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HB 335: "An Act relating to information contained in retirement system records; relating to retirement boards; relating to procedures and hearings under state retirement systems; relating to benefits for reemployed retired members of retirement systems; relating to eligibility for normal retirement for members of the teachers' retirement system who have Alaska BIA credited service; relating to disability benefits for members of state retirement systems; relating to deduction of premiums from retirement benefits; relating to protection of, and assignment and transfer of, amounts held in retirement systems; relating to retirement benefits for certain employees earning high salaries; relating to qualified domestic relations orders in state retirement systems; relating to the definition of 'retirement fund' in the teachers' retirement system; relating to membership of state employees in the teachers' retirement system; relating to refund of contributions made to the judicial retirement system or to the former elected public officers retirement system and repayment of refunded contributions in those systems; relating to self-insurance and excess loss insurance for persons receiving benefits from a state retirement system; relating to participation of elected officials in the public employees' retirement system; relating to reinstatement of credited service in the public employees' retirement system after a refund because of certain levies; relating to the level income option benefit under the public employees' retirement system; relating to participation of employees of political subdivisions and public organizations in the public employees' retirement system; relating to penalties for attempts to defraud the public employees' retirement system; relating to the definition of 'pension fund' in the public employees' retirement system; relating to calculation of years of service and of benefits under the public employees' retirement system for noncertificated employees of certain educational employers; and relating to individual accounts maintained for members of the former elected public officers retirement system."

00HOUSE BILL NO. 335 01 "An Act relating to information contained in retirement system records; relating 02 to retirement boards; relating to procedures and hearings under state retirement 03 systems; relating to benefits for reemployed retired members of retirement 04 systems; relating to eligibility for normal retirement for members of the 05 teachers' retirement system who have Alaska BIA credited service; relating to 06 disability benefits for members of state retirement systems; relating to deduction 07 of premiums from retirement benefits; relating to protection of, and assignment 08 and transfer of, amounts held in retirement systems; relating to retirement 09 benefits for certain employees earning high salaries; relating to qualified domestic 10 relations orders in state retirement systems; relating to the definition of 11 'retirement fund' in the teachers' retirement system; relating to membership of 12 state employees in the teachers' retirement system; relating to refund of 13 contributions made to the judicial retirement system or to the former elected 14 public officers retirement system and repayment of refunded contributions in

01 those systems; relating to self-insurance and excess loss insurance for persons 02 receiving benefits from a state retirement system; relating to participation of 03 elected officials in the public employees' retirement system; relating to 04 reinstatement of credited service in the public employees' retirement system after 05 a refund because of certain levies; relating to the level income option benefit 06 under the public employees' retirement system; relating to participation of 07 employees of political subdivisions and public organizations in the public 08 employees' retirement system; relating to penalties for attempts to defraud the 09 public employees' retirement system; relating to the definition of 'pension fund' 10 in the public employees' retirement system; relating to calculation of years of 11 service and of benefits under the public employees' retirement system for 12 noncertificated employees of certain educational employers; and relating to 13 individual accounts maintained for members of the former elected public officers 14 retirement system." 15 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 16 * Section 1. AS 09.25 is amended by adding a new section to read: 17  Sec. 09.25.151. Confidentiality of retirement records. (a) Except as 18 provided in (b) and (c) of this section, public records, including electronic services and 19 products involving public records, containing information about a person and 20 maintained under AS 14.25, AS 22.25, AS 26.05.222 - 26.05.229, AS 39.35, or former 21 AS 39.37 shall be kept confidential and are not subject to inspection or copying under 22 AS 09.25.110 - 09.25.120. 23  (b) Records described in (a) of this section concerning a person who is a 24 member or former member of a state retirement system who is still living may only 25 be released to 26  (1) the person or the person's guardian; 27  (2) the person's employer or former employer; 28  (3) a state agency authorized to obtain confidential information; 29  (4) a retirement organization representing persons receiving benefits 30 under a state retirement system if the retirement organization is affiliated with an 31 organization representing employees of an employer under AS 23.40.070 - 23.40.260

01 (Public Employment Relations Act); 02  (5) another person if the person has 03  (A) written authorization for release from the affected member 04 or former member or the member's or former member's guardian; or 05  (B) a court order or subpoena to obtain the information. 06  (c) Records described in (a) of this section concerning a member or former 07 member of a state retirement system who is deceased or a deceased member's named 08 beneficiary may only be released to 09  (1) the member's named beneficiary or the beneficiary's guardian; 10  (2) the member's or former member's former employer; 11  (3) a state agency authorized to obtain confidential information; 12  (4) the personal representative of the member's or former member's 13 estate; 14  (5) a retirement organization representing persons receiving benefits 15 under a state retirement system if the retirement organization is affiliated with an 16 organization representing employees of the employer under AS 23.40.070 - 23.40.260 17 (Public Employment Relations Act); 18  (6) another person if the person has written authorization for release 19 from the member or former member, the member's named beneficiary, or the personal 20 representative of the member's or former member's estate or a court order or subpoena 21 to secure the information. 22  (d) In this section, "state retirement system" means the teachers' retirement 23 system under AS 14.25, the judicial retirement system under AS 22.25, the retirement 24 system for members of the national guard under AS 26.05.222 - 26.05.229, the public 25 employees' retirement system under AS 39.35, or the elected public officers retirement 26 system under former AS 39.37. 27 * Sec. 2. AS 14.25.035(a) is amended to read: 28  (a) There is established the Alaska Teachers' Retirement Board as follows: 29  (1) the governor shall appoint five members for overlapping three-year 30 terms; one member must be a resident who is receiving retirement benefits under this 31 chapter; statewide teacher organizations may submit to the governor a list of

01 recommended nominees to serve on the board; 02  (2) the governor shall appoint two physicians authorized to practice 03 medicine in the state to serve as members of the board and two physicians 04 authorized to practice medicine in the state to serve as alternate members to the 05 physician members of the board; the physicians are members of the board only 06 for the purpose of hearing appeals to determine medical eligibility for disability 07 benefits under AS 14.25.130; [THE GOVERNOR SHALL APPOINT TWO 08 PHYSICIANS EACH FROM AT LEAST TWO OF THE STATE'S FOUR JUDICIAL 09 DISTRICTS;] the Public Employees' Retirement Board and the Teachers' Retirement 10 Board may submit to the governor a list of recommended physicians to serve on the 11 board; if the administrator, after making a reasonable effort to secure the 12 participation of two physicians to serve on a disability appeal, is unable to do so, 13 the board may hear the appeal with the participation of only one physician or 14 alternate, in which case, for purposes of a quorum, the board shall be considered 15 to have only one physician as a member; [THE TWO PHYSICIAN MEMBERS 16 FROM THE JUDICIAL DISTRICT IN WHICH A DISABILITY APPEAL HEARING 17 IS CONDUCTED SHALL SERVE ON THE BOARD DURING THE HEARING; IF 18 ONE OR MORE OF THE PHYSICIANS IN THE JUDICIAL DISTRICT IN WHICH 19 A DISABILITY HEARING IS CONDUCTED IS UNABLE TO SERVE AT THE 20 HEARING, OR IF THERE IS NO PHYSICIAN MEMBER FROM THAT JUDICIAL 21 DISTRICT, OTHER PHYSICIAN MEMBERS SHALL SERVE AT THE HEARING, 22 SELECTED FOR SUCH HEARINGS ON A ROTATING BASIS, IN ACCORDANCE 23 WITH REGULATIONS ADOPTED BY THE BOARD;] physician members and 24 alternates serve at the pleasure of the governor. 25 * Sec. 3. AS 14.25.035(b) is amended to read: 26  (b) Members of the board appointed under (a)(1) of this section are entitled 27 to receive [DO NOT RECEIVE COMPENSATION] for their services on the 28 retirement board an honorarium equal to the honorarium provided to trustees of 29 the Alaska State Pension Investment Board under AS 37.10.250 . Physician 30 members of the board are entitled to hourly compensation for their services at a rate 31 to be determined by the commissioner of administration. The rate of compensation

