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CSHB 375(FIN): "An Act establishing the teachers' retirement system past service cost liability account in the Department of Revenue; establishing the public employees' retirement system past service cost liability account in the Department of Revenue; and providing for an effective date."

00                       CS FOR HOUSE BILL NO. 375(FIN)                                                                    
01 "An Act establishing the teachers' retirement system past service cost liability account                                
02 in the Department of Revenue; establishing the public employees' retirement system                                      
03 past service cost liability account in the Department of Revenue; and providing for an                                  
04 effective date."                                                                                                        
05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
06    * Section 1. AS 37.10 is amended by adding new sections to read:                                                   
07 Article 4A. Teachers' and Public Employees' Retirement System Past Service                                            
08                       Cost Liability Accounts.                                                                        
09            Sec. 37.10.200. Teachers' retirement system past service cost                                              
10       liability account. (a) There is established in the Department of Revenue the                                    
11       teachers' retirement system past service cost liability account, consisting of                                    
12       appropriations to the account. The commissioner of revenue shall develop and adopt                                
13       regulations necessary to accomplish the requirements of this section and shall manage                             
14       the account according to the requirements of AS 37.10.071.                                                        
01            (b)  At the end of each fiscal year, after all distributions under (c) of                                    
02       this section are completed, money appropriated for use in that fiscal year                                        
03       reverts to the general fund and all income earned on the money shall be                                           
04       paid to the general fund.                                                                                         
05            (c)  During each fiscal year, the commissioner of revenue shall                                              
06       distribute from the account established in (a) of this section, to each                                           
07       employer other than the state that is a member of the Teachers'                                                   
08       Retirement System of Alaska, a payment in the amount the commissioner                                             
09       of revenue anticipates the employer will pay to the state for that fiscal year                                    
10       toward eliminating the employer's past service cost liability to the                                              
11       Teachers' Retirement System of Alaska.                                                                            
12            (d)  A payment to an employer under (c) of this section must be                                              
13       based on 85 percent of the payroll on which employer contributions to the                                         
14       Teachers' Retirement System of Alaska were required and that the                                                  
15       employer reported to the Department of Administration for the fiscal year                                         
16       preceding by three fiscal years the fiscal year for which a distribution is                                       
17       made under this section, and the past service cost rate of the system for                                         
18       the fiscal year preceding by three fiscal years the fiscal year for which a                                       
19       distribution is made under this section.                                                                          
20            (e)  For any fiscal year that the money available for distribution                                           
21       from the account is insufficient to pay every eligible employer the amount                                        
22       due under this section, the amount distributed in that fiscal year to every                                       
23       eligible employer shall be decreased pro rata.                                                                    
24            (f)  An employer who receives an overpayment in excess of a                                                  
25       distribution authorized by this section or in excess of the employer's past                                       
26       service cost liability shall immediately return the overpayment to the                                            
27       commissioner of revenue, who shall cause it to be returned to the account.                                        
28            Sec. 37.10.202. Public employees' retirement system past                                                   
29       service cost liability account. (a) There is established in the Department of                                   
30       Revenue the public employees' retirement system past service cost liability                                       
01       account, consisting of appropriations to the account. The commissioner of revenue                                 
02       shall develop and adopt regulations necessary to accomplish the requirements of this                              
03       section and shall manage the account according to the requirements of AS 37.10.071.                               
04            (b)  At the end of each fiscal year, after all distributions under (c)                                       
05       and (d) of this section are completed, money appropriated for use in that                                         
06       fiscal year reverts to the general fund and all income earned on the money                                        
07       shall be paid to the general fund.                                                                                
08            (c)  During each fiscal year, the commissioner of revenue shall                                              
09       distribute from the account established in (a) of this section, to each                                           
10       municipal employer or school district employer member of the Public                                               
11       Employees' Retirement System of Alaska, a payment in the amount the                                               
12       commissioner of revenue anticipates the employer will pay to the state for                                        
13       that fiscal year toward eliminating the employer's past service cost                                              
14       liability to the Public Employees' Retirement System of Alaska.                                                   
15            (d)  A payment to an employer under (c) of this section must be                                              
16       based on the payroll on which employer contributions to the Public                                                
17       Employees' Retirement System of Alaska were required and that the                                                 
18       employer reported to the Department of Administration for the fiscal year                                         
19       preceding by three fiscal years the fiscal year for which a distribution is                                       
20       made under (c) of this section and 85 percent of the employer's past service                                      
21       cost rate during the fiscal year that precedes the distribution fiscal year                                       
22       under (c) of this section by three fiscal years.                                                                  
23            (e)  In addition to the distribution under (c) of this section, an                                           
24       employer that paid to the Public Employees' Retirement System of Alaska                                           
25       in excess of the amount the employer was required to pay for the fiscal                                           
26       year preceding by three fiscal years the fiscal year that a distribution is                                       
27       made under this section shall receive, in unrestricted funds, an incentive                                        
28       distribution from the account in an amount equal to 50 percent of the                                             
29       excess.                                                                                                           
30            (f)  For any fiscal year that the money available for distribution from                                      
01       the account is insufficient to pay every eligible employer the amount due                                         
02       under this section, the amount distributed in that fiscal year to every                                           
03       eligible employer shall be decreased pro rata.                                                                    
04            (g)  An employer who receives an overpayment in excess of a                                                  
05       distribution or incentive distribution authorized by this section shall                                           
06       immediately return the overpayment to the commissioner of revenue, who                                            
07       shall cause it to be returned to the account.                                                                     
08            Sec. 37.10.204. Definitions. In AS 37.10.200 - AS 37.10.204,                                                 
09                 (1)  "average past service cost rate" means the average of the past                                     
10       service cost rate of all employers as reported by the state's actuary for the fiscal year                         
11       preceding by three fiscal years the fiscal year for which a distribution is made under                            
12       AS 37.10.200 or AS 37.10.202;                                                                                     
13                 (2)  "past service cost rate" means the annual payment required to                                      
14       eliminate an employer's unfunded liability over the amortization period, divided by the                           
15       payroll for which employer contributions are required and that is reported by the                                 
16       employer to the Department of Administration for the fiscal year preceding by three                               
17       fiscal years the fiscal year that a distribution is made under AS 37.10.200 or                                    
18       AS 37.10.202.                                                                                                     
19    * Sec. 2. This Act takes effect July 1, 2006.