HB 57: "An Act relating to a retirement incentive program for the teachers' retirement system; and providing for an effective date."
00HOUSE BILL NO. 57 01 "An Act relating to a retirement incentive program for the teachers' retirement 02 system; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. PURPOSE. Since it may be necessary for employers who participate in the 05 teachers' retirement system to reduce their personal services costs because of declining state 06 revenue, reimplementation of a retirement incentive program based on the program established 07 by ch. 26, SLA 1986, as amended by ch. 76, SLA 1988, and ch. 89, SLA 1989, as amended 08 by ch. 18, SLA 1990, encouraging employees to retire voluntarily, will reduce the hardship 09 of layoffs. This program is intended to realize sufficient economies to offset the cost of 10 administration and benefits to employers resulting from the award of retirement credits and 11 to result in a net reduction in personal services costs to public employers during a period of 12 declining revenue. 13 * Sec. 2. RETIREMENT INCENTIVE PROGRAM. (a) An employer may adopt a 14 retirement incentive plan under secs. 3 - 5 of this Act, as appropriate, to designate
01 organizational units of employees eligible to participate in the retirement incentive program. 02 (b) The organizational units of a plan must be selected so that implementation of the 03 plan results in maximum savings to the employer in personal services costs within five years 04 after the commencement of the plan. A plan that results in savings in personal services costs 05 in any amount that is in excess of all costs to the employer qualifies under this section. The 06 designation may include only representatives from job classifications whose inclusion 07 contributes to the overall cost savings. 08 (c) A member is eligible to participate in the retirement incentive program only if the 09 member is vested, is employed in a position in a designated organizational unit, and will be 10 qualified to retire under AS 14.25.110 after receipt of the retirement incentive. To participate, 11 a member shall apply on a form provided by the administrator. 12 (d) A participating employer shall prepare and file the retirement incentive plan with 13 the administrator. For state employees other than university employees, the administrator may 14 approve a designated organizational unit only if the office of management and budget certifies 15 that the unit's participation in the plan meets the requirements of (b) of this section. The 16 administrator shall approve the plan if it meets the requirements of this section. The plan must 17 (1) identify organizational units and employees eligible to participate in the 18 program; 19 (2) include a reimbursement agreement that 20 (A) requires the employer, for each employee who is retired under the 21 plan, to reimburse the system within three years after the end of the fiscal year in 22 which the employee is appointed to retirement in an amount equal to 23 (i) the actuarial equivalent of the difference between the benefits 24 the participant receives after the addition of the retirement incentive under this 25 section and the amount the participant would have received without the 26 incentive, less the total of the amount the participant has paid on the 27 indebtedness determined under (e) of this section and the amount paid under 28 (h) of this section, if any; and 29 (ii) an appropriate share of the administrative costs of the 30 program; and 31 (B) provides that contributions from the employer under this section
01 take priority over other obligations of the employer to the maximum extent permitted 02 by law. 03 (e) A member of the teachers' retirement system who participates in the retirement 04 incentive program is indebted to the system. The amount of indebtedness is equal to 25.95 05 percent of the member's actual compensation for the school year, or the calculated school year 06 compensation for a member who works less than the entire school year, for the school year 07 in which the member terminates employment to participate in the program. An outstanding 08 indebtedness at the time a participant is appointed to retirement will require an actuarial 09 adjustment to the benefits payable. 10 (f) A participant in the retirement incentive program receives a credit of three years. 11 The three years must be applied in the following order until exhausted: 12 (1) to meet the age or service required for eligibility for normal retirement 13 under AS 14.25.110; 14 (2) to meet the age required for early retirement under AS 14.25.110; 15 (3) to reduce the actuarial adjustment required for early retirement under 16 AS 14.25.110; 17 (4) as years of credited service for calculating retirement benefits. 18 (g) Except as provided in sec. 6 of this Act, in the determination of whether a member 19 will qualify to retire under this section, credited service may include only service credit for 20 employment rendered to an employer, territorial service under AS 14.25.105, outside service 21 and military service under AS 14.25.060, and Alaska BIA service under AS 14.25.107. 22 (h) In order to establish eligibility for participation under (b) of this section, and in 23 addition to the employee indebtedness under (e) of this section, an employee may elect to 24 assume a portion of the employer liability calculated under (d) of this section. An outstanding 25 indebtedness at the time the employee is appointed to retirement will require an actuarial 26 adjustment to the employee's benefits. 27 * Sec. 3. AUTHORIZATION FOR STATE EMPLOYEE RETIREMENT INCENTIVE. 28 (a) A state agency is authorized to adopt a retirement incentive plan for its employees. A 29 plan adopted under this section must permit a designated employee to apply to the retirement 30 incentive program under sec. 2 of this Act only from July 31, 1993, through no later than 31 October 31, 1993.