01 shall be consistent with the physicians' normal hourly earnings. All members of the 02 board are entitled to travel expenses and per diem authorized for boards and 03 commissions under AS 39.20.180 [WHEN IT IS NECESSARY TO TRAVEL]. 04 * Sec. 4. AS 14.25.035(f) is amended to read: 05  (f) The board shall meet at the call of the chair [CHAIRMAN], any three 06 members, or at the request of the commissioner of administration. The board may 07 adopt regulations defining a quorum for the conduct of its business, including 08 appeals and disability appeals. 09 * Sec. 5. AS 14.25 is amended by adding a new section to read: 10  Sec. 14.25.037. Hearings. (a) The board shall adopt regulations establishing 11 procedures for the conduct of hearings and appeals under this chapter. 12  (b) In the conduct of a hearing under this chapter, the board may issue 13 subpoenas, administer oaths, compel the attendance and testimony of witnesses, compel 14 the taking of depositions and the submission of affidavits, and compel the production 15 of documents and records. The board's powers under this subsection do not extend 16 to prehearing discovery. However, upon good cause shown, the board may permit the 17 preservation of witness testimony if the board cannot successfully compel the witness 18 to attend a hearing. The board may authorize hearing officers to conduct hearings 19 under this chapter and issue decisions; the decision of a hearing officer may be 20 appealed to the board. The board shall adopt procedures for appeals from a hearing 21 officer's decision. 22  (c) A majority of a quorum of the board may issue a ruling or modification 23 of a ruling. If the board's vote on an appeal under this chapter is a tie vote of those 24 members present and voting, the decision being appealed is affirmed. The board, by 25 regulation, shall establish procedures for the reconsideration of a ruling issued under 26 this chapter. A request for reconsideration is timely if it is received within 30 days 27 after the initial ruling was issued. 28  (d) An aggrieved party may appeal a final decision to the superior court. 29 * Sec. 6. AS 14.25.043 is amended to read: 30  Sec. 14.25.043. Reemployment of retired members. If a retired member 31 again becomes an active member, benefit payments may not be made during the period

01 of reemployment. The retirement benefit must be suspended for the entire school year 02 if the teacher is reemployed as an active teacher for a period equivalent to a year of 03 service. During the period of reemployment, deductions from the member's salary will 04 be made in accordance with AS 14.25.050. Upon subsequent retirement, the retired 05 member is entitled to receive an additional benefit based on the credited service and 06 the average base salary during the period of reemployment in accordance with 07 AS 14.25.110. If the initial benefit payments to which the retired member is 08 eligible have been actuarially reduced because the member retired early under 09 AS 14.25.110(b), the member shall also receive an incremental benefit based on 10 the amount of the actuarial reduction imposed by AS 14.25.110(j) on the first 11 benefit and the length of time that the employee was reemployed and not 12 receiving retirement benefits. The amount of the incremental benefit is equal to 13 the difference between the normal retirement benefit to which the member would 14 have been entitled had the member taken a normal retirement and the early 15 retirement benefit that the member has been receiving based on the member's 16 initial period of employment multiplied by the total number of months that the 17 member did not receive retirement benefits because of reemployment and that 18 amount actuarially adjusted to be paid over the expected lifetime of the member. 19 * Sec. 7. AS 14.25.110(a) is amended to read: 20  (a) Subject to AS 14.25.167, a member is eligible for a normal retirement 21 benefit if the member 22  (1) was first hired before July 1, 1975, has attained the age of 55 years, 23 and has at least 15 years of credited service, the last five of which have been 24 membership service or is otherwise vested in the system; 25  (2) has attained the age of 60 years and has at least eight years of 26 membership service; 27  (3) has attained the age of 60 years, has at least five years of 28 membership service, and has [AT LEAST THREE YEARS OF] Alaska BIA service 29 which, when added to the membership service, will equal at least eight years ; 30  (4) has at least 25 years of credited service, the last five of which have 31 been membership service;

01  (5) has at least 20 years of membership service; 02  (6) has at least 20 years of combined membership service and Alaska 03 BIA service, the last five of which have been membership service; or 04  (7) has, for each of 20 school years, 05  (A) at least one-half year of membership service as a part-time 06 teacher; 07  (B) one full year of membership service as a full-time teacher; 08 or 09  (C) any combination of service qualified under this paragraph. 10 * Sec. 8. AS 14.25.130(d) is amended to read: 11  (d) The amount of the disability benefit is equal to 50 percent of the member's 12 base salary immediately before becoming disabled. The disability benefit is increased 13 by 10 percent of the member's base salary immediately before becoming disabled 14 for each dependent child, up to a maximum of four dependent children. 15 * Sec. 9. AS 14.25.130(e) is amended to read: 16  (e) Benefits payable under this section accrue from the first day of the month 17 after which the following requirements are met: (1) the member meets the eligibility 18 requirements of this section; and (2) the member terminates employment. The benefits 19 are payable the last day of the month. If payment is delayed, a retroactive payment 20 must be made to cover the period of deferment. The last payment for a dependent 21 child shall be for the month in which the child ceases to be a dependent child. The 22 last payment for the disabled member shall be made for the month in which the 23 disabled member recovers from the disability, dies, or is eligible for normal retirement. 24 A member is considered to have recovered from a disability if the member is 25 employed or self-employed in sustainable employment and earning at least 75 26 percent of the member's compensation, adjusted for inflation, at the time the 27 member terminated the member's employment under this section. 28 * Sec. 10. AS 14.25.130 is amended by adding a new subsection to read: 29  (f) A member is not entitled to a disability benefit under this section unless 30 the member files a timely application for the benefit with the administrator. The 31 application is timely if it is filed by the later of six months after the date that the

