30       shall continue to be distributed at least as rapidly as under the method of distribution                          
31       being used before the member's death.                                                                             

01            (c)  If a member has made a distribution election and dies before the                                        
02       distribution of the member's interest begins, distribution of the member's entire interest                        
03       shall be completed by December 31 of the calendar year containing the fifth                                       
04       anniversary of the member's death.  However, if any portion of the member's interest                              
05       is payable to a designated beneficiary, distributions may be made over the life of the                            
06       designated beneficiary or over a period certain not greater than the life expectancy of                           
07       the designated beneficiary, commencing on or before December 31 of the calendar                                   
08       year immediately following the calendar year in which the member died, and, if the                                
09       designated beneficiary is the member's surviving spouse, the date distributions are                               
10       required to begin may not be earlier than the later of December 31 of the calendar year                           
11       (1) immediately following the calendar year in which the member died, or (2) in which                             
12       the member would have attained 70 1/2 years of age, whichever is earlier.  If the                                 
13       surviving spouse dies after the member but before payments to the spouse have begun,                              
14       the provisions of this subsection apply as if the surviving spouse were the member.                               
15       An amount paid to a child of the member will be treated as if it were paid to the                                 
16       surviving spouse if the amount becomes payable to the surviving spouse when the                                   
17       child reaches the age of majority.                                                                                
18            (d)  If a member has not made a distribution election before the member's                                    
19       death, the member's designated beneficiary must elect the method of distribution not                              
20       later than December 31 of the calendar year (1) in which distributions would be                                   
21       required to begin under this section, or (2) that contains the fifth anniversary of the                           
22       date of death of the member, whichever is earlier.  If the member does not have a                                 
23       designated beneficiary or if the designated beneficiary does not elect a method of                                
24       distribution, distribution of the member's entire interest must be completed by                                   
25       December 31 of the calendar year containing the fifth anniversary of the member's                                 
26       death.                                                                                                            
27            (e)  For purposes of (c) of this section, distribution of a member's interest is                             
28       considered to begin (1) on the member's required beginning date, or (2) if the                                    
29       designated beneficiary is the member's surviving spouse and the surviving spouse dies                             
30       after the member but before payments to the spouse have begun, on the date                                        
31       distribution is required to begin to the surviving spouse.  If distribution in the form of                        

01       an annuity irrevocably commences to the member before the required beginning date,                                
02       the date distribution is considered to begin is the date that the distribution actually                           
03       commences.                                                                                                        
04            (f)  Notwithstanding any contrary provisions of AS 39.35.700 - 39.35.895, the                                
05       requirements of this section apply to all distributions of a member's interest and take                           
06       precedence over any inconsistent provisions of AS 39.35.700 - 39.35.895.                                          
07            (g)  All distributions required under this section are determined and made in                                
08       accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute,                                   
09       including any minimum distribution incidental benefit requirement.                                                
10            (h)  In this section,                                                                                        
11                 (1)  "designated beneficiary" means the individual who is designated as                                 
12       the beneficiary under the plan in accordance with 26 U.S.C. 401(a)(9) and regulations                             
13       adopted under that statute;                                                                                       
14                 (2)  "required beginning date" means the first day of April of the                                      
15       calendar year following the calendar year in which the member either attains 70 1/2                               
16       years of age or actually retires, whichever is later.                                                             
17            Sec. 39.35.830.  Designation of beneficiary.  (a)  Each member shall                                       
18       designate the beneficiary or beneficiaries to whom the administrator shall distribute                             
19       benefits payable under AS 39.35.700 - 39.35.895 as a consequence of the member's                                  
20       death.  Notwithstanding a previous designation of beneficiary, a person who is the                                
21       spouse of a member at the time of the member's death automatically becomes the                                    
22       designated beneficiary if the spouse was married to the member during part of the                                 
23       member's employment for an employer                                                                               
24                 (1)  except to the extent a qualified domestic relations order filed with                               
25       the administrator provides for payment to a former spouse or other dependent of the                               
26       member; or                                                                                                        
27                 (2)  unless the member filed a revocation of beneficiary accompanied                                    
28       by a written consent to the revocation from the present spouse and each person entitled                           
29       under the order; however, consent of the present spouse is not required if the member                             
30       and the present spouse had been married for less than one year on the date of the                                 
31       member's death and if the member established when filing the revocation that the                                  

01       member and the present spouse were not cohabiting.                                                                
02            (b)  Except as provided in (a) of this section, the member may change or                                     
03       revoke the designation without notice to the beneficiary or beneficiaries at any time.                            
04       If a member designates more than one beneficiary, each shares equally unless the                                  
05       member specifies a different allocation or preference.  The designation of a                                      
06       beneficiary, a change or revocation of a beneficiary, and a consent to revocation of a                            
07       beneficiary shall be made on a form provided by the administrator and is not effective                            
08       until filed with the administrator.                                                                               
09            (c)  If a member fails to designate a beneficiary, or if no designated beneficiary                           
10       survives the member, the death benefit shall be paid                                                              
11                 (1)  to the surviving spouse or, if there is none surviving;                                            
12                 (2)  to the surviving children in equal parts or, if there are none                                     
13       surviving;                                                                                                        
14                 (3)  to the surviving parents in equal parts or, if there are none                                      
15       surviving;                                                                                                        
16                 (4)  to the estate.                                                                                     
17            (d)  A person claiming entitlement to benefits payable under AS 39.35.700 -                                  
18       39.35.895 as a consequence of a member's death shall provide the administrator with a                             
19       marriage certificate, divorce or dissolution judgment, or other evidence of entitlement.                          
20       Documents establishing entitlement may be filed with the administrator immediately                                
21       after a change in the member's marital status.  If the administrator does not receive                             
22       notification of a claim before the date 60 days after the member's death, the person                              
23       claiming entitlement is not entitled to receive from the division of retirement and                               
24       benefits any benefit already paid by the administrator.                                                           
25            Sec. 39.35.840.  Adjustments.  (a)  When a change or error is made in the                                  
26       records maintained by the plan or in the contributions made on behalf of an employee                              
27       or an error is made in computing a benefit, and, as a result, a member or beneficiary is                          
28       entitled to receive from the plan more or less than the member or beneficiary would                               
29       have been entitled to receive had the records or contributions been correct or had the                            
30       error not been made, the records, contributions, or error shall be corrected.  An                                 
31       adjustment to contributions shall be picked up by the employer in accordance with                                 

