HB 327: "An Act relating to retirement incentive programs."
00HOUSE BILL NO. 327 01 "An Act relating to retirement incentive programs." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 14.25 is amended by adding new sections to read: 04 Article 2. Retirement Incentive Program. 05 Sec. 14.25.550. Requirements for a retirement incentive plan. (a) An 06 employer may adopt a retirement incentive plan under AS 14.55.550 - 14.25.620. In 07 the plan, the employer shall 08 (1) designate categories of employees who are eligible to participate in 09 the plan as set out in (b) and (c) of this section; 10 (2) set the time period within which an employee must apply for 11 participation in the plan under (d) of this section; 12 (3) set the date by which a participating employee must be appointed 13 to retirement under (e) of this section; 14 (4) include a reimbursement agreement as required by (f) of this
01 section; 02 (5) demonstrate that the plan, if approved and if eligible employees 03 choose to participate, will result in a savings in personal services costs to the employer 04 within five years. 05 (b) An employer may designate an employee as eligible to participate in a 06 retirement incentive plan under AS 14.25.550 - 14.25.620 only if the 07 (1) employee is vested when the employee applies to participate in the 08 plan and will be qualified to retire under AS 14.25.110 after receipt of the credit 09 described in AS 14.25.560(b); 10 (2) savings in personal services costs for the employee's position will 11 exceed the costs to the employer for the employee's participation in the plan within 12 five years after the employee is appointed to retirement. 13 (c) In preparing a retirement incentive plan under AS 14.25.550 - 14.25.620, 14 the employer shall designate the categories of employees who are eligible to participate 15 in the plan. An employer need not extend the incentive plan to all employees who 16 would otherwise be eligible, but may choose to extend the plan only to employees 17 (1) in specific budget or administrative components of the employer; 18 (2) in specific job classifications; 19 (3) in specific geographic locations; or 20 (4) on the basis of any combination of factors under (1) - (3) of this 21 subsection. 22 (d) A retirement incentive plan must set the time periods within which 23 employees may apply to participate in the plan. The plan may contain more than one 24 application period. The first application period may not begin sooner than 30 days 25 after the plan's approval by the commissioner of administration but must begin within 26 90 days after approval of the plan. An application period must last between 30 and 27 90 days. 28 (e) A retirement incentive plan must set the date by which a participating 29 employee must be appointed to retirement. The date must be the first of the month 30 and within seven months after the last day of the application period within which the 31 employee applied to participate in the plan.
01 (f) A retirement incentive plan filed under this section must include a 02 reimbursement agreement that 03 (1) requires the employer to reimburse the system for each employee 04 who retires under the plan within three years after the end of the fiscal year in which 05 the employee is appointed to retirement in an amount equal to 06 (A) the actuarial equivalent of the difference between the 07 benefits the participant receives after the addition of the credit under 08 AS 14.25.560(b) and the amount the participant would have received without 09 the credit, less the amount the participant has paid on the indebtedness 10 determined under AS 14.25.560(c); and 11 (B) an appropriate share of the administrative costs of the 12 program; and 13 (2) provides that contributions from the employer under this section 14 take priority over other obligations of the employer to the maximum extent permitted 15 by law. 16 (g) An employer shall file its proposed retirement incentive plan with the 17 commissioner of administration. The plan may not take effect unless it is approved 18 by the commissioner. For a plan from an executive branch state agency, the 19 commissioner may approve the plan only if the office of management and budget 20 approves the calculation of savings under (b) of this section and if the commissioner 21 finds that the plan meets the requirements of AS 14.25.550 - 14.25.620. For plans 22 from employers other than the state, the commissioner shall approve the plan if the 23 plan meets the requirements of AS 14.25.550 - 14.25.620. 24 Sec. 14.25.560. Requirements of and benefits for participants. (a) A 25 member who has been approved to participate in an approved retirement incentive plan 26 under AS 14.25.550 - 14.25.620 shall sign a participation agreement with the 27 administrator. The agreement must set out the terms of the member's participation in 28 the plan. 29 (b) A member who participates in an approved retirement incentive plan under 30 AS 14.25.550 - 14.25.620 receives a credit of three years. The three years must be 31 applied in the following order until exhausted:
