CSHB 13(W&M): "An Act relating to prepayments of accrued actuarial liabilities of government retirement systems; relating to the Alaska Municipal Bond Bank Authority, the Alaska Housing Finance Corporation, and the state bond committee; establishing the Alaska Pension Obligation Bond Corporation; permitting the Alaska Municipal Bond Bank Authority or a subsidiary of the authority, a subsidiary of the Alaska Housing Finance Corporation, the state bond committee, and the Alaska Pension Obligation Bond Corporation 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, the Alaska Municipal Bond Bank Authority or a subsidiary of the authority, a subsidiary of the Alaska Housing Finance Corporation, the state bond committee, or the Alaska Pension Obligation Bond Corporation in connection with the issuance of obligations for that purpose, and relating to those obligations; relating to revision of the employer contribution rate in connection with financed prepayment of unfunded accrued actuarial liabilities of government retirement systems; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 13(W&M) 01 "An Act relating to prepayments of accrued actuarial liabilities of government 02 retirement systems; relating to the Alaska Municipal Bond Bank Authority, the Alaska 03 Housing Finance Corporation, and the state bond committee; establishing the Alaska 04 Pension Obligation Bond Corporation; permitting the Alaska Municipal Bond Bank 05 Authority or a subsidiary of the authority, a subsidiary of the Alaska Housing Finance 06 Corporation, the state bond committee, and the Alaska Pension Obligation Bond 07 Corporation to assist state and municipal governmental employers by issuing bonds, 08 notes, commercial paper, or other obligations to enable the governmental employers to 09 prepay all or a portion of the governmental employers' shares of the unfunded accrued 10 actuarial liabilities of retirement systems; authorizing a governmental employer to issue 11 obligations to prepay all or a portion of the governmental employer's shares of the 12 unfunded accrued actuarial liabilities of retirement systems and to enter into a lease or
01 other contractual agreement with a trustee, the Alaska Municipal Bond Bank Authority 02 or a subsidiary of the authority, a subsidiary of the Alaska Housing Finance 03 Corporation, the state bond committee, or the Alaska Pension Obligation Bond 04 Corporation in connection with the issuance of obligations for that purpose, and relating 05 to those obligations; relating to revision of the employer contribution rate in connection 06 with financed prepayment of unfunded accrued actuarial liabilities of government 07 retirement systems; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. AS 14.25.070 is amended by adding new subsections to read: 10 (d) An employer may prepay all or a portion of the employer's share of any 11 accrued actuarial liability to the plan in a lump sum. The commissioner of 12 administration may, by regulation, establish a minimum amount for the lump sum 13 payment of a portion. The administrator shall charge to the employer appropriate and 14 reasonable administrative costs to the plan attributable to a lump sum payment that are 15 not greater than administrative costs applied to other employer contributions. If an 16 employer is grouped with any other employer in accounting for contributions and the 17 employer makes a lump sum payment, the lump sum payment shall be accounted for 18 separately in accordance with regulations adopted by the commissioner. The 19 regulations must provide for crediting to each lump sum payment account all earnings 20 and losses received from investment of that lump sum payment. The lump sum 21 payment shall be used solely to offset contributions under this section required of the 22 employer that made the lump sum payment, taking into account earnings and losses 23 from its investment. A payment made by an employer under this subsection, together 24 with all earnings and losses from investment of that payment, may not be considered 25 in calculating that employer's share of any discretionary payment authorized by the 26 state that benefits multiple employers. 27 (e) For each employer that elects to prepay all or a portion of the employer's 28 share of any accrued actuarial liability to the plan in a lump sum under (d) of this
01 section, the administrator shall calculate a revised employer contribution rate for that 02 employer in recognition of that prepayment not more than 180 days following the 03 prepayment. 04 * Sec. 2. AS 18.56.010 is amended by adding a new subsection to read: 05 (g) The legislature finds that permitting the Alaska Housing Finance 06 Corporation to create a subsidiary to assist in the financing of prepayment of all or a 07 portion of a governmental employer's share of unfunded accrued actuarial liability of 08 retirement systems serves a public purpose in benefiting the people of the state. The 09 Alaska Housing Finance Corporation may act on behalf of the state and its people in 10 serving this public purpose for the benefit of the general public. 11 * Sec. 3. AS 18.56.086 is amended to read: 12 Sec. 18.56.086. Creation of subsidiaries. The corporation may create 13 subsidiary corporations for the purpose of financing or facilitating the financing of 14 school construction, facilities for the University of Alaska, facilities for ports and 15 harbors, prepayment of all or a portion of a governmental employer's share of 16 unfunded accrued actuarial liability of retirement systems, or other capital 17 projects. A subsidiary corporation created under this section may be incorporated 18 under AS 10.20.146 - 10.20.166. The corporation may transfer assets of the 19 corporation to a subsidiary created under this section. A subsidiary created under this 20 section may borrow money and issue bonds as evidence of that borrowing, and has all 21 the powers of the corporation that the corporation grants to it. Unless otherwise 22 provided by the corporation, the debts, liabilities, and obligations of a subsidiary 23 corporation created under this section are not the debts, liabilities, or obligations of the 24 corporation. 25 * Sec. 4. AS 18.56.110(g) is amended to read: 26 (g) Notwithstanding AS 18.56.090(a)(11) and (a) of this section, the 27 corporation may not issue bonds in any 12-month period beginning after June 30, 28 1983, in an amount that exceeds the amount of bonds authorized to be issued during 29 the preceding period, unless a different amount is authorized by the legislature. This 30 subsection does not apply to 31 (1) the issuance by the corporation of refunding bonds;
