00 SENATE CS FOR CS FOR HOUSE BILL NO. 78(FIN) 01 "An Act relating to the public employees' retirement system and the teachers' 02 retirement system; providing certain employees an opportunity to choose between the 03 defined benefit and defined contribution plans of the public employees' retirement 04 system and the teachers' retirement system; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06  * Section 1. AS 14.25.009 is repealed and reenacted to read: 07 Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 08 AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the 09 defined benefit retirement plan under AS 14.25.009 - 14.25.220 and are not members 10 of the defined contribution retirement plan under AS 14.25.310 - 14.25.590. 11  * Sec. 2. AS 14.25.040(a) is amended to read: 12 (a) A teacher or member contracting for service with a participating  13 employer is subject to AS 14.25.009 - 14.25.220 unless the [UNLESS A] teacher or 14 member 01 (1) participates in a university retirement program under AS 14.40.661 02 - 14.40.799;  03 (2) became a member after June 30, 2006, and before July 1, 2026,  04 is eligible to participate in the defined contribution retirement plan under  05 AS 14.25.310 - 14.25.590, and does not elect to participate in the defined benefit  06 retirement plan under AS 14.25.009 - 14.25.220; or 07 (3) has elected under AS 14.25.540 to participate in the plan 08 established in AS 14.25.310 - 14.25.590 and does not elect to participate in the  09 defined benefit retirement plan under AS 14.25.009 - 14.25.220 [, A TEACHER 10 OR MEMBER CONTRACTING FOR SERVICE WITH A PARTICIPATING 11 EMPLOYER IS SUBJECT TO AS 14.25.009 - 14.25.220]. 12  * Sec. 3. AS 14.25.040 is amended by adding new subsections to read: 13 (f) An active member of this plan who is also employed in a position in the 14 public employees' retirement plan under AS 39.35.095 - 39.35.680 may elect to 15 participate solely in this plan if 16 (1) the member directs the public employees' retirement plan employer 17 in writing to 18 (A) pay into this plan the employer contributions required for a 19 member under AS 14.25.009 - 14.25.220; and 20 (B) deduct from the member's salary and pay into this plan 21 (i) the employee contributions required for a member 22 under AS 14.25.009 - 14.25.220; and 23 (ii) an amount equal to the difference between the total 24 employer and state contributions required for a member under 25 AS 14.25.009 - 14.25.220 and the employer contributions that would be 26 required under AS 39.35.095 - 39.35.680 if the member participated in 27 that plan; and 28 (2) the member provides written notice to the administrator. 29 (g) An active member of this plan who elects to participate solely in this plan 30 under (f) of this section may not, while participating solely in this plan, receive 31 credited service for benefit eligibility for service performed in a position in the public 01 employees' retirement plan. 02 (h) A teacher who became a member of the system after June 30, 2006, and 03 before July 1, 2026, or who has elected under AS 14.25.540 to participate in the 04 defined contribution retirement plan under AS 14.25.310 - 14.25.590, is subject to 05 AS 14.25.009 - 14.25.220 and is not eligible to participate in the defined contribution 06 retirement plan established in AS 14.25.310 - 14.25.590 if the teacher 07 (1) is not employed by an employer on July 1, 2026; 08 (2) is reemployed by an employer after July 1, 2026; and 09 (3) has, before the date of reemployment, received 10 (A) a distribution, other than a rollover distribution, of the 11 entire balance in the teacher's individual account in the defined contribution 12 retirement plan; or 13 (B) a rollover distribution of the entire balance in the teacher's 14 individual account in the defined contribution retirement plan under 15 AS 14.25.310 - 14.25.590 and has not within 180 days of reemployment had 16 all or part of a direct rollover distribution from an eligible retirement plan 17 owned by the teacher paid directly into the teacher's individual account under 18 AS 14.25.310 - 14.25.590. 19  * Sec. 4. AS 14.25 is amended by adding a new section to read: 20 Sec. 14.25.044. Election of defined benefit retirement plan by reemployed  21 teachers. (a) A teacher may make a one-time election to participate in the defined 22 benefit retirement plan under AS 14.25.009 - 14.25.220 if the teacher 23 (1) became a member of the defined contribution retirement plan under 24 AS 14.25.310 - 14.25.590 after June 30, 2006, and before July 1, 2026; 25 (2) is not employed by an employer on July 1, 2026; 26 (3) is reemployed by an employer after July 1, 2026; and 27 (4) before the date of reemployment, 28 (A) has not received a distribution of the entire balance in the 29 teacher's individual account under the defined contribution retirement plan 30 under AS 14.25.310 - 14.25.590; or 31 (B) has received a rollover distribution of the entire balance in 01 the teacher's individual account in the plan under AS 14.25.310 - 14.25.590 02 and has within 180 days of reemployment had all or part of a direct rollover 03 distribution from an eligible retirement plan owned by the teacher paid directly 04 into the teacher's individual account under AS 14.25.310 - 14.25.590. 05 (b) An election under (a) of this section may be made not more than 180 days 06 after the date of reemployment. A reemployed teacher electing to participate under (a) 07 of this section shall use the balance of the teacher's individual account in the plan 08 under AS 14.25.310 - 14.25.590, including any rollover contributions, to purchase 09 credited service in the plan under AS 14.25.009 - 14.25.220. An election made under 10 (a) of this section must be made in writing in the manner prescribed by the 11 administrator. An election made by a teacher who is married is not effective unless the 12 election is signed by the teacher's spouse. The administrator shall provide a teacher 13 who is eligible to make an election under (a) of this section with information about the 14 potential consequences of the teacher's election, including calculations to illustrate the 15 effect of moving the teacher's retirement plan from a defined contribution retirement 16 plan to a defined benefit retirement plan. 17 (c) An election made under (a) of this section to participate in the plan under 18 AS 14.25.009 - 14.25.220 is irrevocable. On the effective date of the election, the 19 teacher shall be enrolled as a member of the plan, and the teacher's participation in the 20 plan shall be governed by the applicable provisions of the plan. The teacher's 21 enrollment in the plan is retroactive to the date of hire. 22 (d) When a teacher makes an election under this section to participate in the 23 plan under AS 14.25.009 - 14.25.220, the administrator shall cause the total amount of 24 the teacher's member and employer contributions to the plan under AS 14.25.310 - 25 14.25.590, with investment earnings and losses through the day of the teacher's 26 election to participate as a member in the plan under AS 14.25.009 - 14.25.220, to be 27 actuarially calculated and, subject to (f) of this section, transferred to the retirement 28 fund in the plan under AS 14.25.009 - 14.25.220. On the effective date of the teacher's 29 participation in the plan under AS 14.25.009 - 14.25.220, the teacher shall be credited 30 with service in the plan. The board shall determine the cost of the teacher's actual 31 service time based on the teacher's accrued actuarial liability of pension benefits in the 01 plan, and credit the teacher with service time equal to the value actuarially calculated 02 and transferred to the retirement fund in the plan under AS 14.25.009 - 14.25.220. The 03 board shall adopt regulations establishing transfer procedures. The transfer may not 04 occur later than 60 days after the date the administrator receives the teacher's election, 05 unless the major financial markets for securities available for a transfer are seriously 06 disrupted by an unforeseen event that also causes the suspension of trading on a 07 national securities exchange in the country where the securities were issued; in that 08 event, the 60-day period may be extended by a resolution of the board. A transfer is 09 not commissionable or subject to a fee and may be in the form of cash or a security as 10 determined by the board. The value of a security shall be assessed on the date the 11 security is received in the teacher's account. 12 (e) When making a transfer under (d) of this section or a transfer for a 13 reemployed teacher subject to the plan under AS 14.25.040(h), the administrator shall 14 transfer 15 (1) an amount equal to the decrease in the accrued actuarial liability of 16 the death and disability trust in the plan established under AS 14.25.310 - 14.25.590 17 resulting from the transfer as of the date of transfer, based on the most recent actuarial 18 valuation of the death and disability trust, from the death and disability trust in the 19 plan established under AS 14.25.310 - 14.25.590 to the retirement fund in the plan 20 established under AS 14.25.009 - 14.25.220; and 21 (2) an amount equal to the increase in the accrued actuarial liability of 22 the health care trust in the plan established under AS 14.25.009 - 14.25.220 resulting 23 from the transfer as of the date of transfer, based on the actuarial assumptions set out 24 in (g) of this section, from the trust established under AS 39.30.097(b) for the 25 prefunding of medical benefits provided by AS 14.25.480 to the trust established 26 under AS 39.30.097(a) for the prefunding of medical benefits provided by 27 AS 14.25.171. 28 (f) If the value actuarially calculated under (d) of this section is insufficient to 29 pay for service credit equal to the teacher's actual service time, the administrator shall 30 allow the teacher the option of purchasing service credit in an amount up to the 31 amount needed to eliminate the insufficiency; however, if that value exceeds the 01 amount needed to pay for service credit equal to the teacher's actual service, the 02 administrator shall cause the excess to be paid to the employee as a rollover transfer 03 either to an individual employee annuity account in the Department of Administration 04 under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 05 Plan) or, if the member's employer does not participate in the State of Alaska 06 Supplemental Annuity Plan, to an eligible retirement plan as defined in 07 AS 14.25.360(d). An excess may not be used to purchase additional service credit in 08 the plan under AS 14.25.009 - 14.25.220. When a reemployed teacher enters the plan 09 under AS 14.25.040(h), the administrator shall allow the teacher to pay for a period of 10 service credit up to the teacher's actual service. When a teacher elects to purchase 11 service credit under this section and does not immediately pay for the service credit 12 purchased, an indebtedness is established. Interest as prescribed by regulation accrues 13 on a teacher's indebtedness. If the indebtedness exists when the teacher is appointed to 14 retirement, the administrator shall make a corresponding actuarial adjustment to the 15 benefit payable to the teacher for service in the defined contribution retirement plan. 16 (g) Actuarial assumptions about the plan under AS 14.25.009 - 14.25.220 17 must be based on the most recent actuarial valuation of the plan, except that the 18 retirement rates are computed at 25 percent of the retirement rates used in the most 19 recent actuarial valuation of the retirement fund plus 75 percent of the retirement rates 20 used in the most recent actuarial valuation of the plan under AS 14.25.310 - 14.25.590. 21 (h) The provisions of this section are subject to the requirements of the 22 Internal Revenue Code and the limitations under AS 14.25.010, 14.25.181, 23 14.25.320(c) and (d), and 14.25.490. 24  * Sec. 5. AS 14.25.048(b) is amended to read: 25 (b) An employee or former employee who first became a member of the  26 plan before July 1, 2006, may receive credit for retroactive membership service for 27 employment before June 5, 1988, if the employee or former employee met the 28 requirements listed in (a) of this section at the time of the employment. To receive 29 credit for the retroactive membership service, the employee or former employee shall 30 claim the service and pay the retroactive contributions required under former 31 AS 14.25.061. However, an employee or former employee may not receive retroactive 01 credit under this subsection if the employee received credited service under AS 39.35 02 for the employment. 03  * Sec. 6. AS 14.25.048(c) is amended to read: 04 (c) An employee or former employee who first became a member of the  05 plan before July 1, 2006, and who received credit under AS 39.35 for service that 06 qualifies under (a) of this section may elect to transfer those periods of employment to 07 the plan. To receive credit for retroactive membership service under this subsection, 08 the employee or former employee shall claim the service and pay the retroactive 09 contributions required under former AS 14.25.061. 10  * Sec. 7. AS 14.25.050(a) is amended to read: 11 (a) Except as provided in (c) and (e) of this section, beginning January 1, 12 1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 13 member's base salary accrued from July 1 to the following June 30. [THE 14 EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 15 SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 16 CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 17 CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 18 FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 19 APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 20 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 21 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 22 INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 23 EMPLOYER.] 24  * Sec. 8. AS 14.25.050 is amended by adding new subsections to read: 25 (e) A member who first participates in the plan after June 30, 2006, shall 26 contribute to the plan an amount equal to eight percent of the member's base salary 27 accrued from July 1 to the following June 30. The board may, from time to time, 28 increase or decrease the contribution under this subsection; however, the contribution 29 may not be decreased to less than eight percent of the member's base salary. 