Alaska State Legislature

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CSSB 152(FIN) AM(EFD FLD): "An Act relating to public employee compensation, benefits, and labor relations; relating to salaries, geographic and cost-of-living differentials for certain state employees, and to salary surveys and preparation of an annual pay schedule regarding certain state employees; relating to retirement and early retirement incentives for certain public employees; relating to severance and other pay and benefit programs for public employees; relating to and making conforming amendments concerning certain state aid calculations formerly based on geographic differentials for state employee salaries; relating to the exempt status of certain state employees."

00CS FOR SENATE BILL NO. 152(FIN) am(efd fld) 01 "An Act relating to public employee compensation, benefits, and labor relations; 02 relating to salaries, geographic and cost-of-living differentials for certain state 03 employees, and to salary surveys and preparation of an annual pay schedule 04 regarding certain state employees; relating to retirement and early retirement 05 incentives for certain public employees; relating to severance and other pay and 06 benefit programs for public employees; relating to and making conforming 07 amendments concerning certain state aid calculations formerly based on 08 geographic differentials for state employee salaries; relating to the exempt status 09 of certain state employees." 10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 11 * Section 1. PURPOSE AND LEGISLATIVE INTENT. The purpose of sec. 12 7 of this Act is to affirm the interpretation and practice of the state with regard 13 to the use of criteria similar to the criteria in the permanent fund dividend program 14 for determining the establishment and maintenance of state residency for eligibility

01 for the cost-of-living differential under AS 23.40.210. It is also the intent of the 02 legislature to provide express statutory authority to the state to establish or clarify 03 those standards through adoption of regulations by the Department of Administration 04 and to set the eligibility criteria for the differential outside the collective bargaining 05 context. 06 * Sec. 2. AS 22.05.140(a) is amended to read: 07 (a) Except as provided in (d) of this section, the monthly base salary 08 of the chief justice is $9,203 [$8,333] and for each other justice, the 09 monthly base salary is $9,159 [$8,292]. 10 * Sec. 3. AS 22.07.090(a) is amended to read: 11 (a) Except as provided in (c) of this section, the monthly base salary 12 of a judge of the court of appeals is $8,652 [$7,833]. The compensation 13 of a judge may not be diminished during the term of office, unless by a 14 general law applying to all salaried officers of the state. 15 * Sec. 4. AS 22.10.190(a) is amended to read: 16 (a) Except as provided in (d) of this section, the monthly base salary 17 for each superior court judge is $8,469 [$7,667]. 18 * Sec. 5. AS 22.15.220(a) is amended to read: 19 (a) Except as provided in (e) of this section, the monthly base salary 20 for each district court judge is $7,179 [$6,500]. 21 * Sec. 6. AS 22.15.220(b) is amended to read: 22 (b) Each magistrate shall receive annual compensation including 23 geographic differential pay to be determined by the supreme court. Salary 24 increases shall be determined on the basis of percentage of pay increase the 25 legislature provides for state employees in the classified service. [THE BASE 26 SALARY OF A MAGISTRATE SHALL BE INCREASED BY A 27 PERCENTAGE EQUAL TO THREE AND ONE-HALF PER CENT TIMES 28 THE NUMBER OF STEP INCREASES PROVIDED UNDER AS 39.27.020 29 THAT A STATE EMPLOYEE WOULD RECEIVE WORKING IN THE 30 SAME ELECTION DISTRICT.] A magistrate's annual compensation may be 31 payable, at the option of the magistrate, either monthly in 12 equal

01 installments or semi-monthly in 24 equal installments. 02 * Sec. 7. AS 23.40.210 is amended by adding new subsections to read: 03 (b) An employee is eligible for the cost-of-living differential under 04 (a) of this section only if the individual is a state resident. The required 05 presence of an employee at a work station where room and board are 06 provided or reimbursed by the employer may not be considered to be 07 physical presence in the state or physical absence from the state for purposes 08 of determining eligibility for the cost-of-living differential. 09 (c) The commissioner of administration may adopt regulations under 10 AS 44.62 (Administrative Procedure Act) to clarify and implement the criteria 11 for establishing and maintaining eligibility for the cost-of-living differential. 12 (d) An agreement entered into under AS 23.40.070 - 23.40.260 must 13 require compliance with the eligibility criteria for receiving the cost-of-living 14 differential contained in this section and the regulations adopted by the 15 commissioner under (c) of this section. 16 (e) In this section, "state resident" means an individual who is 17 physically present in the state with the intent to remain permanently in the 18 state under the requirements of AS 01.10.055 or, if the individual is not 19 physically present in the state, intends to return to the state and remain 20 permanently in the state under the requirements of AS 01.10.055, and is 21 absent only temporarily for reasons allowed under AS 43.23.095(8) or a 22 successor statute. 23 * Sec. 8. AS 29.60.160(a) is amended to read: 24 (a) Payments to a municipality or other eligible recipient under 25 AS 29.60.110 - 29.60.130 shall reflect area cost-of-living differentials. 26 Payments shall be based on the sum of per capita, per mile, and per bed 27 or facility grants due each municipality or other recipient multiplied by the 28 appropriate area cost-of-living differential. The area cost-of-living differential 29 for each recipient shall be determined [ANNUALLY BY ELECTION 30 DISTRICT] under the provisions of AS 29.60.164 and 29.60.165 31 [AS 39.27.030]. Application of the area cost-of-living differential may not

01 result in distribution of an amount less than the amount of the payment 02 determined without reference to application of this section. 03 * Sec. 9. AS 29.60 is amended by adding new sections to read: 04 Sec. 29.60.164. AREA COST-OF-LIVING DIFFERENTIALS. (a) The 05 area cost-of-living differential multiplier shall be determined by multiplying the 06 cost-of-living steps found in the table in this subsection by three and one-half 07 percent. The following area cost-of-living steps apply: 08 Election District Cost of Living 09 1 0 10 2 1 11 3 1 12 4 0 13 5 2 14 6a (excluding Valdez Duty Station) 4 15 6b (Valdez Duty Station) 5 16 7 1 17 8 0 18 9 2 19 10 2 20 11 2 21 12 7 22 13 7 23 14 8 24 15a (excluding Nenana Duty Station) 9 25 15b (Nenana Duty Station) 8 26 16a (south of Arctic Circle) 4 27 16b (north of Arctic Circle) 9 28 17 9 29 18 9 30 19 8 31 In other states minus 6.