01       AS 39.35.740 or treated as an adjustment to the employer's contributions in                                       
02       accordance with this section, depending upon the nature of the adjustment.  If no                                 
03       future benefit payments are due, a person who was paid any amount to which the                                    
04       person was not entitled is liable for repayment of that amount, and a person who was                              
05       not paid the full amount to which the person was entitled shall be paid that amount.                              
06            (b)  An adjustment that requires the recovery of benefits may not be made                                    
07       under this section if                                                                                             
08                 (1)  the incorrect benefit was first paid two years or more before the                                  
09       member or beneficiary was notified of the error;                                                                  
10                 (2)  the error was not the result of erroneous information supplied by                                  
11       the member or beneficiary; and                                                                                    
12                 (3)  the member or beneficiary did not have reasonable grounds to                                       
13       believe that the amount of the benefit was in error.                                                              
14            (c)  At each regularly scheduled meeting of the board, the administrator shall                               
15       report to the board on all situations since the administrator's last report in which an                           
16       adjustment has been prohibited under (b) of this section.  If the board finds that there                          
17       is reason to believe that one or more of the conditions set out in (b) of this section                            
18       have not been met, the administrator shall notify the member or beneficiary that an                               
19       adjustment will be made to recover the overpayment.  A member or beneficiary who                                  
20       receives notice of adjustment under this subsection may appeal to the board for a                                 
21       waiver of the adjustment under AS 39.35.850.  An adjustment that requires the                                     
22       repayment of benefits may not be required while the appeal is pending.                                            
23            (d)  The plan shall pay interest on amounts owed to a member or beneficiary.                                 
24       Interest shall be charged on amounts owed to the plan by a member or beneficiary if                               
25       the amount owed is the result of erroneous information supplied by the member or                                  
26       beneficiary, or the member or beneficiary had reasonable grounds to believe the                                   
27       amount of the benefit was in error.  The interest paid under this subsection is at the                            
28       rate established by regulation for indebtedness contributions owed.  Interest accrues                             
29       from the date on which the correct payment was due and continues until an actuarial                               
30       adjustment to the benefit is effective or the amount owed is paid.  Accrued interest for                          
31       periods less than 60 days or in amounts less than the limit established in regulation for                         

01       writing off small indebtedness and refund balances may not be collected or paid under                             
02       this subsection.                                                                                                  
03            Sec. 39.35.850.  Waiver of adjustments.  (a)  Upon appeal by an affected                                   
04       member or beneficiary under (b) of this section, the board may waive an adjustment or                             
05       a portion of an adjustment made under AS 39.35.840 if, in the opinion of the board,                               
06                 (1)  the adjustment or portion of the adjustment will cause undue                                       
07       hardship to the member or beneficiary;                                                                            
08                 (2)  the adjustment was not the result of erroneous information supplied                                
09       by the member or beneficiary;                                                                                     
10                 (3)  before the adjustment was made, the member or beneficiary                                          
11       received confirmation from the administrator that the member's or beneficiary's                                   
12       records were correct; and                                                                                         
13                 (4)  the member or beneficiary had no reasonable grounds to believe                                     
14       the records were incorrect before the adjustment was made.                                                        
15            (b)  In order to obtain consideration of a waiver under this section, the affected                           
16       member or beneficiary must appeal to the board in writing within 30 days after receipt                            
17       of notice that the records have been adjusted.  The ruling of the board shall be in                               
18       writing.                                                                                                          
19            (c)  The board may conduct a hearing on an appeal under this section.                                        
20            (d)  The board may impose conditions on granting a waiver that it considers                                  
21       equitable.  These conditions may include requiring the member or beneficiary to make                              
22       additional contributions to the plan.                                                                             
23            (e)  The board may reconsider a ruling under this section upon request of the                                
24       member or beneficiary or the administrator if the request is received within 30 days                              
25       after the initial ruling.  Any modification of the initial ruling must be made within 30                          
26       days after receipt of a request for reconsideration.                                                              
27            Sec. 39.35.860.  Retirement.  (a)  In order to obtain medical benefits under                               
28       AS 39.35.870 and access to the health reimbursement account plan under                                            
29       AS 39.30.300, an active member must retire directly from the plan.  A member is                                   
30       eligible to retire from the plan if the member has been an active member for at least 12                          
31       months before application for retirement and                                                                      