01 (1) to meet the age required to be eligible for early retirement under 02 AS 14.25.110; 03 (2) to reduce the actuarial adjustment imposed for early retirement 04 under AS 14.25.110; 05 (3) to meet the age or service required for eligibility for normal 06 retirement under AS 14.25.110; 07 (4) as years of credited service for calculating retirement benefits. 08 (c) A member who participates in an approved retirement incentive plan is 09 indebted to the system in an amount calculated under this subsection. The 10 indebtedness is 25.95 percent of the member's actual compensation for the school year 11 in which the member terminates employment, or the calculated school year 12 compensation for a member who works less than the entire school year. An 13 outstanding indebtedness at the time a member is appointed to retirement under an 14 approved retirement incentive plan requires an actuarial adjustment to the benefits 15 payable to that member. 16 (d) In order to establish eligibility for participation in a plan under 17 AS 14.25.550(b) and in addition to the employee indebtedness under (c) of this section, 18 an employee may elect to assume a portion of the school district liability calculated 19 under AS 14.25.550(f). An outstanding indebtedness at the time the employee is 20 appointed to retirement will require an actuarial adjustment to the employee's benefits. 21 Sec. 14.25.570. Requirements for state plans. (a) A state agency may 22 exercise the power given to the employer in AS 14.25.550 - 14.25.620. 23 (b) The commissioner, deputy commissioner, or assistant commissioner of the 24 Department of Education may not participate in a retirement incentive plan under 25 AS 14.25.550 - 14.25.620. 26 (c) A plan adopted for state employees may permit participation only by an 27 employee who is otherwise eligible to participate under AS 14.25.550 - 14.25.620 and 28 who 29 (1) has been continuously employed by the state for at least one year 30 before the employee applies to participate in the state agency's approved plan; 31 (2) is a permanent seasonal employee who has been continuously
01 employed by the state in a permanent seasonal position during all of the time in which 02 the position normally is filled in the 12 months before the employee's application to 03 participate; 04 (3) has a job sharing agreement with a state agency in which two or 05 more employees share a single position identified by a single position control number 06 and in which the employee who applies to participate in the plan was continuously 07 employed by the agency during the portion of the 12 months before the employee's 08 application in which the employee normally worked under the job sharing agreement; 09 or 10 (4) meets a combination of the requirements of (1) - (3) of this 11 subsection. 12 (d) The executive head of a state agency shall describe in detail the expected 13 effect of each category's participation in a plan on the agency's personal services cost 14 and operation. This financial report must be approved by the director of the office of 15 management and budget before the commissioner of administration may approve the 16 proposed plan. The state agency shall report each year to the office of management 17 and budget on the cost of each employee's participation and the effect on the agency's 18 personal services cost and operation. 19 (e) After the employer designates the categories of employees who are eligible 20 to participate under AS 14.25.550(c), a state employee who is employed in a category 21 that has been designated as participating in the plan but who has not been permitted 22 to participate in the plan because the savings in personal services costs for the 23 employee's position will not exceed the costs to the employer for the employee's 24 participation in the plan as required by AS 14.25.550(b)(2) may request review of the 25 determination of cost savings. The review shall be conducted promptly by a panel 26 composed of the executive head of the state agency in which the employee is 27 employed, the commissioner of administration, and the director of the office of 28 management and budget or their designees. The employee may present information 29 to the panel. The decision of the panel is not appealable. 30 Sec. 14.25.580. Recovery of employer delinquencies. To recover a 31 delinquency owed by an employer other than the state under an agreement entered into