30 (f) The employer shall deduct a contribution under this section from the 31 member's salary at the end of each payroll period, and the contribution shall be 01 credited by the plan to the member contribution account. The contributions shall be 02 deducted from member compensation before the computation of applicable federal 03 taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 04 member may not have the option of making the payroll deduction directly in cash 05 instead of having the contribution picked up by the employer. 06 (g) The board shall increase the member contribution under (e) of this section 07 if the board determines that, unless the contribution is increased, the portion of the 08 liability of the plan that is attributable to all members who first became members of 09 the plan after June 30, 2006, will be funded below 90 percent. The board may not 10 increase the member contribution unless the board increases the employer contribution 11 under AS 14.25.070(a)(2) by an equal amount. The board may decrease the 12 contribution under (e) of this section if the board determines that, after the 13 contribution is decreased, the portion of the liability of the plan that is attributable to 14 all members who first became members of the plan after June 30, 2006, will be funded 15 above 90 percent. The board may not decrease the member contribution unless the 16 board decreases the employer contribution under AS 14.25.070(a)(2) by an equal 17 amount. 18 (h) The board may not increase the employer contribution under 19 AS 14.25.070(a) unless the board increases the member contribution under (e) of this 20 section by a comparable amount. 21  * Sec. 9. AS 14.25.065(b) is amended to read: 22 (b) The contributions of employers under AS 14.25.070 must be transmitted to 23 the plan for deposit in the retirement fund and the Alaska retiree health care trust at the 24 close of each pay period. If the contributions are not submitted within the prescribed 25 time limit, interest must be assessed on the outstanding contributions at [ONE AND 26 ONE-HALF TIMES] the most recent actuarially determined rate of earnings for the 27 plan from the date that contributions were originally due. Amounts due from an 28 employer and interest as prescribed in this section may be claimed by the 29 administrator from any agency of the state or political subdivision that has in its 30 possession funds of the employer or that is authorized to disburse funds to the 31 employer that are not restricted by statute or appropriation to a specific purpose. The 01 amount claimed shall be certified by the administrator as sufficient to pay the 02 contributions and interest due from the employer. The amount claimed shall be 03 submitted to the administrator for deposit in the retirement fund and the Alaska retiree 04 health care trust. 05  * Sec. 10. AS 14.25.070(a) is amended to read: 06 (a) Each employer shall contribute to the system every payroll period the  07 lesser of 08 (1) an amount calculated by applying a rate of 12.56 percent to the 09 total of all base salaries paid by the employer to active members of the system and to 10 members who are retired from the plan and reemployed under AS 14.20.136, 11 including any adjustments to contributions required by AS 14.25.173(a); or  12 (2) an amount calculated by applying a rate established by the  13 board under AS 37.10.220 to the total of all base salaries paid by the employer to  14 active members of the system and to members who are retired from the plan and  15 reemployed under AS 14.20.136, including any adjustments to contributions  16 required by AS 14.25.173(a); the rate must be at least 12 percent and be sufficient  17 to pay the actuarially determined employer normal cost, all contributions  18 required under AS 14.25.350 and AS 39.30.370, and past service cost for  19 members of the system. 20  * Sec. 11. AS 14.25.070 is amended by adding a new subsection to read: 21 (i) If the legislature appropriates funds for the purpose of decreasing an 22 employer's contribution, the employer's contribution under (a) of this section shall 23 decrease by that amount. 24  * Sec. 12. AS 14.25.075(a) is amended to read: 25 (a) An employee who is eligible to purchase credited service under 26 AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 27 under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 28 [14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligible to purchase credited 29 service under AS 14.20.345, AS 14.25.044, 14.25.050 [AS 14.25.050], or 14.25.105, 30 in lieu of making payments directly to the plan, may elect to have the member's 31 employer make payments as provided in this section. 01  * Sec. 13. AS 14.25.075(b) is amended to read: 02 (b) A member may elect to have the employer make payments for all or any 03 portion of the amounts payable for the member's purchase of credited service through 04 a salary reduction program as follows: 05 (1) the amounts paid under a salary reduction program are in lieu of 06 contributions by the member making the election; the electing member's salary or 07 other compensation shall be reduced by the amount paid by the employer under this 08 subsection; 09 (2) the member shall make an irrevocable election under this 10 subsection to purchase credited service as permitted in former AS 14.25.061 or in 11 AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 12 14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107 before the member's 13 termination of employment; the irrevocable election must specify the number of 14 payroll periods that deductions will be made from the member's compensation and the 15 dollar amount of deductions for each payroll period during the specified number of 16 payroll periods; the deductions made under this paragraph cease upon the earlier of the 17 member's termination of employment with the employer or the member's death; 18 amounts paid by an employer under (f) of this section may not be applied toward the 19 payment of the dollar amount of the deductions representing the portion of the credited 20 service that is being purchased by the member through payroll deduction in 21 accordance with the member's irrevocable election under this paragraph; 22 (3) amounts paid by an employer under this subsection shall be treated 23 as employer contributions for the purpose of determining tax treatment under 26 24 U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 25 may not be included in the member's gross income for income tax purposes until those 26 amounts are distributed by refund or retirement benefit payments. 27  * Sec. 14. AS 14.25.075(i) is amended to read: 28 (i) On satisfaction of the eligibility requirements of former AS 14.25.061 or  29 of AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 30 14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107, the requirements of this 31 section, and the administrative filing requirements specified by the administrator, the 01 plan shall adjust the member's credited service history and add any additional service 02 credits acquired. 03  * Sec. 15. AS 14.25 is amended by adding a new section to read: 04 Sec. 14.25.086. Sub-trust for members who first became members after  05 June 30, 2006. The administrator shall deposit a portion of employer contributions 06 under AS 14.25.070 and 14.25.085 in a sub-trust of the retirement fund established by 07 the board for members who first became members after June 30, 2006. The amount 08 deposited, when combined with the amount separately computed for medical benefits 09 under AS 14.25.087, must be sufficient to pay the actuarially determined employer 10 normal cost and past service cost for members of the system who first became 11 members after June 30, 2006. When the amount sufficient to pay the actuarially 12 determined employer normal cost, all contributions required under AS 14.25.350 and 13 AS 39.30.370, and past service cost for members of the system is less than 12 percent 14 of all base salaries paid to active members of the system and to members who are 15 retired from the plan and reemployed under AS 14.20.136, including any adjustments 16 to contributions required by AS 14.25.173(a), the administrator shall deposit the 17 difference in the sub-trust established under this section. 18  * Sec. 16. AS 14.25.087 is amended to read: 19 Sec. 14.25.087. Contributions for medical benefits. Contributions made by 20 an employer under AS 14.25.070 and 14.25.085 must [SHALL] be separately 21 computed for benefits provided by AS 14.25.168 and retiree major medical  22 insurance plan benefits provided under AS 14.25.171, and must [SHALL] be 23 deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 24  * Sec. 17. AS 14.25.110(a) is amended to read: 25 (a) Subject to AS 14.25.167, 26 (1) a member who first became a member of the plan before July 1,  27 2006, is eligible for a normal retirement benefit if the member 28 (A) [(1)] was first hired before July 1, 1975, has attained the 29 age of 55 years, and has at least 15 years of credited service, the last five of 30 which have been membership service, or is otherwise vested in the plan; 31 (B) [(2)] has attained the age of 60 years and has at least eight 01 years of membership service; 02 (C) [(3)] has attained the age of 60 years, has at least five years 03 of membership service, and has Alaska BIA service which, when added to the 04 membership service, will equal at least eight years; 05 (D) [(4)] has at least 25 years of credited service, the last five 06 of which have been membership service; 07 (E) [(5)] has at least 20 years of membership service; 08 (F) [(6)] has at least 20 years of combined membership service 09 and Alaska BIA service, the last five of which have been membership service; 10 or 11 (G) [(7)] has, for each of 20 school years, 12 (i) [(A)] at least one-half year of membership service as 13 a part-time teacher; 14 (ii) [(B)] one full year of membership service as a full- 15 time teacher; or 16 (iii) [(C)] any combination of service qualified under 17 this subparagraph;  18 (2) a member who first became a member of the plan after  19 June 30, 2006, is eligible for a normal retirement benefit if the member  20 (A) has attained the age of 60 years and has at least five  21 years of membership service; or  22 (B) has at least 30 years of membership service 23 [PARAGRAPH]. 24  * Sec. 18. AS 14.25.110(b) is amended to read: 25 (b) Subject to AS 14.25.167, a member is eligible for an early retirement 26 benefit upon completing the service requirements in (a)(1)(A) [(a)(1)] of this section 27 and attaining the age of 50 years or upon completing the service requirements in 28 (a)(1)(B) or (C) [(a)(2) OR (3)] of this section and attaining the age of 55 years. 29  * Sec. 19. AS 14.25.110(d) is amended to read: 30 (d) The monthly amount of a retirement benefit 31 (1) for a member who first became a member of the plan before  01 July 1, 2006, and who has paid the full amount of any indebtedness is one-twelfth of 02 the member's average base salary during any three school years of membership service 03 multiplied by 04 (A) [(1)] two percent of the years of credited service earned 05 before June 30, 1990, including credited fractional years, and the years of 06 credited service through a total of 20 years; plus 07 (B) [(2)] two and one-half percent of the years of credited 08 service earned after June 30, 1990, that are more than 20 years of total credited 09 service;  10 (2) for a member who first became a member of the plan after  11 June 30, 2006, and who has paid the full amount of any indebtedness is one- 12 twelfth of the member's average base salary during any five school years of  13 membership service multiplied by  14 (A) two percent of the years of credited service through a  15 total of 10 years; plus  16 (B) two and one-quarter percent of the years over 10 years  17 of total credited service through 20 years; plus  18 (C) two and one-half percent of the years of credited service  19 that are more than 20 years of total credited service. 20  * Sec. 20. AS 14.25.142(a) is amended to read: 21 (a) While residing in the state, a person who first became a member of the  22 plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220,  23 and who is at least 65 years of age or a person who first became a member of the  24 plan before July 1, 2006, and who is receiving a disability benefit under 25 AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost-of-living allowance in 26 addition to the basic benefit. The amount of this allowance is 10 percent of the basic 27 benefit. 28  * Sec. 21. AS 14.25.143(a) is amended to read: 29 (a) Once each year, the administrator shall increase benefit payments to 30 eligible disabled members, to persons age 60 or older receiving benefits under this 31 plan in the preceding calendar year, and to persons who have received benefits under 01 this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 02 under this section. 03  * Sec. 22. AS 14.25.143(b) is amended to read: 04 (b) Subject to (g) and (h) of this section, the [THE] increase in benefit 05 payments applies to total benefit payments except for the cost-of-living allowance 06 under AS 14.25.142. The amount of the increase is a percentage of the current benefit 07 equal to 08 (1) the lesser of 75 percent of the increase in the cost of living in the 09 preceding calendar year or nine percent, for recipients who on July 1 are at least 65 10 years old and for members receiving disability benefits; and 11 (2) the lesser of 50 percent of the increase in the cost of living in the 12 preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 13 less than 65 years old or for recipients who on July 1 are less than 60 years old but 14 who have received benefits from the plan for at least five [EIGHT] years. 15  * Sec. 23. AS 14.25.143 is amended by adding new subsections to read: 16 (g) Subject to (h) of this section, the amount of an increase for members who 17 first became members of the plan after June 30, 2006, and do not meet the eligibility 18 requirements for a permanent fund dividend under AS 43.23.005(a) in effect on July 1, 19 2025, is equal to one-half of the applicable percentage under (b) of this section. 20 (h) If the board determines that the portion of the liability of the plan that is 21 attributable to all members who first became members of the plan after June 30, 2006, 22 is funded below 90 percent, the board shall reduce the amount of the increase 23 determined under (b) or (g) of this section that is payable to a member who first 24 became a member after June 30, 2006. At any time, the board may terminate a 25 reduction made under this subsection. 