01 member's disability began or 90 days after the termination of the member's 02 employment. The board may waive a filing deadline under this subsection if there are 03 extraordinary circumstances that resulted in the inability to meet the filing deadline. 04 The board may delegate the authority to waive a filing deadline under this subsection 05 to the administrator. 06 * Sec. 11. AS 14.25.143 is amended by adding a new subsection to read: 07  (g) The board may advise the administrator whether or not the administrator 08 should grant a discretionary post retirement pension adjustment under the former 09 provisions of this section, and, if so, how much the adjustment should be. 10 * Sec. 12. AS 14.25.168(b) is amended to read: 11  (b) After an election of coverage under this section, major medical insurance 12 coverage takes effect on the same date as retirement benefits begin and stops when the 13 member or survivor is no longer eligible to receive a monthly benefit. The coverage 14 for persons age 65 or older is the same as that available for persons under age 65. 15 The benefits payable to those persons age 65 or older supplement any benefits 16 provided under the federal old age, survivors and disability insurance program. The 17 medical premium and optional insurance premiums owed by a member or 18 survivor shall be deducted from the benefit owed to the member or survivor 19 before payment of the benefit. 20 * Sec. 13. AS 14.25.200(a) is amended to read: 21  (a) Except as provided in AS 29.45.030(a)(1) or in (c) or (d) of this section , 22 member contributions and other amounts held in the system on behalf of a member or 23 other person who is or may become eligible for benefits under the system are exempt 24 from Alaska state and municipal taxes and are not subject to anticipation, alienation, 25 sale, transfer, assignment, pledge, encumbrance, or charge of any kind, either voluntary 26 or involuntary, before they are received by the person entitled to the amount under the 27 terms of the system . Any [, AND ANY] attempt to anticipate, alienate, sell, transfer, 28 assign, pledge, encumber, charge, or otherwise dispose of any right to amounts accrued 29 in the system is void. However, a member's right to receive benefits or the member 30 contribution account may be assigned 31  (1) under a qualified domestic relations order; [OR]

01  (2) to a trust or similar legal device that meets the requirements for a 02 Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4) ; or 03  (3) as provided in (c) or (d) of this section . 04 * Sec. 14. AS 14.25.200 is amended by adding new subsections to read: 05  (c) An inactive member may elect to have the taxable portion of the member 06 contribution account transferred directly to another plan or an individual retirement 07 arrangement that is qualified under the federal Internal Revenue Code and that accepts 08 the transfer. 09  (d) A person receiving benefits under this chapter who intends to join or who 10 belongs to a retirement organization may authorize the administrator to deduct from 11 the person's benefits the amount of annual dues owed to the organization. The person 12 shall make the authorization in writing on a form approved by the administrator. The 13 authorization shall remain in effect until revoked in writing. The revocation is 14 effective when received by the administrator. The administrator may, by regulation, 15 assess a reasonable administrative fee to compensate the system for administration of 16 this subsection. In this subsection, "retirement organization" means an organization 17 representing persons receiving benefits under this chapter that is affiliated with an 18 organization representing employees of the employer under AS 23.40.070 - 23.40.260. 19 * Sec. 15. AS 14.25.220(6) is amended to read: 20  (6) "base salary" 21  (A) means the total remuneration payable under contract for a 22 full year of membership service, including addenda to the contract but, for a 23 member first hired on or after July 1, 1996, does not include remuneration 24 in excess of the limitations set out in 26 U.S.C. 401(a)(17) ; 25  (B) has the same meaning as "compensation" under 26 AS 39.35.680(8) when applied to a state legislator who elects membership 27 under AS 14.25.040(b); 28 * Sec. 16. AS 14.25.220(31) is amended to read: 29  (31) "qualified domestic relations order" means a divorce or dissolution 30 judgment under AS 25.24, including an order approving a property settlement, that 31  (A) creates or recognizes the existence of an alternate payee's

01 right to, or assigns to an alternate payee the right to, receive all or a portion of 02 the member contribution account or benefits payable with respect to a 03 member; 04  (B) sets out the name and last known mailing address, if any, 05 of the member and of each alternate payee covered by the order; 06  (C) sets out the amount or percentage of the member's benefit, 07 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 08 manner in which that amount or percentage is to be determined; 09  (D) sets out the number of payments or period to which the 10 order applies; 11  (E) does not require any type or form of benefit or any option 12 not otherwise provided by this chapter; 13  (F) does not require an increase of benefits in excess of the 14 amount provided by this chapter, determined on the basis of actuarial value; 15 and 16  (G) does not require the payment, to an alternate payee, of 17 benefits that are required to be paid to another alternate payee under another 18 order previously determined to be a qualified domestic relations order; 19 * Sec. 17. AS 14.25.220(35) is amended to read: 20  (35) "retirement fund" or "fund" means the fund in which the assets of 21 the system , including income and interest derived from the investment of money, 22 are deposited and held; 23 * Sec. 18. AS 14.25.220(40) is amended to read: 24  (40) "teacher" or "member" means a person eligible to participate in 25 the system and who is covered by the system, limited to 26  (A) a certificated full-time or part-time elementary or secondary 27 teacher, a certificated school nurse, or a certificated person in a position 28 requiring a teaching certificate as a condition of employment in a public school 29 of the state or in the Department of Education and Early Development ; 30  (B) [THE COMMISSIONER OF EDUCATION AND EARLY 31 DEVELOPMENT AND ALL SUPERVISORY POSITIONS IN THE

01 DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT; 02  (C)] a full-time or part-time teacher of the University of Alaska 03 or a person occupying a full-time administrative position at the University of 04 Alaska that requires academic standing; the approval of the administrator must 05 be obtained before an administrative position qualifies for membership in the 06 system; however, a teacher or administrative person at the university who is 07 participating in the optional university retirement program under AS 14.40.661 08 - 14.40.799 is not a member under this system; 09  (C) [(D)] a state legislator who elects membership under 10 AS 14.25.040(b); 11 * Sec. 19. AS 22.25.020 is amended to read: 12  Sec. 22.25.020. Retirement pay. A retired justice or judge eligible for 13 retirement pay shall receive from the date of eligibility until death monthly 14 compensation equal to five percent per year of service, to a maximum of 75 percent, 15 of the monthly salary authorized for justices and judges, respectively, at the time each 16 retirement payment is made. For a justice or judge who was first employed in this 17 retirement system on or after July 1, 1996, base annual salary does not include 18 remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17) (Internal 19 Revenue Code). 20 * Sec. 20. AS 22.25.041 is amended to read: 21  Sec. 22.25.041. Refund of contributions. (a) Except as provided in (c) of 22 this section, a [A] justice or judge who vacates office for any reason and who has not 23 then accrued five years of creditable service under this chapter is entitled to receive 24 a refund of the total amount of contributions, including principal and interest 25 payments on indebtedness, together with interest credited on the amount. To receive 26 credit for an earlier period of service under AS 22.25.010(f), [IF] a justice or judge 27 who has received a refund of contributions and who returns to active service [, THE 28 JUSTICE OR JUDGE] shall repay in full, before appointment to retirement, 29 [WITHIN ONE YEAR] the refunded contributions with interest at the prevailing rate 30 [TO RECEIVE CREDIT FOR THE EARLIER PERIOD OF SERVICE UNDER 31 AS 22.25.010(f)].