01 (b) For purposes of (a) of this section, "election district" means an 02 election district designated in the governor's proclamation of reapportionment 03 and redistricting of December 7, 1961. 04 Sec. 29.60.165. COST-OF-LIVING SURVEY. Subject to an 05 appropriation for this purpose, the director shall conduct a survey, at least 06 every five years, to review the differentials established in AS 29.60.164. 07 This survey must address factors, as determined by the director, that are also 08 relevant in review of state salary schedules, entitlement for beneficiaries of 09 state programs, and payments for state service providers. The survey must 10 reflect the costs of living in various election districts of the state, and 11 Seattle, Washington, by using the cost of living in Anchorage as the base. 12 * Sec. 10. AS 29.60.290(b) is amended to read: 13 (b) The area cost-of-living differential payable to each municipality 14 under this section shall be determined [ANNUALLY BY ELECTION 15 DISTRICT] under the provisions of AS 29.60.164 and 29.60.165 [AS 16 39.27.030]. Except as provided in AS 29.60.300, application of the area 17 cost-of-living differential may not result in a payment that is less than the 18 minimum payment determined under (a) of this section. [FOR PURPOSES 19 OF THIS SUBSECTION, THE ELECTION DISTRICTS USED ARE THOSE 20 DESIGNATED BY THE PROCLAMATION OF REAPPORTIONMENT AND 21 REDISTRICTING OF DECEMBER 7, 1961, AND RETAINED FOR THE 22 HOUSE OF REPRESENTATIVES BY PROCLAMATION OF THE 23 GOVERNOR SEPTEMBER 3, 1965.] 24 * Sec. 11. AS 39.20.250(a) is amended to read: 25 (a) Terminal leave for unused personal leave shall be allowed upon 26 separation from service. The payment equals the personal leave balance at 27 the time of separation from service multiplied by the officer's or 28 employee's annualized hourly rate of pay [THE COMPENSATION THAT 29 THE OFFICER OR EMPLOYEE WOULD HAVE RECEIVED IF THE 30 OFFICER OR EMPLOYEE HAD REMAINED IN THE SERVICE UNTIL 31 THE EXPIRATION OF THE PERIOD OF UNUSED PERSONAL LEAVE].

01 A payment of terminal leave to an employee shall be made as a lump sum 02 payment [OR IN INSTALLMENTS OVER A PERIOD OF TIME, AS THE 03 EMPLOYEE ELECTS]. 04 * Sec. 12. AS 39.25.110 is amended by adding a new subsection to read: 05 (31) persons employed in the labor relations section in the 06 Department of Administration except those persons employed in clerical or 07 secretarial positions. 08 * Sec. 13. AS 39.27.011 is amended by adding new subsections to read: 09 (e) Effective July 1, 1996, the amounts set out in the salary schedule 10 contained in (a) of this section are increased by the lesser of 11 (1) 1.5 percent; or 12 (2) one-half of the percentage increase in the United States 13 Department of Labor, Bureau of Labor Statistics, consumer price index for 14 all urban consumers for Anchorage, Alaska, from the second half of 1994 to 15 the second half of 1995. 16 (f) Effective July 1, 1997, the amounts set out in the salary schedule 17 contained in (a) of this section, as increased under (e) of this section, are 18 increased by the lesser of 19 (1) 1.5 percent; or 20 (2) one-half of the percentage increase in the United States 21 Department of Labor, Bureau of Labor Statistics, consumer price index for 22 all urban consumers for Anchorage, Alaska, from the second half of 1995 to 23 the second half of 1996. 24 (g) Effective July 1, 1998, the amounts set out in the salary schedule 25 contained in (a) of this section, as increased under (e) and (f) of this 26 section, are increased by the lesser of 27 (1) 1.5 percent; or 28 (2) one-half of the percentage increase in the United States 29 Department of Labor, Bureau of Labor Statistics, consumer price index for 30 all urban consumers for Anchorage, Alaska, from the second half of 1996 to 31 the second half of 1997.

01 * Sec. 14. AS 39.27.020 is repealed and reenacted to read: 02 Sec. 39.27.020. PAY DIFFERENTIALS. (a) The following pay 03 differentials are approved as an amendment to the basic salary schedule in 04 AS 39.27.011: 05 Geographic Area Percentage Above or Below 06 (Election Districts) Basic Salary Schedule 07 3, 4, and 7 - 28 0 08 1, 2, 5, 6 5 09 34 - 36 10 10 29 - 33 4 11 37 - 40 20 12 Washington State minus 20. 13 (b) For purposes of determining the differential provided under (a) 14 of this section, an appointing authority may increase the salary on which the 15 geographic pay differential is computed by up to 20 percent of the 16 employee's base salary set out in AS 39.27.011 if 17 (1) the duty station for the position or job class is located 18 in election districts 37, 38, 39, or 40; 19 (2) the position or job class requires the employee to hold a 20 license to practice law under AS 08.08 or to practice medicine under 21 AS 08.64; and 22 (3) the director certifies that recruitment or retention for the 23 position or job class in that election district is so difficult that the increase 24 is essential to recruitment or retention of employees in the position. 25 (c) The director may establish pay differentials for positions in foreign 26 countries or in states other than the State of Washington. If the director 27 establishes a pay differential under this subsection, the director shall adjust 28 the differential as necessary to maintain equitable relationships between salaries 29 for positions outside the state and in the state. 30 (d) For purposes of (a) of this section, "election district" means an 31 election district designated in the governor's proclamation of reapportionment