01 (2) [OR TO] the issuance by the corporation of bonds the proceeds of 02 which are intended to be used to refinance mortgage loans held by the corporation; or 03 (3) the issuance by a subsidiary of the corporation of bonds to 04 prepay all or a portion of a governmental employer's share of unfunded accrued 05 actuarial liability of retirement systems. 06 * Sec. 5. AS 18.56.390 is amended by adding a new paragraph to read: 07 (14) "governmental employer" means the State of Alaska or a 08 municipality or other state or municipal governmental entity within the state, including 09 an agency, instrumentality, district, school district, public corporation, department, 10 division, or other subdivision of the state or of a municipality, in its capacity as an 11 employer. 12 * Sec. 6. AS 29.47 is amended by adding a new section to read: 13 Sec. 29.47.480. Accrued actuarial liabilities of retirement systems. (a) A 14 municipality, or two or more municipalities jointly, may issue obligations to prepay all 15 or a portion of each participating municipality's share of the accrued actuarial 16 liabilities of retirement systems. A municipality, or two or more municipalities jointly, 17 may enter into a lease or other contractual agreement with a trustee, or the Alaska 18 Municipal Bond Bank Authority or a subsidiary of the authority, a subsidiary of the 19 Alaska Housing Finance Corporation, the state bond committee, or the Alaska Pension 20 Obligation Bond Corporation in connection with the issuance of obligations to prepay 21 all or a portion of each participating municipality's share of the accrued actuarial 22 liabilities of retirement systems. Obligations issued for purposes described in this 23 subsection must be secured and payable as provided in the agreement or under an 24 authorizing ordinance. The agreement or ordinance may provide for reserves and for 25 protective covenants. 26 (b) Amounts paid by a participating municipality in connection with 27 obligations issued under this section, together with proceeds of the obligations and 28 interest or earnings, may be pooled into one or more funds or accounts, including one 29 or more debt service funds. The assets in any of the funds or accounts may be pledged 30 to the holders of the obligations. 31 (c) A municipality may enter into a funds diversion agreement with a state
01 agency regarding payment of money on behalf of the municipality that may be applied 02 to payments under a lease, other agreement, or obligation issued under this section. 03 The funds diversion agreement must provide, subject to any conditions set out in the 04 funds diversion agreement, that all or a portion of the funds otherwise payable to the 05 municipality by the state agency shall be paid directly to the trustee, the Alaska Bond 06 Bank Authority, or its subsidiary, a subsidiary of the Alaska Housing Finance 07 Corporation, the state bond committee, or the Alaska Pension Obligation Bond 08 Corporation, to satisfy, in whole or part, the municipality's payments under the lease, 09 other agreement, or obligations. Nothing in this subsection or in a funds diversion 10 agreement entered into under this subsection obligates the state or a state agency to 11 pay any amount to or on behalf of a municipality that the municipality is not otherwise 12 entitled to receive or to make any payments of principal or interest on the obligations. 13 (d) For purposes of this section, "obligations" means bonds, notes, commercial 14 paper, certificates of participation, or other contractual obligations. 15 * Sec. 7. AS 37.15 is amended by adding new sections to read; 16 Article 8. Pension Obligation Bonds. 17 Sec. 37.15.900. Bond authorization. (a) For purposes of financing 18 prepayment of all or a portion of a governmental employer's share of unfunded 19 accrued actuarial liability of retirement systems, including the costs of issuance and 20 administration, the issuance and sale of bonds of the state by the committee is 21 authorized as provided in this section and AS 37.15.905 - 37.15.955. The net proceeds 22 of the sale of the bonds remaining after payment of costs of issuance and 23 administration shall be transferred to the commissioner of administration for the 24 governmental employer's account. Accrued interest paid on the bonds shall be paid 25 into the pension obligation bond redemption fund. 26 (b) The total unpaid principal amount of bonds, including refunding bonds, 27 but excluding refunded bonds, may not exceed $5,000,000,000. The bonds do not 28 constitute a general obligation of the state. Authorization by the voters of the state or 29 the legislature is not required. 30 (c) The committee may enter into agreements with other state agencies as 31 necessary or convenient to implement this section and AS 37.15.905 - 37.15.955.
01 (d) The committee may contract for the services of underwriters, paying 02 agents, trustees, bond printers, rating agencies, bond insurance, credit enhancement 03 providers, accountants, financial advisors, and bond counsel, and for other services as 04 are necessary to accomplish the bond issuance and sale. 05 Sec. 37.15.905. Bond redemption fund. (a) There is established a special fund 06 of the state, known as the pension obligation bond redemption fund, which is a trust 07 fund for paying and securing the payment of the principal of and interest and 08 redemption premium, if any, on the bonds, and which shall be at all times completely 09 segregated and set apart from all other funds of the state. The committee, on behalf of 10 the state, may obligate and bind the state to set aside and pay into the bond redemption 11 fund, on a monthly or other periodic basis. The bond redemption fund shall be drawn 12 upon only for the purpose of paying the principal of and interest and redemption 13 premium, if any, on the bonds, together with related trustee fees, if any. 14 (b) Money in the bond redemption fund may be invested in the same manner 15 and on the same conditions as permitted for investing of money belonging to the state 16 or held in the treasury under AS 37.10.070; however, the committee may agree with 17 the bondholders to further limit these investments. Earnings on investments must be 18 retained in the bond redemption fund. 19 (c) Separate accounts may be created in the bond redemption fund for the 20 purposes of paying and securing the bonds. The accounts may be combined for 21 purposes of investment and for financial support to achieve the purposes of 22 AS 37.15.910(c). 23 Sec. 37.15.910. Bond terms. (a) The bonds may be issued and sold at public 24 or negotiated sale in the manner, in the amounts or series, and at the time or times that 25 the committee determines. The bonds, or each series of them, shall be sold at the price 26 and upon the terms, conditions, and covenants set by the committee after considering 27 market conditions. Interest rates may be fixed or variable. 28 (b) The bonds mature at the time or times fixed by the committee. The bonds 29 may be subject to redemption before their fixed maturities, as determined by the 30 committee, with or without a premium or premiums. The bonds may be in 31 denominations determined by the committee; may be issued in fully or partially
