CSHB 278(RLS): "An Act relating to prepayments of accrued actuarial liabilities of government retirement systems; relating to the Alaska Municipal Bond Bank Authority; permitting the Alaska Municipal Bond Bank Authority or a subsidiary of the authority to assist state and municipal governmental employers by issuing bonds, notes, commercial paper, or other obligations to enable the governmental employers to prepay all or a portion of the governmental employers' shares of the unfunded accrued actuarial liabilities of retirement systems; authorizing a governmental employer to issue obligations to prepay all or a portion of the governmental employer's shares of the unfunded accrued actuarial liabilities of retirement systems and to enter into a lease or other contractual agreement with a trustee or the Alaska Municipal Bond Bank Authority or a subsidiary of the authority in connection with the issuance of obligations for that purpose, and relating to those obligations; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 278(RLS) 01 "An Act relating to prepayments of accrued actuarial liabilities of government 02 retirement systems; relating to the Alaska Municipal Bond Bank Authority; permitting 03 the Alaska Municipal Bond Bank Authority or a subsidiary of the authority to assist 04 state and municipal governmental employers by issuing bonds, notes, commercial paper, 05 or other obligations to enable the governmental employers to prepay all or a portion of 06 the governmental employers' shares of the unfunded accrued actuarial liabilities of 07 retirement systems; authorizing a governmental employer to issue obligations to prepay 08 all or a portion of the governmental employer's shares of the unfunded accrued 09 actuarial liabilities of retirement systems and to enter into a lease or other contractual 10 agreement with a trustee or the Alaska Municipal Bond Bank Authority or a subsidiary 11 of the authority in connection with the issuance of obligations for that purpose, and 12 relating to those obligations; and providing for an effective date."
01 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 02 * Section 1. AS 14.25.070 is amended by adding a new subsection to read: 03 (d) An employer may prepay all or a portion of the employer's share of any 04 accrued actuarial liability to the plan in a lump sum. The commissioner of 05 administration may, by regulation, establish a minimum amount for the lump sum 06 payment of a portion. The administrator shall charge to the employer appropriate and 07 reasonable administrative costs to the plan attributable to a lump sum payment that are 08 not greater than administrative costs applied to other employer contributions. If an 09 employer is grouped with any other employer in accounting for contributions and the 10 employer makes a lump sum payment, the lump sum payment shall be accounted for 11 separately in accordance with regulations adopted by the commissioner. The 12 regulations must provide for crediting to each lump sum payment account all earnings 13 and losses received from investment of that lump sum payment. The lump sum 14 payment shall be used solely to offset contributions under this section required of the 15 employer that made the lump sum payment, taking into account earnings and losses 16 from its investment. A payment made by an employer under this subsection, together 17 with all earnings and losses from investment of that payment, may not be considered 18 in calculating that employer's share of any discretionary payment authorized by the 19 state that benefits multiple employers. 20 * Sec. 2. AS 29.47 is amended by adding a new section to read: 21 Sec. 29.47.480. Accrued actuarial liabilities of retirement systems. (a) A 22 municipality, or two or more municipalities jointly, may issue obligations to prepay all 23 or a portion of each participating municipality's share of the accrued actuarial 24 liabilities of retirement systems. A municipality, or two or more municipalities jointly, 25 may enter into a lease or other contractual agreement with a trustee or the Alaska 26 Municipal Bond Bank Authority or a subsidiary of the authority in connection with the 27 issuance of obligations to prepay all or a portion of each participating municipality's 28 share of the accrued actuarial liabilities of retirement systems. Obligations issued for 29 purposes described in this subsection must be secured and payable as provided in the 30 agreement or under an authorizing ordinance. The agreement or ordinance may 31 provide for reserves and for protective covenants.