26  * Sec. 24. AS 14.25.168(a) is amended to read: 27 (a) Except as provided in AS 14.25.171 and (c) of this section, the following 28 persons are entitled to major medical insurance coverage under this section: 29 (1) for teachers first hired before July 1, 1990, 30 (A) a teacher who is receiving a monthly benefit from the plan 31 and who has elected coverage; 01 (B) the spouse and dependent children of the teacher described 02 in (A) of this paragraph; 03 (C) the surviving spouse of a deceased teacher who is receiving 04 a monthly benefit from the plan and who has elected coverage; 05 (D) the dependent children of a deceased teacher who are 06 dependent on the surviving spouse described in (C) of this paragraph; 07 (2) for teachers first hired [ON OR] after June 30 [JULY 1], 1990, 08 (A) a teacher who is receiving a monthly benefit from the plan 09 and who has elected coverage for the teacher; 10 (B) the spouse of the teacher described in (A) of this paragraph 11 if the teacher elected coverage for the spouse; 12 (C) the dependent children of the teacher described in (A) of 13 this paragraph if the teacher elected coverage for the dependent children; 14 (D) the surviving spouse of a deceased teacher who is receiving 15 a monthly benefit from the plan and who has elected coverage; 16 (E) the dependent children of a deceased teacher who are 17 dependent on the surviving spouse described in (D) of this paragraph if the 18 surviving spouse has elected coverage for the dependent children. 19  * Sec. 25. AS 14.25 is amended by adding a new section to read: 20 Sec. 14.25.171. Medical benefit; eligibility of employees first hired after  21 June 30, 2006; surviving spouses and dependents. (a) A teacher who first became a 22 member of the plan after June 30, 2006, receives a monthly benefit from the plan, 23 retired from the plan, and has elected benefits under this section is entitled to medical 24 benefits under this section. A member who applies for medical benefits under this 25 section shall apply on the forms and in the manner prescribed by the administrator. A 26 member is eligible to retire from the plan if the member 27 (1) has at least 25 years of service; or 28 (2) reaches the age set for Medicare eligibility and has at least 10 years 29 of service. 30 (b) The member's surviving spouse is eligible to elect medical benefits if the 31 member had retired or was eligible for retirement and medical benefits at the time of 01 the member's death. 02 (c) The medical benefits available to eligible persons are access to the retiree 03 major medical insurance plan and access to the health reimbursement arrangement 04 plan under AS 39.30.300. Access to the retiree major medical insurance plan means 05 that an eligible person may not be denied insurance coverage except for failure to pay 06 the required premium. 07 (d) Retiree major medical insurance plan coverage elected by an eligible 08 member under this section covers the eligible member, the spouse of the eligible 09 member, and the dependent children of the eligible member. 10 (e) Retiree major medical insurance plan coverage elected by a surviving 11 spouse of an eligible member under this section covers the surviving spouse and the 12 dependent children of the eligible member who are dependent on the surviving spouse. 13 (f) Participation in the retiree major medical insurance plan is not required in 14 order to participate in the health reimbursement arrangement plan. 15 (g) A person eligible for medical benefits under this section is not required to 16 participate in the health reimbursement arrangement plan in order to participate in the 17 retiree major medical insurance plan. 18 (h) A person who is eligible for medical benefits under this section must make 19 the irrevocable election to participate or not participate in the retiree major medical 20 insurance plan on or before the date the person reaches 70 1/2 years of age or when the 21 person applies for retirement and medical benefits, whichever is later. 22 (i) Major medical insurance coverage takes effect on the first day of the month 23 following the date of the administrator's approval of the election and stops when the 24 person who elects coverage dies or fails to make a required premium payment. 25 (j) The coverage for persons 65 years of age or older is the same as that 26 available for persons under 65 years of age. The benefits payable to those persons 65 27 years of age or older supplement any benefits provided under the federal old age, 28 survivors, and disability insurance program. 29 (k) The medical and optional insurance premiums owed by the person who 30 elects coverage may be deducted from the health reimbursement arrangement plan. If 31 the amount of the health reimbursement arrangement plan becomes insufficient to pay 01 the premiums, the person who elects coverage under (a) of this section shall pay the 02 premiums directly. 03 (l) The cost of premiums for retiree major medical insurance coverage under 04 this section for an eligible member or surviving spouse who is 05 (1) not eligible for Medicare is an amount equal to the full monthly 06 group premiums for retiree major medical insurance coverage; 07 (2) eligible for Medicare is the following percentage of the premium 08 amounts established for retirees who are eligible for Medicare: 09 (A) 30 percent if the member had 10 or more, but less than 15, 10 years of service; 11 (B) 25 percent if the member had 15 or more, but less than 20, 12 years of service; 13 (C) 20 percent if the member had 20 or more, but less than 25, 14 years of service; 15 (D) 15 percent if the member had 25 or more, but less than 30, 16 years of service; 17 (E) 10 percent if the member had 30 or more years of service. 18 (m) The eligibility for retiree major medical insurance coverage for an 19 alternate payee under a qualified domestic relations order shall be determined based 20 on the eligibility of the member to elect coverage. The alternate payee shall pay the 21 full monthly premium for retiree major medical insurance coverage. 22 (n) The administrator shall 23 (1) inform a person entitled to retiree major medical insurance 24 coverage under this section in writing 25 (A) that the health insurance coverage available to retired 26 members may be different from the health insurance coverage provided to 27 employees; 28 (B) of time limits for selecting optional health insurance 29 coverage; and 30 (C) whether the election is irrevocable; and 31 (2) require that a person entitled to retiree major medical insurance 01 coverage under this section indicate in writing on a form provided by the administrator 02 whether the person has chosen to receive optional health insurance coverage. 03 (o) The monthly group premiums for retiree major medical insurance coverage 04 under this section are established by the administrator in accordance with 05 AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 06 (a) of this section a monthly group premium rate for retiree major medical insurance 07 coverage other than the premium in effect for the month in which the premium is due 08 for coverage for that month. 09 (p) In this section, "health reimbursement arrangement plan" means the State 10 of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 11 Arrangement Plan established in AS 39.30.300. 12  * Sec. 26. AS 14.25.220(5) is amended to read: 13 (5) "average base salary" means,  14 (A) for a teacher who first became a member before July 1,  15 2006, the result obtained by dividing the sum of the member's three highest 16 years' base salary by three, or if a member does not have three years base 17 salary, then by dividing the sum of all base salaries by the number of years of 18 base salary; the base salary for a year in which credit is granted for disability 19 totaling more than one-third of a year may not be used in the computation of 20 the average base salary; the base salary in a school year for which the member 21 receives compensation for less than two-thirds of a year may not be used in the 22 computation of the average base salary; if compensation is received for more 23 than two-thirds of a year, the full base salary for that school year shall be used 24 in the computation of the average base salary; 25 (B) for a teacher who first became a member after June 30,  26 2006, the result obtained by dividing the sum of the member's five highest  27 years' base salary by five, or if a member does not have five years' base  28 salary, then by dividing the sum of all base salaries by the number of  29 years of base salary; the base salary for a year in which credit is granted  30 for disability totaling more than one-third of a year may not be used in the  31 computation of the average base salary; the base salary in a school year  01 for which the member receives compensation for less than two-thirds of a  02 year may not be used in the computation of the average base salary; if  03 compensation is received for more than two-thirds of a year, the full base  04 salary for that school year shall be used in the computation of the average  05 base salary; 06  * Sec. 27. AS 14.25.220(6) is amended to read: 07 (6) "base salary" 08 (A) means the total remuneration payable under contract for a 09 full year of membership service, including addenda to the contract and, for a  10 member who elects to participate solely in this plan under AS 14.25.040(f),  11 remuneration paid by the public employees' retirement plan employer, 12 but, for a member first hired on or after July 1, 1996, does not include 13 remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17); 14 (B) has the same meaning as "compensation" under 15 AS 39.35.680(9) when applied to a state legislator who elects membership 16 under AS 14.25.040(b); 17  * Sec. 28. AS 14.25.220(46) is amended to read: 18 (46) "vested member" or "vested teacher" means an active member 19 who [HAS COMPLETED EITHER] 20 (A) first became a member before July 1, 2006, and has  21 completed  22 (i) 15 years of service, the last five of which have been 23 membership service, for a member first hired before July 1, 1975; 24 (ii) [(B)] eight years of membership service;  25 (iii) [(C)] five years of membership and three years of 26 BIA service; or 27 (iv) [(D)] 12 school years of part-time membership 28 service or 12 school years in each of which the member earned either 29 part-time or full-time membership service; 30 (B) first became a member after June 30, 2006, and has  31 completed five years of membership service;  01  * Sec. 29. AS 14.25.220 is amended by adding a new paragraph to read: 02 (48) "first became a member after June 30, 2006" and "first became a 03 member of the plan after June 30, 2006" include a member who elected under 04 AS 14.25.540 to participate in the defined contribution retirement plan under 05 AS 14.25.310 - 14.25.590 and who elects to participate in the defined benefit 06 retirement plan under AS 14.25.009 - 14.25.220. 07  * Sec. 30. AS 14.25.310 is amended to read: 08 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 09 AS 14.25.310 - 14.25.590 apply only to 10 (1) teachers who first become members [ON OR] after June 30, 2006,  11 and before July 1, 2026, and who are eligible but do not elect to participate in a  12 defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 -  13 39.35.680; and  14 (2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 15 EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 16 DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 17 - 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBERS] 18 who transferred [TRANSFER] into the defined contribution retirement plan under 19 AS 14.25.540 and do not elect to participate in the defined benefit retirement plan  20 under AS 14.25.009 - 14.25.220. 21  * Sec. 31. AS 14.25.310 is amended by adding a new subsection to read: 22 (b) An employer that participates in the plan shall also participate in the 23 defined benefit retirement plan under AS 14.25.009 - 14.25.220. 24  * Sec. 32. AS 14.25.330(a) is amended to read: 25 (a) A teacher who first becomes a member [ON OR] after June 30, 2006, and  26 before July 1, 2026, and who does not participate in a defined benefit retirement  27 plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, 28 SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contribution 29 retirement plan. 30  * Sec. 33. AS 14.25.470(a) is amended to read: 31 (a) In order to obtain medical benefits under AS 14.25.480, a member must 01 retire [DIRECTLY] from the plan. A member is eligible to retire from the plan if 02 [THE MEMBER HAS BEEN AN ACTIVE MEMBER FOR AT LEAST 12 03 MONTHS BEFORE APPLICATION FOR RETIREMENT AND] 04 (1) the member has at least 25 [30] years of service; or 05 (2) the member reaches the normal retirement age, [AND] has at least 06 10 years of service, and has been an active member for at least 12 months  07 immediately before application for retirement. 08  * Sec. 34. AS 14.25.490(a) is amended to read: 09 (a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 10 [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 11 time, in whole or in part, including the right to make retroactive amendments referred 12 to in 26 U.S.C. 401(b). 13  * Sec. 35. AS 14.25.490(b) is amended to read: 14 (b) The plan administrator may not modify or amend the plan retroactively [IN 15 SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 16 [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 17 MADE] before the modification or amendment except to the extent that the reduction 18 is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 19 Revenue Code. 20  * Sec. 36. AS 14.25.490(c) is amended to read: 21 (c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the  22 Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 23 plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 24 is terminated, all investments at the time of termination remain in force until all 25 individual accounts have been completely distributed under the plan. After [, AND, 26 AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 27 employer. 28  * Sec. 37. AS 14.25.490(d) is repealed and reenacted to read: 29 (d) Within one year after determining that a contribution to the plan by an 30 employer was the result of a mistake of fact, the administrator shall return the 31 contribution to the employer. 01  * Sec. 38. AS 14.25.540(a) is amended to read: 02 (a) An [SUBJECT TO (i) OF THIS SECTION, AN] active member of the 03 defined benefit retirement plan of the teachers' retirement system is eligible to 04 participate in the defined contribution retirement plan established under AS 14.25.310 05 - 14.25.590 if that member has not vested. Participation in the defined contribution 06 retirement plan is in lieu of participation in the defined benefit retirement plan 07 established under AS 14.25.009 - 14.25.220. 