01 and redistricting applicable to the 1994 general election. 02 * Sec. 15. AS 39.27.030 is repealed and reenacted to read: 03 Sec. 39.27.030. COST-OF-LIVING SURVEY. Subject to an 04 appropriation for this purpose, the director shall conduct a survey, at least 05 every five years, to review the pay differentials established in AS 39.27.020. 06 The survey may address factors, as determined by the director, that are also 07 relevant in review of state salary schedules, entitlement for beneficiaries of 08 state programs, and payments for state service providers. The survey must 09 reflect the costs of living in various election districts of the state, and 10 Seattle, Washington, by using the cost of living in Anchorage as a base. 11 * Sec. 16. AS 39.27.045 is amended to read: 12 Sec. 39.27.045. DEFINITION. In AS 39.27.020 - 39.27.030 [AS 13 39.27.030 - 39.27.040], "director" means the director of the division of 14 personnel. 15 * Sec. 17. AS 39.35.160(a) is amended to read: 16 (a) A [BEGINNING JANUARY 1, 1987, EACH] peace officer or fire 17 fighter who is first hired on or after the effective date of this bill section 18 shall contribute to the system an amount equal to seven percent of the 19 peace officer's or fire fighter's compensation. A peace officer or fire 20 fighter first hired before the effective date of this bill section shall 21 contribute to the system an amount equal to seven and one-half percent of 22 the peace officer's or fire fighter's compensation. Each [BEGINNING 23 JANUARY 1, 1987, EACH] other employee who is first hired on or after 24 the effective date of this bill section shall contribute to the system an 25 amount equal to six percent of the employee's compensation. Each other 26 employee who is first hired before the effective date of this bill section 27 shall contribute to the system an amount equal to six and three-quarters 28 percent of the employee's compensation. The contributions shall be deducted 29 by the employer at the end of each payroll period. The contributions shall 30 be deducted from employee compensation before computation of applicable 31 federal taxes, and the contributions shall be treated as employer contributions

01 under 26 U.S.C. 414(h)(2). 02 * Sec. 18. AS 39.35.370(a) is amended to read: 03 (a) Subject to AS 39.35.450, a terminated employee is eligible for 04 a normal retirement benefit 05 (1) at age 60 with at least five years credited service; 06 (2) with at least 20 years of credited service as a peace 07 officer or fire fighter for peace officers or fire fighters first hired before 08 the effective date of this bill section; [OR] 09 (3) at age 50 with at least 20 years of credited service as 10 a peace officer or fire fighter, for peace officers and fire fighters first 11 hired on or after the effective date of this bill section; 12 (4) with at least 30 years of credited service for all other 13 employees if the employee was first hired before the effective date of this 14 bill section; or 15 (5) at any time when the employee's age and amount of 16 credited service equal or exceed 85 when added together for all other 17 employees first hired on or after the effective date of this bill section. 18 * Sec. 19. AS 39.35.370(b) is amended to read: 19 (b) Subject to former AS 39.35.450, a terminated employee is 20 eligible for an early retirement benefit at age 55 with at least five years 21 credited service. An actuarial adjustment shall be made to retirement benefits 22 paid under this section for an early retirement benefit. The monthly amount 23 of a retirement benefit that would be due under (c) of this section shall 24 be reduced by multiplying one-half of one percent times the number of 25 months, to the nearest month, by which the retirement date of the 26 employee falls short of the date that the employee reaches age 60. 27 * Sec. 20. AS 39.35.370(c) is amended to read: 28 (c) The monthly amount of a retirement benefit for 29 (1) a peace officer or fire fighter is two percent of the 30 average monthly compensation times the years of credited service through 10 31 years, plus two and one-half percent of the average monthly compensation

01 times the years of service over 10 years; 02 (2) [. FOR] all other employees first hired before the 03 effective date of this bill section, [IT] is 04 (A) [(1)] two percent of the average monthly 05 compensation times all years of service before July 1, 1986, and for 06 years of service through a total of 10 years; plus 07 (B) [(2)] two and one-quarter percent of the average 08 monthly compensation times all years of service after June 30, 1986, 09 over 10 years of total service through 20 years; plus 10 (C) [(3)] two and one-half percent of the average 11 monthly compensation times all years of service after June 30, 1986, 12 over 20 years of total service; 13 (3) all other employees first hired on or after the effective 14 date of this bill section, is 15 (A) one and one-half percent of the average monthly 16 compensation times all years of service through a total of 10 years; 17 plus 18 (B) one and three-quarters percent of the average 19 monthly compensation times all years of service over 10 years of 20 total service through 20 years; plus 21 (C) two percent of the average monthly compensation 22 times all years of service over 20 years. 23 * Sec. 21. AS 39.35.475(a) is amended to read: 24 (a) Once each year the administrator shall increase benefit payments 25 to 26 (1) eligible disabled members; 27 (2) [, TO] persons age 60 or older receiving benefits under 28 this system in the preceding calendar year; 29 (3) members who were first hired before the effective date 30 of this bill section [, AND TO PERSONS] who have received benefits under 31 this system for at least five years and who are not otherwise eligible for

01 an increase under this section; and 02 (4) survivors of members described in (3) of this subsection 03 when the member and the survivor have together received benefits under 04 this system for at least five years. 05 * Sec. 22. AS 39.35.475(b) is amended to read: 06 (b) The increase in benefit payments applies to total benefit payments 07 except for the cost-of-living allowance under AS 39.35.480. For members 08 first hired on or after the effective date of this bill section, the amount 09 of the increase is a percentage of the current benefit equal to the lesser 10 of 50 percent of the increase in the cost of living in the preceding 11 calendar year or six percent. For members first hired before the 12 effective date of this bill section, the [THE] amount of the increase is a 13 percentage of the current benefit equal to 14 (1) the lesser of 75 percent of the increase in the cost of 15 living in the preceding calendar year or nine percent, for recipients who on 16 July 1 are at least 65 years old and for members receiving disability 17 benefits; and 18 (2) the lesser of 50 percent of the increase in the cost of 19 living in the preceding calendar year or six percent, for recipients who on 20 July 1 are at least 60 but less than 65 years old or for recipients who are 21 less than 60 years old on July 1 but who have received benefits from the 22 system for at least five years. 23 * Sec. 23. AS 39.35.535(c) is amended to read: 24 (c) A benefit recipient may elect major medical insurance coverage 25 in accordance with regulations and under the following conditions: 26 (1) a person who is younger than 60 years of age must pay 27 an amount equal to the full monthly group premium for retiree major medical 28 insurance coverage and the full monthly group premium for any dependent 29 coverage elected; 30 (2) a person who is at least 60 years of age but is younger 31 than 65 years of age must pay an amount equal to one-half of the full