01  (b) A justice or judge whose contributions have been involuntarily refunded 02 because of a levy under AS 09.38.065 or because of a federal tax levy may repay 03 the amount levied together with accrued interest whether or not the justice or judge is 04 on active service. Repayments shall be made under (a) of this section. 05 * Sec. 21. AS 22.25.041 is amended by adding new subsections to read: 06  (c) A justice or judge whose rights to a refund are subject to a qualified 07 domestic relations order is entitled to receive a refund of the total amount of 08 contributions, together with interest credited on the amount, only if the present spouse 09 of the justice or judge, if any, and each person entitled under the order consent to the 10 refund in writing on a form provided by the administrator. The administrator may 11 waive written consent from the person entitled to benefits under the order if the 12 administrator determines that the person cannot be located or for other reasons 13 established by regulation. The administrator may waive written consent from the 14 spouse if the administrator determines that 15  (1) the justice or judge was not married to the spouse during any period 16 of the justice's or judge's employment under this chapter; 17  (2) the spouse has no right to benefits under this chapter because of the 18 terms of a qualified domestic relations order; 19  (3) the spouse cannot be located; 20  (4) the justice or judge and spouse have been married for less than two 21 years and the justice or judge establishes that they are not cohabiting; or 22  (5) another reason established by regulation exists. 23  (d) Except as provided in this subsection, in (e) of this section, and in 24 AS 29.45.030(a)(1), amounts held in the system on behalf of a justice or judge or other 25 person who is or may become eligible for benefits under the system are exempt from 26 Alaska state and municipal taxes and are not subject to anticipation, alienation, sale, 27 transfer, assignment, pledge, encumbrance, or charge of any kind, either voluntary or 28 involuntary, before they are received by the person entitled to the amount under the 29 terms of the system, and any attempt to anticipate, alienate, sell, transfer, assign, 30 pledge, encumber, charge, or otherwise dispose of any right to amounts accrued in the 31 system is void. However,

01  (1) the right of a justice or judge to receive benefits or the contributions 02 and interest may be assigned 03  (A) under a qualified domestic relations order; 04  (B) to a trust or similar legal device that meets the requirements 05 for a Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4); or 06  (C) as provided in (e) of this section; 07  (2) a justice or judge may elect to have the taxable portion of the 08 qualifying distributions transferred directly to another qualified plan or an individual 09 retirement account that accepts the transfer. 10  (e) A person receiving benefits under this chapter who intends to join or who 11 belongs to a retirement organization may authorize the administrator to deduct from 12 the person's benefits the amount of annual dues owed to the organization. The person 13 shall make the authorization in writing on a form approved by the administrator. The 14 authorization shall remain in effect until revoked in writing. A revocation is effective 15 when received by the administrator. The administrator may, by regulation, assess a 16 reasonable administrative fee to compensate the system for administration of this 17 subsection. In this subsection, "retirement organization" means an organization 18 representing persons receiving benefits under this chapter that is affiliated with an 19 organization representing employees of the employer under AS 23.40.070 - 23.40.260. 20 * Sec. 22. AS 22.25.090(b) is amended to read: 21  (b) Except as provided in (d) of this section, major medical insurance coverage 22 takes effect on the same date as retirement benefits begin [,] and stops when the retired 23 person or survivor is no longer eligible to receive a monthly benefit. The coverage for 24 persons age 65 or older is the same as that available for persons under 65 years of 25 age . The benefits payable to those persons age 65 or older supplement any benefits 26 provided under the federal old age, survivors, and disability insurance program. The 27 medical premium and optional insurance premiums owed by a retired person or 28 survivor shall be deducted from the benefit payable to the retired person or 29 survivor before payment of the benefit. 30 * Sec. 23. AS 22.25.900 is amended to read: 31  Sec. 22.25.900. Definition. In this chapter, "qualified domestic relations

01 order" means a divorce or dissolution judgment under AS 25.24, including an order 02 approving a property settlement, that 03  (1) creates or recognizes the existence of an alternate payee's right to, 04 or assigns to an alternate payee the right to, receive all or a portion of the member 05 contributions and interest or benefits payable with respect to a justice or judge; 06  (2) sets out the name and last known mailing address, if any, of the 07 justice or judge and of each alternate payee covered by the order; 08  (3) sets out the amount or percentage of the justice's or judge's benefit, 09 or of any survivor's benefit, to be paid to the alternate payee, or sets out the manner 10 in which that amount or percentage is to be determined; 11  (4) sets out the number of payments or period to which the order 12 applies; 13  (5) does not require any type or form of benefit or any option not 14 otherwise provided by this chapter; 15  (6) does not require an increase of benefits in excess of the amount 16 provided by this chapter, determined on the basis of actuarial value; 17  (7) does not require the payment, to an alternate payee, of benefits that 18 are required to be paid to another alternate payee under another order previously 19 determined to be a qualified domestic relations order. 20 * Sec. 24. AS 26.05.224 is amended by adding new subsections to read: 21  (g) Except as provided in this subsection or AS 29.45.030(a)(1), amounts held 22 in the system on behalf of a member or other person who is or may become eligible 23 for benefits under the system are exempt from Alaska state and municipal taxes and 24 are not subject to anticipation, alienation, sale, transfer, assignment, pledge, 25 encumbrance, or charge of any kind, either voluntary or involuntary, before they are 26 received by the person entitled to the amount under the terms of the system, and any 27 attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, or 28 otherwise dispose of any right to amounts accrued in the system is void. However, 29  (1) a member's right to receive benefits or the member contribution 30 account may be assigned 31  (A) under a qualified domestic relations order; or

01  (B) to a trust or similar legal device that meets the requirements 02 for a Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 03 1396p(d)(4); 04  (2) a member may elect to have the taxable portion of the qualifying 05 distributions transferred directly to another plan or individual retirement arrangement 06 qualified under the federal Internal Revenue Code. 07  (h) Amounts held in the system and benefits payable under this section are 08 exempt from garnishment, execution, or levy as provided in AS 09.38 (Alaska 09 Exemptions Act). 10 * Sec. 25. AS 39.30.091 is amended to read: 11  Sec. 39.30.091. Authorization for self-insurance and excess loss insurance. 12 Notwithstanding AS 21.86.310 or AS 39.30.090, the Department of Administration 13 may provide, by means of self-insurance, one or more of the benefits listed in 14 AS 39.30.090(a)(1) for state employees eligible for the benefits by law or under a 15 collective bargaining agreement and for persons receiving benefits under AS 14.25, 16 AS 22.25, AS 39.35, or former AS 39.37, and their dependents . The department 17 shall procure any necessary excess loss insurance under AS 39.30.090. 18 * Sec. 26. AS 39.35.030(b) is repealed and reenacted to read: 19  (b) Three public members are appointed by the governor to serve at the 20 pleasure of the governor for six-year staggered terms. One of the public members 21 must be or have been employed by an employer other than the State of Alaska. The 22 governor shall fill a vacancy in an unexpired appointive term by appointment for the 23 remainder of the term. 24 * Sec. 27. AS 39.35.030(c) is amended to read: 25  (c) Two members of the board must be members of the system elected by [A 26 MAJORITY OF THE VOTES CAST BY] members of the system. Elections shall be 27 conducted by the board. The candidate who receives the most votes cast in the 28 election is elected to the seat. If two seats are to be filled at the election, the 29 candidate who receives the most votes cast and the candidate who receives the 30 next most votes cast are elected to the seats. The term of office of an elected 31 member is six years. A vacancy in an unexpired elective term shall be filled by