08  * Sec. 39. AS 14.25.540(h) is amended to read: 09 (h) An [A MEMBER WHO IS ELIGIBLE TO ELECT TRANSFER TO THE 10 DEFINED CONTRIBUTION RETIREMENT PLAN MUST MAKE THE 11 ELECTION NOT LATER THAN 12 MONTHS AFTER THE FIRST DAY OF THE 12 MONTH FOLLOWING THE ADMINISTRATOR'S RECEIPT OF THE 13 NOTIFICATION THAT THE MEMBER'S EMPLOYER CONSENTS TO 14 TRANSFERS OF ITS MEMBERS UNDER (i) OF THIS SECTION. THE] election to 15 participate in the defined contribution retirement plan must be made in writing on 16 forms and in the manner prescribed by the administrator. Before accepting an election 17 to participate in the defined contribution retirement plan, the administrator must 18 provide the employee planning on making an election to participate in the defined 19 contribution retirement plan with information, including calculations to illustrate the 20 effect of moving the employee's retirement plan from the defined benefit retirement 21 plan to the defined contribution retirement plan as well as other information to clearly 22 inform the employee of the potential consequences of the employee's election. An 23 election made under this subsection to participate in the defined contribution 24 retirement plan is irrevocable. Upon making the election, the participant shall be 25 enrolled as a member of the defined contribution retirement plan, the member's 26 participation in the plan shall be governed by the provisions of AS 14.25.310 - 27 14.25.590, and the member's participation in the defined benefit retirement plan under 28 AS 14.25.009 - 14.25.220 shall terminate. The participant's enrollment in the defined 29 contribution retirement plan shall be effective the first day of the month after the 30 administrator receives the completed enrollment forms. An election made by an 31 eligible member who is married is not effective unless the election is signed by the 01 individual's spouse. 02  * Sec. 40. AS 37.10.220(a) is amended to read: 03 (a) The board shall 04 (1) hold regular and special meetings at the call of the chair or of at 05 least five members; meetings are open to the public, and the board shall keep a full 06 record of all its proceedings; 07 (2) after reviewing recommendations from the Department of 08 Revenue, adopt investment policies for each of the funds entrusted to the board,  09 including a policy to prevent each fund from having an unfunded liability greater  10 than 10 percent; 11 (3) determine the appropriate investment objectives for the defined 12 benefit plans established under the teachers' retirement system under AS 14.25 and the 13 public employees' retirement system under AS 39.35; 14 (4) assist in prescribing the policies for the proper operation of the 15 systems and take other actions necessary to carry out the intent and purpose of the 16 systems in accordance with AS 37.10.210 - 37.10.390; 17 (5) provide a range of investment options and establish the rules by 18 which participants can direct their investments among those options with respect to 19 accounts established under 20 (A) AS 14.25.340 - 14.25.350 (teachers' retirement system 21 defined contribution individual accounts); 22 (B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 23 Annuity Plan); 24 (C) AS 39.35.730 - 39.35.750 (public employees' retirement 25 system defined contribution individual accounts); and 26 (D) AS 39.45.010 - 39.45.060 (public employees' deferred 27 compensation program); 28 (6) establish the rate of interest that shall be annually credited to each 29 member's individual contribution account in accordance with AS 14.25.145 and 30 AS 39.35.100 and the rate of interest that shall be annually credited to each member's 31 account in the health reimbursement arrangement plan under AS 39.30.300 - 01 39.30.495; the rate of interest shall be adopted on the basis of the probable effective 02 rate of interest on a long-term basis, and the rate may be changed from time to time; 03 (7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 04 (8) coordinate with the retirement system administrator to have an 05 annual actuarial valuation of each retirement system prepared to determine system 06 assets, accrued liabilities, and funding ratios and to certify to the appropriate 07 budgetary authority of each employer in the system 08 (A) an appropriate contribution rate for normal costs; [AND] 09 (B) an appropriate contribution rate for liquidating any past 10 service liability; in this subparagraph, the appropriate contribution rate for 11 liquidating the past service liability of the defined benefit retirement plan under 12 AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 13 retirement plan under AS 39.35.095 - 39.35.680 must be [DETERMINED BY 14 A LEVEL PERCENT OF PAY METHOD] based on amortization of the past 15 service liability for a closed term of 25 years;  16 (C) an appropriate monthly employer contribution under  17 AS 14.25.070 and AS 39.35.255; and  18 (D) appropriate adjustments, if any, under AS 14.25.050(e)  19 and AS 39.35.160(e); 20 (9) review actuarial assumptions prepared and certified by a member 21 of the American Academy of Actuaries and conduct experience analyses of the 22 retirement systems not less than once every four years, except for health cost 23 assumptions, which shall be reviewed annually; the results of all actuarial assumptions 24 prepared under this paragraph shall be reviewed and certified by a second member of 25 the American Academy of Actuaries before presentation to the board; 26 (10) contract for an independent audit of the state's actuary not less 27 than once every four years; 28 (11) contract for an independent audit of the state's performance 29 consultant not less than once every four years; 30 (12) obtain an external performance review to evaluate the investment 31 policies of each fund entrusted to the board and report the results of the review to the 01 appropriate fund fiduciary; 02 (13) by the first day of each regular legislative session, report to the 03 governor, the legislature, and the individual employers participating in the state's 04 retirement systems on the financial condition of the systems in regard to 05 (A) the valuation of trust fund assets and liabilities; 06 (B) current investment policies adopted by the board; 07 (C) a summary of assets held in trust listed by the categories of 08 investment; 09 (D) the income and expenditures for the previous fiscal year; 10 (E) the return projections for the next calendar year; 11 (F) one-year, three-year, five-year, and 10-year investment 12 performance for each of the funds entrusted to the board; and 13 (G) other statistical data necessary for a proper understanding 14 of the financial status of the systems; 15 (14) submit quarterly updates of the investment performance reports to 16 the Legislative Budget and Audit Committee; 17 (15) develop an annual operating budget; [AND] 18 (16) administer pension forfeitures required under AS 37.10.310 using 19 the procedures of AS 44.62 (Administrative Procedure Act);  20 (17) establish one or more sub-trusts of the pension fund to hold  21 employer contributions deposited under AS 14.25.086 and AS 39.35.281,  22 employee contributions, assets, and earnings attributable to members of the  23 defined benefit retirement plan under AS 14.25.009 - 14.25.220 or the defined  24 benefit retirement plan under AS 39.35.095 - 39.35.680 who first became  25 members of the respective plan after June 30, 2006; and  26 (18) account for and track employer contributions, employee  27 contributions, assets, and earnings in each trust fund or sub-trust attributable to  28 members who first became members after June 30, 2006, of the defined benefit  29 retirement plan under AS 14.25.009 - 14.25.220 and members who first became  30 members after June 30, 2006, of the defined benefit retirement plan under  31 AS 39.35.095 - 39.35.680; employer contributions that exceed those assigned to  01 members who first became members after June 30, 2006, of the defined benefit  02 retirement plan under AS 14.25.009 - 14.25.220 and members who first became  03 members after June 30, 2006, of the defined benefit retirement plan under  04 AS 39.35.095 - 39.35.680 shall be transferred or retained in trusts or sub-trusts  05 with liability allocated toward employer normal costs for members who became  06 members of the respective defined benefit retirement plan before July 1, 2026,  07 past service costs, the health reimbursement arrangement plan under  08 AS 39.30.300 - 39.30.495, and employer contributions under AS 14.25.350 and  09 AS 39.35.750. 10  * Sec. 41. AS 37.10.220(b) is amended to read: 11 (b) The board may 12 (1) employ outside investment advisors to review investment policies; 13 (2) enter into an agreement with the fiduciary of another state fund in 14 order to assume the management and investment of those assets; 15 (3) contract for other services necessary to execute the board's powers 16 and duties; 17 (4) enter into confidentiality agreements that would exempt records 18 from AS 40.25.110 and 40.25.120 if the records contain information that could affect 19 the value of investment by the board or that could impair the ability of the board to 20 acquire, maintain, or dispose of investments; 21 (5) adjust the amount of the increase in benefits payable to a  22 member who first became a member after June 30, 2006, as provided under  23 AS 14.25.143 and AS 39.35.475;  24 (6) adjust contributions under AS 14.25.050(e) and  25 AS 39.35.160(e).  26  * Sec. 42. AS 39.30.090(a) is amended to read: 27 (a) The Department of Administration may obtain a policy or policies of group 28 insurance covering state employees, persons entitled to coverage under AS 14.25.168, 29 14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 30 AS 39.37.145, employees of other participating governmental units, or persons 31 entitled to coverage under AS 23.15.136, subject to the following conditions: 01 (1) a group insurance policy shall provide one or more of the following 02 benefits: life insurance, accidental death and dismemberment insurance, weekly 03 indemnity insurance, hospital expense insurance, surgical expense insurance, dental 04 expense insurance, audiovisual insurance, or other medical care insurance; 05 (2) each eligible employee of the state, the spouse and the unmarried 06 children chiefly dependent on the eligible employee for support, and each eligible 07 employee of another participating governmental unit shall be covered by the group 08 policy, unless exempt under regulations adopted by the commissioner of 09 administration; 10 (3) a governmental unit may participate under a group policy if 11 (A) its governing body adopts a resolution authorizing 12 participation and payment of required premiums; 13 (B) a certified copy of the resolution is filed with the 14 Department of Administration; and 15 (C) the commissioner of administration approves the 16 participation in writing; 17 (4) in procuring a policy of group health or group life insurance as 18 provided under this section or excess loss insurance as provided in AS 39.30.091, the 19 Department of Administration shall comply with the dual choice requirements of 20 AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 21 transact business in the state under AS 21.09, a hospital or medical service corporation 22 authorized to transact business in this state under AS 21.87, or a health maintenance 23 organization authorized to operate in this state under AS 21.86; an excess loss 24 insurance policy may be obtained from a life or health insurer authorized to transact 25 business in this state under AS 21.09 or from a hospital or medical service corporation 26 authorized to transact business in this state under AS 21.87; 27 (5) the Department of Administration shall make available bid 28 specifications for desired insurance benefits or for administration of benefit claims and 29 payments to (A) all insurance carriers authorized to transact business in this state 30 under AS 21.09 and all hospital or medical service corporations authorized to transact 31 business under AS 21.87 who are qualified to provide the desired benefits; and (B) 01 insurance carriers authorized to transact business in this state under AS 21.09, hospital 02 or medical service corporations authorized to transact business under AS 21.87, and 03 third-party administrators licensed to transact business in this state and qualified to 04 provide administrative services; the specifications shall be made available at least once 05 every five years; the lowest responsible bid submitted by an insurance carrier, hospital 06 or medical service corporation, or third-party administrator with adequate servicing 07 facilities shall govern selection of a carrier, hospital or medical service corporation, or 08 third-party administrator under this section or the selection of an insurance carrier or a 09 hospital or medical service corporation to provide excess loss insurance as provided in 10 AS 39.30.091; 11 (6) if the aggregate of dividends payable under the group insurance 12 policy exceeds the governmental unit's share of the premium, the excess shall be 13 applied by the governmental unit for the sole benefit of the employees; 14 (7) a person receiving benefits under AS 14.25.110, AS 22.25, 15 AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 16 effect under this section at the time of termination of employment with the state or 17 participating governmental unit; 18 (8) a person electing to have insurance under (7) of this subsection 19 shall pay the cost of this insurance; 20 (9) for each permanent part-time employee electing coverage under 21 this section, the state shall contribute one-half the state contribution rate for permanent 22 full-time state employees, and the permanent part-time employee shall contribute the 23 other one-half; 24 (10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 25 or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 26 and eligible dependents under this section; the level of coverage for persons over 65 27 shall be the same as that available before reaching age 65 except that the benefits 28 payable shall be supplemental to any benefits provided under the federal old age, 29 survivors, and disability insurance program; a person electing to have insurance under 30 this paragraph shall pay the cost of the insurance; the commissioner of administration 31 shall adopt regulations implementing this paragraph; 01 (11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 02 or former AS 39.37 may obtain long-term care insurance for that person and eligible 03 dependents under this section; a person who elects insurance under this paragraph 04 shall pay the cost of the insurance premium; the commissioner of administration shall 05 adopt regulations to implement this paragraph; 06 (12) each licensee holding a current operating agreement for a vending 07 facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 08 applies to governmental units other than the state. 