CSHB 354(STA): "An Act relating to a retirement incentive program for certain employees of school districts under the teachers' retirement system and the public employees' retirement system; and providing for an effective date."
00CS FOR HOUSE BILL NO. 354(STA) 01 "An Act relating to a retirement incentive program for certain employees of 02 school districts under the teachers' retirement system and the public employees' 03 retirement system; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. PURPOSE. Since it may be necessary for school districts who participate in 06 the state retirement systems to reduce their personal services costs because of declining state 07 revenue, reimplementation of the retirement incentive programs established by ch. 26, SLA 1986, 08 as amended by ch. 76, SLA 1988, and by sec. 7, ch. 104, SLA 1989, and ch. 89, SLA 1989, as 09 amended by sec. 8, ch. 104, SLA 1989, and by ch. 18, SLA 1990, encouraging school district 10 employees to retire voluntarily, will reduce the hardship of layoffs. This program is intended 11 to realize sufficient economies to offset the cost of administration and benefits to school districts 12 resulting from the award of retirement credits and to result in a net reduction in personal services 13 costs to school districts during a period of declining revenue. 14 * Sec. 2. RETIREMENT INCENTIVE PROGRAM. (a) A school district may adopt a
01 retirement incentive plan under sec. 3 of this Act to designate organizational units of employees 02 eligible to participate in the retirement incentive program. 03 (b) The organizational units of a plan must be selected so that implementation of the 04 plan results in maximum savings to the school district in personal services costs within five years 05 after the commencement of the plan. A plan that results in savings in personal services costs 06 in any amount that is in excess of all costs to the school district qualifies under this subsection. 07 The designation may include only representatives from job classifications whose inclusion 08 contributes to the overall cost savings. 09 (c) A member is eligible to participate in the retirement incentive program only if the 10 member is vested, is employed in a position in a designated organizational unit, and will be 11 qualified to retire under AS 14.25.110 or AS 39.35.370 after receipt of the retirement incentive. 12 To participate, a member shall apply on a form provided by the administrator. 13 (d) A participating school district shall prepare and file the retirement incentive plan 14 with the commissioner of education. The commissioner shall review the plan and certify it 15 only if the plan as proposed by the school district will result in a savings for the district. If 16 certified by the commissioner, the participating school district shall file the plan and the 17 certification with the administrator. The administrator shall approve the plan if it is certified by 18 the commissioner of education and if it meets the requirements of this section. The plan must 19 (1) identify organizational units and employees eligible to participate in the 20 program; 21 (2) include a reimbursement agreement that 22 (A) requires the school district, for each employee who is retired under 23 the plan, to reimburse the system within three years after the end of the fiscal year in 24 which the employee is appointed to retirement in an amount equal to 25 (i) the actuarial equivalent of the difference between the benefits 26 the participant receives after the addition of the retirement incentive under this 27 section and the amount the participant would have received without the incentive, 28 less the total of the amount the participant has paid on the indebtedness 29 determined under (e) or (f) of this section and the amount paid under (i) of this 30 section, if any; and 31 (ii) an appropriate share of the administrative costs of the
01 program; and 02 (B) provides that contributions from the school district under this section 03 take priority over other obligations of the school district to the maximum extent 04 permitted by law. 05 (e) A member of the teachers' retirement system who participates in the retirement 06 incentive program is indebted to the system. The amount of indebtedness is equal to 25.95 07 percent of the member's actual compensation for the school year, or the calculated school year 08 compensation for a member who works less than the entire school year, for the school year in 09 which the member terminates employment to participate in the program. An outstanding 10 indebtedness at the time a participant is appointed to retirement will require an actuarial 11 adjustment to the benefits payable. 12 (f) A member of the public employees' retirement system who participates in the 13 retirement incentive program is indebted to the system. The amount of indebtedness is equal 14 to 20.25 percent of the member's actual annual compensation, or the calculated annual 15 compensation for a member who works fewer than 12 months, for the year in which the member 16 terminates employment to participate in the program. An outstanding indebtedness at the time 17 a participant is appointed to retirement will require an actuarial adjustment to the benefits 18 payable. 19 (g) A participant in the retirement incentive program receives a credit of three years. 20 The three years must be applied in the following order until exhausted: 21 (1) to meet the age or service required for eligibility for normal retirement under 22 AS 14.25.110 or AS 39.35.370, as appropriate; 23 (2) to meet the age required for early retirement under AS 14.25.110 or 24 AS 39.35.370, as appropriate; 25 (3) to reduce the actuarial adjustment required for early retirement under 26 AS 14.25.110 or AS 39.35.370, as appropriate; 27 (4) as years of credited service for calculating retirement benefits. 28 (h) In the determination of whether a member will qualify to retire under this section, 29 credited service may include only, 30 (1) for members of the teachers' retirement system, service credit for 31 employment rendered to an employer, territorial service under AS 14.25.105, outside service and