01 (b) The plan may not permit an employee who is the commissioner, a deputy 02 commissioner, or assistant commissioner of a state department to participate. 03 (c) A plan adopted under this section may only permit participation by an employee 04 who is otherwise qualified and who 05 (1) has been continuously employed by the state since November 1, 1992; 06 (2) is a permanent seasonal employee continuously employed by the state in 07 the permanent seasonal position during all of the time since November 1, 1992, in which the 08 position normally was filled; 09 (3) has a job sharing agreement with a state agency in which two or more 10 employees share a single position identified by a single position control number and in which 11 the employee choosing to participate was continuously employed by the agency during all of 12 the time since November 1, 1992, in which the employee normally worked under the job 13 sharing agreement; or 14 (4) meets a combination of the requirements of this subsection. 15 (d) Under a plan adopted under this section, the administrator may not accept the 16 application of an employee unless the employee will be appointed to retirement on or before 17 July 1, 1994. 18 (e) In this section, "state agency" does not include the University of Alaska. 19 * Sec. 4. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR EMPLOYEES OF 20 THE UNIVERSITY OF ALASKA. (a) The Board of Regents of the University of Alaska 21 is authorized to adopt a retirement incentive plan for its employees. A plan adopted under this 22 section must permit designated employees to apply to the retirement incentive program under 23 sec. 2 of this Act only from June 30, 1993, through no later than December 31, 1993. 24 (b) Under a plan adopted under this section, the administrator may not accept the 25 application of an employee unless the employee will be appointed to retirement on or before 26 August 1, 1994. The Board of Regents may set an earlier date by which employees of the 27 university must be appointed to retirement in order to participate. 28 (c) Notwithstanding the exclusion of members of the optional university retirement 29 program from participation in the teachers' retirement system under AS 14.25.040(a), 30 14.25.220(40), and AS 14.40, a participant in the optional university retirement program who 31 is vested in the teachers' retirement system may participate in the retirement incentive
01 program if the individual meets the other qualifications of this Act. 02 * Sec. 5. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER 03 EMPLOYEES IN THE TEACHERS' RETIREMENT SYSTEM. (a) An employer under the 04 teachers' retirement system who is not otherwise covered by secs. 3 or 4 of this Act is 05 authorized to adopt a retirement incentive plan for its employees under sec. 2 of this Act. A 06 plan adopted under this section must permit designated employees to apply to the retirement 07 incentive program under sec. 2 of this Act only from June 30, 1993, through no later than 08 December 31, 1993. 09 (b) Under a plan adopted under this section, the administrator may not accept the 10 application of an employee unless the employee will be appointed to retirement on or before 11 August 1, 1994. The employer may set an earlier date by which employees of the employer 12 must be appointed to retirement in order to participate. 13 * Sec. 6. POLITICAL SUBDIVISION OR PUBLIC ORGANIZATION EMPLOYMENT. 14 Notwithstanding other provisions of law, a vested member who is a state employee and is 15 participating in the retirement incentive program may receive credit for employment with a 16 political subdivision or public organization before the political subdivision or organization 17 became an employer under the system for purposes of determining the years of service 18 requirements for retirement under AS 14.25.110. The member may not receive credit for 19 those years under this section for purposes of determining benefits. In order for a state 20 employee to receive credit under this section, the employee's participation in the program 21 must contribute to the overall cost savings of the agency. 22 * Sec. 7. RECOVERY OF EMPLOYER DELINQUENCIES. To recover a delinquency 23 owed by an employer other than the state under an agreement entered under sec. 2(d)(2) of 24 this Act, the Department of Administration may 25 (1) bring an action against the employer; or 26 (2) direct that the amount of the delinquency or a lesser amount be withheld 27 from any money payable to the employer by a state department or agency and that the amount 28 withheld be credited to the delinquency. 29 * Sec. 8. REEMPLOYMENT INDEBTEDNESS. (a) If a participant in the retirement 30 incentive program is reemployed after appointment to retirement under the program as a 31 member of the public employees' retirement system under AS 39.35, the teachers' retirement