01                 (1)  the member has at least 25 years of service as a peace officer or fire                             
02       fighter or 30 years of membership service for all other employees; or                                             
03                 (2)  the member reaches the normal retirement age and has at least 10                                   
04       years of membership service.                                                                                      
05            (b)  The normal retirement age is 60 years of age; however, whenever the                                     
06       board adopts a new table of actuarial factors, if those factors include an increase in life                       
07       expectancy, the normal retirement age shall be increased by the same number of years                              
08       or portions of years as the increase in life expectancy from the previously adopted                               
09       table of actuarial factors.                                                                                       
10            (c)  A member must apply to the administrator for appointment to retirement.                                 
11       Application shall be made on forms and in the manner prescribed by the administrator.                             
12            (d)  A member who continues in the employ of the employer after reaching                                     
13       normal retirement age shall continue to participate in the plan and to have                                       
14       contributions allocated to the member's account.                                                                  
15            Sec. 39.35.870.  Medical benefits.  (a)  The medical benefits available to                                 
16       eligible persons are access to the retiree major medical insurance plan and to the                                
17       health reimbursement account.  Access to the retiree major medical insurance plan                                 
18       means that an eligible person may not be denied insurance coverage except for failure                             
19       to pay the required premium.                                                                                      
20            (b)  The following persons are eligible for the retiree major medical insurance                              
21       plan provided under this section and the health reimbursement account:                                            
22                 (1)  a member with at least 30 years of service and who retires directly                                
23       from the plan;                                                                                                    
24                 (2)  the surviving spouse of a member who elected coverage under (1)                                    
25       of this subsection;                                                                                               
26                 (3)  a member who reaches the normal retirement age as provided in                                      
27       AS 39.35.860, has at least 10 years of service, and retires directly from the plan;                               
28                 (4)  the surviving spouse of a member who elected coverage under (3)                                    
29       of this subsection.                                                                                               
30            (c)  Retiree major medical insurance plan coverage elected by an eligible                                    
31       member under this section covers the eligible member, the spouse of the eligible                                  

01       member, and the dependent children of the qualified member.                                                       
02            (d)  Retiree major medical insurance plan coverage elected by a surviving                                    
03       spouse of a eligible member under this section covers the surviving spouse and the                                
04       dependent children of the surviving spouse.                                                                       
05            (e)  Major medical insurance coverage takes effect on the first day of the                                   
06       month following the date of the election and stops when the person who elects                                     
07       coverage under (b) of this section dies or fails to make a required premium payment.                              
08            (f)  The coverage for persons who are eligible for Medicare is the same as that                              
09       available for persons who are not yet eligible for Medicare.  The benefits payable to                             
10       those Medicare eligible persons supplement any benefits provided under the Medicare                               
11       program.                                                                                                          
12            (g)  The medical and optional insurance premiums owed by the person who                                      
13       elects coverage under (b) of this section shall be deducted from the health                                       
14       reimbursement account.  If the amount of the health reimbursement account becomes                                 
15       insufficient to pay the premiums, the person who elects coverage under (a) of this                                
16       section shall pay the premiums directly.                                                                          
17            (h)  The portion of the cost of premiums payable by the employee for retiree                                 
18       major medical insurance coverage for an eligible member or surviving spouse who is                                
19                 (1)  younger than the normal retirement age set in AS 39.35.860 is the                                  
20       amount equal to the full monthly group premium for retiree major medical insurance                                
21       coverage;                                                                                                         
22                 (2)  the normal retirement age set in AS 39.35.860 or older is the                                      
23       following percentage of the premium amount established for retirees normal                                        
24       retirement age or older:  70 percent if the member had 10 years of service; for each                              
25       additional year of service after the member's tenth year of service, the cost of                                  
26       premiums decreases by three percentage points; however, the minimum employee                                      
27       portion of the premium is 10 percent if the member had 30 or more years of service.                               
28            (i)  The eligibility for and cost of premiums for retiree major medical insurance                            
29       coverage for an alternate payee under a qualified domestic relations order shall be                               
30       determined based on the years of service of the member to which the alternate payee is                            
31       entitled under the order.                                                                                         

01            (j)  The monthly group premiums for retiree major medical insurance coverage                                 
02       are established by the administrator in accordance with AS 39.30.095.  Nothing in                                 
03       AS 39.35.700 - 39.35.895 guarantees a person who elects coverage under (a) of this                                
04       section a monthly group premium rate for retiree major medical insurance coverage                                 
05       other than the premium in effect for the month in which the premium is due for                                    
06       coverage for that month.                                                                                          
07            (k)  In this section,                                                                                        
08                 (1)  "health reimbursement account" means the plan established in                                       
09       AS 39.30.300;                                                                                                     
10                 (2)  "retires directly from the plan" means that the member is an active                                
11       member at the time that the member applies to the administrator for appointment to                                
12       retirement and that the member continues as an active member up through the day                                   
13       before the day the member is appointed to retirement.                                                           
14            Sec. 39.35.880.  Management and investment of fund.  (a)  The Alaska State                                 
15       Pension Investment Board is the fiduciary of the fund.  In managing the fund, the                                 
16       Alaska State Pension Investment Board shall                                                                       
17                 (1)  consider the status of the fund's investments and the plan's                                       
18       liabilities on both a current and a probable future basis;                                                        
19                 (2)  determine the appropriate investment objectives for the fund;                                      
20                 (3)  establish investment policies aimed at achieving the objectives; and                               
21                 (4)  act only in regard to the best financial interests of the plan and                                 
22       beneficiaries.                                                                                                    
23            (b)  The Alaska State Pension Investment Board may invest the fund on the                                    
24       basis of probable total rate of return without regard to the distinction between principal                        
25       and income or to the generation of income.                                                                        
26            (c)  In carrying out investment duties under AS 39.35.700 - 39.35.895, the                                   
27       Alaska State Pension Investment Board has the same powers and duties in regard to                                 
28       the teacher's retirement trust fund as are provided in AS 37.10.071, except that the                              
29       standard of prudence that the board must obey under AS 37.10.071(c) shall be in                                   
30       regard to the management of large trust investments rather than large investments.                                
31            Sec. 39.35.884.  Special rules for treatment of qualified military service.                                