01 registered form; must be payable as to principal and interest at the place or places 02 determined by the committee; must be signed on behalf of the state in the manner 03 provided by the committee; and must be issued under and subject to the terms, 04 conditions, covenants, and protective features safeguarding payment of the bonds as 05 found necessary by the committee. 06 (c) If the committee finds it reasonably necessary, the committee may select a 07 trustee or trustees for the holders of the bonds, or any series of them, for the 08 safeguarding and disbursement of any of the money in the bond redemption fund or 09 for duties with respect to the enforcement, authentication, delivery, payment, and 10 registration of the bonds as the committee may determine. The committee shall fix the 11 rights, duties, powers, and obligations of the trustee or trustees. 12 (d) In its determination of all matters and questions relating to the issuance 13 and sale of the bonds and the fixing of their maturities, terms, conditions, and 14 covenants as provided in (a) of this section, the decisions of the committee shall be 15 those that are reasonably necessary for the best interests of the state and its inhabitants 16 and that will accomplish the most advantageous sale of the bonds. Decisions of the 17 committee, as expressed in a bond resolution, are final and are conclusively 18 considered to comply with the requirements of AS 37.15.900 - 37.15.955. 19 Sec. 37.15.915. Bond resolution. The committee shall authorize the issuance 20 of bonds by adopting a resolution and shall prepare all other documents and 21 proceedings necessary for the issuance, sale, and delivery of the bonds or any part or 22 series of them. The bond resolution must fix the principal amount, denominations, 23 date, maturities, manner of sale, place or places of payment, rights of redemption, if 24 any, terms, form, conditions, and covenants of the bonds or each series of them. 25 Sec. 37.15.920. Enforcement by bond owner. (a) The owner or owners of not 26 less than 10 percent of the aggregate principal amount of any series or issue of bonds 27 or the trustee for the owners of the bonds or any series of them may, by appropriate 28 proceedings in state court, require and compel the transfer, setting aside, and payment 29 of money and the enforcement of all of the terms, conditions, and covenants as 30 required and provided in AS 37.15.900 - 37.15.955, as appropriate, and the bond 31 resolution.
01 (b) A proceeding under (a) of this section may be commenced and conducted 02 only in the Superior Court for the State of Alaska, First Judicial District at Juneau. 03 Sec. 37.15.925. Amounts required for payments. The committee shall, 04 before June 30 of each year or from time to time within the year, as appropriate, 05 commencing with the year in which the bonds are issued, certify to the commissioner 06 of revenue and the commissioner of administration the amounts required in the current 07 fiscal year and the next ensuing fiscal year by the bond resolution or resolutions to be 08 paid from the general fund into the bond redemption fund and to be paid into and 09 maintained in any reserve fund or account or other fund or account created by the 10 bond resolution or resolutions, and shall also certify to the commissioners the last date 11 or dates upon which payments may be made. 12 Sec. 37.15.930. Purposes and sufficiency of revenue. The proceeds of bonds 13 may be used for the purposes described in AS 37.15.900(a), as appropriate. Bonds 14 may not be issued unless the committee first finds that the actuarially assumed rate of 15 return on the funds managed by the Alaska Retirement Management Board is 16 projected to exceed the true interest cost to be paid on the bonds by at least 1.5 percent 17 annually. 18 Sec. 37.15.935. Refunding. (a) The committee may refund the bonds or any 19 part of them at or before their maturities or redemption dates by the issuance of 20 refunding bonds of the state if, in the opinion of the committee, refunding is 21 advantageous to and in the best interest of the state and its inhabitants. 22 (b) The issuance of refunding bonds need not be authorized by the voters of 23 the state or by an act of the legislature. The committee shall adopt the resolution or 24 resolutions and prepare all other documents and proceedings necessary for the 25 issuance, exchange or sale, and delivery of the refunding bonds. All provisions of 26 AS 37.15.900 - 37.15.955 are applicable to the refunding bonds and to the issuance, 27 sale, or exchange of them, except as otherwise provided in this section. 28 (c) Refunding bonds may be issued in a principal amount sufficient to provide 29 money for the advance or current refunding of all bonds to be refunded and interest on 30 the refunded bonds and, in addition, for the payment of all costs of issuance and 31 administration of the refunding bonds. These expenses also include the difference in
01 amount between the par value of the refunding bonds and any amount less than par for 02 which the refunding bonds are sold; the premium, if any, necessary to be paid in order 03 to call or retire the outstanding bonds and the interest accruing on them to date of the 04 call or retirement; and other such costs. The committee is authorized to incur expenses 05 to carry out this section. 06 (d) The committee may contract with a refunding trustee to hold the proceeds 07 of refunding bonds in trust until the proceeds, together with earnings on the proceeds, 08 are applied to pay the principal of, premium, if any, and interest on the bonds to be 09 refunded. Until the refunding bond proceeds are applied, the proceeds may be invested 10 in direct obligations of, or obligations guaranteed by, the United States or an agency or 11 corporation of the United States whose obligations constitute direct obligations of, or 12 obligations guaranteed by the United States. 13 Sec. 37.15.940. Bonds as legal investments. The bonds are legal investments 14 for all banks, trust companies, savings banks, savings and loan associations, and other 15 persons carrying on a banking business, all insurance companies and other persons 16 carrying on an insurance business, and all executors, administrators, trustees, and other 17 fiduciaries. The bonds may be accepted as security for deposits of all money of the 18 state and its political subdivisions. 19 Sec. 37.15.945. Statutory construction. AS 37.15.900 - 37.15.955 shall be 20 liberally construed in order to carry out the purposes for which they were enacted. 21 Sec. 37.15.950. Regulations. The committee may adopt regulations necessary 22 to implement the provisions of AS 37.15.900 - 37.15.955. 23 Sec. 37.15.955. Definitions. In AS 37.15.900 - 37.15.955, 24 (1) "bond redemption fund" means the pension obligation bond 25 redemption fund established in AS 37.15.905; 26 (2) "bond resolution" means a resolution or resolutions adopted by the 27 committee under AS 37.15.915 authorizing the issuance of bonds; 28 (3) "bonds" means the pension obligation bonds authorized in 29 AS 37.15.900 - 37.15.955; 30 (4) "committee" means the state bond committee created in 31 AS 37.15.110 or any other committee, body, department, or officer of the state that