09 * Sec. 43. AS 39.30.097(a) is amended to read: 10 (a) The commissioner of administration is authorized to prefund medical 11 benefits provided by AS 14.25.168, 14.25.171, AS 22.25.090, [AND] AS 39.35.535,  12 and 39.35.537 by establishing an irrevocable trust that is exempt from federal income 13 tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 14 and actuarial requirements of the Governmental Accounting Standards Board. 15  * Sec. 44. AS 39.30.097(b) is amended to read: 16 (b) The commissioner of administration is authorized to prefund medical 17 benefits provided by AS 14.25.480 [, AS 39.30.300,] and AS 39.35.880 by 18 establishing an irrevocable trust that is exempt from federal income tax under 26 19 U.S.C. 115 and subject to the applicable financial reporting, disclosure, and actuarial 20 requirements of the Governmental Accounting Standards Board. 21  * Sec. 45. AS 39.30.097 is amended by adding a new subsection to read: 22 (f) The commissioner of administration is authorized to prefund medical 23 benefits provided by AS 39.30.300 by establishing an irrevocable trust that is exempt 24 from federal income tax under 26 U.S.C. 115 and subject to the applicable financial 25 reporting, disclosure, and actuarial requirements of the Governmental Accounting 26 Standards Board. 27  * Sec. 46. AS 39.30.300 is amended to read: 28 Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree  29 Health Reimbursement Arrangement Plan established. The State of Alaska 30 Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 31 established for 01 (1) teachers who first become members of the [DEFINED 02 CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 -  03 14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], 04 and teachers who elected under AS 14.25.540 to participate in the plan under  05 AS 14.25.310 - 14.25.590; and  06 (2) employees of the state, political subdivisions of the state, and 07 public organizations of the state who first become members [OF THE DEFINED 08 CONTRIBUTION PLAN] of the public employees' retirement system (AS 39.35) 09 [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER AS 39.35.700 - 10 39.35.990 ON OR] after June 30, 2006, and employees of the state, political  11 subdivisions of the state, and public organizations of the state who elected under  12 AS 39.35.940 to participate in the plan established under AS 39.35.700 - 39.35.990 13 [JULY 1, 2006]. 14 * Sec. 47. AS 39.30.340 is amended to read: 15 Sec. 39.30.340. Powers and duties of the administrator. The administrator 16 shall establish a teachers' and public employees' retiree health reimbursement 17 arrangement plan trust fund under AS 39.30.097(f) in which the assets of the plan 18 shall be deposited and held. [THE RETIREE HEALTH REIMBURSEMENT 19 ARRANGEMENT PLAN TRUST FUND MAY BE A SUB-TRUST OF THE 20 ALASKA RETIREE HEALTH CARE TRUST ESTABLISHED UNDER 21 AS 39.30.097(b).] The administrator has the same powers and duties with regard to 22 the plan and the trust fund as provided in AS 14.25.003 and 14.25.004. 23  * Sec. 48. AS 39.30.370 is amended to read: 24 Sec. 39.30.370. Contributions by employers. Except as required under (b)  25 of this section, for [FOR] each member of the plan, an employer shall contribute to 26 the teachers' and public employees' retiree health reimbursement arrangement plan 27 trust fund an amount equal to three percent of the average annual compensation of all 28 employees of all employers in the teachers' retirement system and public employees' 29 retirement system. [THE ADMINISTRATOR SHALL MAINTAIN A RECORD FOR 30 EACH MEMBER TO ACCOUNT FOR EMPLOYER CONTRIBUTIONS ON 31 BEHALF OF THAT MEMBER. THE BOARD SHALL ESTABLISH BY 01 REGULATION THE RATE OF INTEREST TO BE APPLIED ANNUALLY TO 02 THE AMOUNT IN A MEMBER'S INDIVIDUAL ACCOUNT.]  03 * Sec. 49. AS 39.30.370 is amended by adding new subsections to read:  04 (b) For each member of the plan who is a peace officer or firefighter, an 05 employer shall contribute to the teachers' and public employees' retiree health 06 reimbursement arrangement plan trust fund an amount equal to four percent of the 07 average annual compensation of all employees of all employers in the teachers' 08 retirement system and public employees' retirement system. 09 (c) The administrator shall maintain a record for each member to account for 10 employer contributions on behalf of that member. The board shall establish by 11 regulation the rate of interest to be applied annually to the amount in a member's 12 individual account. 13 (d) In this section, "peace officer" and "firefighter" have the meaning given in 14 AS 39.35.990. 15  * Sec. 50. AS 39.30.380 is amended to read: 16 Sec. 39.30.380. Termination of employment. A person who terminates 17 employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470,  18 AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 19 contributions made on behalf of the person to the teachers' and public employees' 20 retiree health reimbursement arrangement trust fund. If a person returns to 21 employment with a participating employer by December 31 of the year in which the 22 person reaches 65 years of age, the person's account balance shall be restored in the 23 amount recorded on the date of termination from the trust, adjusted for inflation at the 24 rate of the Consumer Price Index for Anchorage, Alaska. The earlier period of 25 employment with a participating employer shall be credited toward eligibility for 26 medical benefits. 27  * Sec. 51. AS 39.30.390 is amended to read: 28 Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 29 eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 30 [AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the 31 individual account established for a member under the plan [, EXCEPT MEMBERS 01 DO NOT HAVE TO RETIRE DIRECTLY FROM THE SYSTEM]. A person who is 02 the dependent child of an eligible member is eligible for reimbursements if the eligible 03 member and surviving spouse have both died so long as the person meets the 04 definition of dependent child. 05  * Sec. 52. AS 39.30.400(a) is amended to read: 06 (a) The administrator may deduct the cost of monthly premiums from the 07 individual account for retiree major medical insurance on behalf of an eligible person 08 who elected retiree major medical insurance under AS 14.25.171, 14.25.480,  09 AS 39.35.537, or 39.35.880 [AS 14.25.480 OR AS 39.35.880]. 10  * Sec. 53. AS 39.30.420(a) is amended to read: 11 (a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 12 [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 13 time, in whole or in part, including the right to make retroactive amendments referred 14 to in 26 U.S.C. 401(b). 15  * Sec. 54. AS 39.30.420(b) is amended to read: 16 (b) The plan administrator may not modify or amend the plan retroactively [IN 17 SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 18 [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 19 MADE] before the modification or amendment except to the extent that the reduction 20 is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 21 Revenue Code. 22  * Sec. 55. AS 39.30.420(c) is amended to read: 23 (c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the  24 Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 25 plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 26 is terminated, all investments at the time of termination remain in force until all 27 individual accounts have been completely distributed under the plan. After [, AND, 28 AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 29 employer. 30  * Sec. 56. AS 39.30.420(d) is repealed and reenacted to read: 31 (d) Within one year after determining that a contribution to the plan by an 01 employer was the result of a mistake of fact, the administrator shall return the 02 contribution to the employer. 03  * Sec. 57. AS 39.30.495(5) is amended to read: 04 (5) "eligible person" means a person who meets the eligibility 05 requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 06 OR AS 39.35.870]; 07  * Sec. 58. AS 39.30.495(6) is amended to read: 08 (6) "employer" has the meaning given in AS 14.25.220 for employers  09 of teachers in the defined benefit retirement plan established in AS 14.25.009 -  10 14.25.220, has the meaning given in AS 14.25.590 for employers of teachers in the 11 defined contribution plan established in AS 14.25.310 - 14.25.590, has the meaning  12 given in AS 39.35.680 for employers of public employees in the defined benefit  13 retirement plan established in AS 39.35.095 - 39.35.680, and has the meaning given 14 in AS 39.35.990 for employers of public employees in the defined contribution plan 15 established in AS 39.35.700 - 39.35.990; 16  * Sec. 59. AS 39.30.495(9) is amended to read: 17 (9) "member" means a member of the plan [DEFINED 18 CONTRIBUTION PLAN OF THE TEACHERS' RETIREMENT SYSTEM IN 19 AS 14.25.310 - 14.25.590 OR A MEMBER OF THE PUBLIC EMPLOYEES' 20 RETIREMENT SYSTEM IN AS 39.35.700 - 39.35.990]; 21  * Sec. 60. AS 39.35.095 is amended to read: 22 Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 23 [FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 24 only to members first hired 25 (1) before July 1, 2006, who have  26 (A) not elected under AS 39.35.940 to participate in the  27 defined contribution retirement plan under AS 39.35.700 - 39.35.990; or  28 (B) elected under AS 39.35.940 to participate in the defined  29 contribution retirement plan under AS 39.35.700 - 39.35.990 and are  30 former members of the defined contribution retirement plan under  31 AS 39.35.700 - 39.35.990;  01 (2) after June 30, 2006, and before July 1, 2026, who are former  02 members of the defined contribution retirement plan under AS 39.35.700 -  03 39.35.990; or 04 (3) on or after July 1, 2026;  05 (A) by the State of Alaska; or  06 (B) by an employer that is a political subdivision or public  07 organization of the state that elects to provide defined benefits under  08 AS 39.35.095 - 39.35.680 to employees who first become members of the  09 plan after June 30, 2006 [: AS 39.35.095 - 39.35.680]. 10  * Sec. 61. AS 39.35.095 is amended by adding a new subsection to read: 11 (b) An employee who became a member of the system after June 30, 2006, 12 and before July 1, 2026, or who has elected under AS 39.35.940 to participate in the 13 defined contribution retirement plan under AS 39.35.700 - 39.35.990, is subject to 14 AS 39.35.095 - 39.35.680 if the employee 15 (1) is not employed by an employer on July 1, 2026; 16 (2) is reemployed after July 1, 2026, by the state or by an employer 17 that elects to provide defined benefits under AS 39.35.095 - 39.35.680 to employees 18 who first become members of the plan after June 30, 2006; and 19 (3) has, before the date of reemployment, received 20 (A) a distribution, other than a rollover distribution, of the 21 entire balance in the member's individual account in the defined contribution 22 retirement plan; or 23 (B) a rollover distribution of the entire balance in the member's 24 individual account in the defined contribution retirement plan and has not 25 within 180 days of reemployment had all or part of a direct rollover 26 distribution from an eligible retirement plan owned by the member paid 27 directly into the member's individual account. 28  * Sec. 62. AS 39.35.100(b) is amended to read: 29 (b) An individual account shall be maintained for each employee to record the 30 amount of the employee's mandatory contributions collected under AS 39.35.160 31 [AS 39.35.160(a)]. As of the last day of each calendar year and of each fiscal year, this 01 account shall be credited with interest by applying the prescribed rate of interest, as 02 determined by the board, to the balance in the account as of that date. When the 03 employee is appointed to retirement, the amount held in the individual account shall 04 be used first to fully finance the benefits paid. Once this account has been exhausted, 05 the plan shall fully finance the benefits paid that were not financed by the employee's 06 individual account. 07  * Sec. 63. AS 39.35 is amended by adding a new section to article 3 to read: 08 Sec. 39.35.159. Election of defined benefit retirement plan by reemployed  09 employees. (a) An employee of the state or of an employer that elects to provide 10 defined benefits under AS 39.35.095 - 39.35.680 to employees who first become 11 members of the plan after June 30, 2006, may make a one-time election to participate 12 in the plan under AS 39.35.095 - 39.35.680 if the employee was first hired after 13 June 30, 2006, and before July 1, 2026, and, if not employed by an employer on 14 July 1, 2026, is reemployed by an employer after July 1, 2026, and, before the date of 15 reemployment, 16 (1) has not received a distribution of the entire balance in the 17 employee's individual account under the defined contribution retirement plan 18 established in AS 39.35.700 - 39.35.990; or 19 (2) has received a rollover distribution of the entire balance in the 20 member's individual account in the defined contribution retirement plan and has 21 within 180 days of reemployment had all or part of a direct rollover distribution from 22 an eligible retirement plan owned by the member paid directly into the member's 23 individual account. 