01       Notwithstanding any contrary provisions of AS 39.35.700 - 39.35.895, with respect to                              
02       qualified military service, contributions shall be made and benefits and service credit                           
03       shall be provided in accordance with 26 U.S.C. 414(u).                                                            
04            Sec. 39.35.888.  Exemption from taxation and process.  (a) Except as                                       
05       provided in AS 29.45.030(a)(1) or in (c) of this section, member contributions and                                
06       other amounts held in the plan on behalf of a member or other person who is or may                                
07       become eligible for benefits under the plan are exempt from Alaska state and                                      
08       municipal taxes and are not subject to anticipation, alienation, sale, transfer,                                  
09       assignment, pledge, encumbrance, or charge of any kind, either voluntary or                                       
10       involuntary, before they are received by the person entitled to the amount under the                              
11       terms of the plan.  Any attempt to anticipate, alienate, sell, transfer, assign, pledge,                          
12       encumber, charge, or otherwise dispose of any right to amounts accrued in the plan is                             
13       void.  However, a member's right to receive benefits or the member contribution                                   
14       account may be assigned                                                                                           
15                 (1)  under a qualified domestic relations order;                                                        
16                 (2)  to a trust or similar legal device that meets the requirements for a                               
17       Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4); or                                     
18                 (3)  as provided in (c) of this section.                                                                
19            (b)  Member contributions and other amounts held in the plan and benefits                                    
20       payable under AS 39.35.700 - 39.35.895 are exempt from garnishment, execution, or                                 
21       levy as provided in AS 09.38.                                                                                     
22            (c)  An inactive member may elect to have the taxable portion of the member                                  
23       contribution account transferred directly to another plan or an individual retirement                             
24       arrangement that is qualified under the federal Internal Revenue Code and that accepts                            
25       the transfer.                                                                                                     
26            Sec. 39.35.890.  Time limit for application.  If an application for benefits or                            
27       for refund has not been filed with the administrator by July 1 following the date on                              
28       which an inactive member (except a member on leave of absence without pay) would                                  
29       attain age 75, or if an application for benefits or for refund has not been filed with the                        
30       administrator within the 50 years following the most recent date on which the person                              
31       was an active member, benefits or refunds may not be paid under AS 39.35.700 -                                    

01       39.35.895 and the member's records may be destroyed.                                                              
02            Sec. 39.35.892.  Penalty for false statements.  (a)  A person who knowingly                                
03       makes a false statement, or falsifies or permits to be falsified any record of this plan,                         
04       in an attempt to defraud this plan, is guilty of a class A misdemeanor and forfeits all                           
05       rights under AS 39.35.700 - 39.35.895.                                                                            
06            (b)  In this section, "knowingly" has the meaning given in AS 11.81.900(a).                                  
07            Sec. 39.35.895.  Definitions.  In AS 39.35.700 - 39.35.895, unless the context                             
08       requires otherwise,                                                                                               
09                 (1)  "active member" means an employee who is employed by an                                            
10       employer, is receiving compensation for seasonal, permanent full-time, or permanent                               
11       part-time services, and is making contributions to the plan;                                                      
12                 (2)  "actuarial adjustment" means the adjustment necessary to obtain                                    
13       equality in value of the aggregate expected payments under two different forms of                                 
14       pension payments, considering expected mortality and interest earnings on the basis of                            
15       assumptions, factors, and methods specified in regulations issued under this plan that                            
16       are formally adopted by the board that clearly preclude employer discretion in the                                
17       determination of the amount of any member's benefit;                                                              
18                 (3)  "administrator" has the meaning given in AS 39.35.680;                                             
19                 (4)  "beneficiary" means a person designated by an employee to receive                                  
20       benefits that may be due from the plan upon the employee's death;                                                 
21                 (5)  "board" has the meaning given in AS 39.35.680;                                                     
22                 (6)  "calendar year" has the meaning given in AS 39.35.680;                                             
23                 (7)  "compensation" means the remuneration earned by an employee                                        
24       for personal services rendered to an employer, payments for leave that is actually used                           
25       by the employee, and any amount deferred under an employer-sponsored deferred                                     
26       compensation plan, but does not include retirement benefits, severance pay or other                               
27       separation bonuses, welfare benefits, per diem, expense allowances, workers'                                      
28       compensation payments, or payments for leave not used by the employee whether                                     
29       those leave payments are scheduled payments, lump-sum payments, donations, or                                     
30       cash-ins; for a member first hired on or after July 1, 1996, compensation does not                                
31       include remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17)                                 