01 monthly group premium for retiree major medical insurance coverage and any 02 dependent coverage elected; 03 (3) a disabled member or a person 65 years of age or older 04 and who is receiving a benefit based on membership which began before 05 the effective date of this bill section is not required to make premium 06 payments for retiree major medical insurance coverage or any dependent 07 coverage; 08 (4) a disabled member or person 65 years of age or older 09 and who is receiving a benefit based on membership that began on or 10 after the effective date of this bill section is not required to make 11 premium payments for retiree major medical insurance coverage; however, 12 for any dependent coverage elected, the person is required to pay an 13 amount equal to one-half of the monthly group premium. 14 * Sec. 24. AS 39.35.680(4) is amended to read: 15 (4) "average monthly compensation" means the result obtained 16 by dividing the compensation earned by an employee during a considered 17 period by the number of months, including fractional months, for which 18 compensation was earned; the considered period consists of (A) for employees 19 first hired before the effective date of this bill section, the three 20 consecutive payroll years during the period of credited service that yields the 21 highest average, and (B) for employees first hired on or after the effective 22 date of this bill section, the five consecutive payroll years during the 23 period of credited service that yield the highest average, or if the 24 employee does not have the required number of [THREE] consecutive 25 payroll years, the employee's period of credited service; an employee must 26 have at least 115 days of credited service in the last payroll year in order 27 for that year to be used as part of the [THREE] consecutive payroll years; 28 * Sec. 25. AS 44.31.020 is amended to read: 29 Sec. 44.31.020. DUTIES OF DEPARTMENT. The Department of 30 Labor shall 31 (1) enforce the laws, and adopt regulations under them

01 concerning employer-employee relationships, including the safety, hours of 02 work, wages, and conditions of workers, including children; 03 (2) accumulate, analyze, and report labor statistics; 04 (3) operate systems of workers' compensation and unemployment 05 insurance; and 06 (4) gather data reflecting the cost of living in the various 07 election districts of the state upon request of the director of personnel for 08 determination of area cost-of-living differentials under AS 29.60.164 and 09 29.60.165 or under AS 39.27.030 [AS 39.27.030 - 39.27.040]. 10 * Sec. 26. AS 39.27.035, 39.27.040; AS 39.35.450(a)(3), and 39.35.460 are 11 repealed. 12 * Sec. 27. FINDINGS AND PURPOSE AS TO SECS. 28 - 41. The State 13 of Alaska and many local governments are facing the need to restructure their 14 operations and their work forces in order to reduce expenditures and to balance 15 budgets. Retirement and separation incentives are management tools that have been 16 used extensively by the private sector, the federal government, and other state and 17 local governments across the country. The purpose of secs. 28 - 41 of this Act 18 is to make these management tools temporarily available to the state and to the 19 municipalities of the state. Sections 28 - 41 of this Act will enable these entities 20 to be more efficient and cost-effective by eliminating certain nonessential positions 21 and producing a net reduction in personnel costs. 22 * Sec. 28. RETIREMENT INCENTIVE PROGRAM. (a) An employer may 23 adopt a retirement incentive plan under secs. 28 - 41 of this Act, as appropriate, 24 and designate categories of employees eligible to participate in that plan. An 25 employer need not extend the incentive plan to all employees who would otherwise 26 be eligible, but may choose to extend the plan only to employees 27 (1) in specific budget or administrative components of the employer; 28 (2) in specific job classifications; 29 (3) in specific geographic locations; or 30 (4) on the basis of any combination of factors under (1) - (3) of 31 this subsection.

01 (b) An employee is eligible to participate in a retirement incentive plan 02 under secs. 28 - 41 of this Act only if the 03 (1) employee is a vested member of the public employees' retirement 04 system or the teachers' retirement system; 05 (2) employee will be qualified to retire under AS 14.25.110 or 06 AS 39.35.370 after receipt of the credit described in (f) of this section; 07 (3) savings to the employer in personal services costs for the 08 employee's position will exceed the costs to the employer for that position within 09 three years after the employee is appointed to retirement. 10 (c) An employer shall file its proposed retirement incentive plan with the 11 commissioner of administration. The commissioner shall approve the plan if the 12 plan meets the requirements of secs. 28 - 41 of this Act, except that the 13 commissioner may approve a state agency's retirement incentive plan only if the 14 office of management and budget approves the calculation of savings under (b)(3) 15 of this section. A proposed plan filed under this section must 16 (1) identify job classifications of employees, and specific budget or 17 administrative components, eligible to participate in the plan; 18 (2) include a reimbursement agreement that 19 (A) requires the employer, for each employee who retires under 20 the plan, to reimburse the appropriate retirement system, within three years 21 after the end of the fiscal year in which the employee is appointed to 22 retirement, in an amount equal to 23 (i) the actuarial equivalent of the difference between the 24 benefits the participant receives after the addition of the credit under 25 (f) of this section and the amount the participant would have received 26 without the credit, less the amount the participant has paid on the 27 indebtedness determined under (d) or (e) of this section; and 28 (ii) an appropriate share of the administrative costs of 29 the program; and 30 (B) provides that contributions from the employer under this 31 section take priority over other obligations of the employer to the maximum

01 extent permitted by law. 02 (d) A member of the teachers' retirement system who participates in an 03 approved retirement incentive plan under secs. 28 - 41 of this Act is indebted to 04 that system for an amount calculated under this subsection. The indebtedness is 05 25.95 percent of the member's actual compensation for the school year in which the 06 member terminates employment, or the calculated school year compensation for a 07 member who works less than the entire school year. An outstanding indebtedness 08 at the time a member is appointed to retirement under an approved retirement 09 incentive plan requires an actuarial adjustment to the benefits payable to that 10 member. 11 (e) A member of the public employees' retirement system who participates 12 in an approved retirement incentive plan under secs. 28 - 41 of this Act is 13 indebted to that system for an amount calculated under this subsection. The 14 indebtedness is 22 1/2 percent for a peace officer or fire fighter, and 20 1/4 15 percent for other members, of the member's actual annual compensation for the year 16 in which the member terminates employment, or the calculated annual compensation 17 for a member who works fewer than 12 months. An outstanding indebtedness at 18 the time a member is appointed to retirement under an approved retirement incentive 19 plan requires an actuarial adjustment to the benefits payable to that member. 20 (f) An employee who participates in an approved retirement incentive plan 21 under secs. 28 - 41 of this Act receives a credit of three years. The three years 22 must be applied in the following order until exhausted: 23 (1) to meet the age or service required for eligibility for normal 24 retirement under AS 14.25.110 or AS 39.35.370, as appropriate; 25 (2) to meet the age required for early retirement under AS 14.25.110 26 or AS 39.35.370, as appropriate; 27 (3) to reduce the actuarial adjustment required for early retirement 28 under AS 14.25.110 or AS 39.35.370, as appropriate; 29 (4) as years of credited service for calculating retirement benefits. 30 (g) In this section, 31 (1) "department" means