24 (b) An election under (a) of this section may be made not more than 180 days 25 after the date of reemployment. A reemployed employee electing to participate under 26 (a) of this section shall use the balance of the employee's individual account in the 27 plan under AS 39.35.700 - 39.35.990, including any rollover contributions, to 28 purchase credited service in the plan under AS 39.35.095 - 39.35.680. An election 29 made under (a) of this section must be made in writing in the manner prescribed by the 30 administrator. An election made by an employee who is married is not effective unless 31 the election is signed by the employee's spouse. The administrator shall provide an 01 employee who is eligible to make an election under (a) of this section with 02 information about the potential consequences of the employee's election, including 03 calculations to illustrate the effect of moving the employee's retirement plan from a 04 defined contribution retirement plan to a defined benefit retirement plan. 05 (c) An election made under (a) of this section to participate in the plan under 06 AS 39.35.095 - 39.35.680 is irrevocable. On the effective date of the election, an 07 eligible employee shall be enrolled as a member of the plan, and the employee's 08 participation in the plan shall be governed by the applicable provisions of the plan. 09 The employee's enrollment in the plan is retroactive to the date of hire. 10 (d) When an eligible employee makes an election under this section to 11 participate in the plan under AS 39.35.095 - 39.35.680, the administrator shall cause 12 the total amount of the employee's employee and employer contributions to the plan 13 under AS 39.35.700 - 39.35.990, with investment earnings and losses through the day 14 of the employee's election to participate as a member in the plan under AS 39.35.095 - 15 39.35.680, to be actuarially calculated and, subject to (f) of this section, transferred to 16 the pension fund in the plan under AS 39.35.095 - 39.35.680. On the effective date of 17 the employee's participation in the plan under AS 39.35.095 - 39.35.680, the employee 18 shall be credited with service in the plan. The board shall determine the cost of the 19 employee's actual service time based on the employee's accrued actuarial liability of 20 pension benefits in the plan, and credit the employee with service time equal to the 21 value actuarially calculated and transferred to the pension fund in the plan under 22 AS 39.35.095 - 39.35.680. The board shall adopt regulations establishing transfer 23 procedures. The transfer may not occur later than 60 days after the date the 24 administrator receives the employee's election, unless the major financial markets for 25 securities available for a transfer are seriously disrupted by an unforeseen event that 26 also causes the suspension of trading on a national securities exchange in the country 27 where the securities were issued; in that event, the 60-day period may be extended by 28 a resolution of the board. A transfer is not commissionable or subject to a fee and may 29 be in the form of cash or a security as determined by the board. The value of a security 30 shall be assessed on the date the security is received in the employee's account. 31 (e) When making a transfer under (d) of this section or a transfer for a 01 reemployed employee subject to the plan under AS 39.35.095(b), the administrator 02 shall transfer 03 (1) an amount equal to the decrease in the accrued actuarial liability of 04 the death and disability trust in the plan under AS 39.35.700 - 39.35.990 resulting 05 from the transfer as of the date of transfer, based on the most recent actuarial valuation 06 of the death and disability trust, from the death and disability trust in the plan under 07 AS 39.35.700 - 39.35.990 to the pension fund in the plan under AS 39.35.095 - 08 39.35.680; and 09 (2) an amount equal to the increase in the accrued actuarial liability of 10 the health care trust in the plan under AS 39.35.095 - 39.35.680 resulting from the 11 transfer as of the date of transfer, based on the actuarial assumptions set out in (g) of 12 this section, from the trust established under AS 39.30.097(b) for the prefunding of 13 medical benefits provided by AS 39.35.880 to the trust established under 14 AS 39.30.097(a) for the prefunding of medical benefits provided by AS 39.35.537. 15 (f) If the value actuarially calculated under (d) of this section is insufficient to 16 pay for service credit equal to the employee's actual service, the administrator shall 17 allow the employee the option of purchasing service credit in an amount up to the 18 amount needed to eliminate the insufficiency; however, if that value exceeds the 19 amount needed to pay for service credit equal to the employee's actual service, the 20 administrator shall cause the excess to be paid to the employee as a rollover transfer 21 either to an individual employee annuity account in the Department of Administration 22 under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 23 Plan) or, if the member's employer does not participate in the State of Alaska 24 Supplemental Annuity Plan, to an eligible retirement plan as defined in 25 AS 39.35.760(d). An excess may not be used to purchase additional service credit in 26 the plan under AS 39.35.095 - 39.35.680. When a reemployed employee enters the 27 plan under AS 39.35.095(b), the administrator shall allow the employee to pay for a 28 period of service credit up to the employee's actual service. When an employee elects 29 to purchase service credit under this section and does not immediately pay for the 30 service credit purchased, an indebtedness is established. Interest as prescribed by 31 regulation accrues on an employee's indebtedness. If the indebtedness exists when the 01 employee is appointed to retirement, the administrator shall make a corresponding 02 actuarial adjustment to the benefit payable to the employee for service in the defined 03 contribution retirement plan. 04 (g) Actuarial assumptions about the plan under AS 39.35.095 - 39.35.680 05 must be based on the most recent actuarial valuation of the plan, except that the 06 retirement rates are computed at 25 percent of the retirement rates used in the most 07 recent actuarial valuation of the pension fund for the plan plus 75 percent of the 08 retirement rates used in the most recent actuarial valuation of the plan under 09 AS 39.35.700 - 39.35.990. 10 (h) The provisions of this section are subject to the requirements of the 11 Internal Revenue Code and the limitations under AS 39.35.115, 39.35.678, 12 39.35.710(c) and (d), and 39.35.895. In this subsection, "Internal Revenue Code" has 13 the meaning given in AS 39.35.990. 14  * Sec. 64. AS 39.35.160(a) is amended to read: 15 (a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 16 each peace officer or firefighter shall contribute to the plan an amount equal to seven 17 and one-half percent of the peace officer's or firefighter's compensation, and, except [. 18 EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, 19 each other employee shall contribute to the plan an amount equal to six and three- 20 quarters percent of the employee's compensation. [THE CONTRIBUTIONS SHALL 21 BE DEDUCTED BY THE EMPLOYER AT THE END OF EACH PAYROLL 22 PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 23 COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 24 TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 25 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 26 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 27 OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 28  * Sec. 65. AS 39.35.160 is amended by adding new subsections to read: 29 (e) An employee who first participates in the plan after June 30, 2006, shall 30 contribute to the plan an amount equal to eight percent of the employee's 31 compensation. The board may, from time to time, increase or decrease the contribution 01 under this subsection; however, the contribution may not be decreased to less than 02 eight percent of the employee's compensation. 03 (f) Contributions under (a) and (e) of this section shall be deducted by the 04 employer at the end of each payroll period. The contributions shall be deducted from 05 employee compensation before computation of applicable federal taxes, and the 06 contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 07 member may not have the option of making the payroll deduction directly instead of 08 having the contribution picked up by the employer. 09 (g) The board shall increase the employee contribution under (e) of this 10 section if the board determines that, unless the contribution is increased, the portion of 11 the liability of the plan that is attributable to employees who first participate in the 12 plan after June 30, 2006, will be funded below 90 percent. The board may not increase 13 the employee contribution unless the board increases the employer contribution under 14 AS 39.35.255(k)(2) by an equal amount. The board may decrease the contribution 15 under (e) of this section if the board determines that, after the contribution is 16 decreased, the portion of the liability of the plan that is attributable to all members 17 who first became members of the plan after June 30, 2006, will be funded above 90 18 percent. The board may not decrease the employee contribution required unless the 19 board decreases the employer contribution under AS 39.35.255(k)(2) by an equal 20 amount. 21 (h) The board may not increase the employer contribution under 22 AS 39.35.255(k) unless the board increases the member contribution under (e) of this 23 section by a comparable amount. 24  * Sec. 66. AS 39.35.165(a) is amended to read: 25 (a) An employee who is eligible to purchase credited service under 26 AS 39.35.159, 39.35.310 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 27 39.35.360, or 39.35.370, a member who is eligible to purchase credited service under 28 AS 39.35.375, or an elected public official who is eligible to purchase credited service 29 under AS 39.35.381 is an employee for purposes of this section. An employee may, in 30 lieu of making payments directly to the plan, elect to have the employee's employer 31 make payments as provided in this section. 01  * Sec. 67. AS 39.35.165(b) is amended to read: 02 (b) An employee may elect to have the employer make payments for all or any 03 portion of the amounts payable for the employee's purchase of credited service 04 through a salary reduction program as follows: 05 (1) the amounts paid under a salary reduction program are in lieu of 06 contributions by the employee making the election; the electing employee's salary or 07 other compensation shall be reduced by the amount paid by the employer under this 08 subsection; 09 (2) the employee shall make an irrevocable election under this section 10 to purchase credited service as permitted in AS 39.35.159, 39.35.310 [AS 39.35.310], 11 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 39.35.375, or 12 39.35.381 and before the employee's termination of employment; the irrevocable 13 election must specify the number of payroll periods that deductions will be made from 14 the employee's compensation and the dollar amount of deductions for each payroll 15 period during the specified number of payroll periods; the deductions made under this 16 paragraph cease upon the earlier of the member's termination of employment with the 17 employer or the member's death; amounts paid by an employer under (f) of this 18 section may not be applied toward the payment of the dollar amount of the deductions 19 representing the portion of the credited service that is being purchased by the member 20 through payroll deduction in accordance with the member's irrevocable election under 21 this subsection; 22 (3) amounts paid by an employer under this subsection shall be treated 23 as employer contributions for the purpose of determining tax treatment under the 24 Internal Revenue Code; the amounts paid by the employer under this section may not 25 be included in the member's gross income for income tax purposes until those amounts 26 are distributed by refund or retirement benefit payments. 27  * Sec. 68. AS 39.35.165(g) is amended to read: 28 (g) Payments made under this section shall be applied to reduce the 29 employee's outstanding indebtedness described in AS 39.35.159, 39.35.310 30 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 31 39.35.375, or 39.35.381 at the time that the contributions are received by the plan. 01  * Sec. 69. AS 39.35.165(i) is amended to read: 02 (i) On satisfaction of the eligibility requirements of AS 39.35.159, 39.35.310 03 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.341, 39.35.345, 39.35.360, 39.35.370, 04 39.35.375, or 39.35.381, the requirements of this section, and the administrative filing 05 requirements specified by the commissioner, the plan shall adjust the employee's 06 credited service history and add any additional service credits acquired. 07  * Sec. 70. AS 39.35.255(a) is amended to read: 08 (a) Each employer, except as provided in (h) and (k) of this section, shall 09 contribute to the system every payroll period an amount calculated by applying a rate 10 of 22 percent of the greater of the total of all base salaries 11 (1) paid by the employer to employees who are active members of the 12 system and who first became members of the retirement plan under AS 39.35.095  13 - 39.35.680 before July 1, 2006, including any adjustments to contributions required 14 by AS 39.35.520; or 15 (2) paid by the employer to employees who were active members of 16 the system during the corresponding payroll period for the fiscal year ending 17 (A) June 30, 2008; or 18 (B) June 30, 2012, if that total is less than the total under (A) of 19 this paragraph, and the employer is a municipality in which the population 20 decreased by more than 25 percent between 2000 and 2010, according to the 21 decennial census conducted by the United States Bureau of the Census. 22  * Sec. 71. AS 39.35.255(d) is amended to read: 23 (d) Notwithstanding (a) and (k) of this section, the annual employer 24 contribution rate may not be less than the rate sufficient to allow payment of the 25 employer normal cost and the employer contributions required under AS 39.30.370 26 and AS 39.35.750. 27  * Sec. 72. AS 39.35.255 is amended by adding new subsections to read: 28 (j) If the legislature appropriates funds for the purpose of decreasing an 29 employer's contribution, the employer's contribution under (a) and (k) of this section 30 shall decrease by that amount. 31 (k) Notwithstanding (a) of this section, and except as provided in (h) of this 01 section, the state and each employer that elects to provide defined benefits under 02 AS 39.35.095 - 39.35.680 to employees who first become members of the plan after 03 June 30, 2006, shall contribute to the system every payroll period the lesser of 04 (1) an amount calculated by applying a rate of 24 percent of the greater 05 of the total of all base salaries 06 (A) paid by the employer to employees who are active 07 members of the system, including any adjustments to contributions required by 08 AS 39.35.520; or 09 (B) paid by the employer to employees who were active 10 members of the system during the corresponding payroll period for the fiscal 11 year ending 12 (i) June 30, 2008; or 13 (ii) June 30, 2012, if that total is less than the total 14 under (i) of this subparagraph, and the employer is a municipality in 15 which the population decreased by more than 25 percent between 2000 16 and 2010, according to the decennial census conducted by the United 17 States Bureau of the Census; or 18 (2) an amount calculated by applying a rate established by the board 19 under AS 37.10.220 to the total of all base salaries paid by the employer to active 20 members of the system; the rate must be at least 12 percent and be sufficient to pay the 21 actuarially determined employer normal cost, all contributions required under 22 AS 39.30.370 and AS 39.35.750, and the past service cost attributable to active 23 members of the system who first became members of the retirement plan under 24 AS 39.35.095 - 39.35.680 after June 30, 2006. 