01       (Internal Revenue Code);                                                                                          
02                 (8)  "employee contribution account" means the total maintained by the                                  
03       plan of the employer's contributions, employee's mandatory contributions, voluntary                               
04       contributions, indebtedness principal, and interest contributions, interest credited to                           
05       each of those accounts, and adjustments to the accounts in accordance with                                        
06       AS 39.35.840;                                                                                                     
07                 (9)  "employer" has the meaning given in AS 39.35.680;                                                  
08                 (10)  "former member" means a terminated member;                                                        
09                 (11)  "fund" means the assets of the retirement plan established in                                     
10       AS 39.35.700 - 39.35.895;                                                                                         
11                 (12)  "inactive member" means an employee who is terminated and                                         
12       who has not received a refund from the plan or an employee on leave-without-pay                                   
13       status or layoff status;                                                                                          
14                 (13)  "member" or "employee"                                                                            
15                      (A)  means a person eligible to participate in the plan and who                                    
16            is covered by the plan;                                                                                      
17                      (B)  includes                                                                                      
18                           (i)  an active member;                                                                        
19                           (ii)  an inactive member;                                                                     
20                           (iii)  a vested member;                                                                       
21                           (iv)  a deferred vested member;                                                               
22                           (v)  a nonvested member;                                                                      
23                           (vi)  a retired member;                                                                       
24                      (C)  does not include                                                                              
25                           (i)  former members;                                                                          
26                           (ii)  persons compensated on a contractual or fee basis;                                      
27                           (iii)  casual or emergency employees or nonpermanent                                          
28                 employees as defined in AS 39.25.200;                                                                   
29                           (iv)  persons covered by the teachers' retirement system                                      
30                 or persons covered by the optional university retirement program;                                       
31                           (v)  employees of the division of marine transportation                                       

01                 engaged in operating the state ferry system who are covered by a union                                  
02                 or group retirement system to which the state makes contributions;                                      
03                           (vi)  justices of the supreme court or judges of the court                                    
04                 of appeals or of the superior or district courts of Alaska;                                             
05                           (vii)  the administrative director of courts appointed                                        
06                 under art. IV, sec. 16, Constitution of the State of Alaska, unless the                                 
07                 director becomes a member under AS 39.35.158;                                                           
08                           (viii)  members of the elected public officers' retirement                                    
09                 system (former AS 39.37); and                                                                           
10                           (ix)  contractual employees of the legislative branch of                                      
11                 state government under AS 24.10.060(f);                                                                 
12                      (D)  may include employees of the division of marine                                               
13            transportation excluded under (C)(v) of this paragraph if                                                    
14                           (i)  the State of Alaska formally agrees to their inclusion                                   
15                 through the process of collective bargaining; and                                                       
16                           (ii)  no collective bargaining agreement has the effect of                                    
17                 obligating contributions made by the state under AS 39.30.150 in the                                    
18                 event the state resumes participation in the federal social security                                    
19                 system;                                                                                                 
20                 (14)  "military service" has the meaning given in AS 39.35.680;                                         
21                 (15)  "peace officer" or "fire fighter" has the meaning given in                                        
22       AS 39.35.680;                                                                                                     
23                 (16)  "plan" means the defined contribution retirement plan in                                          
24       AS 39.35.700 - 39.35.895;                                                                                         
25                 (17)  "public organization" means an organization or entity                                             
26                      (A)  created by the constitution or laws of the state for the                                      
27            purpose of administering state programs;                                                                     
28                      (B)  whose officers and employees are paid by a method other                                       
29            than by the state payroll prepared by the Department of Administration; and                                  
30                      (C)  whose employees are not required by law to participate in                                     
31            the plan;                                                                                                    

01                 (18)  "qualified domestic relations order" means a divorce or                                           
02       dissolution judgment under AS 25.24, including an order approving a property                                      
03       settlement, that                                                                                                  
04                      (A)  creates or recognizes the existence of an alternate payee's                                   
05            right to, or assigns to an alternate payee the right to, receive all or a portion of                         
06            employee contribution account or the benefits payable with respect to an                                     
07            employee;                                                                                                    
08                      (B)  sets out the name and last known mailing address, if any, of                                  
09            the employee and of each alternate payee covered by the order;                                               
10                      (C)  sets out the amount or percentage of the employee's benefit,                                  
11            or of any survivor's benefit, to be paid to the alternate payee, or sets out the                             
12            manner in which that amount or percentage is to be determined;                                               
13                      (D)  sets out the number of payments or period to which the                                        
14            order applies;                                                                                               
15                      (E)  sets out the plan to which the order applies;                                                 
16                      (F)  does not require any type or form of benefit or any option                                    
17            not otherwise provided by this plan;                                                                         
18                      (G)  does not require an increase of benefits in excess of the                                     
19            amount provided by this plan, determined on the basis of actuarial value; and                                
20                      (H)  does not require the payment to an alternate payee of                                         
21            benefits that are required to be paid to another alternate payee under another                               
22            order previously determined to be a qualified domestic relations order;                                      
23                 (19)  "retired member" means an employee who is terminated, who has                                     
24       not received a refund from the plan, and who is receiving a retirement benefit from the                           
25       plan;                                                                                                             
26                 (20)  "retirement" means that period of time from the first day of the                                  
27       month following (A) the date of termination, and (B) application for retirement, in                               
28       which a person is appointed to receive a retirement benefit;                                                      
29                 (21)  "surviving spouse" means the spouse of an employee who has                                        
30       been married to the employee for at least one year at the time of the employee's death;                           
31                 (22)  "terminated" means a person no longer employed by an employer                                     