01 (A) a principal department of the executive branch of state 02 government; an independent state entity that is attached to a principal 03 department of the executive branch for administrative purposes but that is not 04 a public organization as defined in AS 39.35.680 is part of that department 05 for purposes of this paragraph; and 06 (B) the Office of the Governor; 07 (2) "employer" 08 (A) for purposes of a retirement incentive plan under 09 AS 14.25, means the Board of Regents of the University of Alaska, the 10 Department of Education, or the Regional Resource Center, but does not 11 include a school district; and 12 (B) for purposes of a retirement incentive plan under 13 AS 39.35, has the meaning given in AS 39.35.680 and includes a department 14 but does not include a school district. 15 * Sec. 29. AUTHORIZATION FOR STATE EMPLOYEE RETIREMENT 16 INCENTIVE. (a) A state agency may adopt, and file with the commissioner of 17 administration for approval, a proposed retirement incentive plan for its employees 18 as part of a permanent reduction in the personal services costs in that section of 19 the state agency. 20 (b) Upon the request of a state agency, the commissioner of administration 21 shall establish one or more periods during which the employees of that state agency 22 who are eligible under sec. 28(b) of this Act to participate in a retirement incentive 23 plan may apply to the commissioner of administration to participate in the state 24 agency's approved plan. The periods shall begin no earlier than June 30, 1996, and 25 end no later than June 30, 1999. The periods shall be no less than 30 days and 26 no more than 60 days in duration, and may not begin less than 30 days after their 27 establishment. A state agency is not required to request an application period and 28 may request more than one application period. 29 (c) A proposed retirement incentive plan adopted under this section may not 30 permit an employee who is the governor, the lieutenant governor, or a commissioner, 31 deputy commissioner, or assistant commissioner of a principal department of the

01 executive branch to participate in the plan. 02 (d) A proposed retirement incentive plan adopted under this section may 03 permit participation only by an employee who is eligible to participate under sec. 04 28(b) of this Act and who 05 (1) has been continuously employed by the state for at least one year 06 before the employee applies to participate in the state agency's approved plan; 07 (2) is a permanent seasonal employee who has been continuously 08 employed by the state in a permanent seasonal position during all of the time in 09 the one year before the employee's application to participate in which the position 10 normally is filled; 11 (3) has a job sharing agreement with a state agency in which two 12 or more employees share a single position identified by a single position control 13 number and in which the employee who applies to participate in the plan was 14 continuously employed by the agency during the portion of the one year before the 15 employee's application in which the employee normally worked under the job sharing 16 agreement; or 17 (4) meets a combination of the requirements of this subsection. 18 (e) The commissioner of administration may not accept the application of 19 an employee to participate in an approved retirement incentive plan adopted under 20 this section unless the employee will be appointed to retirement not later than the 21 first day of the month that is six months after the last day of the application 22 period established by the commissioner under (b) of this section. A state agency, 23 in a plan adopted under this section, may set an earlier date by which an 24 employee must be appointed to retirement in order to participate in the plan. 25 * Sec. 30. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR 26 EMPLOYEES OF THE UNIVERSITY OF ALASKA. (a) The Board of Regents 27 of the University of Alaska may adopt, and file with the commissioner of 28 administration for approval, a proposed retirement incentive plan for university 29 employees. 30 (b) Upon the request of the Board of Regents, the commissioner of 31 administration shall establish one or more periods during which the employees of

01 the university who are eligible under sec. 28(b) of this Act to participate in a 02 retirement incentive plan may apply to the commissioner of administration to 03 participate in the university's approved plan. The periods shall begin no earlier than 04 June 30, 1996, and end no later than June 30, 1999. The periods shall be no 05 less than 30 days and no more than 60 days in duration and may not begin less 06 than 30 days after their establishment. The Board of Regents is not required to 07 request an application period and may request more than one application period. 08 (c) The commissioner of administration may not accept the application of 09 an employee to participate in an approved retirement incentive plan adopted under 10 this section unless the employee will be appointed to retirement not later than the 11 first day of the month that is six months after the last day of the application 12 period established by the commissioner under (b) of this section. The Board of 13 Regents, in a plan adopted under this section, may set an earlier date by which 14 an employee of the University of Alaska must be appointed to retirement in order 15 to participate in the plan. 16 (d) A participant in the optional university retirement program under 17 AS 14.40.661 - 14.40.799 who is vested in the public employees' retirement system 18 or the teachers' retirement system may participate in a retirement incentive plan for 19 that system if the participant meets the other qualifications of secs. 28 - 41 of this 20 Act. If a provision of this subsection is inconsistent with another provision of law, 21 the provision of this subsection governs. 22 * Sec. 31. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR OTHER 23 EMPLOYEES IN THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM. (a) The 24 governing body of a political subdivision of the state or public organization that has 25 elected to participate in the public employees' retirement system under AS 39.35.550 26 - 39.35.650 may adopt, and file with the commissioner of administration for 27 approval, a proposed retirement incentive plan for its employees. A plan adopted 28 under this section must provide that the application period for participation in the 29 retirement incentive plan is December 31, 1996, through June 30, 1997. 30 (b) The commissioner of administration may not accept the application of 31 an employee to participate in an approved retirement incentive plan adopted under