01 succeeds to the rights, powers, duties, and obligations of the state bond committee by 02 law; 03 (5) "costs of issuance and administration" means all costs associated 04 with issuance and administration of pension obligation bonds and refunding bonds, 05 including costs of bond printing, official statements, financial advisors, travel costs, 06 rating agencies, bond insurance, letters and lines of credit for credit enhancement, 07 underwriters, legal services, paying agents, bond registrars, bond and escrow trustees, 08 arbitrage rebate, and all other costs, including administrative costs, both direct and 09 indirect. 10 * Sec. 8. AS 37 is amended by adding a new chapter to read: 11 Chapter 16. Alaska Pension Obligation Bond Corporation. 12 Sec. 37.16.010. Alaska Pension Obligation Bond Corporation. There is 13 established the Alaska Pension Obligation Bond Corporation. The corporation is a 14 public corporation and government instrumentality in the Department of Revenue 15 managed by a board of directors. The purpose of the corporation is to finance 16 prepayment of all or a portion of a governmental employer's share of unfunded 17 accrued actuarial liability of retirement systems. 18 Sec. 37.16.020. Board of directors. The directors of the corporation are the 19 commissioner of commerce, community, and economic development, the 20 commissioner of administration, and the commissioner of revenue. If a director is 21 absent or otherwise unable to act, the director's designee in the department shall act as 22 a director of the corporation in the director's place. 23 Sec. 37.16.030. Bond authorization. (a) For purposes of financing 24 prepayment of all or a portion of a governmental employer's share of unfunded 25 accrued actuarial liability of retirement systems, including the costs of issuance and 26 administration, the issuance and sale of bonds by the corporation is authorized as 27 provided in this section and AS 37.16.040 - 37.16.900. The net proceeds of the sale of 28 the bonds remaining after payment of costs of issuance and administration shall be 29 transferred to the commissioner of administration for the governmental employer's 30 account. Accrued interest paid on the bonds shall be paid into the reserve fund. 31 (b) The total unpaid principal amount of bonds, including refunding bonds,
01 but excluding refunded bonds, may not exceed $5,000,000,000. The bonds do not 02 constitute a general obligation of the state. Authorization by the votes of the state or 03 the legislature is not required. 04 (c) The corporation may enter into agreements with other state agencies as 05 necessary or convenient to implement this section and AS 37.16.040 - 37.16.900. 06 (d) The corporation may contract for the services of underwriters, paying 07 agents, trustees, bond printers, rating agencies, bond insurance, credit enhancement 08 providers, accountants, financial advisors, and bond counsel, and other services as are 09 necessary to accomplish the bond issuance and sale. 10 Sec. 37.16.040. Reserve fund. (a) The corporation may establish and maintain 11 a special fund called the Alaska Pension Obligation Bond Corporation reserve fund in 12 which there shall be deposited or transferred 13 (1) all money appropriated by the legislature for the purpose of the 14 fund in accordance with the provisions of (g) of this section; 15 (2) all proceeds of bonds required to be deposited in the fund by terms 16 of a contract between the corporation and its bondholders or a resolution of the 17 corporation with respect to the proceeds of bonds; 18 (3) all other money appropriated by the legislature to the reserve fund; 19 and 20 (4) any other money or funds of the corporation that it decides to 21 deposit in the fund. 22 (b) Subject to the provisions of (h) of this section, money in the reserve fund 23 shall be held and applied solely to the payment of the interest on and principal of 24 bonds of the corporation as the interest and principal become due and payable and for 25 the retirement of bonds. Money may not be withdrawn if a withdrawal would reduce 26 the amount in the reserve fund to an amount less than the required debt service reserve 27 except for payment of interest then due and payable on bonds and the principal of 28 bonds then maturing and payable and for the retirement of bonds in accordance with 29 the terms of a contract between the corporation and its bondholders and for which 30 payments of other money of the corporation is not then available. 31 (c) Money in the reserve fund in excess of the required debt service reserve as
01 defined in (b) of this section, whether by reason of investment or otherwise, may be 02 withdrawn at any time by the corporation and transferred to another fund or account of 03 the corporation subject to the provision of (h) of this section. 04 (d) Money in the reserve fund may be invested in the same manner and on the 05 same conditions as permitted for investment of funds belonging to the state or held in 06 the treasury under AS 37.10.070; however, the corporation may agree with the 07 bondholders to further limit these investments. 08 (e) For purposes of valuation, investments in the reserve fund shall be valued 09 at par or, if purchased at less than par, at cost unless otherwise provided by resolution 10 of the corporation. Valuation on a particular date shall include the amount of interest 11 then earned or accrued to that date on the money or investments in the reserve fund. 12 (f) Notwithstanding any other provision of AS 37.16.010 - 37.16.900, bonds 13 may not be issued by the corporation unless there is in the reserve fund the required 14 debt service reserve for all bonds then issued and outstanding and for the bonds to be 15 issued; however, the corporation may satisfy this requirement by depositing as much 16 of the proceeds of the bonds to be issued, upon their issuance, as is needed to meet the 17 required debt service reserve. The corporation may at any time issue its bonds or notes 18 for the purpose of increasing the amount in the reserve fund to the required debt 19 service reserve, or to meet whatever higher or additional reserve that may be fixed by 20 the corporation with respect to the fund. 21 (g) In order to assure the maintenance of the required debt service reserve in 22 the reserve fund, the legislature may appropriate annually to the corporation for 23 deposit in the fund the sum, certified by the chair of the corporation to the governor 24 and to the legislature, that is necessary to restore the fund to an amount equal to the 25 required debt service reserve. The chair annually, before January 30, shall make and 26 deliver to the governor and to the legislature a certificate stating the sum required to 27 restore the fund to that amount, and the certified sum may be appropriated and paid to 28 the corporation during the then current state fiscal year. Nothing in this subsection 29 creates a debt or liability of the state. 30 (h) All amounts received on account of money appropriated to the reserve 31 fund shall be held and applied in accordance with (b) of this section.