01 system under AS 14.25, or the judicial retirement system under AS 22.25, the participant loses 02 the incentive credit received under sec. 2(f) of this Act and is indebted to the system. The 03 amount of the indebtedness is equal to 110 percent of the amount the participant received as 04 a result of participation in the program to which the participant was not otherwise entitled, in- 05 cluding the cost of health insurance. The participant is entitled to a credit to be applied 06 against the reemployment indebtedness in the amount the participant has paid under sec. 2(e) 07 and (h) of this Act. Interest accrues on the indebtedness at the rate established by regulation 08 from the date of reemployment until the member is appointed to retirement and accepts an 09 actuarial adjustment to the member's future benefits or until the amount is paid in full. 10 (b) Except a provided in this subsection, for three years after the date on which an 11 employee who participated in the program retired, the participant may not be employed by or 12 enter into a contract for personal services with a state department or agency. This subsection 13 does not prohibit 14 (1) the University of Alaska, during the three years immediately following the 15 employee's retirement, from entering into a personal services contract for the performance of 16 teaching or research duties with an employee who has participated in the program; or 17 (2) a participant in the program from accepting employment with the 18 legislature during the legislative session if the employment is on an hourly basis and if the 19 employment does not entitle the employee to receive retirement, health, or leave benefits. 20 (c) Notwithstanding the prohibition in (b) of this section, an employer may enter into 21 a personal services contract with an employee who has participated in the program if the 22 employer establishes to the satisfaction of the Board of Regents for the University of Alaska 23 or the commissioner of administration for all other employers that the employer has a 24 compelling reason to do so because of the employee's specialized or extensive experience that 25 relates to a particular program or project of the employer. 26 * Sec. 9. OFFICE OF MANAGEMENT AND BUDGET. (a) When designating an orga- 27 nizational unit for participation in the retirement incentive program, the executive head of a 28 state agency shall describe in detail the expected effect of the program on the agency's 29 personal services cost and operation. This report shall be filed with the office of management 30 and budget. For each employee who will receive credit for employment under sec. 6 of this 31 Act, the agency head shall establish to the satisfaction of the office that the proposed
01 participation contributes to the overall agency cost savings. The agency shall report as 02 required by the office of management and budget on the cost of each member's participation 03 and the effect on the agency's personal services cost and operation. 04 (b) The office of management and budget shall develop and implement a method to 05 document in the governor's annual budget request the net reduction in personal services costs 06 for each agency that adopts a retirement incentive plan. 07 (c) The office of management and budget shall submit to the legislature annual reports 08 on the retirement incentive program beginning on January 15, 1995, and continuing through 09 January 15, 1997, and shall submit a final report on January 15, 1998. Each report must 10 provide the information necessary for the legislature to evaluate the effectiveness of the 11 program in achieving its objectives. The report must include information on the designated 12 organizational units under the retirement incentive plans including the cost of the retirement 13 incentive program per participant, the cost to the state, the cost to the employee, the annual 14 budgeted amount by agency for the retirement incentive, and the projected or actual net 15 savings over the five-year period. 16 * Sec. 10. PROGRAM CHANGES. An employee does not have a vested or contractual 17 right to a benefit under this Act until an agreement is executed with the administrator that 18 permits the benefits to be offered to an organizational unit of which the employee is a 19 member. The legislature reserves the right to change any aspect of the incentive program as 20 it relates to members of organizational units for which participation agreements are executed 21 by the administrator after the effective date of the changes. 22 * Sec. 11. DEFINITIONS. The definitions set out in AS 14.25.220 apply to secs. 2 - 11 23 of this Act. 24 * Sec. 12. Sections 2 - 6 of this Act are repealed July 1, 1995. 25 * Sec. 13. This Act takes effect immediately under AS 01.10.070(c).