01       participating in the plan.                                                                                        
02    * Sec. 34.  AS 39.35.680(39) is repealed.                                                                          
03    * Sec. 35.  The uncodified law of the State of Alaska is amended by adding a new section to                        
04 read:                                                                                                                   
05       OPTION TO PARTICIPATE IN DEFINED CONTRIBUTION RETIREMENT                                                          
06 PLAN AND ENROLLMENT PERIOD FOR NONVESTED, ACTIVE MEMBERS OF THE                                                         
07 TEACHERS' RETIREMENT DEFINED BENEFIT PLAN.  (a)  Notwithstanding                                                        
08 AS 14.25.310, added by sec. 10 of this Act, an active member of the defined benefits                                    
09 retirement plan of the teachers' retirement system is eligible to participate in the defined                            
10 contribution retirement plan established under AS 14.25.310 - 14.25.495, added by sec. 10 of                            
11 this Act if that member has not vested.  Participation in the defined contribution retirement                           
12 plan is in lieu of participation in the defined benefits plan established under AS 14.25.012.                           
13       (b)  A member who has vested in a defined benefits retirement plan is not eligible to                             
14 transfer under this section.  An active member who is on a leave of absence during the entire                           
15 90-day enrollment period is not eligible.                                                                               
16       (c)  Each eligible member who elects to participate in the defined contribution                                   
17 retirement plan shall have transferred to a new account the present value of the member                                 
18 contribution account balance held in trust for the member under the defined benefits                                    
19 retirement plan of the teachers' retirement system.  The employer contribution made on behalf                           
20 of that employee shall also transfer and the appropriate percentage of the employer                                     
21 contribution shall be applied to the employee's health reimbursement account and to the                                 
22 employee's medical benefits.  Upon a transfer, all service credit previously earned under the                           
23 defined benefits plan shall be nullified for purposes of entitlement to a future benefit under the                      
24 defined benefits plan, but shall be credited for purposes of vesting in the medical benefits                            
25 under AS 14.25.480, added by sec. 10 of this Act.  A participant is precluded from                                      
26 transferring the member contribution account balance from the defined benefits retirement                               
27 plan upon the expiration of the period afforded to enroll in the defined contribution retirement                        
28 plan.  An eligible member whose accounts are subject to a qualified domestic relations order                            
29 may not make an election under this subsection unless the qualified domestic relations order                            
30 is amended or vacated and court-certified copies of the order are received by the                                       
31 administrator.                                                                                                          

01       (d)  As directed by the participant, the board shall transfer or cause to be transferred                          
02 the appropriate amounts to the designated account.  The board shall establish transfer                                  
03 procedures by regulation.                                                                                               
04       (e)  The period of enrollment for eligible members electing to participate in the                                 
05 defined contribution retirement plan is from the effective date of this Act until the 91st day                          
06 after the effective date of this Act.  The election must be made in writing on forms and in the                         
07 manner prescribed by the administrator.  Before accepting an election to participate in the                           
08 defined contribution plan, the administrator must provide the employee planning on making                               
09 an election to participate in the defined contribution plan with information including                                  
10 calculations to illustrate the effect of moving the employee's retirement plan from the defined                         
11 benefit plan to the defined contribution plan as well as other information to clearly inform the                        
12 employee of the potential consequences of the employee's election.  An election made under                            
13 this subsection to participate in the defined contribution retirement plan is irrevocable.  Upon                        
14 making the election, the participant shall be enrolled as a member of the defined contribution                          
15 retirement plan, the member's participation in the plan shall be governed by the provisions of                          
16 AS 14.25.310 - 14.25.495, added by sec. 10 of this Act, and the member's participation in the                           
17 defined benefits retirement plan under AS 14.25.012 shall terminate.  The participant's                                 
18 enrollment in the defined retirement contribution plan shall be effective the first day of the                          
19 month after the administrator receives the completed enrollment forms.  An election made by                             
20 an eligible member who is married is not effective unless the election is signed by the                                 
21 individual's spouse.                                                                                                    
22       (f)  A member who fails to elect to participate in the defined retirement contribution                            
23 plan within the prescribed time period is considered to have elected to retain membership in                            
24 the defined benefits plan of the teachers' retirement system, and the member's option to elect                          
25 to participate in the defined contribution retirement plan is forfeited.                                                
26       (g)  In this section,                                                                                             
27            (1)  "administrator" has the meaning given in AS 14.25.220;                                                  
28            (2)  "board" has the meaning given in AS 14.25.220;                                                          
29            (3)  "defined benefits retirement plan" means the retirement plan established in                             
30 AS 14.25.012;                                                                                                           
31            (4)  "defined contribution retirement plan" means the retirement plan                                        