25  * Sec. 73. AS 39.35 is amended by adding a new section to read: 26 Sec. 39.35.281. Sub-trust for members who first became members after  27 June 30, 2006. The administrator shall deposit a portion of employer contributions 28 under AS 39.35.255 and 39.35.280 in a sub-trust of the retirement fund established by 29 the board for members who first became members after June 30, 2006. The amount 30 deposited, when combined with the amount separately computed for medical benefits 31 under AS 39.35.282, must be sufficient to pay the actuarially determined employer 01 normal cost and past service cost for members of the system who first became 02 members after June 30, 2006. When the amount sufficient to pay the actuarially 03 determined employer normal cost, all contributions required under AS 39.30.370 and 04 AS 39.35.750, and past service cost for members of the system is less than 12 percent 05 of all base salaries paid to active members of the system, the administrator shall 06 deposit the difference in the sub-trust established under this section. 07 * Sec. 74. AS 39.35.282 is amended to read: 08 Sec. 39.35.282. Contributions for medical benefits. Contributions made by 09 an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 10 computed for benefits provided by AS 39.35.535 and retiree major medical  11 insurance plan benefits provided under AS 39.35.537, and must [SHALL] be 12 deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 13  * Sec. 75. AS 39.35.340(i) is amended to read: 14 (i) Notwithstanding (d) of this section, a member who retires as a peace officer 15 or firefighter may elect to use five or fewer years of credited service granted under this 16 section in computing years of credited service under AS 39.35.535(c) or 39.35.537. 17 When eligibility for credited service for military service has been established and an 18 election under this subsection has been made, an indebtedness in addition to the 19 indebtedness determined under (b) of this section shall be determined for each year of 20 military service used under this subsection, in an amount based on the increase, if any, 21 in the present value of future benefits for that year as determined by the department. 22  * Sec. 76. AS 39.35.345(d) is amended to read: 23 (d) An employee may choose whether the credited service granted under this 24 section is used to satisfy the credited service requirements for normal retirement under 25 AS 39.35.370(a)(1)(B) or (C), 39.35.370(a)(2)(B), (C), or (D), [AS 39.35.370(a)(2) 26 OR (3)] or 39.35.385(f) or is only used for the calculation of benefits. An election 27 under this subsection is irrevocable and applies to all temporary credited service that 28 the employee has accrued when the employee retires. An election under this 29 subsection does not change the date that an employee is considered to have 30 commenced participation in the plan under AS 39.35.120. 31  * Sec. 77. AS 39.35.370(a) is amended to read: 01 (a) Subject to AS 39.35.450, a terminated employee 02 (1) who first became a member before July 1, 2006, is eligible for a 03 normal retirement benefit 04 (A) [(1)] at age 60 with at least five years of credited service; 05 (B) [(2)] with at least 20 years of credited service as a peace 06 officer or firefighter; or 07 (C) [(3)] with at least 30 years of credited service;  08 (2) who first became a member of the plan after June 30, 2006, is  09 eligible for a normal retirement benefit  10 (A) at age 60 with at least five years of credited service;  11 (B) at age 55 with at least 20 years of credited service as a  12 peace officer or firefighter;  13 (C) at age 50 with at least 25 years of credited service as a  14 peace officer or firefighter; or  15 (D) with at least 30 years of credited service [FOR ALL 16 OTHER EMPLOYEES]. 17  * Sec. 78. AS 39.35.381(e) is amended to read: 18 (e) A person who retires under this section is not entitled to disability or death 19 benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 20 to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 21 section may not be used for vesting under AS 39.35.095 - 39.35.680. 22  * Sec. 79. AS 39.35.475(b) is amended to read: 23 (b) Subject to (g) and (h) of this section, the [THE] increase in benefit 24 payments applies to total benefit payments except for the cost-of-living allowance 25 under AS 39.35.480. The amount of the increase is a percentage of the current benefit 26 equal to 27 (1) the lesser of 75 percent of the increase in the cost of living in the 28 preceding calendar year or nine percent, for recipients who on July 1 are at least 65 29 years old and for members receiving disability benefits; and 30 (2) the lesser of 50 percent of the increase in the cost of living in the 31 preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 01 less than 65 years old or for recipients who are less than 60 years old on July 1 but 02 who have received benefits from the plan for at least five years. 03  * Sec. 80. AS 39.35.475 is amended by adding new subsections to read: 04 (g) Subject to (h) of this section, the amount of an increase for members who 05 first became members of the plan after June 30, 2006, and do not meet the eligibility 06 requirements for a permanent fund dividend under AS 43.23.005(a) in effect on July 1, 07 2025, is equal to one-half of the applicable percentage under (b) of this section. 08 (h) If the board determines that the portion of the liability of the plan that is 09 attributable to all members who first became members of the plan after June 30, 2006, 10 is funded below 90 percent, the board shall reduce the amount of the increase 11 determined under (b) or (g) of this section that is payable to a member who first 12 became a member after June 30, 2006. At any time, the board may terminate a 13 reduction made under this subsection. 14  * Sec. 81. AS 39.35.480(a) is amended to read: 15 (a) While residing in the state, a person who first became a member of the  16 plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680,  17 and who is 65 years of age or older or a person who first became a member of the  18 plan before July 1, 2006, and who is receiving a disability benefit is entitled to 19 receive a monthly cost-of-living allowance in addition to the basic benefit. The 20 amount of this allowance shall be $50 or 10 percent of the basic benefit, whichever is 21 greater. 22  * Sec. 82. AS 39.35.535(a) is amended to read: 23 (a) Except as provided in (d) and (g) of this section, the following persons are 24 entitled to major medical insurance coverage under this section: 25 (1) for employees first hired before July 1, 1986, 26 (A) an employee who is receiving a monthly benefit from the 27 plan and who has elected coverage; 28 (B) the spouse and dependent children of the employee 29 described in (A) of this paragraph; 30 (C) the surviving spouse of a deceased employee who is 31 receiving a monthly benefit from the plan and who has elected coverage; 01 (D) the dependent children of a deceased employee who are 02 dependent on the surviving spouse described in (C) of this paragraph; 03 (2) for members first hired [ON OR] after June 30 [JULY 1], 1986, 04 (A) an employee who is receiving a monthly benefit from the 05 plan and who has elected coverage for the employee; 06 (B) the spouse of the employee described in (A) of this 07 paragraph if the employee elected coverage for the spouse; 08 (C) the dependent children of the employee described in (A) of 09 this paragraph if the employee elected coverage for the dependent children; 10 (D) the surviving spouse of a deceased employee who is 11 receiving a monthly benefit from the plan and who has elected coverage; 12 (E) the dependent children of a deceased employee who are 13 dependent on the surviving spouse described in (D) of this paragraph if the 14 surviving spouse has elected coverage for the dependent children. 15  * Sec. 83. AS 39.35.535(c) is amended to read: 16 (c) A benefit recipient who became a member before July 1, 2006, or the  17 surviving spouse of the member may elect major medical insurance coverage in 18 accordance with regulations and under the following conditions: 19 (1) a person, other than a disabled member or a disabled member who 20 is appointed to normal retirement, shall [MUST] pay an amount equal to the full 21 monthly group premium for retiree major medical insurance coverage if the person is 22 (A) younger than 60 years of age and has less than 23 (i) 25 years of credited service as a peace officer under 24 AS 39.35.360 and 39.35.370; or 25 (ii) 30 years of credited service under AS 39.35.360 and 26 39.35.370 that is not service as a peace officer; or 27 (B) of any age and has less than 10 years of credited service; 28 (2) a person is not required to make premium payments for retiree 29 major medical coverage if the person 30 (A) is a disabled member; 31 (B) is a disabled member who is appointed to normal 01 retirement; 02 (C) is 60 years of age or older and has at least 10 years of 03 credited service; or 04 (D) has at least 05 (i) 25 years of credited service as a peace officer under 06 AS 39.35.360 and 39.35.370; or 07 (ii) 30 years of credited service under AS 39.35.360 and 08 39.35.370 not as a peace officer. 09  * Sec. 84. AS 39.35.535 is amended by adding a new subsection to read:  10 (g) A benefit recipient who first became a member after June 30, 2006, or a 11 surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 12 under this section but may elect medical benefits under AS 39.35.537. 13  * Sec. 85. AS 39.35 is amended by adding a new section to read: 14 Sec. 39.35.537. Medical benefit; eligibility of employees first hired after  15 June 30, 2006; surviving spouses and dependents. (a) An employee who first 16 became a member of the plan after June 30, 2006, receives a monthly benefit from the 17 plan, retired from the plan, and has elected benefits under this section is entitled to 18 medical benefits under this section. A member who applies for medical benefits under 19 this section shall apply on the forms and in the manner prescribed by the 20 administrator. A member is eligible to retire from the plan if the member 21 (1) is at least 50 years of age and has at least 20 years of membership 22 service as a peace officer or firefighter; 23 (2) has at least 25 years of membership; or 24 (3) reaches the age set for Medicare eligibility and has at least 10 years 25 of membership service. 26 (b) The member's surviving spouse is eligible to elect medical benefits if the 27 member had retired or was eligible for retirement and medical benefits at the time of 28 the member's death. 29 (c) The medical benefits available to eligible persons are access to the retiree 30 major medical insurance plan and access to the health reimbursement arrangement 31 plan under AS 39.30.300. Access to the retiree major medical insurance plan means 01 that an eligible person may not be denied insurance coverage except for failure to pay 02 the required premium. 03 (d) Retiree major medical insurance plan coverage elected by an eligible 04 member under this section covers the eligible member, the spouse of the eligible 05 member, and the dependent children of the eligible member. 06 (e) Retiree major medical insurance plan coverage elected by a surviving 07 spouse of an eligible member under this section covers the surviving spouse and the 08 dependent children of the eligible member who are dependent on the surviving spouse. 09 (f) Participation in the retiree major medical insurance plan is not required in 10 order to participate in the health reimbursement arrangement plan. 11 (g) A person eligible for medical benefits under this section is not required to 12 participate in the health reimbursement arrangement plan in order to participate in the 13 retiree major medical insurance plan. 14 (h) A person who is eligible for medical benefits under this section must make 15 the irrevocable election to participate or not participate in the retiree major medical 16 insurance plan on or before the date the person reaches 70 1/2 years of age or when the 17 person applies for retirement and medical benefits, whichever is later. 18 (i) Major medical insurance coverage takes effect on the first day of the month 19 following the date of the administrator's approval of the election and stops when the 20 person who elects coverage dies or fails to make a required premium payment. 21 (j) The coverage for persons 65 years of age or older is the same as that 22 available for persons under 65 years of age. The benefits payable to those persons 65 23 years of age or older supplement any benefits provided under the federal old age, 24 survivors, and disability insurance program. 25 (k) The medical and optional insurance premiums owed by the person who 26 elects coverage may be deducted from the health reimbursement arrangement plan. If 27 the amount of the health reimbursement arrangement plan becomes insufficient to pay 28 the premiums, the person who elects coverage under (a) of this section shall pay the 29 premiums directly. 30 (l) The cost of premiums for retiree major medical insurance coverage under 31 this section for an eligible member or surviving spouse who is 01 (1) not eligible for Medicare is an amount equal to the full monthly 02 group premiums for retiree major medical insurance coverage; 03 (2) eligible for Medicare is the following percentage of the premium 04 amounts established for retirees who are eligible for Medicare: 05 (A) 30 percent if the member had 10 or more, but less than 15, 06 years of service; 07 (B) 25 percent if the member had 15 or more, but less than 20, 08 years of service; 09 (C) 20 percent if the member had 20 or more, but less than 25, 10 years of service; 11 (D) 15 percent if the member had 25 or more, but less than 30, 12 years of service; 13 (E) 10 percent if the member had 30 or more years of service. 14 (m) The eligibility for retiree major medical insurance coverage for an 15 alternate payee under a qualified domestic relations order shall be determined based 16 on the eligibility of the member to elect coverage. The alternate payee shall pay the 17 full monthly premium for retiree major medical insurance coverage. 