01 this section unless the employee will be appointed to retirement on or before 02 February 1, 1998. The governing body of the political subdivision or public 03 organization, in a plan adopted under this section, may set an earlier date by which 04 an employee must be appointed to retirement in order to participate in the plan. 05 * Sec. 32. AUTHORIZATION FOR RETIREMENT INCENTIVE FOR 06 EMPLOYEES OF REGIONAL RESOURCE CENTERS IN THE TEACHERS' 07 RETIREMENT SYSTEM. (a) A regional resource center that has employees who 08 are members of the teachers' retirement system may adopt, and file with the 09 commissioner of administration for approval, a proposed retirement incentive plan for 10 its employees. A plan adopted under this section must provide that the application 11 period for participation in the retirement incentive plan is June 30, 1996, through 12 December 31, 1996. 13 (b) The commissioner of administration may not accept the application of 14 an employee to participate in an approved retirement incentive plan adopted under 15 this section unless the employee will be appointed to retirement on or before 16 August 1, 1997. The regional resource center, in a plan adopted under this section, 17 may set an earlier date by which an employee must be appointed to retirement in 18 order to participate in the plan. 19 * Sec. 33. POLITICAL SUBDIVISION OR PUBLIC ORGANIZATION 20 EMPLOYMENT. For purposes of determining the years of service requirements for 21 retirement under AS 14.25.110 or AS 39.35.370, as appropriate, a vested member 22 who is a state employee and who applies to participate in a retirement incentive 23 plan approved under secs. 28 - 41 of this Act may receive credit for employment 24 with a political subdivision or public organization before the political subdivision or 25 organization became an employer under the public employees' retirement system. 26 The member may not receive credit for those years under this section for purposes 27 of determining benefits. If a provision of this section is inconsistent with any other 28 provision of law, the provision of this section governs. 29 * Sec. 34. PROVISION AND AUTHORIZATION FOR ADMINISTRATIVE 30 DIRECTOR OF COURT. (a) The chief justice of the state supreme court may 31 adopt a retirement incentive plan for an administrative director of the Alaska Court

01 System who is a member of the judicial retirement system under AS 22.25.012 if 02 participation in the plan will result in savings to the court system in personal 03 services costs within three years after commencement of the plan. The 04 administrative director may participate only if the administrative director is vested 05 in the judicial retirement system and will be qualified to retire under AS 22.25.010 06 after receipt of the retirement incentive. To participate, the administrative director 07 shall apply to the commissioner of administration to participate in the approved court 08 system plan. 09 (b) The court system shall include in the retirement incentive plan a 10 reimbursement agreement that requires the court system, for each administrative 11 director of the Alaska Court System who is retired under the plan, to reimburse 12 the judicial retirement system within three years after the end of the fiscal year in 13 which the administrative director is appointed to retirement in an amount equal to 14 (1) the actuarial equivalent of the difference between the benefits the 15 administrative director receives after the addition of the credit under (e) of this 16 section and the amount the participant would have received without the credit, less 17 the total of the amount the participant has paid on the indebtedness determined 18 under (d) of this section; and 19 (2) an appropriate share of the administrative costs of the program. 20 (c) A retirement incentive plan adopted under this section must provide that 21 contributions from the court system under (b) of this section take priority over other 22 obligations of the court system under (b) of this section to the maximum extent 23 permitted by law. 24 (d) An administrative director of the Alaska Court System who participates 25 in an approved retirement incentive plan is indebted to the system. The amount 26 of indebtedness is equal to 21 percent of the director's actual annual compensation 27 for the year in which the director terminates employment to participate in the 28 program, or the calculated annual compensation for an administrative director who 29 works fewer than 12 months. An outstanding indebtedness at the time the 30 administrative director is appointed to retirement under an approved retirement 31 incentive plan will require an actuarial adjustment to the benefits payable to the

01 director. 02 (e) An administrative director of the Alaska Court System who participates 03 in an approved retirement incentive plan receives a credit of three years that may 04 only be used to meet the age requirements for normal or early retirement under 05 AS 22.25.010(d). 06 (f) The chief justice of the Alaska Supreme Court may adopt and file with 07 the commissioner of administration for approval, a proposed retirement incentive plan 08 for the administrative director of the court system who is a member of the judicial 09 retirement system. Upon the request of the chief justice, the commissioner of 10 administration shall establish a period during which an administrative director eligible 11 to participate in the retirement incentive plan of the court system may apply to the 12 commissioner of administration to participate in the court system's approved plan. 13 The period shall begin no earlier than July 1, 1996, and end no later than 14 June 30, 1999. The period shall be no less than 30 days and no more than 60 15 days in duration and may not begin less than 30 days after establishment. The 16 chief justice is not required to request an application period. 17 (g) The commissioner of administration may not accept the application of 18 an administrative director of the court system to participate in an approved 19 retirement incentive plan adopted under this section unless the administrative director 20 will be appointed to retirement not later than the first day of the month that is 21 six months after the last day of the application period established by the 22 commissioner under (f) of this section. The chief justice, in a plan adopted under 23 this section, may set an earlier date by which an administrative director must be 24 appointed to retirement in order to participate in the plan. 25 * Sec. 35. RECOVERY OF EMPLOYER DELINQUENCIES. To recover a 26 delinquency owed by an employer other than the state under an agreement entered 27 into under sec. 28(c)(2) of this Act, the Department of Administration may 28 (1) direct that the amount of the delinquency or a lesser amount be 29 withheld from any money payable to the employer by a state department or agency 30 and that the amount withheld be credited to the delinquency; and 31 (2) bring action against the employer.

01 * Sec. 36. REEMPLOYMENT INDEBTEDNESS; PROHIBITION ON 02 REEMPLOYMENT. (a) If an individual is reemployed as a member of the public 03 employees' retirement system under AS 39.35, the teachers' retirement system under 04 AS 14.25, the judicial retirement system under AS 22.25, or the optional university 05 retirement program under AS 14.40.661 - 14.40.799 after appointment to retirement 06 under secs. 28 - 41 of this Act, that individual forfeits the incentive credit received 07 under secs. 28 - 41 of this Act and is indebted to the system under which the 08 individual took retirement. The indebtedness is 150 percent of the amount the 09 individual received as a result of participation in a retirement incentive plan under 10 secs. 28 - 41 of this Act and to which the individual would not otherwise have 11 been entitled, including the cost of health insurance. The amount that the individual 12 has paid under sec. 28(d) or (e) of this Act will be applied as a credit toward 13 the reemployment indebtedness. Interest on the reemployment indebtedness accrues 14 from the date of reemployment until the date that the individual either is appointed 15 to retirement and accepts an actuarial adjustment to the individual's future benefits 16 or repays the indebtedness in full. The rate of interest is that established by 17 regulation for the public employees' retirement system by the public employees' 18 retirement board and for the teachers' retirement system by the teachers' retirement 19 board. 20 (b) An individual who was appointed to retirement under secs. 28 - 41 of 21 this Act may not be employed by, or enter into a contract for personal services 22 with, a state agency or the University of Alaska within the five years after the 23 date of appointment to retirement, except that 24 (1) the University of Alaska may enter into a personal services 25 contract with the individual for teaching or research that does not entitle the 26 individual to receive retirement, health, or leave benefits, except social security 27 replacement if required by the Internal Revenue Code; and 28 (2) the individual may accept employment with the legislature during 29 a legislative session if the employment is on an hourly basis and does not entitle 30 the individual to receive retirement, health, or leave benefits. 31 (c) Notwithstanding the prohibition in (b) of this section, a state agency or