01 (b) Amounts paid by a participating municipality in connection with 02 obligations issued under this section, together with proceeds of the obligations and 03 interest or earnings, may be pooled into one or more funds or accounts, including one 04 or more debt service funds. The assets in any of the funds or accounts may be pledged 05 to the holders of the obligations. 06 (c) A municipality may enter into a funds diversion agreement with a state 07 agency regarding payment of money on behalf of the municipality that may be applied 08 to payments under a lease, other agreement, or obligation issued under this section. 09 The funds diversion agreement must provide, subject to any conditions set out in the 10 funds diversion agreement, that all or a portion of the funds otherwise payable to the 11 municipality by the state agency shall be paid directly to the trustee, Alaska Bond 12 Bank Authority, or its subsidiary to satisfy, in whole or part, the municipality's 13 payments under the lease, other agreement, or obligations. Nothing in this subsection 14 or in a funds diversion agreement entered into under this subsection obligates the state 15 or a state agency to pay any amount to or on behalf of a municipality that the 16 municipality is not otherwise entitled to receive or to make any payments of principal 17 or interest on the obligations. 18 (d) For purposes of this section "obligations" means bonds, notes, commercial 19 paper, certificates of participation, or other contractual obligations. 20 * Sec. 3. AS 39.35.100(b)(3) is amended to read: 21 (3) A separate account for each employer shall be maintained. The 22 account shall be credited with contributions of the employer. Except as provided in 23 AS 39.35.270(d), this [THIS] account shall be charged with the employer's actuarial 24 charge for pension, death benefits, and other benefits paid under this plan to or on 25 behalf of the employee of the employer. Except as provided in AS 39.35.270(d), 26 after [AFTER] an allowance for interest credited to employee contribution accounts 27 and employee savings accounts, the investment income of the pension fund shall be 28 allocated to the retirement reserve account and to each employer asset share account 29 according to the ratio that the average of the assets in the account as of the beginning 30 and as of the end of the fiscal year bears to the total of the average balance of the 31 retirement reserve account and all employer accounts.
01 * Sec. 4. AS 39.35.100(b)(4) is amended to read: 02 (4) An expense account shall be maintained for the plan. Except as 03 provided in AS 39.35.270(d), this [THIS] account shall be charged with all 04 disbursements representing administrative expenses incurred by the plan. At the end of 05 the year, the expense account shall be allocated to each employer in accordance with 06 (3) of this subsection. Expenditures from this account shall be included in the 07 governor's budget for each fiscal year and are subject to approval by the legislature. 08 * Sec. 5. AS 39.35.270 is amended by adding a new subsection to read: 09 (d) An employer may prepay all or a portion of the employer's share of any 10 accrued actuarial liability to the plan in a lump sum. The commissioner may, by 11 regulation, establish a minimum amount for the lump sum payment of a portion. The 12 commissioner shall charge to the employer appropriate and reasonable costs to the 13 plan attributable to a lump sum payment that are not greater than administrative costs 14 applied to other employer contributions. If an employer makes a lump sum payment, 15 the lump sum payment shall be accounted for separately in accordance with 16 regulations adopted by the commissioner. The regulations must provide for crediting 17 to each lump sum payment account all earnings and losses received from investment 18 of that lump sum payment. The lump sum payment shall be used solely to offset 19 contributions under this section required of the employer that made the lump sum 20 payment, taking into account earnings and losses from its investment. A payment 21 made by an employer under this subsection, together with all earnings and losses from 22 investment of that payment, may not be considered in calculating that employer's 23 share of any discretionary payment authorized by the state that benefits multiple 24 employers. 25 * Sec. 6. AS 44.85.010 is amended to read: 26 Sec. 44.85.010. Legislative policy. (a) It is the policy of the state to 27 (1) [TO] foster and promote by all reasonable means the provision of 28 adequate capital markets and facilities for borrowing money by municipalities in the 29 state to finance capital improvements or for other authorized purposes, to assist these 30 municipalities in fulfilling their capital needs and requirements by use of borrowed 31 money within statutory interest rate or cost of borrowing limitations, to the greatest