18 (n) The administrator shall 19 (1) inform a person entitled to retiree major medical insurance 20 coverage under this section in writing 21 (A) that the health insurance coverage available to retired 22 members may be different from the health insurance coverage provided to 23 employees; 24 (B) of time limits for selecting optional health insurance 25 coverage; and 26 (C) whether the election is irrevocable; and 27 (2) require that a person entitled to retiree major medical insurance 28 coverage under this section indicate in writing on a form provided by the administrator 29 whether the person has chosen to receive optional health insurance coverage. 30 (o) The monthly group premiums for retiree major medical insurance coverage 31 under this section are established by the administrator in accordance with 01 AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 02 (a) of this section a monthly group premium rate for retiree major medical insurance 03 coverage other than the premium in effect for the month in which the premium is due 04 for coverage for that month. 05 (p) In this section, "health reimbursement arrangement plan" means the State 06 of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 07 Arrangement Plan established in AS 39.30.300. 08  * Sec. 86. AS 39.35.610(a) is amended to read: 09 (a) The contributions of an employer and the contributions of its employees 10 shall be transmitted to the administrator as soon as practicable after the close of the 11 payroll period for which the contributions are made. Subject to (c) of this section, if an 12 employer is delinquent in transferring the contributions for more than 15 days, interest 13 shall be assessed on the outstanding contributions at [ONE AND ONE-HALF TIMES] 14 the most recent actuarially determined rate of earnings for the retirement plan from the 15 date that the contributions were originally due. 16  * Sec. 87. AS 39.35.680(4) is amended to read: 17 (4) "average monthly compensation" means the result obtained by 18 dividing the compensation earned by an employee during a considered period by the 19 number of months, including fractional months, for which compensation was earned; 20 an employee must have at least 115 days of credited service in the last payroll year in 21 order for that year to be used as part of the consecutive payroll years; the considered 22 period consists of 23 (A) for employees first hired before July 1, 1996, the three 24 consecutive payroll years during the period of credited service that yield the 25 highest average; 26 (B) for employees who first become members of the plan 27 [FIRST HIRED ON OR] after June 30 [JULY 1], 1996, the five consecutive 28 payroll years during the period of credited service that yield the highest 29 average; 30 (C) if the employee does not have the number of consecutive 31 payroll years required by (A) or (B) of this paragraph, the actual number of 01 months, including fractional months, that the employee worked; 02 (D) for an employee who has made an election under 03 AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 04 fractional months, that the employee worked; 05 (E) for a peace officer or firefighter hired before July 1, 2006 06 [AT ANY TIME], the three consecutive payroll years during the period of 07 credited service that yield the highest average; 08 (F) for a peace officer or firefighter who first becomes a  09 member of the plan after June 30, 2006, the five consecutive payroll years  10 during the period of credited service that yield the highest average; 11  * Sec. 88. AS 39.35.680(18) is amended to read: 12 (18) "employer" means 13 (A) the State of Alaska; 14 (B) a political subdivision or public organization of the state 15 that participates in the plan based on a resolution to participate in the plan that 16 was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or 17 (C) a political subdivision or public organization of the state 18 that, as a result of consolidation or reorganization [THAT OCCURS ON OR 19 AFTER JULY 1, 2006], assumes liability under the plan of a political 20 subdivision or public organization described in (B) of this paragraph; 21  * Sec. 89. AS 39.35.680 is amended by adding a new paragraph to read: 22 (44) "first became a member after June 30, 2006" and "first became a 23 member of the plan after June 30, 2006" include a member who elected under 24 AS 39.35.940 to participate in the plan under AS 39.35.700 - 39.35.990 and who 25 elects to participate in the defined benefit retirement plan under AS 39.35.095 - 26 39.35.680. 27  * Sec. 90. AS 39.35.700 is amended to read: 28 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 29 AS 39.35.700 - 39.35.990 apply only to 30 (1) members first hired [ON OR] after June 30, 2006, who do not  31 participate in a defined benefit retirement plan under AS 14.25.009 - 14.25.220 or  01 AS 39.35.095 - 39.35.680; and 02 (2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 03 EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 04 RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 05 FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who 06 transferred [TRANSFER] into the defined contribution retirement plan under 07 AS 39.35.940 and do not elect to participate in the defined benefit retirement plan  08 under AS 39.35.095 - 39.35.680.  09  * Sec. 91. AS 39.35.720 is amended to read: 10 Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 11 after June 30, 2006, and before July 1, 2026, who does not participate in a defined  12 benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 -  13 39.35.680 [JULY 1, 2006,] shall participate in the plan set out in AS 39.35.700 - 14 39.35.990. 15  * Sec. 92. AS 39.35.870(a) is amended to read: 16 (a) In order to obtain medical benefits under AS 39.35.880, an active member 17 must retire [DIRECTLY] from the plan. A member is eligible to retire from the plan if 18 [THE MEMBER HAS BEEN AN ACTIVE MEMBER FOR AT LEAST 12 19 MONTHS BEFORE APPLICATION FOR RETIREMENT AND] 20 (1) the member has at least 20 [25] years of membership service as a 21 peace officer or firefighter or at least 25 [30] years of membership service for all other 22 employees; or 23 (2) the member reaches the normal retirement age, [AND] has at least 24 10 years of membership service, and has been an active member for at least 12  25 months immediately before application for retirement. 26  * Sec. 93. AS 39.35.895(a) is amended to read: 27 (a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 28 [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 29 time, in whole or in part, including the right to make retroactive amendments referred 30 to in 26 U.S.C. 401(b). 31  * Sec. 94. AS 39.35.895(b) is amended to read: 01 (b) The plan administrator may not modify or amend the plan retroactively [IN 02 SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 03 [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 04 MADE] before the modification or amendment except to the extent that the reduction 05 is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 06 Revenue Code. 07  * Sec. 95. AS 39.35.895(c) is amended to read: 08 (c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the  09 Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 10 plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 11 is terminated, all investments at the time of termination remain in force until all 12 individual accounts have been completely distributed under the plan. After [, AND, 13 AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 14 employer. 15  * Sec. 96. AS 39.35.895(d) is repealed and reenacted to read: 16 (d) Within one year after determining that a contribution to the plan by an 17 employer was the result of a mistake of fact, the administrator shall return the 18 contribution to the employer. 19  * Sec. 97. AS 39.35.940(a) is amended to read: 20 (a) An [SUBJECT TO (i) OF THIS SECTION, AN] active member of the 21 defined benefit retirement plan of the public employees' retirement system is eligible 22 to participate in the defined contribution retirement plan established under 23 AS 39.35.700 - 39.35.990 if that member has not vested. Participation in the defined 24 contribution retirement plan is in lieu of participation in the defined benefit retirement 25 plan established under AS 39.35.095 - 39.35.680. 26  * Sec. 98. AS 39.35.940(h) is amended to read: 27 (h) An [EMPLOYEE WHO IS ELIGIBLE TO ELECT TRANSFER TO THE 28 DEFINED CONTRIBUTION RETIREMENT PLAN MUST MAKE THE 29 ELECTION NOT LATER THAN 12 MONTHS AFTER THE FIRST DAY OF THE 30 MONTH FOLLOWING THE ADMINISTRATOR'S RECEIPT OF THE 31 NOTIFICATION THAT THE EMPLOYEE'S EMPLOYER CONSENTS TO 01 TRANSFERS OF ITS EMPLOYEES UNDER (i) OF THIS SECTION. THE] election 02 to participate in the defined contribution retirement plan must be made in writing on 03 forms and in the manner prescribed by the administrator. Before accepting an election 04 to participate in the defined contribution retirement plan, the administrator must 05 provide the employee planning on making an election to participate in the defined 06 contribution retirement plan with information, including calculations to illustrate the 07 effect of moving the employee's retirement plan from the defined benefit retirement 08 plan to the defined contribution retirement plan as well as other information to clearly 09 inform the employee of the potential consequences of the employee's election. An 10 election made under this subsection to participate in the defined contribution 11 retirement plan is irrevocable. Upon making the election, the participant shall be 12 enrolled as a member of the defined contribution retirement plan, the member's 13 participation in the plan shall be governed by the provisions of AS 39.35.700 - 14 39.35.990, and the member's participation in the defined benefit retirement plan under 15 AS 39.35.115 shall terminate. The participant's enrollment in the defined contribution 16 retirement plan shall be effective the first day of the month after the administrator 17 receives the completed enrollment forms. An election made by an eligible member 18 who is married is not effective unless the election is signed by the individual's spouse. 19  * Sec. 99. AS 14.25.012(c), 14.25.061, 14.25.540(i); and AS 39.35.940(i) are repealed. 20  * Sec. 100. The uncodified law of the State of Alaska is amended by adding a new section 21 to read: 22 TRANSITION: RETIREMENT PLAN ELECTION. (a) A teacher who became a 23 member of the defined contribution retirement plan of the teachers' retirement system after 24 June 30, 2006, and before July 1, 2026, and who, on July 1, 2026, is a member employed by 25 an employer in the defined contribution retirement plan of the teachers' retirement system 26 may, before January 1, 2027, make a one-time election to participate in the defined benefit 27 retirement plan and to transfer all contributions that have been made or should be made to the 28 defined contribution retirement plan for service the member completes before the effective 29 date of the member's participation in the defined benefit retirement plan. The transferred 30 contributions shall be used to purchase credited service in the defined benefit retirement plan 31 on an actuarial equivalent basis determined by the Alaska Retirement Management Board 01 established under AS 37.10.210. The provisions of AS 14.25.044 apply to an election made 02 under this subsection. 03 (b) An employee who became a member of the defined contribution retirement plan 04 of the public employees' retirement system after June 30, 2006, and before July 1, 2026, and 05 who, on July 1, 2026, is a member employed by an employer in the defined contribution 06 retirement plan of the public employees' retirement system may make a one-time election to 07 participate in the defined benefit retirement plan under AS 39.35.095 - 39.35.680 and to 08 transfer all contributions that have been made or should be made to the defined contribution 09 retirement plan for service the member completes before the effective date of the member's 10 participation in the defined benefit retirement plan. The election may be made before 11 January 1, 2027, by an employee of the state, or during the period beginning October 1, 2026, 12 and ending December 31, 2026, by an employee of an employer that elects under sec. 101 of 13 this Act to provide defined benefits under AS 39.35.095 - 39.35.680 to employees who first 14 become members of the plan after June 30, 2006. The transferred contributions shall be used 15 to purchase credited service in the defined benefit retirement plan on an actuarial equivalent 16 basis determined by the Alaska Retirement Management Board established under 17 AS 37.10.210. The provisions of AS 39.35.159 apply to an election made under this 18 subsection. 19  * Sec. 101. The uncodified law of the State of Alaska is amended by adding a new section 20 to read: 21 TRANSITION: EMPLOYER PARTICIPATION IN THE DEFINED BENEFIT 22 RETIREMENT PLAN. An employer that is a political subdivision or public organization of 23 the state may, during the period beginning July 1, 2026, and ending September 30, 2026, elect 24 to provide defined benefits under AS 39.35.095 - 39.35.680 to employees who first become 25 members of the plan after June 30, 2006, and who do not participate in the defined 26 contribution retirement plan under AS 39.35.700 - 39.35.990. 27  * Sec. 102. The uncodified law of the State of Alaska is amended by adding a new section 28 to read: 29 ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 30 may adopt regulations necessary to implement secs. 40 and 41 of this Act. Regulations 31 adopted by the Alaska Retirement Management Board under this Act relate to the internal 01 management of a state agency and are not subject to AS 44.62 (Administrative Procedure Act) 02 under AS 37.10.240. 03 (b) The commissioner of administration may adopt regulations necessary to 04 implement secs. 1 - 39 and 41 - 100 of this Act. Regulations adopted by the commissioner of 05 administration under this Act relate to the internal management of a state agency and are not 06 subject to AS 44.62 (Administrative Procedure Act) under AS 14.25.005, AS 39.30.098, and 07 AS 39.35.005. 08 (c) Regulations adopted under this section may not take effect before the effective 09 date of the law being implemented by the regulation. 10  * Sec. 103. Section 102 of this Act takes effect immediately under AS 01.10.070(c). 11  * Sec. 104. Except as provided in sec. 103 of this Act, this Act takes effect July 1, 2026.