01 the University of Alaska may enter into a personal services contract with an 02 individual who was appointed to retirement under secs. 28 - 41 of this Act if the 03 Board of Regents, for the University of Alaska, or the commissioner of 04 administration, for a state agency, determines that there is a compelling reason to 05 do so because of the individual's specialized or extensive experience that relates to 06 a particular program or project of the state agency or university. However, a state 07 agency may not enter into a contract with an individual under this subsection if 08 the individual was employed by the state agency at the time of the individual's 09 appointment to retirement. 10 * Sec. 37. OFFICE OF MANAGEMENT AND BUDGET. (a) When 11 designating an employee category for participation in a retirement incentive plan or 12 a separation incentive program under secs. 28 - 41 of this Act, the executive head 13 of the relevant state agency shall describe in detail the expected effect of the plan 14 or program on the agency's personal services cost and operation. This financial 15 report must be approved by the director of the office of management and budget 16 before the commissioner of administration may approve the proposed plan or 17 program. The state agency shall report each year to the office of management and 18 budget on the cost of each employee's participation and the effect on the agency's 19 personal services cost and operation. 20 (b) The office of management and budget shall submit to the legislature 21 annual reports on the retirement incentive and separation incentive programs under 22 secs. 28 - 41 of this Act beginning January 15, 1998, and continuing through 23 January 15, 2000, and shall submit a final report January 15, 2001. Each report 24 must provide the information necessary for the legislature to evaluate the 25 effectiveness of the programs in achieving their objectives. The report must include 26 information on the designated employee categories under the incentive programs, the 27 cost to the state, the cost to the employee, the annual budgeted amount, by state 28 agency, for the incentives, the number of positions deleted or left vacant, and the 29 projected or actual net savings over the three-year period, and recommendations to 30 the legislature for changes in appropriations that reflect the cost and cost savings 31 resulting from the retirement and separation incentive programs.

01 * Sec. 38. PROGRAM CHANGES. (a) An individual employee does not 02 have a vested or contractual right to a benefit under secs. 28 - 41 of this Act 03 until an agreement is executed with the administrator that specifically authorizes that 04 employee to participate in the retirement incentive program under secs. 28 - 41 of 05 this Act or until an agreement is executed with the commissioner of administration 06 to participate in the separation incentive program under secs. 28 - 41 of this Act. 07 The legislature reserves the right to change any aspect of either incentive program 08 as it relates to employees for whom participation agreements have not yet been 09 executed with the administrator or with the commissioner of administration. 10 (b) In this section, "administrator" means the administrator of the public 11 employees' retirement system of employees who are members of that system, and 12 the administrator of the teachers' retirement system for employees who are members 13 of that system. 14 * Sec. 39. REGULATIONS. The commissioner of administration may adopt 15 regulations under AS 44.62 (Administrative Procedure Act) to implement and interpret 16 secs. 28 - 41 of this Act. 17 * Sec. 40. LEGISLATIVE EMPLOYEE RETIREMENT INCENTIVE PLAN. 18 (a) The Legislative Council may adopt and file with the commissioner of 19 administration a retirement incentive plan for employees of the legislative branch of 20 state government. The plan must designate categories of employees eligible to 21 participate in that plan, include a reimbursement agreement for the cost of 22 participation by employees in the plan, require employees to meet the eligibility 23 criteria, and pay the indebtedness amount as though the plan were subject to sec. 24 28 of this Act. The Legislative Council may exercise the powers of a state 25 agency under sec. 28 of this Act, but a plan adopted by the council is not subject 26 to review by the office of management and budget or approval of the commissioner 27 of administration. 28 (b) The application periods established by the Legislative Council under the 29 plan during which the employees of a legislative agency who meet the requirements 30 of sec. 28(b) of this Act are eligible to participate in the retirement incentive plan 31 shall begin no earlier than June 30, 1996, and end no later than June 30, 1999.

01 The application periods shall be no less than 30 days and not more than 60 days 02 in duration, and may not begin less than 30 days after their establishment. The 03 Legislative Council is not required to establish an application period and may 04 establish more than one application period. 05 (c) The commissioner of administration may not accept the application of 06 an employee to participate in the Legislative Council retirement incentive plan under 07 this section unless the employee will be appointed to retirement not later than the 08 first day of the month that is six months after the last day of the application 09 period established by the Legislative Council under this section. The Legislative 10 Council may set an earlier date by which an employee must be appointed to 11 retirement in order to participate in the plan. 12 (d) The provisions of secs. 33, 35, 36, 38, and 41 of this Act apply to 13 a plan adopted under this section. 14 * Sec. 41. DEFINITIONS. (a) Unless otherwise provided in secs. 28 - 41 15 of this Act, the definitions set out in AS 14.25.220 apply to provisions in secs. 16 29 - 36 of this Act that relate to teachers' retirement system and members of the 17 teachers' retirement system. 18 (b) Unless otherwise provided in secs. 28 - 41 of this Act, the definitions 19 set out in AS 39.35.680 apply to provisions in secs. 29 - 36 of this Act that 20 relate to the public employees' retirement system and members of the public 21 employees' retirement system except that "employer" does not include a school 22 district. 23 (c) In secs. 28 - 41 of this Act, 24 (1) "office of management and budget" means the office of 25 management and budget in the Office of the Governor; 26 (2) "public employees' retirement system" means the Public Employees' 27 Retirement System of Alaska (AS 39.35); 28 (3) "state agency" 29 (A) means 30 (i) the judicial branch of state government; 31 (ii) a principal department of the executive branch of

