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SB 97: "An Act relating to pension obligation bonds."

00                             SENATE BILL NO. 97                                                                          
01 "An Act relating to pension obligation bonds."                                                                          
02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
03    * Section 1. AS 18.56.086 is amended to read:                                                                      
04 Sec. 18.56.086. Creation of subsidiaries. The corporation may create                                                  
05 subsidiary corporations for the purpose of financing or facilitating the financing of                                   
06 school construction, facilities for the University of Alaska, facilities for ports and                                  
07 harbors, the acquisition, development, management, or operation of affordable                                           
08 housing, prepayment of all or a portion of a governmental employer's share of                                           
09 unfunded accrued actuarial liability of retirement systems, or other capital projects. A                                
10 subsidiary corporation created under this section may be incorporated under                                             
11 AS 10.20.146 - 10.20.166. The corporation may transfer assets of the corporation to a                                   
12 subsidiary created under this section. A subsidiary created under this section may                                      
13 borrow money and issue bonds as evidence of that borrowing, and has all the powers                                      
14 of the corporation that the corporation grants to it. However, a subsidiary created for                                 
15 the purpose of financing or facilitating the financing of prepayment of a governmental                                  
01 employer's share of unfunded accrued actuarial liability of retirement systems may                                      
02 borrow money and issue bonds only after submitting a proposal to the Legislative                                    
03 Budget and Audit Committee under (b) of this section, if the state bond rating is                                   
04 the equivalent of AA- or better, and subject to AS 37.15.903. Unless otherwise                                      
05 provided by the corporation, the debts, liabilities, and obligations of a subsidiary                                    
06 corporation created under this section are not the debts, liabilities, or obligations of the                            
07       corporation.                                                                                                      
08    * Sec. 2. AS 18.56.086 is amended by adding a new subsection to read:                                              
09 (b)  Before the issuance of bonds under this section, the subsidiary corporation                                        
10 shall submit a proposal to the Legislative Budget and Audit Committee for review,                                       
11 and 45 days shall elapse before bonds are issued, unless the Legislative Budget and                                     
12 Audit Committee earlier recommends that the subsidiary corporation proceed with the                                     
13 issuance. Should the Legislative Budget and Audit Committee recommend within the                                        
14 45-day period that the subsidiary corporation not proceed with the issuance of bonds,                                   
15 the subsidiary corporation shall again review the proposal and, if the subsidiary                                       
16 corporation decides to issue the bonds, the subsidiary corporation shall provide the                                    
17 Legislative Budget and Audit Committee with a statement of the subsidiary                                               
18       corporation's reasons for doing so before issuance under this section.                                            
19    * Sec. 3. AS 37.15.900(a) is amended to read:                                                                      
20 (a)  For purposes of financing prepayment of all or a portion of a governmental                                         
21 employer's share of unfunded accrued actuarial liability of retirement systems,                                         
22 including the costs of issuance and administration, the issuance and sale of bonds of                                   
23 the state by the committee is authorized as provided in this section and AS 37.15.903 -                                 
24 37.15.955, but only after submitting a proposal to the Legislative Budget and                                       
25 Audit Committee under (e) of this section and if the state bond rating is the                                       
26 equivalent of AA- or better. The net proceeds of the sale of the bonds remaining after                                  
27 payment of costs of issuance and administration shall be transferred to the                                             
28 commissioner of administration for the account of the governmental employer whose                                       
29 share of unfunded accrued actuarial liability is to be prepaid for application to that                                  
30 liability. Accrued interest paid on the bonds shall be paid into the pension obligation                                 
31       bond redemption fund.                                                                                             
01    * Sec. 4. AS 37.15.900 is amended by adding a new subsection to read:                                              
02 (e)  Before the issuance and sale of bonds under this section, the committee                                            
03 shall submit a proposal to the Legislative Budget and Audit Committee for review,                                       
04 and 45 days shall elapse before bonds are issued and sold, unless the Legislative                                       
05 Budget and Audit Committee earlier recommends that the committee proceed with the                                       
06 issuance. Should the Legislative Budget and Audit Committee recommend within the                                        
07 45-day period that the committee not proceed with the issuance and sale of bonds, the                                   
08 committee shall again review the proposal and, if the committee decides to issue and                                    
09 sell the bonds, the committee shall provide the Legislative Budget and Audit                                            
10 Committee with a statement of the committee's reasons for doing so before issuance                                      
11       under this section.                                                                                               
12    * Sec. 5. AS 37.15.903 is amended to read:                                                                         
13 Sec. 37.15.903. Pension obligation bond limit. The total unpaid principal                                             
14 amount of bonds, including refunding bonds, but excluding refunded bonds, issued by                                     
15 all state entities added together, for the purposes of financing prepayment of all or a                                 
16 portion of a governmental employer's share of unfunded accrued liability of retirement                                  
17       systems, may not exceed $2,500,000,000 [$5,000,000,000].                                                      
18    * Sec. 6. AS 37.16.030(a) is amended to read:                                                                      
19 (a)  For purposes of financing prepayment of all or a portion of a governmental                                         
20 employer's share of unfunded accrued actuarial liability of retirement systems,                                         
21 including the costs of issuance and administration, the issuance and sale of bonds by                                   