01 extent possible to reduce costs of borrowed money to taxpayers and residents of the 02 state, and equally to encourage continued investor interest in the purchase of bonds or 03 notes of municipalities as sound and preferred securities for investment; 04 (2) [TO] encourage municipalities to continue their independent 05 undertakings and financing of capital improvements and other authorized purposes 06 and to assist them by making capital funds available at reduced interest costs for 07 orderly financing of capital improvements and other purposes especially during 08 periods of restricted credit or money supply, particularly for those municipalities not 09 otherwise able to borrow for capital needs; 10 (3) [TO] assist municipalities to provide for adequate insurance 11 coverage by authorizing the Alaska Municipal Bond Bank Authority to issue 12 negotiable or nonnegotiable revenue bonds, notes, or certificates of participation either 13 directly or through an entity it may create for the purpose of providing a self-insurance 14 program for municipalities or municipal joint insurance arrangements organized under 15 AS 21.76; 16 (4) assist governmental employers to prepay all or a portion of 17 their share of unfunded accrued actuarial liabilities of retirement systems in an 18 effort to reduce their costs of satisfying their contractual obligations to provide 19 retirement and other benefits to public employees through the issuance of bonds, 20 notes, commercial paper, or other obligations by the bond bank authority or by a 21 subsidiary corporation created by the bond bank authority under AS 44.85.085. 22 (b) The legislature further declares that 23 (1) the exercise of the powers of the state in the interest of its 24 municipalities and in the interest of public employees of the state and of its 25 municipalities is required to further and implement the policies declared in (a) of this 26 section by authorizing the creation of a state bond bank authority as a body corporate 27 and politic that will have full powers to borrow money and to issue its bonds and notes 28 to make capital funds available for borrowing by municipalities and for borrowing 29 by or on behalf of governmental employers, by authorizing governmental 30 employers to contract with the bond bank authority or with a subsidiary created 31 under AS 44.85.085 for the purpose of reducing future costs of providing
01 retirement and other benefits to employees, and by granting broad powers to the 02 bond bank authority to carry out the declared policies, which are in the public interest 03 of the state and its taxpayers and residents; 04 (2) state funds should be applied or authorized to be paid to a state 05 bond bank authority only to provide adequate assurance and security to the holders of 06 the bonds or notes of the bond bank authority; 07 (3) the bond bank authority should conduct its operations to provide 08 the lowest rates in terms of borrowing to municipalities as is consistent with a self- 09 supporting operation with no expectation of subsidization with state funds; the 10 legislature does not intend that the bond bank authority be utilized as a means to 11 finance municipalities beyond their capability to meet repayment schedules and debt 12 service requirements of bonds or notes; 13 (4) the bond bank authority or its subsidiary should conduct its 14 operations to provide the lowest rates in terms of borrowing to governmental 15 employers under AS 44.85.085 and 44.85.086 as is consistent with a self- 16 supporting operation with no expectation of subsidization with state funds; the 17 legislature does not intend that the bond bank authority or its subsidiary be 18 utilized as a means to finance governmental employers under AS 44.85.085 and 19 44.85.086 beyond their capability to meet repayment schedules and debt service 20 requirements of bonds, notes, commercial paper, or other obligations to the bond 21 bank authority or its subsidiary. 22 * Sec. 7. AS 44.85.080 is amended to read: 23 Sec. 44.85.080. Powers of bond bank authority. The bond bank authority 24 may 25 (1) sue and be sued; 26 (2) adopt and alter an official seal; 27 (3) make and enforce bylaws and regulations for the conduct of its 28 business and for the use of its services and facilities; 29 (4) maintain an office at any place in the state; 30 (5) acquire, hold, use, and dispose of its income, revenues, funds, and 31 money;