01 under AS 14.25.550(f), the Department of Administration may 02 (1) direct that the amount of the delinquency or a lesser amount be 03 withheld from any money payable to the employer by a state department or agency and 04 that the amount withheld be credited to the delinquency; and 05 (2) bring an action against the employer. 06 Sec. 14.25.590. Reemployment indebtedness; prohibition against 07 reemployment. (a) If an individual is reemployed as a member of this system, the 08 public employees' retirement system under AS 39.35, the judicial retirement system 09 under AS 22.25, or the optional university retirement program under AS 14.40.661 - 10 14.40.799 after appointment to retirement under AS 14.25.550 - 14.25.620, that 11 individual forfeits the incentive credit received under AS 14.25.560(b) and is indebted 12 to the system. The indebtedness is 110 percent of the amount the individual received 13 as a result of participation in a retirement incentive plan and to which the individual 14 would not otherwise have been entitled, including the cost of health insurance. The 15 amount that the individual has paid under AS 14.25.560(c) and (d), if any, will be 16 applied as a credit toward the reemployment indebtedness. Interest on the 17 reemployment indebtedness accrues from the date of reemployment until the date that 18 the individual either is appointed to retirement and accepts an actuarial adjustment to 19 the individual's future benefits or repays the indebtedness in full. The rate of interest 20 is that established by regulation by the board. 21 (b) An individual who was appointed to retirement under AS 14.25.550 - 22 14.25.620 may not be employed by, or enter into a contract for personal services with, 23 the state within the five years after the date of appointment to retirement, except that 24 (1) the University of Alaska may enter into a personal services contract 25 with the individual for teaching or research that does not entitle the individual to 26 receive retirement, health, or leave benefits, except social security replacement if 27 required by 26 U.S.C. (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 the 30 individual to receive retirement, health, or leave benefits except social security 31 replacement if required by 26 U.S.C. (Internal Revenue Code).
01 (c) Notwithstanding the prohibition in (b) of this section, the state may enter 02 into a personal services contract with an individual who was appointed to retirement 03 under AS 14.25.550 - 14.25.620 if the Board of Regents, for the University of Alaska, 04 or the commissioner of administration, as appropriate, determines that there is a 05 compelling reason to do so because of the individual's specialized or extensive 06 experience that relates to a particular program or project of the state agency or 07 university. However, the state may not enter into a contract with an individual under 08 this subsection if the individual was employed by that state entity other than the 09 University of Alaska at the time of the individual's appointment to retirement. 10 Sec. 14.25.600. Office of management and budget report. The office of 11 management and budget shall submit to the legislature reports on the retirement 12 incentive program every other year beginning January 15, 2001. Each report must 13 provide the information necessary for the legislature to evaluate the effectiveness of 14 the program in achieving its objectives. The report must include information on 15 (1) the designated employee categories under the incentive programs; 16 (2) the cost to the system, the employer, and the employee; 17 (3) the annual budgeted amount, by state agency, for the incentives; 18 (4) the number of positions deleted or left vacant, and the projected or 19 actual net savings over the five-year period; and 20 (5) recommendations to the legislature for changes in appropriations 21 that reflect the cost and cost savings resulting from the retirement incentive program. 22 Sec. 14.25.610. Program changes. An employee does not have a vested or 23 contractual right to a benefit under AS 14.25.550 - 14.25.620 until a participation 24 agreement is executed with the administrator under AS 14.25.560(a). The legislature 25 reserves the right to change any aspect of the incentive program as it relates to 26 employees for whom participation agreements have not yet been executed with the 27 administrator. 28 Sec. 14.25.620. Definitions. In AS 14.25.550 - 14.25.620, 29 (1) "office of management and budget" means the office of 30 management and budget in the Office of the Governor; 31 (2) "state agency" means the Department of Education and Early
01 Development, the Special Education Service Agency, or the University of Alaska. 02 * Sec. 2. AS 39.35 is amended by adding new sections to read: 03 Article 9. Retirement Incentive Program. 04 Sec. 39.35.800. Requirements for a retirement incentive plan. (a) An 05 employer may adopt a retirement incentive plan under AS 39.35.800 - 39.35.870. In 06 the plan the employer shall 07 (1) designate categories of employees who are eligible to participate in 08 the plan as set out in (b) and (c) of this section; 09 (2) set the time period within which an employee must apply for 10 participation in the plan under (d) of this section; 11 (3) set the date by which a participating employee must be appointed 12 to retirement under (e) of this section; 13 (4) include a reimbursement agreement as required by (f) of this 14 section; 15 (5) demonstrate that the plan, if approved and if eligible employees 16 choose to participate, will result in a savings in personal services costs to the employer 17 within five years. 