01 (i) All references to the reserve fund in this section include special accounts 02 within the reserve fund that may be created by the corporation to secure the payment 03 of particular bonds. 04 (j) The commissioner of revenue may, subject to appropriation, lend surplus 05 money in the general fund to the corporation for deposit to any account in the reserve 06 fund in an amount equal to the required debt service reserve. The loans shall be made 07 on the terms and conditions that may be agreed upon by the commissioner of revenue 08 and the corporation, including, without limitation, terms and conditions providing that 09 the loans need not be repaid until the obligations of the corporation secured and to be 10 secured by the account in the reserve fund are no longer outstanding. 11 (k) In this section, "required debt service reserve" means, as of the date of 12 computation, the amount required to be on deposit in the reserve fund as provided by 13 resolution of the corporation. 14 Sec. 37.16.050. Bond terms. (a) The bonds may be issued and sold at public 15 or negotiated sale in the manner, in the amounts or series, and at the time or times that 16 the corporation determines the bonds, or each series of them, shall be sold at the price 17 and upon the terms, conditions, and covenants set by the corporation after considering 18 market conditions. Interest rates may be fixed or variable. 19 (b) The bonds mature at the time or times fixed by the corporation. The bonds 20 may be subject to redemption before their fixed maturities, as determined by the 21 corporation, with or without a premium or premiums. The bonds may be in 22 denominations determined by the corporation; may be issued in fully or partially 23 registered form; must be payable as to principal and interest at the place or places 24 determined by the corporation; must be signed in the manner provided by the 25 corporation; and must be issued under and subject to the terms, conditions, covenants, 26 and protective features safeguarding payment of the bonds as found necessary by the 27 corporation. 28 (c) If the corporation finds it reasonably necessary, the corporation may select 29 a trustee or trustees for the holders of the bonds, or any series of them, for the 30 safeguarding and disbursement of any of the money in the bond reserve fund or for 31 duties with respect to the enforcement, authentication, delivery, payment, and
01 registration of the bonds as the corporation may determine. The corporation shall fix 02 the rights, duties, powers and obligations of the trustee or trustees. 03 (d) In its determination of all matters and questions relating to the issuance 04 and sale of the bonds and the fixing of their maturities, terms, conditions, and 05 covenants as provided in (a) of this section, the decisions of the corporation shall be 06 those that are reasonably necessary for the best interests of the state and its inhabitants 07 and that will accomplish the most advantageous sale of the bonds. Decisions of the 08 corporation, as expressed in a bond resolution, are final and are conclusively 09 considered to comply with the requirements of AS 37.16.010 - 37.16.900. 10 Sec. 37.16.060. Bond resolution. The corporation shall authorize the issuance 11 of bonds by adopting a resolution and shall prepare all other documents and 12 proceedings necessary for the issuance, sale, and delivery of the bonds or any part or 13 series of them. The bond resolution must fix the principal amount, denominations, 14 date, maturities, manner of sale, place or places of payment, rights of redemption, if 15 any, terms, form, conditions, and covenants of the bonds or each series of them. 16 Sec. 37.16.070. Enforcement by bond owner. (a) The owner or owners of not 17 less than 10 percent of the aggregate principal amount of any series or issue of bonds 18 or the trustee for the owners of the bonds or any series of them may, by appropriate 19 proceedings in state court, require and compel the transfer, setting aside, and payment 20 of money and the enforcement of all of the terms, conditions, and covenants as 21 required and provided in AS 37.16.010 - 37.16.900, as appropriate, and the bond 22 resolution. 23 (b) A proceeding under (a) of this section may be commenced and conducted 24 only in the Superior Court for the State of Alaska, First Judicial District at Juneau. 25 Sec. 37.16.080. Purposes and sufficiency of revenue. The proceeds of bonds 26 may be used for the purposes described in AS 37.16.030(a), as appropriate. Bonds 27 may not be issued unless the corporation first finds that the actuarially assumed rate of 28 return on the funds managed by the Alaska Retirement Management Board is 29 projected to exceed the true interest cost to be paid on the bonds by at least 1.5 percent 30 annually. 31 Sec. 37.16.090. Refunding. (a) The corporation may refund the bonds or any
01 part of them at or before their maturities or redemption dates by the issuance of 02 refunding bonds of the corporation if, in the opinion of the corporation, refunding is 03 advantageous to and in the best interest of the state and its inhabitants. 04 (b) The issuance of refunding bonds need not be authorized by the voters of 05 the state or by an act of the legislature. The corporation shall adopt the resolution or 06 resolutions and prepare all other documents and proceedings necessary for the 07 issuance, exchange or sale, and delivery of the refunding bonds. All provisions of 08 AS 37.16.010 - 37.16.900 are applicable to the refunding bonds and to the issuance, 09 sale, or exchange of them, except as otherwise provided in this section. 10 (c) Refunding bonds may be issued in a principal amount sufficient to provide 11 money for the advance or current refunding of all bonds to be refunded and interest on 12 the refunded bonds and, in addition, for the payment of all costs of issuance and 13 administration of the refunding bonds. These expenses also include the difference in 14 amount between the par value of the refunding bonds and any amount less than par for 15 which the refunding bonds are sold; the premium, if any, necessary to be paid in order 16 to call or retire the outstanding bonds and the interests accruing on them to date of the 17 call or retirement; and other of these costs. The corporation is authorized to incur 18 expenses to carry out this section. 19 (d) The corporation may contract with a refunding trustee to hold the proceeds 20 of refunding bonds in trust until the proceeds, together with earnings on the proceeds, 21 are applied to pay the principal of premium, if any, and interest on the bonds to be 22 refunded. Until the refunding bond proceeds are applied, the proceeds may be invested 23 in direct obligations of, or obligations guaranteed by, the United States of an agency or 24 corporation of the United States whose obligations constitute direct obligations of, or 25 obligations guaranteed by the United States. 26 Sec. 37.16.100. Bonds as legal investments. The bonds are legal investments 27 for all banks, trust companies, savings banks, savings and loan associations, and other 28 persons carrying on a banking business, all insurance companies and other persons 29 carrying on an insurance business, and all executors, administrators, trustees, and other 30 fiduciaries. The bonds may be accepted as security for deposits of all money of the 31 state and its political subdivisions.