22 the corporation is authorized as provided in this section and AS 37.16.040 - 37.16.900,                                 
23 but only after submitting a proposal to the Legislative Budget and Audit                                            
24 Committee under (e) of this section and if the state bond rating is the equivalent of                               
25 AA- or better. The net proceeds of the sale of the bonds remaining after payment of                                     
26 costs of issuance and administration shall be transferred to the commissioner of                                        
27 administration for the account of the governmental employer whose share of unfunded                                     
28 accrued actuarial liability is to be prepaid for application to that liability. Accrued                                 
29       interest paid on the bonds shall be paid into the reserve fund.                                                   
30    * Sec. 7. AS 37.16.030 is amended by adding a new subsection to read:                                              
31 (e)  Before the issuance and sale of bonds under this section, the corporation                                          
01 shall submit a proposal to the Legislative Budget and Audit Committee for review,                                       
02 and 45 days shall elapse before bonds are issued and sold, unless the Legislative                                       
03 Budget and Audit Committee earlier recommends that the corporation proceed with                                         
04 the issuance. Should the Legislative Budget and Audit Committee recommend within                                        
05 the 45-day period that the corporation not proceed with the issuance and sale of bonds,                                 
06 the corporation shall again review the proposal and, if the corporation decides to issue                                
07 and sell the bonds, the corporation shall provide the Legislative Budget and Audit                                      
08 Committee with a statement of the corporation's reasons for doing so before issuance                                    
09       under this section.                                                                                               
10    * Sec. 8. AS 44.85.010(a) is amended to read:                                                                      
11            (a)  It is the policy of the state to                                                                        
12 (1)  foster and promote by all reasonable means the provision of                                                        
13 adequate capital markets and facilities for borrowing money by municipalities in the                                    
14 state to finance capital improvements or for other authorized purposes, to assist these                                 
15 municipalities in fulfilling their capital needs and requirements by use of borrowed                                    
16 money within statutory interest rate or cost of borrowing limitations, to the greatest                                  
17 extent possible to reduce costs of borrowed money to taxpayers and residents of the                                     
18 state, and equally to encourage continued investor interest in the purchase of bonds or                                 
19       notes of municipalities as sound and preferred securities for investment;                                         
20 (2)  encourage municipalities to continue their independent                                                             
21 undertakings and financing of capital improvements and other authorized purposes                                        
22 and to assist them by making capital funds available at reduced interest costs for                                      
23 orderly financing of capital improvements and other purposes especially during                                          
24 periods of restricted credit or money supply, particularly for those municipalities not                                 
25       otherwise able to borrow for capital needs;                                                                       
26 (3)  assist municipalities to provide for adequate insurance coverage by                                                
27 authorizing the Alaska Municipal Bond Bank Authority to issue negotiable or                                             
28 nonnegotiable revenue bonds, notes, or certificates of participation either directly or                                 
29 through an entity it may create for the purpose of providing a self-insurance program                                   
30 for municipalities or municipal joint insurance arrangements organized under                                            
31       AS 21.76;                                                                                                         
01 (4)  assist governmental employers to prepay all or a portion of their                                                  
02 share of unfunded accrued actuarial liabilities of retirement systems in an effort to                                   
03 reduce their costs of satisfying their contractual obligations to provide retirement and                                
04 other benefits to public employees through the issuance of bonds, notes, commercial                                     
05 paper, or other obligations by the bond bank authority or by a subsidiary corporation                                   
06 created by the bond bank authority under AS 44.85.085, but only after submitting a                                  
07 proposal to the Legislative Budget and Audit Committee and if the state bond                                        
08 rating is the equivalent of AA- or better; this assistance is limited as provided in                                    
09       AS 37.15.903;                                                                                                     
10 (5)  assist the University of Alaska to provide heating or energy                                                       
11 projects by providing capital funds through loans that minimize costs and the effects                                   
12       on the debt capacity of the University of Alaska;                                                                 
13 (6)  assist regional health organizations to provide health care facilities                                             
14 by providing capital funds through loans that minimize costs and the effects on the                                     
15 debt capacity of regional health organizations when the commissioner of health and                                      
16 social services anticipates a state financial benefit and an increase in regional quality                               
17       of care;                                                                                                          
18 (7)  assist joint action agencies in providing public utilities, including                                              
19 hydroelectric power projects, through loans and bonds that minimize costs and the                                       
20       effects on the debt capacity of public utilities and joint action agencies.                                       
21    * Sec. 9. AS 44.85.085(c) is amended to read:                                                                      
22 (c)  A subsidiary corporation created under (a) of this section may, after                                          
23 submitting a proposal to the Legislative Budget and Audit Committee under (e)                                       
24 of this section, if the state bond rating is the equivalent of AA- or better, and subject                           
25 to AS 37.15.903, borrow money and issue bonds, notes, commercial paper, or other                                        
26 obligations as evidence of that borrowing and may have all the powers of the bond                                       
27 bank authority that the bond bank authority grants to it. The provisions of                                             