18 (b) An employer may designate an employee as eligible to participate in a 19 retirement incentive plan under AS 39.35.800 - 39.35.870 only if the 20 (1) employee is vested when the employee applies to participate in the 21 plan and will be qualified to retire under AS 39.35.370 after receipt of the credit 22 described in AS 39.35.810 of this section; 23 (2) savings in personal services costs for the employee's position will 24 exceed the costs to the employer for the employee's participation in the plan within 25 five years after the employee is appointed to retirement. 26 (c) In preparing a retirement incentive plan under AS 39.35.800 - 39.35.870, 27 the employer shall designate the categories of employees who are eligible to participate 28 in the plan. An employer need not extend the incentive plan to all employees who 29 would otherwise be eligible, but may choose to extend the plan only to employees 30 (1) in specific budget or administrative components of the employer; 31 (2) in specific job classifications;
01 (3) in specific geographic locations; or 02 (4) on the basis of any combination of factors under (1) - (3) of this 03 subsection. 04 (d) A retirement incentive plan must set the time periods within which 05 employees may apply to participate in the plan. The plan may contain more than one 06 application period. The first application period may not begin sooner than 30 days 07 after the plan's approval by the commissioner of administration but must begin within 08 90 days after approval of the plan. An application period must last between 30 and 09 60 days. 10 (e) A retirement incentive plan must set the date by which a participating 11 employee must be appointed to retirement. The date may not be later than seven 12 months after the last day of the application period within which the employee applied 13 to participate in the plan. 14 (f) A retirement incentive plan filed under this section must include a 15 reimbursement agreement that 16 (1) requires the employer to reimburse the system for each employee 17 who retires under the plan within three years after the end of the fiscal year in which 18 the employee is appointed to retirement in an amount equal to 19 (A) the actuarial equivalent of the difference between the 20 benefits the participant receives after the addition of the credit under 21 AS 39.35.810(b) and the amount the participant would have received without 22 the credit, less the amount the participant has paid on the indebtedness 23 determined under AS 39.35.810(c); and 24 (B) an appropriate share of the administrative costs of the 25 program; and 26 (2) provides that contributions from the employer under this section 27 take priority over other obligations of the employer to the maximum extent permitted 28 by law. 29 (g) An employer shall file its proposed retirement incentive plan with the 30 commissioner of administration. For a plan from an employer other than the state 31 legislature, the plan may not take effect unless it is approved by the commissioner of
01 administration. For a plan from a state agency, the commissioner may approve the 02 plan only if the office of management and budget approves the calculation of savings 03 under (b) of this section and if the commissioner finds that the plan meets the 04 requirements of AS 39.35.800 - 39.35.870. For plans from employers other than the 05 state, the commissioner shall approve the plan if the plan meets the requirements of 06 AS 39.35.800 - 39.35.870. 07 Sec. 39.35.810. Requirements of and benefits for participants. (a) A 08 member who has been approved to participate in an approved retirement incentive plan 09 under AS 39.35.800 - 39.35.870 shall sign a participation agreement with the 10 administrator. The agreement must set out the terms of the member's participation in 11 the plan. 12 (b) A member who participates in an approved retirement incentive plan under 13 AS 39.35.800 - 39.35.870 receives a credit of three years. The three years must be 14 applied in the following order until exhausted: 15 (1) to meet the age required to be eligible for early retirement under 16 AS 39.35.370; 17 (2) to reduce the actuarial adjustment imposed for early retirement 18 under AS 39.35.370; 19 (3) to meet the age or service required for eligibility for normal 20 retirement under AS 39.35.370; 21 (4) as years of credited service for calculating retirement benefits. 22 (c) A member who participates in an approved retirement incentive plan is 23 indebted to the system in an amount calculated under this subsection. The 24 indebtedness is 22 1/2 percent for a peace officer or fire fighter, and 20 1/4 percent 25 for other members, of the member's actual annual compensation for the year in which 26 the member terminates employment, or the calculated annual compensation for a 27 member who works fewer than 12 months. An outstanding indebtedness at the time 28 a member is appointed to retirement under an approved retirement incentive plan 29 requires an actuarial adjustment to the benefits payable to that member. 30 (d) In order to establish eligibility for participation in a plan under 31 AS 39.35.800(b) and in addition to the employee indebtedness under (c) of this section,