01 Sec. 37.16.110. Debt service repayment contracts. The corporation shall 02 enter into contracts with governmental employers for the purpose of recouping 03 amounts paid as debt service on bonds issued by the corporation for the benefit of 04 governmental employers. The corporation may pledge the revenue of the contracts as 05 security for the bonds issued by the corporation. 06 Sec. 37.16.800. Statutory construction. AS 37.16.010 - 37.16.900 shall be 07 liberally construed in order to carry out the purposes for which they were enacted. 08 Sec. 37.16.810. Regulations. The corporation may adopt regulations necessary 09 to implement the provisions of AS 37.16.010 - 37.16.900. 10 Sec. 37.16.900. Definitions. In AS 37.16.010 - 37.16.900, 11 (1) "bond resolution" means the resolution or resolutions adopted by 12 the corporation under AS 37.16.060 authorizing the issuance of bonds; 13 (2) "bonds" means the pensions obligation bonds authorized in 14 AS 37.16.010 - 37.16.900; 15 (3) "corporation" means the Alaska Pension Obligation Bond 16 Corporation created in AS 37.16.010; 17 (4) "costs of issuance and administration" means all costs associated 18 with issuance and administration of pension obligation bonds and refunding bonds, 19 including costs of bond printing, official statements, financial advisors, travel costs, 20 rating agencies, bond insurance, letters and lines of credit for credit enhancement, 21 underwriters, legal services, paying agents, bonds registrars, bond and escrow trustees, 22 arbitrage rebate, and all other costs, including administrative costs, both direct and 23 indirect; 24 (5) "reserve fund" means the Alaska Pension Obligation Bond 25 Corporation reserve fund established in AS 37.16.040. 26 * Sec. 9. AS 39.35.100(b)(3) is amended to read: 27 (3) A separate account for each employer shall be maintained. The 28 account shall be credited with contributions of the employer. Except as provided in 29 AS 39.35.270(d), this [THIS] account shall be charged with the employer's actuarial 30 charge for pension, death benefits, and other benefits paid under this plan to or on 31 behalf of the employee of the employer. Except as provided in AS 39.35.270(d),
01 after [AFTER] an allowance for interest credited to employee contribution accounts 02 and employee savings accounts, the investment income of the pension fund shall be 03 allocated to the retirement reserve account and to each employer asset share account 04 according to the ratio that the average of the assets in the account as of the beginning 05 and as of the end of the fiscal year bears to the total of the average balance of the 06 retirement reserve account and all employer accounts. 07 * Sec. 10. AS 39.35.100(b)(4) is amended to read: 08 (4) An expense account shall be maintained for the plan. Except as 09 provided in AS 39.35.270(d), this [THIS] account shall be charged with all 10 disbursements representing administrative expenses incurred by the plan. At the end of 11 the year, the expense account shall be allocated to each employer in accordance with 12 (3) of this subsection. Expenditures from this account shall be included in the 13 governor's budget for each fiscal year and are subject to approval by the legislature. 14 * Sec. 11. AS 39.35.270 is amended by adding new subsections to read: 15 (d) An employer may prepay all or a portion of the employer's share of any 16 accrued actuarial liability to the plan in a lump sum. The commissioner may, by 17 regulation, establish a minimum amount for the lump sum payment of a portion. The 18 commissioner shall charge to the employer appropriate and reasonable costs to the 19 plan attributable to a lump sum payment that are not greater than administrative costs 20 applied to other employer contributions. If an employer makes a lump sum payment, 21 the lump sum payment shall be accounted for separately in accordance with 22 regulations adopted by the commissioner. The regulations must provide for crediting 23 to each lump sum payment account all earnings and losses received from investment 24 of that lump sum payment. The lump sum payment shall be used solely to offset 25 contributions under this section required of the employer that made the lump sum 26 payment, taking into account earnings and losses from its investment. A payment 27 made by an employer under this subsection, together with all earnings and losses from 28 investment of that payment, may not be considered in calculating that employer's 29 share of any discretionary payment authorized by the state that benefits multiple 30 employers. 31 (e) For each employer that elects to prepay all or a portion of the employer's
01 share of any accrued actuarial liability to the plan in a lump sum under (d) of this 02 section, the administrator shall calculate a revised employer contribution rate for that 03 employer in recognition of that prepayment not more than 180 days following the 04 prepayment. 05 * Sec. 12. AS 44.85.010 is amended to read: 06 Sec. 44.85.010. Legislative policy. (a) It is the policy of the state to 07 (1) [TO] foster and promote by all reasonable means the provision of 08 adequate capital markets and facilities for borrowing money by municipalities in the 09 state to finance capital improvements or for other authorized purposes, to assist these 10 municipalities in fulfilling their capital needs and requirements by use of borrowed 11 money within statutory interest rate or cost of borrowing limitations, to the greatest 12 extent possible to reduce costs of borrowed money to taxpayers and residents of the 13 state, and equally to encourage continued investor interest in the purchase of bonds or 14 notes of municipalities as sound and preferred securities for investment; 15 (2) [TO] encourage municipalities to continue their independent 16 undertakings and financing of capital improvements and other authorized purposes 17 and to assist them by making capital funds available at reduced interest costs for 18 orderly financing of capital improvements and other purposes especially during 19 periods of restricted credit or money supply, particularly for those municipalities not 20 otherwise able to borrow for capital needs; 21 (3) [TO] assist municipalities to provide for adequate insurance 22 coverage by authorizing the Alaska Municipal Bond Bank Authority to issue 23 negotiable or nonnegotiable revenue bonds, notes, or certificates of participation either 24 directly or through an entity it may create for the purpose of providing a self-insurance 25 program for municipalities or municipal joint insurance arrangements organized under 26 AS 21.76; 27 (4) assist governmental employers to prepay all or a portion of 28 their share of unfunded accrued actuarial liabilities of retirement systems in an 29 effort to reduce their costs of satisfying their contractual obligations to provide 30 retirement and other benefits to public employees through the issuance of bonds, 31 notes, commercial paper, or other obligations by the bond bank authority or by a