01 election for a new six-year term. 02 * Sec. 28. AS 39.35.030(d) is amended to read: 03  (d) The governor shall appoint two physicians authorized to practice medicine 04 in the state to serve as members of the board and two physicians authorized to 05 practice medicine in the state to serve as alternate members to the physician 06 members of the board. The physicians are members of the board only for the 07 purpose of hearing appeals to determine medical eligibility for disability benefits under 08 AS 39.35.400 and 39.35.410. If the administrator, after making a reasonable effort 09 to secure the participation of two physician members or alternates to serve on a 10 disability appeal, is unable to do so, the board may hear the appeal with the 11 participation of only one physician member or alternate, in which case, for 12 purposes of a quorum, the board shall be considered to have only one physician 13 as a member [THE GOVERNOR SHALL APPOINT TWO PHYSICIANS EACH 14 FROM AT LEAST TWO OF THE STATE'S FOUR JUDICIAL DISTRICTS]. The 15 Public Employees' Retirement Board and the Teachers' Retirement Board may submit 16 to the governor a list of recommended physicians to serve on the board. [THE TWO 17 PHYSICIAN MEMBERS FROM THE JUDICIAL DISTRICT IN WHICH A 18 DISABILITY APPEAL HEARING IS CONDUCTED SHALL SERVE ON THE 19 BOARD DURING THE HEARING. IF ONE OR MORE OF THE PHYSICIANS IN 20 THE JUDICIAL DISTRICT IN WHICH A DISABILITY HEARING IS 21 CONDUCTED IS UNABLE TO SERVE AT THE HEARING, OR IF THERE IS NO 22 PHYSICIAN MEMBER FROM THAT JUDICIAL DISTRICT, OTHER PHYSICIAN 23 MEMBERS SHALL SERVE AT THE HEARING, SELECTED FOR SUCH 24 HEARINGS ON A ROTATING BASIS, IN ACCORDANCE WITH REGULATIONS 25 ADOPTED BY THE BOARD.] Physician members serve at the pleasure of the 26 governor. 27 * Sec. 29. AS 39.35.030(e) is amended to read: 28  (e) Members of the board appointed under [IDENTIFIED IN] (b) of this 29 section or elected under (c) of this section are entitled to [DO NOT] receive 30 [COMPENSATION] for their services on the retirement board an honorarium equal 31 to the honorarium provided to trustees of the Alaska State Pension Investment

01 Board under AS 37.10.250 . Physician members of the board are entitled to hourly 02 compensation for their services at a rate to be determined by the commissioner of 03 administration. The rate of compensation shall be consistent with the physicians' 04 normal hourly earnings. All members of the board are entitled to travel expenses and 05 per diem when it is necessary to travel. 06 * Sec. 30. AS 39.35.040 is amended to read: 07  Sec. 39.35.040. Powers and duties of board. The Public Employees 08 Retirement Board has the following powers and duties: 09  (1) to hold regular meetings and special meetings considered necessary; 10 all meetings are open to the public , and the board keeps a full record of all its 11 proceedings; the board may, by regulation, define a quorum for the conduct of its 12 business, including appeals and disability appeals; 13  (2) to adopt, with modifications it considers proper, regulations 14 recommended by the administrator for carrying out this chapter; 15  (3) to consider and adopt resolutions on matters referred to it by the 16 administrator in connection with changes in policy and revisions of this chapter; 17  (4) to act as an appeals board, hold hearings at the request of an 18 employer, employee, surviving spouse , or a beneficiary on decisions made by the 19 administrator, and submit its findings to the administrator; 20  (5) to have prepared, at least biennially, an actuarial valuation of the 21 total obligations under the system of each employer and, on the basis of the valuation 22 and in time for incorporation of the results in the state budget, to certify to the 23 appropriate budgetary authorities of each employer: 24  (A) an appropriate contribution rate for all employers; and 25  (B) an amount appropriate for each employer to liquidate the 26 employee's past service liability; the board shall have an actuarial and financial 27 experience analysis of the system conducted at appropriate intervals, but no less 28 frequently than once every six years; the actuarial valuations and the actuarial 29 and financial experience analysis shall be prepared and certified by a member 30 of the American Academy of Actuaries; 31  (6) to prescribe the policies for the proper operation of the system and

01 carry on other activities that are considered necessary to carry out the intent and 02 purpose of the system in accordance with this chapter; 03  (7) to prescribe the rate of interest that shall be credited to the 04 employee accounts each year; 05  (8) to waive the requirements of AS 39.35.520 in accordance with 06 AS 39.35.522; 07  (9) to exercise the duties set out in AS 39.30.155 with respect to the 08 supplemental employee benefit program under AS 39.30.150 - 39.30.180; 09  (10) to exercise the duties set out in AS 39.45.025 with respect to the 10 deferred compensation program for state employees; 11  (11) to adopt regulations for the election of trustees to the Alaska State 12 Pension Investment Board and for removal from the investment board of trustees 13 elected from the system ; 14  (12) to adopt a contribution surcharge under AS 39.35.160(c) . 15 * Sec. 31. AS 39.35 is amended by adding a new section to read: 16  Sec. 39.35.077. Hearings. (a) The board shall adopt regulations establishing 17 procedures for the conduct of hearings and appeals under this chapter. 18  (b) In the conduct of a hearing under this chapter, the board may issue 19 subpoenas, administer oaths, compel the attendance and testimony of witnesses, compel 20 the taking of depositions and the submission of affidavits, and compel the production 21 of documents and records. The board's powers under this subsection do not extend 22 to prehearing discovery. However, upon good cause shown, the board may permit the 23 preservation of witness testimony if the board cannot successfully compel the witness 24 to attend a hearing. The board may authorize hearing officers to conduct hearings 25 under this chapter and issue decisions; the decision of a hearing officer may be 26 appealed to the board. The board shall adopt procedures for appeals from a hearing 27 officer's decision. 28  (c) A majority of a quorum of the board may issue a ruling or modification 29 of a ruling. If the board's vote on an appeal under this chapter is a tie vote of those 30 members present and voting, the decision being appealed is affirmed. The board, by 31 regulation, shall establish procedures for the reconsideration of a ruling issued under