01 an employee may elect to assume a portion of the employer liability calculated under 02 AS 39.35.800(f). An outstanding indebtedness at the time the employee is appointed 03 to retirement will require an actuarial adjustment to the employee's benefits. 04 Sec. 39.35.820. Requirements for state plans. (a) A department or 05 independent state agency in the executive branch may exercise the power given to the 06 employer in AS 39.35.800 - 39.35.870 for employees in executive branch departments 07 and agencies. The supreme court may exercise the power given to the employer in 08 AS 39.35.800 - 39.35.870 for court system employees. The legislative council or the 09 Legislative Budget and Audit Committee, as appropriate, may exercise the power given 10 to the employer in AS 39.35.800 - 39.35.870 for employees of the legislative branch 11 of government. 12 (b) A proposed plan for state employees may not permit the governor, the 13 lieutenant governor, or a commissioner, deputy commissioner, or assistant 14 commissioner of a principal department of the executive branch to participate in the 15 plan. 16 (c) A plan adopted for state employees may permit participation only by an 17 employee who is otherwise eligible to participate under AS 39.35.800 - 39.35.870 and 18 who 19 (1) has been continuously employed by the state for at least one year 20 before the employee applies to participate in the state agency's approved plan; 21 (2) is a permanent seasonal employee who has been continuously 22 employed by the state in a permanent seasonal position during all of the time in which 23 the position normally is filled in the twelve months before the employee's application 24 to participate; 25 (3) has a job sharing agreement with a state agency in which two or 26 more employees share a single position identified by a single position control number 27 and in which the employee who applies to participate in the plan was continuously 28 employed by the agency during the portion of the twelve months before the 29 employee's application in which the employee normally worked under the job sharing 30 agreement; or 31 (4) meets a combination of the requirements of (1) - (3) of this
01 subsection. 02 (d) For purposes of determining whether an employee has met the years of 03 service requirement to be eligible for retirement under AS 39.35.370, a vested member 04 who is a state employee and who applies to participate in a retirement incentive plan 05 under AS 39.35.800 - 39.35.870 may receive credit for employment with a political 06 subdivision or public organization before the political subdivision or organization 07 became an employer under the public employees' retirement system. The member 08 may not receive credit for those years under this section for purposes of determining 09 the amount of the employee's benefits. 10 (e) The executive head of a department shall describe in detail the expected 11 effect of each category's participation in a plan on the department's personal services 12 cost and operation. This financial report must be approved by the director of the 13 office of management and budget before the commissioner of administration may 14 approve the proposed plan. The department shall report each year to the office of 15 management and budget on the cost of each employee's participation and the effect on 16 the department's personal services cost and operation. For a plan for employees of the 17 court system, the chief justice of the supreme court shall perform the duties of the 18 executive head of a department under this subsection. 19 (f) After the employer designates the categories of employees who are eligible 20 to participate under AS 39.35.800(c), a state employee who is employed in a category 21 that has been designated as participating in the plan but who has not been permitted 22 to participate in the plan because the savings in personal services costs for the 23 employee's position will not exceed the costs to the employer for the employee's 24 participation in the plan as required by AS 39.35.800(b)(2) may request review of the 25 determination of cost savings. The review shall be conducted promptly by a panel 26 composed of the commissioner or other executive head of the department or agency 27 in which the employee is employed, the commissioner of administration, and the 28 director of the office of management and budget or their designees. The employee 29 may present information to the panel. The decision of the panel is not appealable. 30 Sec. 39.35.830. Recovery of employer delinquencies. To recover a 31 delinquency owed by an employer other than the state under an agreement entered into