01 military service under AS 14.25.060, and Alaska BIA service under AS 14.25.107; 02 (2) for members of the public employees' retirement system, service credit for 03 employment rendered to an employer. 04 (i) In order to establish eligibility for participation under (b) of this section, and in 05 addition to the employee indebtedness under (e) or (f) of this section, an employee may elect 06 to assume a portion of the school district liability calculated under (d) of this section. An 07 outstanding indebtedness at the time the employee is appointed to retirement will require an 08 actuarial adjustment to the employee's benefits. 09 * Sec. 3. AUTHORIZATION FOR RETIREMENT INCENTIVE. (a) A school district is 10 authorized to adopt a retirement incentive plan for its employees under sec. 2 of this Act. A 11 plan adopted under this section must permit designated employees to apply to the retirement 12 incentive program under sec. 2 of this Act only from June 30, 1996, through no later than 13 December 31, 1996. 14 (b) Under a plan adopted under this section, the administrator may not accept the 15 application of an employee unless the employee will be appointed to retirement on or before 16 August 1, 1997. The school district may set an earlier date by which employees of the school 17 district must be appointed to retirement in order to participate. 18 * Sec. 4. RECOVERY OF SCHOOL DISTRICT DELINQUENCIES. To recover a 19 delinquency owed by a school district under an agreement entered under sec. 2(d)(2) of this Act, 20 the Department of Administration may 21 (1) bring an action against the school district; or 22 (2) direct that the amount of the delinquency or a lesser amount be withheld 23 from any money payable to the school district by a state department or agency and that the 24 amount withheld be credited to the delinquency. 25 * Sec. 5. REEMPLOYMENT INDEBTEDNESS. (a) If a participant in the retirement 26 incentive program is reemployed after appointment to retirement under the program as a member 27 of the public employees' retirement system under AS 39.35, the teachers' retirement system 28 under AS 14.25, or the judicial retirement system under AS 22.25, the participant loses the 29 incentive credit received under sec. 2(g) of this Act and is indebted to the system. The amount 30 of the indebtedness is equal to 110 percent of the amount the participant received as a result of 31 participation in the program to which the participant was not otherwise entitled, including the
01 cost of health insurance. The participant is entitled to a credit to be applied against the 02 reemployment indebtedness in the amount the participant has paid under sec. 2(e), (f), and (i) 03 of this Act. Interest accrues on the indebtedness at the rate established by regulation from the 04 date of reemployment until the member is appointed to retirement and accepts an actuarial 05 adjustment to the member's future benefits or until the amount is paid in full. 06 (b) Except as provided in this subsection, for three years after the date on which an 07 employee who participated in the program retired, the participant may not be employed by or 08 enter into a contract for personal services with a state department or agency. This subsection 09 does not prohibit 10 (1) the University of Alaska, during the three years immediately following the 11 employee's retirement, from entering into a personal services contract for the performance of 12 teaching or research duties with an employee who has participated in the program; or 13 (2) a participant in the program from accepting employment with the legislature 14 during the legislative session if the employment is on an hourly basis and if the employment 15 does not entitle the employee to receive retirement, health, or leave benefits. 16 (c) Notwithstanding the prohibition in (b) of this section, a school district may enter into 17 a personal services contract with an employee who has participated in the program if the school 18 district establishes to the satisfaction of the commissioner of administration that the school 19 district has a compelling reason to do so because of the employee's specialized or extensive 20 experience that relates to a particular program or project of the school district. 21 * Sec. 6. PROGRAM CHANGES. An employee does not have a vested or contractual right 22 to a benefit under this Act until an agreement is executed with the administrator that permits the 23 benefits to be offered to an organizational unit of which the employee is a member. The 24 legislature reserves the right to change any aspect of the retirement incentive program as it 25 relates to members of organizational units for which agreements are executed by the 26 administrator after the effective date of the changes. 27 * Sec. 7. DEFINITIONS. The definitions set out in AS 14.25.220 apply to secs. 2 - 7 of this 28 Act for members of the teachers' retirement system. The definitions set out in AS 39.35.680 29 apply to secs. 2 - 7 of this Act for members of the public employees' retirement system. 30 * Sec. 8. Sections 2 - 3 of this Act are repealed July 1, 1998. 31 * Sec. 9. This Act takes effect immediately under AS 01.10.070(c).