01 this chapter. A request for reconsideration is timely if it is received within 30 days 02 after the initial ruling was issued. 03  (d) An aggrieved party may appeal a final decision to the superior court. 04 * Sec. 32. AS 39.35.125(a) is amended to read: 05  (a) An elected official of the state or of a political subdivision of the state 06 if the political subdivision has elected under AS 39.35.550 - 39.35.650 to designate 07 elected officials in the classifications of employees entitled to participate in the 08 system is included in the system unless the official files a written waiver of coverage 09 with the administrator. A waiver under this subsection waives coverage of future 10 employment as an elected official, regardless of any change of employer. An elected 11 official may file a waiver under this subsection at any time after election to office, 12 including the period before taking the oath of office. An elected official may revoke 13 a waiver under this subsection by filing a written revocation with the administrator. 14 A revocation under this subsection operates prospectively only, and the elected official 15 may not receive credited service for service as an elected official while the waiver was 16 in effect. There is no limit on the number of times an elected official may file a 17 waiver or revocation under this subsection. 18 * Sec. 33. AS 39.35.150 is amended to read: 19  Sec. 39.35.150. Re-employment of retired employees. If a retired employee 20 subsequently becomes an active member, benefit payments may not be made during 21 the period of re-employment. During the period of re-employment, deductions from 22 the employee's salary shall be made in accordance with AS 39.35.160. Upon 23 subsequent retirement, the retired employee is entitled to receive an additional pension 24 based on the credited service and the average monthly compensation earned during the 25 period of re-employment in accordance with AS 39.35.370. If the initial benefit 26 payments to which the retired member is eligible have been reduced because the 27 member retired early under AS 39.35.370(b) or increased because the member 28 elected to receive a level income option benefit under former AS 39.35.460, the 29 member shall also receive an incremental benefit based on the amount of the 30 reduction imposed by AS 39.35.370(b) or the increase under former AS 39.35.460 31 on the first benefit and the length of time that the employee was reemployed and

01 not receiving retirement benefits. The amount of the incremental benefit is equal 02 to the difference between the normal retirement benefit to which the member 03 would have been entitled had the member taken a normal retirement and the 04 early retirement benefit or benefit under the level income option that the member 05 has been receiving based on the member's initial period of employment multiplied 06 by the total number of months that the member did not receive retirement 07 benefits because of reemployment and that amount actuarially adjusted to be paid 08 over the expected lifetime of the member. In the case of a member who selected 09 benefits under the level income option, the total number of months may not 10 include any month in which the member was 65 years of age or older. 11 * Sec. 34. AS 39.35.160(c) is amended to read: 12  (c) An employee who has made an [IRREVOCABLE] election under 13 AS 39.35.300(c) or 39.35.310(c) to have the employee's years of service as a 14 noncertificated employee of a state boarding school, of a school district or regional 15 educational attendance area, of the special education service agency, or of the Alaska 16 Vocational Technical Center determined by reference to AS 14.25.220 shall pay a 17 contribution surcharge for that service. The amount of the surcharge is the difference 18 between the amount the employer would have had to contribute under AS 39.35.250 - 19 39.35.290 for the employee when treating the employee's credited service as service 20 earned under AS 39.35.300(c) or 39.35.310(c) less the amount the employer would 21 have had to contribute under AS 39.35.250 - 39.35.290 without treating the employee's 22 credited service as service earned under AS 39.35.300(c) or 39.35.310(c). 23 * Sec. 35. AS 39.35.300(c) is amended to read: 24  (c) A noncertificated employee of the Alaska Vocational Technical Center or 25 a state boarding school who first becomes a member of the system on or after July 1, 26 1999, may, within 90 days after the employee first joins the system, make an 27 [IRREVOCABLE] election under this subsection to have the years of service that the 28 employee earns as a noncertificated employee determined using the table for service 29 on or after July 1, 1969, that is set out in the definition of "year of service" in 30 AS 14.25.220. A noncertificated employee of the Alaska Vocational Technical Center 31 or a state boarding school who is an active member of the system on July 1, 1999,

01 may, within 180 days after July 1, 1999, make the [IRREVOCABLE] election. A 02 member of the system who is an inactive member on July 1, 1999, and who is later 03 employed as a noncertificated employee of the Alaska Vocational Technical Center or 04 a state boarding school may, within 90 days after beginning the subsequent 05 employment, make the [IRREVOCABLE] election. An election under this subsection 06 is irrevocable except as provided in (d) of this section and shall be made in writing 07 on a form provided by the administrator. The election applies to the employee's 08 service earned for the school year in which the election is accepted by the 09 administrator and applies to all subsequent employment as a noncertificated employee 10 of a state boarding school, a school district or regional educational attendance area, the 11 special education service agency, or the Alaska Vocational Technical Center. An 12 employee who makes an election under this subsection shall pay the contribution 13 surcharge as set out in AS 39.35.160(c). 14 * Sec. 36. AS 39.35.300 is amended by adding new subsections to read: 15  (d) A noncertificated employee who has made an election under (c) of this 16 section and who thereafter changes employment status from working for less than a 17 full year, whether part-time or full time, to working for a full year, whether part-time 18 or full-time, may, between July 1 and September 30, revoke the election and cease 19 payment of the contribution surcharge. A revocation under this subsection is 20 retroactive to July 1 of the school year, as defined in AS 14.25.220, in which the 21 revocation is made. 22  (e) A noncertificated employee who has not made an election under (c) of this 23 section who changes employment status from working for a full year, whether part- 24 time or full-time, to working for less than a full year, whether part-time or full-time, may, 25 between July 1 and September 30, make the election and begin paying the contribution 26 surcharge. The election is retroactive to July 1 of the school year, as defined in AS 14.25.220, 27 in which the election is made. 28 * Sec. 37. AS 39.35.310(c) is amended to read: 29  (c) A noncertificated employee of a school district, a regional educational 30 attendance area, or the special education service agency who first becomes a member 31 of the system on or after July 1, 1999, may, within 90 days after the employee first

01 joins the system, make an [IRREVOCABLE] election under this subsection to have 02 the years of service that the employee earns as a noncertificated employee determined 03 using the table for service on or after July 1, 1969, that is set out in the definition of 04 "year of service" in AS 14.25.220. A noncertificated employee of a school district, a 05 regional educational attendance area, or the special education service agency who is 06 an active member of the system on July 1, 1999, may, within 180 days after July 1, 07 1999, make the [IRREVOCABLE] election. A member of the system who is an 08 inactive member on July 1, 1999, and who later is employed as a noncertificated 09 employee of a school district, a regional educational attendance area, or the special 10 education service agency may, within 90 days after beginning the subsequent 11 employment, make the [IRREVOCABLE] election. An election under this subsection 12 is irrevocable except as provided in (d) of this section and shall be made in writing 13 on a form provided by the administrator. The election applies to the employee's 14 service earned for the school year in which the election is accepted by the 15 administrator and applies to all subsequent employment as a noncertificated employee 16 of a state boarding school, a school district or regional educational attendance area, the 17 special education service agency, or the Alaska Vocational Technical Center. An 18 employee who makes an election under this subsection shall pay the contribution 19 surcharge as set out in AS 39.35.160(c). 20 * Sec. 38. AS 39.35.310 is amended by adding new subsections to read: 21  (d) A noncertificated employee who has made an election under (c) of this 22 section and who thereafter changes employment status from working for less than a 23 full year, whether part-time or full-time, to working for a full year, whether part-time 24 or full-time, may, between July 1 and September 30, revoke the election and cease 25 payment of the contribution surcharge. A revocation under this subsection is 26 retroactive to the beginning of the school year, as defined in AS 14.25.220, in which 27 the revocation was made. 28  (e) A noncertificated employee who has not made an election under (c) of this 29 section who changes employment status from working for a full year, whether part- 30 time or full-time, to working for less than a full year may, between July 1 and September 30, 31 make the election and begin paying the contribution surcharge. The election is retroactive to