01 (6) acquire, rent, lease, hold, use, and dispose of other personal 02 property for its purposes; 03 (7) subject to AS 44.85.100(b), borrow money and issue its negotiable 04 bonds or notes and provide for and secure their payment, provide for the rights of their 05 holders and purchase, hold and dispose of any of its bonds or notes; 06 (8) fix and revise from time to time and charge and collect fees and 07 charges for the use of its services or facilities; 08 (9) accept gifts or grants from the United States, or from any 09 governmental unit or person, firm, or corporation, carry out the terms or provisions or 10 make agreements with respect to the gifts or grants, and do all things necessary, 11 useful, desirable, or convenient in connection with procuring, accepting, or disposing 12 of the gifts or grants; 13 (10) do anything authorized by this chapter, through its officers, 14 agents, or employees or by contracts with a person; 15 (11) make, enter into, and enforce all contracts necessary, convenient, 16 or desirable for the purposes of the bond bank authority or pertaining to a loan to a 17 political subdivision, a purchase or sale of municipal bonds or other investments, or 18 the performance of its duties and execution of any of its powers under this chapter; 19 (12) purchase or hold municipal bonds at prices and in a manner the 20 bond bank authority considers advisable, and sell municipal bonds acquired or held by 21 it at prices without relation to cost and in a manner the bond bank authority considers 22 advisable; 23 (13) invest funds or money of the bond bank authority not required at 24 the time of investment for loan to political subdivisions for the purchase of municipal 25 bonds, in the same manner as permitted for investment of funds belonging to the state, 26 except as otherwise provided in this chapter; 27 (14) prescribe the form of application or procedure required of a 28 political subdivision for a loan or purchase of its municipal bonds, fix the terms and 29 conditions of the loan or purchase, and enter into agreements with political 30 subdivisions with respect to loans or purchases; 31 (15) render services to a political subdivision in connection with a
01 public or private sale of its municipal bonds, including advisory and other services, 02 and charge for services rendered; 03 (16) charge for its costs and services in review or consideration of a 04 proposed loan to a political subdivision or purchase by the bond bank authority of 05 municipal bonds of the political subdivision, whether or not the loan is made or the 06 municipal bonds purchased; 07 (17) fix and establish terms and provisions with respect to a purchase 08 of municipal bonds by the bond bank authority, including date and maturities of the 09 bonds, provisions as to redemption or payment before maturity, and any other matters 10 which in connection with the purchase are necessary, desirable, or advisable in the 11 judgment of the bond bank authority; 12 (18) procure insurance against any losses in connection with its 13 property, operations, or assets in amounts and from insurers as it considers desirable; 14 (19) to the extent permitted under its contracts with the holders of 15 bonds or notes of the bond bank authority, consent to modification of the rate of 16 interest, time and payment of installment of principal or interest, security or any other 17 term of a bond or note, contract or agreement of any kind to which the bond bank 18 authority is a party; 19 (20) by regulation, create a new entity or new entities for the purpose 20 of issuing negotiable or nonnegotiable revenue bonds, notes, or certificates of 21 participation to finance a self-insurance program for municipalities or municipal joint 22 insurance arrangements organized under AS 21.76 or to provide assistance to 23 governmental employers under AS 44.85.085(a); the powers, duties, and 24 membership of the new entity or entities shall be limited to the powers, duties, and 25 membership of the authority and stated in the regulation; the new entity or entities 26 shall each be a public corporation and an instrumentality of the state with the same 27 legal existence and continuing succession as the bond bank authority; and 28 (21) do all acts and things necessary, convenient, or desirable to carry 29 out the powers expressly granted or necessarily implied in this chapter. 30 * Sec. 8. AS 44.85 is amended by adding new sections to read: 31 Sec. 44.85.085. Creation of subsidiary corporation. (a) The bond bank
01 authority may create one or more subsidiary corporations for the following purposes: 02 (1) providing financial and other assistance to governmental employers 03 to enable the governmental employers to reduce their costs of providing retirement 04 and other benefits to their employees by prepaying all or a portion of their shares of 05 the unfunded accrued actuarial liabilities of retirement systems; 06 (2) receiving payments and providing servicing for payments to or 07 from participating governmental employers; and 08 (3) performing other duties and providing other services as the 09 subsidiary corporation considers necessary or desirable to further the purposes set out 10 in (1) and (2) of this subsection. 11 (b) The bond bank authority may incorporate under AS 10.20.146 - 10.20.166 12 a subsidiary corporation created under (a) of this section. The bond bank authority 13 may transfer assets of the bond bank authority to the subsidiary corporation and may 14 agree to secure bonds, notes, commercial paper, or other obligations of the subsidiary 15 corporation with a reserve fund established under AS 44.85.270. 