CSSB 6(L&C): "An Act relating to reemployment of persons who retire under the teachers' retirement system; relating to retirement incentives for members of the defined benefit retirement plan of the teachers' retirement system and the defined benefit retirement plan of the Public Employees' Retirement System of Alaska; and providing for an effective date."
00 CS FOR SENATE BILL NO. 6(L&C) 01 "An Act relating to reemployment of persons who retire under the teachers' retirement 02 system; relating to retirement incentives for members of the defined benefit retirement 03 plan of the teachers' retirement system and the defined benefit retirement plan of the 04 Public Employees' Retirement System of Alaska; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 07 to read: 08 PURPOSE AND INTENT. The State of Alaska and many local governments and 09 school districts are facing the need to restructure their operations and workforces to reduce 10 expenditures and balance budgets. Retirement incentives are management tools that have been 11 used extensively by the private sector, the federal government, and other state and local 12 governments across the country. A purpose of this Act is to make those management tools 13 temporarily available to the state and to municipalities and school districts in the state. This 14 Act will enable those entities to reduce operating costs by allowing certain positions to
01 become vacant and then eliminating those positions or leaving them vacant. 02 * Sec. 2. AS 14.20.136(b) is amended to read: 03 (b) A member who is retired under AS 14.25.110 [AS 14.25.110(a)] may not 04 be reemployed under (a) of this section unless the member 05 (1) certifies that the member and the school district did not arrange 06 before the member retired from the school district for the member to be reemployed 07 by the school district after the member retired; and 08 (2) has been retired for at least 09 (A) 60 days if the member is at least 62 years of age; or 10 (B) six months if the member is less than 62 years of age. 11 * Sec. 3. AS 14.20.136(f) is amended to read: 12 (f) The requirements of (c), (d), and (e)(1) of this section do not apply to the 13 rehire of a member who is 14 (1) eligible for restoration of tenure rights under AS 14.20.165; or 15 (2) paid by the hour solely to mentor one or more members who 16 are employed in the teaching profession under AS 14.20.370 and have worked for 17 less than four years in that profession. 18 * Sec. 4. AS 14.25.043(f) is amended to read: 19 (f) If a member who retired under AS 14.25.110 [AS 14.25.110(a)] is 20 reemployed by a school district under AS 14.20.136, 21 (1) the member does not become an active member; 22 (2) the member shall continue to receive retirement benefits from the 23 plan as though the member were not reemployed by the school district; 24 (3) deductions from the member's salary may not be made under 25 AS 14.25.050; and 26 (4) the member may not receive credited service in the plan during the 27 period of reemployment. 28 * Sec. 5. AS 14.25.043(g) is amended to read: 29 (g) Notwithstanding (f) of this section, a member who is retired under 30 AS 14.25.110 [AS 14.25.110(a)] and reemployed by a school district under 31 AS 14.20.136 is eligible to receive the group health plan coverage provided to active
01 members employed by that school district. This subsection does not apply to a 02 retired member who is rehired and paid by the hour solely to mentor one or 03 more members who are employed in the teaching profession under AS 14.20.370 04 and have worked for less than four years in that profession. 05 * Sec. 6. AS 14.25.070(a) is amended to read: 06 (a) Each employer shall contribute to the system every payroll period an 07 amount calculated by applying a rate of 12.56 percent to the total of 08 (1) all base salaries paid by the employer to active members of the 09 system and to members who are retired from the plan, [AND] reemployed under 10 AS 14.20.136, and eligible to receive group health plan coverage under 11 AS 14.25.043(g); and 12 (2) all [INCLUDING ANY] adjustments to contributions required by 13 AS 14.25.173(a). 14 * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 RETIREMENT INCENTIVE PROGRAM. (a) An employer, including a state agency, 17 a political subdivision of the state, a public organization, and the University of Alaska, may 18 elect to adopt a retirement incentive program under this Act. The employer may limit 19 applicability of the program to employees 20 (1) in specific budget or administrative components designated by the 21 employer; 22 (2) in specific job classifications designated by the employer; 23 (3) in specific geographic locations identified by the employer; or 24 (4) based on any combination of factors under (1) - (3) of this subsection. 25 (b) Only the administrator may approve or deny an employee's application to 26 participate in a retirement incentive program adopted by an employer under (a) of this section. 27 The administrator shall deny an application by a teacher if, after consulting with the school 28 district that employs the teacher, the administrator determines that 29 (1) granting the application will create a vacant position that the school district 30 more likely than not will be unable to fill in a timely manner; and 31 (2) the school district's inability to fill the vacant position in a timely manner