01 July 1 of the school year, as defined in AS 14.25.220, in which the election was made. 02 * Sec. 39. AS 39.35.350(b) is amended to read: 03  (b) An employee may reinstate credited service associated with a refund by 04 repaying the total amount of the refund. A former member who received a total 05 refund of the former member's contribution account balance because of a levy under 06 AS 09.38.065 or a federal tax levy may reinstate the credited service , without being 07 reemployed by an employer, in the same manner as an employee. Interest accrues 08 from the date of the refund until repayment of the refund or retirement, whichever 09 occurs first. Payments shall be applied first to accrued interest and then to principal. 10 * Sec. 40. AS 39.35.400(a) is amended to read: 11  (a) An employee is eligible for a nonoccupational disability benefit if the 12 employee's employment is terminated because of a total and apparently permanent 13 nonoccupational disability, as defined in AS 39.35.680, before the employee's normal 14 retirement date and after five or more years of credited service. A member is not 15 entitled to a nonoccupational disability benefit under this section unless the 16 member files an application for the benefit with the administrator within 90 days 17 after the member terminated employment. The board may waive a filing deadline 18 if there are extraordinary circumstances that resulted in the inability to meet the 19 deadline. The board may delegate the authority to waive a filing deadline under 20 this subsection to the administrator. 21 * Sec. 41. AS 39.35.400 is amended by adding a new subsection to read: 22  (g) A member is considered to have recovered from a disability under this 23 section if the member is employed or self-employed in sustainable employment and 24 earning at least 75 percent of the member's compensation, adjusted for inflation, at the 25 time the member terminated the member's employment under this section. 26 * Sec. 42. AS 39.35.410(f) is amended to read: 27  (f) An employee is not entitled to an occupational disability benefit unless the 28 employee files an application for it with the administrator [WITHIN SIX MONTHS 29 AFTER THE DATE OF THE ACCIDENT, IF DISABILITY IS ATTRIBUTABLE TO 30 AN ACCIDENT, WITHIN SIX MONTHS AFTER THE DATE THE DISABILITY 31 BEGINS IF THE DISABILITY IS CAUSED BY AN OCCUPATIONAL DISEASE,

01 OR] within 90 [30] days of the date of terminating employment [, WHICHEVER IS 02 LATER. IF THE DISABILITY IS ATTRIBUTABLE TO AN ACCIDENT, THE 03 EMPLOYEE SHALL FILE A NOTICE OF THE ACCIDENT WITH THE 04 ADMINISTRATOR WITHIN 30 DAYS FOLLOWING THE DATE IT OCCURRED. 05 THIS 30-DAY FILING PERIOD IS SUSPENDED FOR THE TIME THE 06 EMPLOYEE'S CONDITION PREVENTS FILING]. If the employee is unable to meet 07 a filing requirement of this subsection, it may be waived by the Public Employees' 08 Retirement Board if there are extraordinary circumstances that resulted in the 09 employee's inability to meet the filing requirement. The board may delegate the 10 authority to waive a filing deadline under this subsection to the administrator 11 [FOR CAUSE]. 12 * Sec. 43. AS 39.35.410 is amended by adding a new subsection to read: 13  (i) A member is considered to have recovered from a disability under this 14 section if the member is employed or self-employed in sustainable employment and 15 earning at least 75 percent of the member's compensation, adjusted for inflation, at the 16 time the member terminated the member's employment under this section. 17 * Sec. 44. AS 39.35.450(a) is amended to read: 18  (a) Benefits payable under this section are in place of benefits payable under 19 AS 39.35.370, 39.35.385, and former AS 39.35.460. Upon filing an application with 20 the administrator or when a disabled employee first attains eligibility for normal 21 retirement under AS 39.35.400(f) or 39.35.410(h), the employee shall designate the 22 person who is the employee's spouse at the time of appointment to retirement as the 23 contingent beneficiary. However, if the designation of the spouse is revoked under (c) 24 of this section, the employee may designate a dependent approved by the administrator 25 as the contingent beneficiary or may take normal or early retirement under 26 AS 39.35.370 or 39.35.385 or, if the employee was first hired before July 1, 1996, 27 benefit payments under the level income option under former AS 39.35.460 . The 28 administrator shall pay benefits under the option elected by the employee. The 29 employee may elect an option that provides that [(1)] the employee is entitled to 30 receive a reduced benefit payable for life, and, after the employee's death, the 31 contingent beneficiary is entitled to payments in the amount of

01  (1) 75 percent of the reduced benefit payable for life; or 02  (2) [THE EMPLOYEE IS ENTITLED TO RECEIVE A REDUCED 03 BENEFIT PAYABLE FOR LIFE, AND, AFTER THE EMPLOYEE'S DEATH, THE 04 CONTINGENT BENEFICIARY IS ENTITLED TO RECEIVE PAYMENTS IN THE 05 AMOUNT OF] 50 percent of the reduced benefit payable for life. 06 * Sec. 45. AS 39.35.475 is amended by adding a new subsection to read: 07  (g) The board may advise the administrator whether or not the administrator 08 should grant a discretionary post retirement pension adjustment under the former 09 provisions of this section and, if so, how much the adjustment should be. 10 * Sec. 46. AS 39.35.500 is amended to read: 11  Sec. 39.35.500. Safeguard of employee funds held by the system. Except 12 as provided in AS 29.45.030(a)(1) or in (b) of this section , employee contributions 13 and other amounts held in the system are exempt from Alaska state and local taxes. 14 Except as provided in this subsection and in (b) or (c) of this section, amounts 15 [AMOUNTS] held on behalf of, or payable to, any employee or other person who is 16 or may become eligible for benefits under the system are not subject to anticipation, 17 alienation, sale, transfer, assignment, pledge, encumbrance, or charge of any kind, 18 either voluntary or involuntary, before being received by the person entitled to the 19 amount under the terms of the system. An attempt to anticipate, alienate, sell, transfer, 20 assign, pledge, encumber, charge, or otherwise dispose of a right to amounts held 21 under the system is void. However, an employee's right to receive benefits or the 22 member's employee contribution account may be assigned 23  (1) under a qualified domestic relations order; or 24  (2) to a trust or similar legal device that meets the requirements for a 25 Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4). 26 * Sec. 47. AS 39.35.500 is amended by adding new subsections to read: 27  (b) An inactive member may elect to have the taxable portion of an inactive 28 employee contribution account transferred directly to another plan or an individual 29 retirement arrangement qualified under the federal Internal Revenue Code that accepts 30 the transfer. 31  (c) A person receiving benefits under this chapter who intends to join or who