01 state government; and independent state entity that is attached to a 02 principal department of the executive branch for administrative purposes 03 but that is not a public organization as defined in AS 39.35.680 is 04 part of that department for purposes of this clause; and 05 (iv) the Office of the Governor; 06 (B) does not include 07 (i) the University of Alaska; 08 (ii) a political subdivision of the state; or 09 (iii) a public organization as defined in AS 39.35.680; 10 (4) "teachers' retirement system" means the Teachers' Retirement 11 System of Alaska (AS 14.25). 12 * Sec. 42. CERTAIN EXEMPT EMPLOYEES OF THE EXECUTIVE 13 BRANCH. Permanent and temporary employees of the executive branch who are 14 in the exempt service under AS 39.25, who are not members of a collective 15 bargaining unit established under the Public Employment Relations Act (AS 23.40), 16 and who are not otherwise covered by AS 39.27.011(a), are entitled to receive 17 salary adjustments comparable to those received by the classified and partially exempt 18 employees of the executive branch under AS 39.27.011(e) - (g), as enacted by sec. 19 13 of this Act, and to receive geographic differentials comparable to those received 20 by the classified and partially exempt employees of the executive branch under 21 AS 39.25.020, as enacted by sec. 14 of this Act. 22 * Sec. 43. EMPLOYEES OF THE UNIVERSITY OF ALASKA. The 23 employees of the University of Alaska who are not members of a collective 24 bargaining unit are entitled to receive salary increases in accordance with the 25 compensation policy of the Board of Regents of the University of Alaska. 26 * Sec. 44. EMPLOYEES OF THE JUDICIAL BRANCH. For the fiscal years 27 beginning July 1, 1997, and July 1, 1998, permanent and temporary employees of 28 the judicial branch, other than justices and judges, who are not members of a 29 collective bargaining agreement, are entitled to receive salary adjustments comparable 30 to those received by the classified and partially exempt employees of the executive 31 branch under AS 39.27.011(f) - (g), as that statute is amended in sec. 13 of this

01 Act, and geographic differential adjustments comparable to those received by the 02 classified and partially exempt employees of the executive branch under 03 AS 39.27.020, as enacted by sec. 14 of this Act. 04 * Sec. 45. JUDICIAL BRANCH EMPLOYEES. For the fiscal year beginning 05 July 1, 1996, and ending June 30, 1997, the temporary and permanent employees 06 of the judicial branch, other than justices and judges, who are not members of a 07 collective bargaining unit are entitled to receive a salary increase of 5.2 percent of 08 the employee's base salary as of June 30, 1996. 09 * Sec. 46. JUDGES AND JUSTICES. Notwithstanding AS 22.05.140(d), 10 AS 22.07.090(c), AS 22.10.190(d), and AS 22.15.220(e), and sec. 13 of this Act, 11 justices and judges in the judicial branch are not entitled to receive the increases 12 provided by AS 22.05.140(d), AS 22.07.090(c), AS 22.10.190(d), and AS 22.15.220(e) 13 for the fiscal year beginning July 1, 1996, and ending June 30, 1997. 14 * Sec. 47. LEGISLATIVE BRANCH EMPLOYEES. Employees of the 15 legislative branch of state government, other than legislators, are entitled to receive 16 salary adjustments comparable to those received by the classified and partially exempt 17 employees of the executive branch under AS 39.27.011(e) - (g), as enacted by sec. 18 13 of this Act. 19 * Sec. 48. APPROVAL OF MONETARY TERMS OF AGREEMENTS. This 20 section constitutes approval of the monetary terms of the collective bargaining 21 agreements entered into between the state and the following collective bargaining 22 organizations: 23 (1) Alaska State Employees Association, for the General Government 24 Unit; 25 (2) Alaska Public Employees Association, for the Supervisory Unit; 26 (3) Public Employees Local 71, for the Labor, Trades and Crafts 27 Unit; 28 (4) Inlandboatmen's Union of the Pacific, representing the unlicensed 29 marine unit; 30 (5) International Organization of Masters, Mates, and Pilots, Pacific 31 Maritime Region, for the Masters, Mates, and Pilots Unit;

01 (6) Public Safety Employees Association, representing state troopers 02 and other commissioned law enforcement personnel; 03 (7) the Classified Employees Association, representing University of 04 Alaska employees; and 05 (8) the Alaska Community Colleges' Federation of Teachers, 06 representing faculty members of the University of Alaska; 07 (9) the Alyeska Correspondence School Education Association 08 representing teachers at the Alyeska Central School; 09 (10) Alaska Vocational Technical Center Teacher's Association 10 representing teachers at the Alyeska Central School; and 11 (11) International Brotherhood of Electrical Workers representing 12 nonjudicial, nonsupervisory, classified employees of the Alaska Court System. 13 * Sec. 49. LIMITATION ON THE REDUCTION OF EMPLOYEE SALARIES. 14 (a) So long as the employee remains in the same geographic area, as defined in 15 AS 39.27.020(a) and (d), as enacted by sec. 14 of this Act, 16 (1) the salary that an employee is receiving on June 30, 1996, 17 may not be reduced by application of a provision of this Act until July 1, 18 1997; 19 (2) for the fiscal year beginning July 1, 1997, the salary that 20 an employee is receiving on June 30, 1997, may not be reduced by more 21 than five percent as a result of the application of a provision of this Act. 22 (b) If an employee moves to another geographic area after June 30, 23 1996, both the pay differential in AS 39.27.020(a), as amended by sec. 14 24 of this Act, apply to that employee's salary on the effective date of the 25 move. 26 * Sec. 50. LIMITATION ON THE REDUCTION OF EMPLOYEE SALARIES. 27 (a) The salary that an employee is receiving on June 30, 1996, may not be 28 reduced by application of a provision of sec. 14 of this Act until June 30, 1997, 29 so long as the employee remains in the same geographic area, as set out in 30 AS 39.27.020, as amended by sec. 14 of this Act. 31 (b) If an employee moves to another geographic area after July 1, 1996,

01 the pay differential in AS 39.27.020(a), as amended by sec. 14 of this Act, applies 02 to that employee's salary on the effective date of the move. 03 (c) Nothing in this Act prohibits a reduction in an employee's salary as a 04 result of a voluntary or involuntary demotion. 05 * Sec. 51. Nothing in this Act modifies or terminates the terms of a 06 collective bargaining agreement in effect on the effective date of this Act. 07 * Sec. 52. Section 50 of this Act is repealed July 1, 1997. 08 * Sec. 53. Sections 28, 29, and 40 of this Act are repealed July 1, 2000. 09 * Sec. 54. Sections 30 - 34 of this Act are repealed December 31, 1999.