01 will create undue hardship for the school district. 02 (c) An employer that elects to adopt a retirement incentive program under (a) of this 03 section shall propose the adopted program to the administrator for approval. The administrator 04 shall approve the program if the program meets the requirements of this section and, if the 05 employer is a state agency, sec. 14(a) of this Act. A program proposed under this section must 06 include 07 (1) job classification designations, and specific budget and administrative 08 components related to those job classification designations, that are wholly or partially made 09 up of employees who may be eligible to participate in the program; 10 (2) a reimbursement agreement that requires 11 (A) the employer, for each employee who participates in the program, 12 to reimburse the defined benefit retirement plan in the appropriate retirement system, 13 within three years after the end of the fiscal year in which the employee is appointed 14 to retirement, in an amount equal to the actuarial equivalent of the difference between 15 the benefits the participant receives after the addition of the credit under (i) of this 16 section and the benefits the participant would have received without the credit, less the 17 amount the participant has paid on the indebtedness determined under (g) or (h) of this 18 section; and 19 (B) the employer's obligation to contribute under this section be given 20 priority over other financial obligations of the employer to the maximum extent 21 permitted by law. 22 (d) An employer that elects, under (a) of this section, to adopt a retirement incentive 23 program may request that the administrator establish one or more periods during which one or 24 more employees of the employer who are eligible under (e) of this section may apply to 25 participate in the program. A period established by the administrator under this subsection 26 may not begin earlier than 30 days after the date it is established or end later than June 30, 27 2024, and must be not less than 30 days and not more than 60 days in duration. 28 (e) The administrator may not allow an employee to participate in a retirement 29 incentive program adopted under this Act unless the employee is eligible under the program 30 for appointment to retirement not later than the earlier of 31 (1) the first day of the sixth month that follows the last day of the application
01 period established by the administrator under (d) of this section; or 02 (2) a date set under the retirement incentive program as the date employees are 03 required to be eligible for appointment to retirement. 04 (f) An employee is eligible to participate in a retirement incentive program under this 05 Act only if 06 (1) the employee is a vested member of a defined benefit retirement plan in 07 the public employees' retirement system or the teachers' retirement system; 08 (2) the employee has credit for service under AS 14.25.110 or AS 39.35.370 09 that occurred before July 1, 2006; 10 (3) the employee is at least 50 years of age, and, before application of credit 11 described in (i) of this section, has 12 (A) at least 15 years of credited service as a peace officer or firefighter, 13 as those terms are defined in AS 39.35.680; or 14 (B) at least 20 years of credited service as an employee other than an 15 employee described in (A) of this paragraph; 16 (4) the employee will be qualified to retire under AS 14.25.110 or 17 AS 39.35.370 after receipt of the credit described in (i) of this section; 18 (5) for an employer that is a state agency, the employee satisfies the additional 19 requirements under sec. 8 of this Act; and 20 (6) the savings to the employer in personal services costs for the employee's 21 position will exceed the costs to the employer for that position within three years after the 22 employee is appointed to retirement. 23 (g) A member of the defined benefit retirement plan in the teachers' retirement system 24 who participates in an approved retirement incentive program under this Act is indebted to the 25 defined benefit retirement plan for an amount calculated under this subsection. The 26 indebtedness is 25.95 percent of the member's actual compensation for the school year in 27 which the member terminates employment, or the calculated school year compensation for a 28 member who works less than the entire school year, plus an appropriate share of the 29 administrative costs of the program. The member may apply annual or personal leave to the 30 indebtedness before appointment to retirement. If the indebtedness is outstanding 31 indebtedness at the time the member is appointed to retirement under the retirement incentive