01 subsidiary corporation created by the bond bank authority under AS 44.85.085. 02 (b) The legislature further declares that 03 (1) the exercise of the powers of the state in the interest of its 04 municipalities and in the interest of public employees of the state and of its 05 municipalities is required to further and implement the policies declared in (a) of this 06 section by authorizing the creation of a state bond bank authority as a body corporate 07 and politic that will have full powers to borrow money and to issue its bonds and notes 08 to make capital funds available for borrowing by municipalities and for borrowing 09 by or on behalf of governmental employers, by authorizing governmental 10 employers to contract with the bond bank authority or with a subsidiary created 11 under AS 44.85.085 for the purpose of reducing future costs of providing 12 retirement and other benefits to employees, and by granting broad powers to the 13 bond bank authority to carry out the declared policies, which are in the public interest 14 of the state and its taxpayers and residents; 15 (2) state funds should be applied or authorized to be paid to a state 16 bond bank authority only to provide adequate assurance and security to the holders of 17 the bonds or notes of the bond bank authority; 18 (3) the bond bank authority should conduct its operations to provide 19 the lowest rates in terms of borrowing to municipalities as is consistent with a self- 20 supporting operation with no expectation of subsidization with state funds; the 21 legislature does not intend that the bond bank authority be utilized as a means to 22 finance municipalities beyond their capability to meet repayment schedules and debt 23 service requirements of bonds or notes; 24 (4) the bond bank authority or its subsidiary should conduct its 25 operations to provide the lowest rates in terms of borrowing to governmental 26 employers under AS 44.85.085 and 44.85.086 as is consistent with a self- 27 supporting operation with no expectation of subsidization with state funds; the 28 legislature does not intend that the bond bank authority or its subsidiary be 29 utilized as a means to finance governmental employers under AS 44.85.085 and 30 44.85.086 beyond their capability to meet repayment schedules and debt service 31 requirements of bonds, notes, commercial paper, or other obligations to the bond
01 bank authority or its subsidiary. 02 * Sec. 13. AS 44.85.080 is amended to read: 03 Sec. 44.85.080. Powers of bond bank authority. The bond bank authority 04 may 05 (1) sue and be sued; 06 (2) adopt and alter an official seal; 07 (3) make and enforce bylaws and regulations for the conduct of its 08 business and for the use of its services and facilities; 09 (4) maintain an office at any place in the state; 10 (5) acquire, hold, use, and dispose of its income, revenues, funds, and 11 money; 12 (6) acquire, rent, lease, hold, use, and dispose of other personal 13 property for its purposes; 14 (7) subject to AS 44.85.100(b), borrow money and issue its negotiable 15 bonds or notes and provide for and secure their payment, provide for the rights of their 16 holders, and purchase, hold, and dispose of any of its bonds or notes; 17 (8) fix and revise from time to time and charge and collect fees and 18 charges for the use of its services or facilities; 19 (9) accept gifts or grants from the United States, or from any 20 governmental unit or person, firm, or corporation, carry out the terms or provisions or 21 make agreements with respect to the gifts or grants, and do all things necessary, 22 useful, desirable, or convenient in connection with procuring, accepting, or disposing 23 of the gifts or grants; 24 (10) do anything authorized by this chapter, through its officers, 25 agents, or employees or by contracts with a person; 26 (11) make, enter into, and enforce all contracts necessary, convenient, 27 or desirable for the purposes of the bond bank authority or pertaining to a loan to a 28 political subdivision, a purchase or sale of municipal bonds or other investments, or 29 the performance of its duties and execution of any of its powers under this chapter; 30 (12) purchase or hold municipal bonds at prices and in a manner the 31 bond bank authority considers advisable, and sell municipal bonds acquired or held by
01 it at prices without relation to cost and in a manner the bond bank authority considers 02 advisable; 03 (13) invest funds or money of the bond bank authority not required at 04 the time of investment for loan to political subdivisions for the purchase of municipal 05 bonds, in the same manner as permitted for investment of funds belonging to the state, 06 except as otherwise provided in this chapter; 07 (14) prescribe the form of application or procedure required of a 08 political subdivision for a loan or purchase of its municipal bonds, fix the terms and 09 conditions of the loan or purchase, and enter into agreements with political 10 subdivisions with respect to loans or purchases; 11 (15) render services to a political subdivision in connection with a 12 public or private sale of its municipal bonds, including advisory and other services, 13 and charge for services rendered; 14 (16) charge for its costs and services in review or consideration of a 15 proposed loan to a political subdivision or purchase by the bond bank authority of 16 municipal bonds of the political subdivision, whether or not the loan is made or the 17 municipal bonds purchased; 18 (17) fix and establish terms and provisions with respect to a purchase 19 of municipal bonds by the bond bank authority, including date and maturities of the 20 bonds, provisions as to redemption or payment before maturity, and any other matters 21 that [WHICH] in connection with the purchase are necessary, desirable, or advisable 22 in the judgment of the bond bank authority; 23 (18) procure insurance against any losses in connection with its 24 property, operations, or assets in amounts and from insurers as it considers desirable; 25 (19) to the extent permitted under its contracts with the holders of 26 bonds or notes of the bond bank authority, consent to modification of the rate of 27 interest, time and payment of installment of principal or interest, security or any other 28 term of a bond or note, contract or agreement of any kind to which the bond bank 29 authority is a party; 30 (20) by regulation, create a new entity or new entities for the purpose 31 of issuing negotiable or nonnegotiable revenue bonds, notes, or certificates of