16 (c) A subsidiary corporation created under (a) of this section may borrow 17 money and issue bonds, notes, commercial paper, or other obligations as evidence of 18 that borrowing and may have all the powers of the bond bank authority that the bond 19 bank authority grants to it. The provisions of AS 44.85.130 - 44.85.170 and 44.85.270 20 - 44.85.390 apply to the subsidiary corporation and to bonds, notes, commercial paper, 21 or other obligations issued by the subsidiary corporation. Unless otherwise provided 22 by the bond bank authority, the debts, liabilities, and obligations of the subsidiary 23 corporation are not the debts, liabilities, or obligations of the bond bank authority. 24 (d) The staff of the bond bank authority serves as staff of a subsidiary 25 corporation created under (a) of this section. The bond bank authority shall determine 26 the membership or the process for selecting the membership of the board of directors 27 of the subsidiary corporation. The bond bank authority may permit some or all of its 28 directors to serve on the board of directors of the subsidiary corporation. 29 Sec. 44.85.086. Powers of subsidiary corporation. A subsidiary corporation 30 created under AS 44.85.085 has the following powers in addition those granted to it 31 under AS 44.85.085(c):
01 (1) to make loans to and enter into contracts with governmental 02 employers; 03 (2) to incur debt in furtherance of its purposes in the form of bonds, 04 notes, commercial paper, or other obligations as the subsidiary corporation considers 05 appropriate; 06 (3) to secure its debt with a pledge of any assets that are available to 07 the subsidiary corporation for the purpose, including identified revenue and 08 contractual payments from participating governmental employers, and the general 09 assets and revenue of the subsidiary corporation; and 10 (4) to enter into contracts with underwriters, bond counsel, financial 11 advisors, accountants, actuaries, and other contractors to provide assistance as the 12 subsidiary corporation considers desirable to accomplish its purposes. 13 * Sec. 9. AS 44.85.100(b) is amended to read: 14 (b) The bond bank authority shall include in the report required by (a) of this 15 section an estimate of the amount of revenue bonds of the bond bank authority to be 16 issued during the fiscal year following the fiscal year in which the report is submitted. 17 Other than refunding bonds and other than bonds, notes, commercial paper, or 18 other obligations issued under AS 44.85.086 and 44.85.180(a)(5), the [THE] bond 19 bank authority may not issue revenue bonds [, OTHER THAN REFUNDING 20 BONDS,] in excess of $75,000,000 during any fiscal year beginning after June 30, 21 1981, unless the legislature, by law, approves the estimate required by this subsection 22 for that fiscal year. 23 * Sec. 10. AS 44.85.180(a) is amended to read: 24 (a) Subject to AS 44.85.100(b), the bond bank authority may issue its bonds or 25 notes in principal amounts that it considers necessary to provide funds for any 26 purposes under this chapter, including 27 (1) the purchase of municipal bonds; 28 (2) the making of loans through the purchase of municipal bonds, 29 notes, or certificates of participation secured by an agreement between the bond bank 30 authority and a municipality or a municipal joint insurance arrangement organized 31 under AS 21.76;
01 (3) the payment, funding, or refunding of the principal of, or interest or 02 redemption premiums on, bonds or notes issued by it whether the bonds or notes or 03 interest to be funded or refunded have or have not become due; 04 (4) the establishment or increase of reserves to secure or to pay bonds 05 or notes or interest on bonds or notes and all other costs or expenses of the bond bank 06 authority incident to and necessary or convenient to carry out its corporate purposes 07 and powers; 08 (5) assisting governmental employers to prepay all or a portion of 09 their share of the unfunded accrued actuarial liabilities of retirement systems, 10 with security as the bond bank authority considers reasonable. 11 * Sec. 11. AS 44.85.180(c) is amended to read: 12 (c) Notwithstanding the provisions of (a) and (b) of this section, the total 13 amount of bond bank authority bonds and notes outstanding at any one time [, 14 EXCEPT BONDS OR NOTES ISSUED TO FUND OR REFUND BONDS OR 15 NOTES,] may not exceed $500,000,000. This subsection does not apply to (1) 16 bonds or notes issued to fund or refund bonds or notes; (2) bonds, notes, 17 commercial paper, and other obligations issued under AS 44.85.086 or 18 44.85.180(a)(5). 19 * Sec. 12. AS 44.85.410(a)(5) is amended by adding a new paragraph to read: 20 (8) "governmental employer" means the State of Alaska or a 21 municipality or other state or municipal governmental entity within the state, including 22 an agency, instrumentality, district, school district, public corporation, department, 23 division, or other subdivision of the state or of a municipality, in its capacity as an 24 employer. 25 * Sec. 13. This Act takes effect immediately under AS 01.10.070(c).