01 established in AS 14.25.320;                                                                                            
02            (5)  "Internal Revenue Code" has the meaning given in AS 14.25.220;                                          
03            (6)  "member" has the meaning given in AS 14.25.220;                                                         
04            (7)  "member contribution account" has the meaning given in AS 14.25.220;                                    
05            (8)  "qualified domestic relations order" has the meaning given in                                           
06 AS 14.25.220.                                                                                                           
07    * Sec. 36.  The uncodified law of the State of Alaska is amended by adding a new section to                        
08 read:                                                                                                                   
09       OPTION TO PARTICIPATE IN DEFINED CONTRIBUTION RETIREMENT                                                          
10 PLAN AND ENROLLMENT PERIOD FOR NONVESTED, ACTIVE MEMBERS OF                                                             
11 PUBLIC EMPLOYEES' RETIREMENT SYSTEM DEFINED BENEFIT PLAN.  (a)                                                          
12 Notwithstanding AS 39.35.700, added by sec. 33 of this Act, an active member of the defined                             
13 benefits retirement plan of the public employees' retirement system is eligible to participate in                       
14 the defined contribution retirement plan established under AS 39.35.700 - 39.35.895, added                              
15 by sec. 33 of this Act.  Participation in the defined contribution retirement plan is in lieu of                        
16 participation in the defined benefits plan established under AS 39.35.115.                                              
17       (b)  A member who has vested in a defined benefits retirement plan is not eligible to                             
18 transfer under this section.  An active member who is on a leave of absence during the entire                           
19 90-day enrollment period is not eligible.                                                                               
20       (c)  Each eligible member who elects to participate in the defined contribution                                   
21 retirement plan shall have transferred to a new account the present value of the employee                               
22 contribution account and the employee savings account held in trust for the member under the                            
23 defined benefits retirement plan of the public employees' retirement system.  The employer                              
24 contribution made on behalf of that employee shall also transfer and the appropriate                                    
25 percentage of the employer contribution shall be applied to the employee's health                                       
26 reimbursement account and to the employee's medical benefits.  Upon a transfer, all service                             
27 credit previously earned under the defined benefits plan shall be nullified for purposes of                             
28 entitlement to a future benefit under the defined benefits plan, but shall be credited for                              
29 purposes of vesting in the medical benefits under AS 39.35.870, added by sec. 33 of this Act.                           
30 A participant is precluded from transferring the employee contribution account balance and                              
31 the employee savings account balance from the defined benefits retirement plan upon the                                 

01 expiration of the period afforded to enroll in the defined contribution retirement plan.  An                            
02 eligible member whose accounts are subject to a qualified domestic relations order may not                              
03 make an election under this subsection unless the qualified domestic relations order is                                 
04 amended or vacated and court-certified copies of the order are received by the administrator.                           
05       (d)  As directed by the participant, the board shall transfer or cause to be transferred                          
06 the appropriate amounts to the designated account.                                                                      
07       (e)  The period of enrollment for eligible members electing to participate in the                                 
08 defined contribution retirement plan is from the effective date of this Act until the 91st day                          
09 after the effective date of this Act.  The election must be made in writing on forms and in the                         
10 manner prescribed by the administrator.  Before accepting an election to participate in the                             
11 defined contribution plan, the administrator must provide the employee planning on making                               
12 an election to participate in the defined contribution plan with information including                                  
13 calculations to illustrate the effect of moving the employee's retirement plan from the defined                         
14 benefit plan to the defined contribution plan as well as other information to clearly inform the                        
15 employee of the potential consequences of the employee's election.  An election made under                              
16 this subsection to participate in the defined contribution retirement plan is irrevocable.  Upon                        
17 making the election, the participant shall be enrolled as a member of the defined contribution                          
18 retirement plan, the member's participation in the plan shall be governed by the provisions of                          
19 AS 39.35.700 - 39.35.895, added by sec. 33 of this Act, and the member's participation in the                           
20 defined benefits retirement plan under AS 39.35.115 shall terminate.  The participant's                                 
21 enrollment in the defined retirement contribution plan shall be effective the first day of the                          
22 month after the administrator receives the completed enrollment forms.  An election made by                             
23 an eligible member who is married is not effective unless the election is signed by the                                 
24 individual's spouse.                                                                                                    
25       (f)  A member who fails to elect to participate in the defined retirement contribution                            
26 plan within the prescribed time period is considered to have elected to retain membership in                            
27 the defined benefits plan of the public employees' retirement system, and the member's option                           
28 to elect to participate in the defined contribution retirement plan is forfeited.                                       
29       (g)  In this section,                                                                                             
30            (1)  "administrator" has the meaning given in AS 39.35.680;                                                  
31            (2)  "board" has the meaning given in AS 39.35.680;                                                          

01            (3)  "defined benefits retirement plan" means the retirement plan established in                             
02 AS 39.35.005;                                                                                                           
03            (4)  "defined contribution retirement plan" means the retirement plan                                        
04 established in AS 39.35.710;                                                                                            
05            (5)  "employee contribution account" has the meaning given in AS 39.35.680;                                  
06            (6)  "employee savings account" has the meaning given in AS 39.35.680;                                       
07            (7)  "Internal Revenue Code" has the meaning given in AS 39.35.680;                                          
08            (8)  "member" has the meaning given in AS 39.35.680;                                                         
09            (9)  "member contribution account" has the meaning given in AS 39.35.680;                                    
10            (10)  "qualified domestic relations order" has the meaning given in                                          
11 AS 39.35.680.                                                                                                           
12    * Sec. 37.  The uncodified law of the State of Alaska is amended by adding a new section to                        
13 read:                                                                                                                   
14       LEGISLATIVE INTENT REGARDING INVESTMENT OPTIONS FOR                                                               
15 INDIVIDUAL ACCOUNTS.  It is the intent of the legislature that, under AS 14.25.380,                                     
16 added by sec. 10 of this Act, for teachers, and under AS 39.35.770, added by sec. 33 of this                            
17 Act, for public employees, the administrator of the respective plans will provide investment                            
18 options that are similar to the investment options provided for individual employee annuity                             
19 accounts in the Department of Administration under the terms of the State of Alaska                                     
20 Supplemental Annuity Plan under AS 39.30.150 - 39.30.180.                                                               
21    * Sec. 38.  The uncodified law of the State of Alaska is amended by adding a new section to                        
22 read:                                                                                                                   
23       REVISOR INSTRUCTION.  (a)  In the following statutes, the revisor of statutes shall                               
24 substitute the spanned reference "AS 14.25.010 - 14.25.220" for references to "this chapter":                           
25 AS 14.25.010, 14.25.012, 14.25.040, 14.25.045, 14.25.047, 14.25.048, 14.25.061, 14.25.062,                              
26 14.25.063, 14.25.070, 14.25.075, 14.25.105, 14.25.107, 14.25.110, 14.25.142, 14.25.150,                                 
27 14.25.153, 14.25.160, 14.25.165, 14.25.166, and 14.25.220.                                                              
28       (b)  In the following statute sections, the revisor of statutes shall substitute "the                             
29 defined benefit retirement plans" for references to "the system":  AS 14.25.012(b), 14.25.015,                          
30 14.25.020(a), 14.25.022(g), 14.25.030, 14.25.035(c), 14.25.035(d), 14.25.035(e),                                        
31 14.25.035(j), 14.25.040(d), 14.25.045(a), 14.25.047, 14.25.048(a), 14.25.048(c), 14.25.055,                             