01 participation to finance a self-insurance program for municipalities or municipal joint 02 insurance arrangements organized under AS 21.76 or to provide assistance to 03 governmental employers under AS 44.85.085(a); the powers, duties, and 04 membership of the new entity or entities shall be limited to the powers, duties, and 05 membership of the authority and stated in the regulation; the new entity or entities 06 shall each be a public corporation and an instrumentality of the state with the same 07 legal existence and continuing succession as the bond bank authority; and 08 (21) do all acts and things necessary, convenient, or desirable to carry 09 out the powers expressly granted or necessarily implied in this chapter. 10 * Sec. 14. AS 44.85 is amended by adding new sections to read: 11 Sec. 44.85.085. Creation of subsidiary corporation. (a) The bond bank 12 authority may create one or more subsidiary corporations for the following purposes: 13 (1) providing financial and other assistance to governmental employers 14 to enable the governmental employers to reduce their costs of providing retirement 15 and other benefits to their employees by prepaying all or a portion of their shares of 16 the unfunded accrued actuarial liabilities of retirement systems; 17 (2) receiving payments and providing servicing for payments to or 18 from participating governmental employers; and 19 (3) performing other duties and providing other services as the 20 subsidiary corporation considers necessary or desirable to further the purposes set out 21 in (1) and (2) of this subsection. 22 (b) The bond bank authority may incorporate under AS 10.20.146 - 10.20.166 23 a subsidiary corporation created under (a) of this section. The bond bank authority 24 may transfer assets of the bond bank authority to the subsidiary corporation and may 25 agree to secure bonds, notes, commercial paper, or other obligations of the subsidiary 26 corporation with a reserve fund established under AS 44.85.270. 27 (c) A subsidiary corporation created under (a) of this section may borrow 28 money and issue bonds, notes, commercial paper, or other obligations as evidence of 29 that borrowing and may have all the powers of the bond bank authority that the bond 30 bank authority grants to it. The provisions of AS 44.85.130 - 44.85.170 and 44.85.270 31 - 44.85.390 apply to the subsidiary corporation and to bonds, notes, commercial paper,
01 or other obligations issued by the subsidiary corporation. Unless otherwise provided 02 by the bond bank authority, the debts, liabilities, and obligations of the subsidiary 03 corporation are not the debts, liabilities, or obligations of the bond bank authority. 04 (d) The staff of the bond bank authority serves as staff of a subsidiary 05 corporation created under (a) of this section. The bond bank authority shall determine 06 the membership or the process for selecting the membership of the board of directors 07 of the subsidiary corporation. The bond bank authority may permit some or all of its 08 directors to serve on the board of directors of the subsidiary corporation. 09 Sec. 44.85.086. Powers of subsidiary corporation. A subsidiary corporation 10 created under AS 44.85.085 has the following powers in addition those granted to it 11 under AS 44.85.085(c): 12 (1) to make loans to and enter into contracts with governmental 13 employers; 14 (2) to incur debt in furtherance of its purposes in the form of bonds, 15 notes, commercial paper, or other obligations as the subsidiary corporation considers 16 appropriate; 17 (3) to secure its debt with a pledge of any assets that are available to 18 the subsidiary corporation for the purpose, including identified revenue and 19 contractual payments from participating governmental employers, and the general 20 assets and revenue of the subsidiary corporation; and 21 (4) to enter into contracts with underwriters, bond counsel, financial 22 advisors, accountants, actuaries, and other contractors to provide assistance as the 23 subsidiary corporation considers desirable to accomplish its purposes. 24 * Sec. 15. AS 44.85.100(b) is amended to read: 25 (b) The bond bank authority shall include in the report required by (a) of this 26 section an estimate of the amount of revenue bonds of the bond bank authority to be 27 issued during the fiscal year following the fiscal year in which the report is submitted. 28 Other than refunding bonds and other than bonds, notes, commercial paper, or 29 other obligations issued under AS 44.85.086 and 44.85.180(a)(5), the [THE] bond 30 bank authority may not issue revenue bonds [, OTHER THAN REFUNDING 31 BONDS,] in excess of $75,000,000 during any fiscal year beginning after June 30,
01 1981, unless the legislature, by law, approves the estimate required by this subsection 02 for that fiscal year. 03 * Sec. 16. AS 44.85.180(a) is amended to read: 04 (a) Subject to AS 44.85.100(b), the bond bank authority may issue its bonds or 05 notes in principal amounts that it considers necessary to provide funds for any 06 purposes under this chapter, including 07 (1) the purchase of municipal bonds; 08 (2) the making of loans through the purchase of municipal bonds, 09 notes, or certificates of participation secured by an agreement between the bond bank 10 authority and a municipality or a municipal joint insurance arrangement organized 11 under AS 21.76; 12 (3) the payment, funding, or refunding of the principal of, or interest or 13 redemption premiums on, bonds or notes issued by it whether the bonds or notes or 14 interest to be funded or refunded have or have not become due; 15 (4) the establishment or increase of reserves to secure or to pay bonds 16 or notes or interest on bonds or notes and all other costs or expenses of the bond bank 17 authority incident to and necessary or convenient to carry out its corporate purposes 18 and powers; 19 (5) assisting governmental employers to prepay all or a portion of 20 their share of the unfunded accrued actuarial liabilities of retirement systems, 21 with security as the bond bank authority considers reasonable. 22 * Sec. 17. AS 44.85.180(c) is amended to read: 23 (c) Notwithstanding the provisions of (a) and (b) of this section, the total 24 amount of bond bank authority bonds and notes outstanding at any one time [, 25 EXCEPT BONDS OR NOTES ISSUED TO FUND OR REFUND BONDS OR 26 NOTES,] may not exceed $750,000,000. This subsection does not apply to (1) 27 bonds or notes issued to fund or refund bonds or notes; (2) bonds, notes, 28 commercial paper, and other obligations issued under AS 44.85.086 or 29 44.85.180(a)(5). 30 * Sec. 18. AS 44.85.410 is amended by adding a new paragraph to read: 31 (8) "governmental employer" means the State of Alaska or a
01 municipality or other state or municipal governmental entity within the state, including 02 an agency, instrumentality, district, school district, public corporation, department, 03 division, or other subdivision of the state or of a municipality, in its capacity as an 04 employer. 05 * Sec. 19. This Act takes effect immediately under AS 01.10.070(c).