Legislature(2007 - 2008)
2007-03-16 Senate Journal
Full Journal pdf2007-03-16 Senate Journal Page 0570 SB 125 SENATE BILL NO. 125 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: 2007-03-16 Senate Journal Page 0571 "An Act relating to the accounting and payment of contributions under the defined benefit plan of the Public Employees' Retirement System of Alaska, to calculations of contributions under that defined benefit plan, and to participation in, and termination of and amendments to participation in, that defined benefit plan; making conforming amendments; and providing for an effective date." was read the first time and referred to the Finance Committee. The following fiscal information was published today: Fiscal Note No. 1, indeterminate, Department of Administration Governor's transmittal letter dated March 15: Dear President Green: Under the authority of art. III, sec. 18, of the Alaska Constitution, I am transmitting a bill relating to the accounting and payment of contributions collected under the defined benefit plan of the Public Employees' Retirement System of Alaska (PERS), to calculations of contributions under that defined benefit plan, and to termination of and amendments to participation in that defined benefit plan. The bill would change the defined benefit plan of the PERS established under AS 39.35.095 - 39.35.680 into an employer cost- sharing program similar to the teachers' retirement system (TRS) defined benefit plan established under AS 14.25.009 - 14.25.220, in which all employers make contributions at one uniform rate. The Alaska Retirement Management Board supports the changes made by this bill. The bill also sets the stage to address the unfunded liability of the defined benefit plan of the PERS. As Governor, I am committed to working toward resolving the large unfunded liability that currently faces both PERS and TRS. This effort will require help and support from the legislature, political subdivisions, public employers and public employees. This bill is part of that effort. Under the existing defined benefit plan of the PERS, participating employers make contributions at rates that vary depending on such factors as the number and experience of employees that the employer 2007-03-16 Senate Journal Page 0572 chooses to cover and whether the employer recognizes employees' past service. Under the proposed new cost-sharing plan, employers would pay a uniform contribution rate. The bill would provide for a transitional 90-day period for participating employers to amend their participation agreements to add or terminate coverage of a department, group, or other classification of employees from the defined benefit plan. After this period, the covered employee, departments, groups, or other classifications within the defined benefit plan would remain fixed. The bill would repeal and reenact AS 39.35.100 to provide for one integrated system of accounting for all employers. The bill would repeal AS 39.35.250, 39.35.270, and 39.35.280, governing contributions by employers, and would add a new employer contribution section, AS 39.35.255, modeled after the employer contribution statute in the TRS. The bill also would set the stage to address the problem of unfunded liability for the defined benefit plan of the PERS by amending AS 39.35.260 to add a new provision that would require the state to pay a contribution rate calculated to include 65 percent of the plan's unfunded liability as of June 30, 2006, and would require the political subdivision and public organization employers to pay the remaining 35 percent of that unfunded liability. The bill also would amend AS 39.35.610 to provide that if an employer's contributions are not submitted within the time limit prescribed by statute, the plan administrator could collect funds in the possession of any agency and due to be disbursed to that employer if the funds due for disbursement are not restricted by statute or appropriation to a specific purpose. The transition sections of the bill would take effect immediately. The remainder of the bill would go into effect on July 1, 2007. I urge your support of this bill. Sincerely, /s/ Sarah Palin Governor