01 14.25.060(a), 14.25.060(b), 14.25.060(d), 14.25.061(a), 14.25.062, 14.25.065, 14.25.075(a),                             
02 14.25.075(c), 14.25.075(d), 14.25.075(e), 14.25.075(g), 14.25.075(h), 14.25.075(i),                                     
03 14.25.107, 14.25.110(a), 14.25.110(k), 14.25.110(l), 14.25.110(m) 14.25.143(b),                                         
04 14.25.163(b), 14.25.163(c), 14.25.165(i), 14.25.167(g), 14.25.168(a), 14.25.168(c),                                     
05 14.25.173(a), 14.25.173(d), 14.25.175(d), 14.25.220(1), 14.25.220(2), 14.25.220(7),                                     
06 14.25.220(14), 14.25.220(20), 14.25.220(22), 14.25.220(23), 14.25.220(31), 14.25.220(34),                               
07 14.25.220(36),  14.25.220(40),  and 14.25.220(42).                                                                      
08       (c)  In the following statute sections, the revisor of statutes shall substitute "the plan"                       
09 for references to "the system":  AS 39.35.010(a), 39.35.010(c), 39.35.011, 39.35.020,                                   
10 39.35.030(c), 39.35.040, 39.35.042(g), 39.35.050(a), 39.35.060, 39.35.070, 39.35.090,                                   
11 39.35.100, 39.35.120, 39.35.125, 39.35.131, 39.35.154, 39.35.160(a), 39.35.165(a),                                      
12 39.35.165(c), 39.35.165(d), 39.35.165(e), 39.35.165(g), 39.35.165(h), 39.35.165(i),                                     
13 39.35.170, 39.35.180, 39.35.195, 39.35.250, 39.35.280, 39.35.300(c), 39.35.310(a),                                      
14 39.35.310(c), 39.35.340(a), 39.35.342(a), 39.35.342(d), 39.35.345(a), 39.35.345(d),                                     
15 39.35.360(a), 39.35.360(g),  39.35.360(h), 39.35.360(i), 39.35.360(j), 39.35.360(k),                                    
16 39.35.370(f), 39.35.370(g),  39.35.370(h), 39.35.370(i), 39.35.370(j), 39.35.370(k),                                    
17 39.35.371(i), 39.35.381(b), 39.35.381(g), 39.35.385(c), 39.35.400(e), 39.35.450(g),                                     
18 39.35.475(a), 39.35.475(b), 39.35.475(d), 39.35.500(a), 39.35.505, 39.35.520(a),                                        
19 39.35.520(d), 39.35.522(d), 39.35.527(a), 39.35.527(b), 39.35.530, 39.35.535(a),                                        
20 39.35.535(d), 39.35.550, 39.35.560, 39.35.570, 39.35.580, 39.35.590, 39.35.600, 39.35.610,                              
21 39.35.620(a), 39.35.620(h), 39.35.650, 39.35.670, 39.35.675(a), 39.35.680(1), 39.35.680(2),                             
22 39.35.680(5),  39.35.680(9), 39.35.680(12), 39.35.680(15), 39.35.680(16), 39.35.680(17),                                
23 39.35.680(20), 39.35.680(29), 39.35.680(32), 39.35.680(33), 39.35.680(34),  and                                         
24 39.35.680(35).                                                                                                          
25       (d)  In the following statutes, the revisor of statutes shall substitute the spanned                              
26 reference "AS 39.35.010 - 39.35.680" for references to "this chapter":  AS 39.35.165,                                   
27 39.35.200, 39.35.250, 39.35.300, 39.35.340, 39.35.350, 39.35.360(a), 39.35.360(b),                                      
28 39.35.360(i), 39.35.360(j), 39.35.370, 39.35.371, 39.35.381, 39.35.480, 39.35.490, 39.35.495,                           
29 39.35.505, 39.35.530, 39.35.546, 39.35.547, 39.35.615, 39.35.620, 39.35.675, 39.35.677, and                             
30 39.35.680.                                                                                                              
31    * Sec. 39.  This Act takes effect July 1, 2005.