01 program, the pension benefits payable to the member shall be reduced by an actuarial 02 adjustment that eliminates the indebtedness. 03 (h) A member of the defined benefit retirement plan in the public employees' 04 retirement system who participates in an approved retirement incentive program under this 05 Act is indebted to the defined benefit retirement plan for an amount calculated under this 06 subsection. The indebtedness is 22 1/2 percent for a peace officer or firefighter, and 20 1/4 07 percent for other members, of the member's actual annual compensation for the year in which 08 the member terminates employment, or the calculated annual compensation for a member 09 who works fewer than 12 months, plus an appropriate share of the administrative costs of the 10 program. The member may apply annual or personal leave to the indebtedness before 11 appointment to retirement. If the indebtedness is outstanding at the time the member is 12 appointed to retirement under the retirement incentive program, the pension benefits payable 13 to the member shall be reduced by an actuarial adjustment that eliminates the indebtedness. 14 (i) An employee who participates in an approved retirement incentive program under 15 this Act receives a credit of three years. The three years must be applied in the following 16 order of priority until exhausted: 17 (1) to meet the age or service required for eligibility for normal retirement 18 under AS 14.25.110 or AS 39.35.370, as appropriate; 19 (2) to meet the age required for early retirement under AS 14.25.110 or 20 AS 39.35.370, as appropriate; 21 (3) to reduce the actuarial adjustment required for early retirement under 22 AS 14.25.110 or AS 39.35.370, as appropriate; 23 (4) as years of credited service for calculating retirement benefits. 24 * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 AUTHORIZATION FOR STATE EMPLOYEE RETIREMENT INCENTIVE. (a) 27 Subject to (b) of this section, an employee of a state agency may participate in a retirement 28 incentive program approved under sec. 7 of this Act by the administrator if the employee is 29 eligible to participate under sec. 7 of this Act and the employee 30 (1) has been continuously employed by the state for at least one year before 31 the employee applies to participate in the program;
01 (2) is a permanent seasonal employee employed by the state in a permanent 02 seasonal position for the entire period the position was filled during the 12 months preceding 03 the employee's application to participate in the program; 04 (3) has been employed under a job-sharing agreement in which a state agency 05 allowed two or more employees to share a single position that is identified by a single 06 position control number, for the entire period in which the position was shared during the 12 07 months preceding the employee's application to participate in the program; or 08 (4) meets a combination of the requirements of this subsection. 09 (b) The governor, the lieutenant governor, and a commissioner, deputy commissioner, 10 or assistant commissioner of a principal department of the executive branch of state 11 government may not retire under a retirement incentive program adopted under this Act. 12 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 AUTHORIZATION FOR RETIREMENT INCENTIVE FOR EMPLOYEES OF THE 15 UNIVERSITY OF ALASKA. Notwithstanding AS 14.40.661 - 14.40.799, a participant in a 16 university retirement program under AS 14.40.661 - 14.40.799 who is vested in a defined 17 benefit retirement plan in the public employees' retirement system or the teachers' retirement 18 system may participate in a retirement incentive program for that defined benefit retirement 19 plan if the participant satisfies the requirements under secs. 7 - 19 of this Act that apply to 20 participants in that retirement incentive program. 21 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 POLITICAL SUBDIVISION OR PUBLIC ORGANIZATION EMPLOYMENT. 24 Notwithstanding AS 14.25 or AS 39.35, for purposes of determining the years of service 25 required for retirement under AS 14.25.110 or AS 39.35.370, as appropriate, an employee of a 26 state agency who has vested as a member of a defined benefit retirement plan in the teachers' 27 retirement system or the public employees' retirement system and applies to participate in a 28 retirement incentive program approved under this Act may receive credit for service while 29 employed with a political subdivision or a public organization that occurred before the 30 political subdivision or public organization elected to participate in that defined benefit 31 retirement plan. The credit may not be applied for the purpose of determining the amount of a