28 AS 44.85.130 - 44.85.170 and 44.85.270 - 44.85.390 apply to the subsidiary                                              
29 corporation and to bonds, notes, commercial paper, or other obligations issued by the                                   
30 subsidiary corporation. Unless otherwise provided by the bond bank authority, the                                       
31 debts, liabilities, and obligations of the subsidiary corporation are not the debts,                                    
01       liabilities, or obligations of the bond bank authority.                                                           
02    * Sec. 10. AS 44.85.085 is amended by adding a new subsection to read:                                             
03 (e)  Before the issuance of bonds under this section or under AS 44.85.086, the                                         
04 subsidiary corporation shall submit a proposal to the Legislative Budget and Audit                                      
05 Committee for review, and 45 days shall elapse before bonds are issued, unless the                                      
06 Legislative Budget and Audit Committee earlier recommends that the subsidiary                                           
07 corporation proceed with the issuance. Should the Legislative Budget and Audit                                          
08 Committee recommend within the 45-day period that the subsidiary corporation not                                        
09 proceed with the issuance of bonds, the subsidiary corporation shall again review the                                   
10 proposal and, if the subsidiary corporation decides to issue the bonds, the subsidiary                                  
11 corporation shall provide the Legislative Budget and Audit Committee with a                                             
12 statement of the subsidiary corporation's reasons for doing so before issuance under                                    
13       this section.                                                                                                     
14    * Sec. 11. AS 44.85.086 is amended to read:                                                                        
15 Sec. 44.85.086. Powers of subsidiary corporation. A subsidiary corporation                                            
16 created under AS 44.85.085 has the following powers in addition those granted to it                                     
17       under AS 44.85.085(c):                                                                                            
18 (1)  to make loans to and enter into contracts with governmental                                                        
19       employers;                                                                                                        
20 (2)  to incur debt, subject to AS 37.15.903, in furtherance of its                                                      
21 purposes, in the form of bonds, notes, commercial paper, or other obligations as the                                    
22 subsidiary corporation considers appropriate, but only after submitting a proposal to                               
23 the Legislative Budget and Audit Committee under AS 44.85.085(e) and if the                                         
24       state bond rating is the equivalent of AA- or better;                                                             
25 (3)  to secure its debt with a pledge of any assets that are available to                                               
26 the subsidiary corporation for the purpose, including identified revenue and                                            
27 contractual payments from participating governmental employers, and the general                                         
28       assets and revenue of the subsidiary corporation; and                                                             
29 (4)  to enter into contracts with underwriters, bond counsel, financial                                                 
30 advisors, accountants, actuaries, and other contractors to provide assistance as the                                    
31       subsidiary corporation considers desirable to accomplish its purposes.                                            
01    * Sec. 12. AS 44.85.180(a) is amended to read:                                                                     
02            (a)  Subject to AS 44.85.100(b), the bond bank authority may issue its bonds or                              
03       notes in principal amounts that it considers necessary to provide funds for any                                   
04       purposes under this chapter, including                                                                            
05                 (1)  the purchase of municipal bonds;                                                                   
06 (2)  the making of loans through the purchase of municipal bonds,                                                       
07 notes, or certificates of participation secured by an agreement between the bond bank                                   
08 authority and a municipality or a municipal joint insurance arrangement organized                                       
09       under AS 21.76;                                                                                                   
10 (3)  the payment, funding, or refunding of the principal of, or interest or                                             
11 redemption premiums on, bonds or notes issued by it whether the bonds or notes or                                       
12       interest to be funded or refunded have or have not become due;                                                    
13 (4)  the establishment or increase of reserves to secure or to pay bonds                                                
14 or notes or interest on bonds or notes and all other costs or expenses of the bond bank                                 
15 authority incident to and necessary or convenient to carry out its corporate purposes                                   
16       and powers;                                                                                                       
17 (5)  assisting governmental employers to prepay all or a portion of their                                               
18 share of the unfunded accrued actuarial liabilities of retirement systems, with security                                
19 as the bond bank authority considers reasonable; however, to carry out this paragraph,                                  
20 bonds and other obligations may only be issued after submitting a proposal to the                                   
21 Legislative Budget and Audit Committee under (f) of this section and if the state                                   
22 bond rating is the equivalent of AA- or better; bonds issued under this paragraph are                                   
23       subject to AS 37.15.903.                                                                                          
24    * Sec. 13. AS 44.85.180 is amended by adding a new subsection to read:                                             
25 (f)  Before the issuance of bonds under this section, the bond bank authority                                           
26 shall submit a proposal to the Legislative Budget and Audit Committee for review,                                       
27 and 45 days shall elapse before bonds are issued, unless the Legislative Budget and                                     
28 Audit Committee earlier recommends that the bond bank authority proceed with the                                        
29 issuance. Should the Legislative Budget and Audit Committee recommend within the                                        
30 45-day period that the bond bank authority not proceed with the issuance of bonds, the                                  
31 bond bank authority shall again review the proposal and, if the bond bank authority                                     
01       decides to issue the bonds, the bond bank authority shall provide the Legislative                                 
02       Budget and Audit Committee with a statement of the bond bank authority's reasons for                              
03       doing so before issuance under this section.