01 under AS 39.35.800(f), the Department of Administration may 02 (1) direct that the amount of the delinquency or a lesser amount be 03 withheld from any money payable to the employer by a state department or agency and 04 that the amount withheld be credited to the delinquency; and 05 (2) bring an action against the employer. 06 Sec. 39.35.840. Reemployment indebtedness; prohibition against 07 reemployment. (a) If an individual is reemployed as a member of this system, the 08 teachers' retirement system under AS 14.25, the judicial retirement system under 09 AS 22.25, or the optional university retirement program under AS 14.40.661 - 10 14.40.799 after appointment to retirement under AS 39.35.800 - 39.35.870, that 11 individual forfeits the incentive credit received under AS 39.35.810(b) and is indebted 12 to the system. The indebtedness is 110 percent of the amount the individual received 13 as a result of participation in a retirement incentive plan and to which the individual 14 would not otherwise have been entitled, including the cost of health insurance. The 15 amount that the individual has paid under AS 39.35.810(c) and (d), if any, will be 16 applied as a credit toward the reemployment indebtedness. Interest on the 17 reemployment indebtedness accrues from the date of reemployment until the date that 18 the individual either is appointed to retirement and accepts an actuarial adjustment to 19 the individual's future benefits or repays the indebtedness in full. The rate of interest 20 is that established by regulation by the board. 21 (b) An individual who was appointed to retirement under AS 39.35.800 - 22 39.35.870 may not be employed by, or enter into a contract for personal services with, 23 a state agency within the five years after the date of appointment to retirement, except 24 that 25 (1) the University of Alaska may enter into a personal services contract 26 with the individual for teaching or research that does not entitle the individual to 27 receive retirement, health, or leave benefits, except social security replacement if 28 required by 26 U.S.C. (Internal Revenue Code); and 29 (2) the individual may accept employment with the legislature during 30 a legislative session if the employment is on an hourly basis and does not entitle the 31 individual to receive retirement, health, or leave benefits except social security
01 replacement if required by 26 U.S.C. (Internal Revenue Code). 02 (c) Notwithstanding the prohibition in (b) of this section, a state agency may 03 enter into a personal services contract with an individual who was appointed to 04 retirement under AS 39.35.800 - 39.35.870 if the Board of Regents, for the University 05 of Alaska, or the commissioner of administration, as appropriate, determines that there 06 is a compelling reason to do so because of the individual's specialized or extensive 07 experience that relates to a particular program or project of the state agency or 08 university. However, a state agency may not enter into a contract with an individual 09 under this subsection if the individual was employed by that state agency other than 10 the University of Alaska at the time of the individual's appointment to retirement. 11 Sec. 39.35.850. Office of management and budget report. The office of 12 management and budget shall submit to the legislature reports on the retirement 13 incentive program every two years beginning January 15, 2001. Each report must 14 provide the information necessary for the legislature to evaluate the effectiveness of 15 the program in achieving its objectives. The report must include information on 16 (1) the designated employee categories under the incentive programs; 17 (2) the cost to the system, the employer, and the employee; 18 (3) the annual budgeted amount, by state agency, for the incentives; 19 (4) the number of positions deleted or left vacant, and the projected or 20 actual net savings over the five-year period; and 21 (5) recommendations to the legislature for changes in appropriations 22 that reflect the cost and cost savings resulting from the retirement incentive program. 23 Sec. 39.35.860. Program changes. An employee does not have a vested or 24 contractual right to a benefit under AS 39.35.800 - 39.35.870 until a participation 25 agreement is executed with the administrator under AS 39.35.810(a). The legislature 26 reserves the right to change any aspect of the incentive program as it relates to 27 employees for whom participation agreements have not yet been executed with the 28 administrator. 29 Sec. 39.35.870. Definitions. In AS 39.35.800 - 39.35.870, 30 (1) "department" means 31 (A) a principal department of the executive branch of state
01 government; an independent state entity that is attached to a principal 02 department of the executive branch for administrative purposes but that is not 03 a public organization as defined in AS 39.35.680 is part of that department for 04 purposes of this paragraph; and 05 (B) the Office of the Governor; 06 (2) "office of management and budget" means the office of 07 management and budget in the Office of the Governor. 08 * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section 09 to read: 10 INSTRUCTION TO REVISOR. The revisor of statutes is requested to renumber 11 AS 14.25.210 and 14.25.220 so that they appear at the end of AS 14.25 and to renumber 12 AS 39.35.660 - 39.35.690 so that they appear at the end of AS 39.35.