01 retirement benefit. 02 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 RECOVERY OF EMPLOYER DELINQUENCIES. To recover a delinquency owed 05 under this Act by an employer other than the state, the commissioner of administration may 06 (1) withhold an amount of money equal to the amount of the delinquency, or a 07 lesser amount, from money payable to the employer by the state, and credit it against the 08 delinquency; and 09 (2) bring an action against the employer. 10 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 STOPPING ENROLLMENT FOR ACTUARIAL REASONS. If the administrator 13 determines after approving a retirement incentive program under this Act that an increase in 14 the number of participants in that retirement incentive program will have a significant 15 negative effect on the actuarial soundness of a defined benefit retirement plan in the teachers' 16 retirement system or the public employees' retirement system, the administrator may close the 17 program to new applicants. 18 * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 REEMPLOYMENT INDEBTEDNESS; PROHIBITION ON REEMPLOYMENT. (a) 21 If an individual is reemployed as a member of the defined benefit retirement plan in the public 22 employees' retirement system under AS 39.35, the defined benefit retirement plan in the 23 teachers' retirement system under AS 14.25, the defined benefit retirement plan in the judicial 24 retirement system under AS 22.25, or the defined benefit retirement plan in the optional 25 university retirement program under AS 14.40.661 - 14.40.799 after appointment to 26 retirement under secs. 7 - 19 of this Act, that individual forfeits incentive credit received or 27 due under sec. 7(i) of this Act and incurs an indebtedness to the defined benefit retirement 28 plan under which the individual has been reemployed as a member. The indebtedness is 110 29 percent of the amount, including health insurance premium costs, that the individual received 30 solely as a result of participation in a retirement incentive program under this Act. The 31 administrator shall apply the amount the individual has paid under sec. 7 of this Act as a
01 requirement for participation in the retirement incentive as a credit toward the member's 02 reemployment indebtedness under this subsection. Interest on the reemployment indebtedness 03 accrues from the date of reemployment until the date that the individual either is appointed to 04 retirement and accepts an actuarial adjustment to the individual's future benefits or repays the 05 indebtedness in full. The rate of interest is that established by regulation for the member's 06 defined benefit retirement plan by the Alaska Retirement Management Board. 07 (b) A state agency or the University of Alaska may not employ or contract for 08 personal services with an individual who is appointed to retirement under a retirement 09 incentive program authorized by this Act for a period of three years immediately following 10 the date of the individual's appointment to retirement, except that 11 (1) the University of Alaska may enter into a personal services contract with 12 the individual for teaching or research; 13 (2) the individual may accept employment with the legislature during a 14 legislative session if the employment is on an hourly basis and does not entitle the individual 15 to receive retirement, health, or leave benefits; 16 (3) the individual may accept employment with a school district as a substitute 17 teacher; and 18 (4) the individual may accept employment with a school district if the 19 individual participated in the defined benefit retirement plan in the teachers' retirement system 20 and the employment is on an hourly basis and does not entitle the individual to receive 21 retirement, health, or leave benefits. 22 (c) Notwithstanding the prohibition in (b) of this section, a state agency or the 23 University of Alaska may enter into a personal services contract with an individual who was 24 appointed to retirement under secs. 7 - 19 of this Act if the administrator approves the 25 contract. 26 * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 OFFICE OF MANAGEMENT AND BUDGET. (a) The director of the office of 29 management and budget shall review each retirement incentive program adopted by a state 30 agency, determine whether the program will result in a net reduction to the operating costs of 31 the state agency that adopted it for a five-year period beginning July 1, 2021, and report the
01 outcome of the review to the administrator. The administrator may not approve a retirement 02 incentive program adopted by a state agency under sec. 7 of this Act unless the office of 03 management and budget determines that the program's expected effect on the state agency's 04 operation costs is a net reduction. The state agency that adopts the program shall cooperate 05 with and provide information to the office of management and budget to aid with the 06 preparation of the review under this subsection and reports under (b) of this section. 07 (b) Beginning January 15, 2022, and continuing through January 15, 2025, the office 08 of management and budget shall submit to the senate secretary and the chief clerk of the 09 house of representatives an annual report on the retirement incentive programs established 10 under this Act and notify the legislature that the report is available. Each report must provide 11 the information necessary for the legislature to evaluate the retirement incentive programs, 12 including the effect of the programs on the defined benefit retirement plans of the teachers' 13 retirement system and the public employees' retirement system, and whether the programs are 14 economical for employers. The report must include, for each program, 15 (1) the designated employee categories; 16 (2) the employer's cost for each participant; 17 (3) the actual annual cost to the state; 18 (4) for state agencies, the budgeted annual cost; 19 (5) the cost paid by each participant; 20 (6) the number of positions that became vacant as a result of the program and 21 how many of those positions remain vacant; 22 (7) for the relevant three-year period, the projected net savings and the actual 23 net savings resulting from the program. 24 * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 PROGRAM CHANGES. An individual employee does not have a vested or 27 contractual right to a benefit under secs. 7 - 19 of this Act until an agreement is executed with 28 the administrator that authorizes the employee to participate in that retirement incentive 29 program. The legislature may change a retirement incentive program established under this 30 Act as it relates to employees for whom an agreement under this section has not been 31 executed.
01 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 REGULATIONS. The commissioner of administration may adopt regulations under 04 AS 44.62 (Administrative Procedure Act) to implement and interpret secs. 7 - 19 of this Act. 05 * Sec. 17. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 DEFINITIONS. (a) Unless provided otherwise in this Act, the definitions set out in 08 AS 14.25.220 apply to provisions in secs. 7 - 16 of this Act that relate to the teachers' 09 retirement system and members of the teachers' retirement system. 10 (b) Unless provided otherwise in this Act, the definitions set out in AS 39.35.680 11 apply to provisions in secs. 7 - 16 of this Act that relate to the public employees' retirement 12 system and members of the public employees' retirement system. 13 (c) In secs. 7 - 19 of this Act, 14 (1) "administrator" means the commissioner of administration or the 15 commissioner's designee; 16 (2) "employer" has the meaning given in AS 14.25.220 and AS 39.35.680; 17 (3) "office of management and budget" means the office of management and 18 budget in the Office of the Governor; 19 (4) "public employees' retirement system" means the Public Employees' 20 Retirement System of Alaska (AS 39.35); 21 (5) "public organization" has the meaning given in AS 39.35.680; 22 (6) "state agency" means 23 (A) the legislative branch of state government; 24 (B) a principal department of the executive branch of state 25 government; 26 (C) an independent state entity that is attached to a principal 27 department of the executive branch of state government for administrative purposes 28 and is not a public organization as defined in AS 39.35.680; or 29 (D) the Office of the Governor; 30 (7) "teachers' retirement system" means the teachers' retirement system under 31 AS 14.25.
01 * Sec. 18. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 APPLICABILITY TO EXISTING BENEFICIARIES. Sections 1 - 17 of this Act may 04 not impair or diminish the retirement benefits of a person who, before the effective date of 05 this Act, is appointed to retirement under a defined benefit retirement plan in the teachers' 06 retirement system or the public employees' retirement system or receives a benefit under that 07 plan. 08 * Sec. 19. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 APPLICABILITY TO CONTRACTS. Sections 1 - 18 of this Act apply to contracts 11 entered into on or after the effective date of this Act. 12 * Sec. 20. Sections 1 and 7 - 17 of this Act are repealed July 1, 2024. 13 * Sec. 21. This Act takes effect immediately under AS 01.10.070(c).