01 belongs to a retirement organization may authorize the administrator to deduct from 02 the person's benefits the amount of annual dues owed to the organization. The person 03 shall make the authorization in writing on a form approved by the administrator. The 04 authorization shall remain in effect until revoked in writing. A revocation is effective 05 when received by the administrator. The administrator may, by regulation, assess a 06 reasonable administrative fee to compensate the system for administration of this 07 subsection. In this subsection, "retirement organization" means an organization 08 representing persons receiving benefits under this chapter that is affiliated with an 09 organization representing employees of the employer under AS 23.40.070 - 23.40.260. 10 * Sec. 48. AS 39.35.522(b) is amended to read: 11  (b) In order to obtain consideration of a waiver under this section, the affected 12 member or beneficiary must appeal to the board in writing within 30 days after receipt 13 of notice that the records have been adjusted. [THE BOARD SHALL RULE ON THE 14 APPEAL IN WRITING WITHIN 120 DAYS AFTER ITS RECEIPT.] 15 * Sec. 49. AS 39.35.522(c) is amended to read: 16  (c) The board may [, AT ITS DISCRETION,] conduct a hearing on an appeal 17 under this section. [IN REACHING A DECISION ON AN APPEAL, THE BOARD 18 MAY ISSUE SUBPOENAS, ADMINISTER OATHS, COMPEL THE ATTENDANCE 19 AND TESTIMONY OF WITNESSES, COMPEL THE TAKING OF DEPOSITIONS 20 AND THE SUBMISSION OF AFFIDAVITS, AND COMPEL THE PRODUCTION 21 OF DOCUMENTS AND RECORDS.] 22 * Sec. 50. AS 39.35.522(e) is amended to read: 23  (e) The board may reconsider a ruling under this section under 24 AS 39.35.077(c) [UPON REQUEST OF THE MEMBER OR BENEFICIARY OR THE 25 ADMINISTRATOR IF THE REQUEST IS RECEIVED WITHIN 30 DAYS AFTER 26 THE INITIAL RULING.] Any modification of the initial ruling must be made within 27 30 days after receipt of a request for reconsideration. 28 * Sec. 51. AS 39.35.535(b) is amended to read: 29  (b) Except as provided in (d) of this section, after an election of coverage 30 under this section, major medical insurance coverage takes effect on the same date that 31 benefits begin, and stops when the member or survivor is no longer eligible to receive

01 a monthly benefit. The coverage for persons age 65 or older is the same coverage 02 available for a person under 65 years of age . The benefits payable to persons age 65 03 or older supplement any benefits provided under the federal old age, survivors and 04 disability insurance program. The medical premium and optional insurance 05 premiums owed by a member or survivor shall be deducted from the benefit owed 06 to the member or survivor before payment of the benefit. 07 * Sec. 52. AS 39.35.615(a) is amended to read: 08  (a) A political subdivision or public organization may request that its 09 participation agreement be amended. The request may be made only after adoption 10 of a resolution by the legislative body of the political subdivision and approval of the 11 resolution by the person required by law to approve the resolution, or, in the case of 12 a public organization, after adoption of a resolution by the governing body of that 13 public organization. A certified copy of the resolution shall be filed with the 14 administrator. If a political subdivision or public organization amends its participation 15 agreement so as to terminate coverage of a department, group, or other classification 16 of employees, each employee whose coverage is so terminated, regardless of the 17 employee's employment status at the date of termination, shall be considered fully 18 vested in actuarially adjusted accrued retirement benefits as of the date of termination, 19 unless 20  (1) the employee's contributions have been refunded ; or 21  (2) the political subdivision or public organization amended its 22 participation agreement to exclude coverage for the affected department, group, 23 or other classification of employees at the written request of a majority of the 24 employees employed in that department, group, or other classification at the time 25 the request was made . 26 * Sec. 53. AS 39.35.670 is amended to read: 27  Sec. 39.35.670. Fraud. A person who knowingly makes a false statement, or 28 falsifies or permits to be falsified a record of this system, in an attempt to defraud the 29 system [,] is guilty of a class A misdemeanor [, AND UPON CONVICTION IS 30 PUNISHABLE BY A FINE OF NOT MORE THAN $500, OR BY IMPRISONMENT 31 FOR NOT MORE THAN TWELVE MONTHS, OR BY BOTH].

01 * Sec. 54. AS 39.35.680(4) is amended to read: 02  (4) "average monthly compensation" means the result obtained by 03 dividing the compensation earned by an employee during a considered period by the 04 number of months, including fractional months, for which compensation was earned; 05 an employee must have at least 115 days of credited service in the last payroll 06 year in order for that year to be used as part of the consecutive payroll years; the 07 considered period consists of 08  (A) for employees first hired before July 1, 1996, the three 09 consecutive payroll years during the period of credited service that yield 10 [YIELDS] the highest average ; [,] and 11  (B) for employees first hired on or after July 1, 1996, the five 12 consecutive payroll years during the period of credited service that yield the 13 highest average ; 14  (C) [, OR] if the employee does not have the [REQUIRED] 15 number of consecutive payroll years required by (A) or (B) of this 16 paragraph , the actual number of months, including fractional months, that 17 the employee worked [EMPLOYEE'S PERIOD OF CREDITED SERVICE]; 18  (D) for an employee who has made an election under 19 AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 20 fractional months, that the employee worked [AN EMPLOYEE MUST 21 HAVE AT LEAST 115 DAYS OF CREDITED SERVICE IN THE LAST 22 PAYROLL YEAR IN ORDER FOR THAT YEAR TO BE USED AS PART 23 OF THE CONSECUTIVE PAYROLL YEARS]; 24 * Sec. 55. AS 39.35.680(8) is amended to read: 25  (8) "compensation" means the [TOTAL] remuneration earned by an 26 employee for personal services rendered to an employer, including employee 27 contributions under AS 39.35.160, cost-of-living differentials only as provided in 28 AS 39.35.675, payments for leave that is actually used by the employee, the amount 29 by which the employee's wages are reduced under AS 39.30.150(c), and any amount 30 deferred under an employer-sponsored deferred compensation plan, but does not 31 include retirement benefits, severance pay or other separation bonuses, welfare

01 benefits, per diem, expense allowances, workers' compensation payments, or payments 02 for leave not used by the employee whether those leave payments are scheduled 03 payments, lump-sum payments, donations, or cash-ins; for a member first hired on 04 or after July 1, 1996, compensation does not include remuneration in excess of the 05 limitations set out in 26 U.S.C. 401(a)(17) (Internal Revenue Code); 06 * Sec. 56. AS 39.35.680(29) is amended to read: 07  (29) "pension fund" or "fund" means the fund in which the assets of 08 the system , including income and interest derived from the investment of money, 09 are deposited and held; 10 * Sec. 57. AS 39.35.680(34) is amended to read: 11  (34) "qualified domestic relations order" means a divorce or dissolution 12 judgment under AS 25.24, including an order approving a property settlement, that 13  (A) creates or recognizes the existence of an alternate payee's 14 right to, or assigns to an alternate payee the right to, receive all or a portion of 15 employee contribution account or the benefits payable with respect to an 16 employee; 17  (B) sets out the name and last known mailing address, if any, 18 of the employee and of each alternate payee covered by the order; 19  (C) sets out the amount or percentage of the employee's benefit, 20 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 21 manner in which that amount or percentage is to be determined; 22  (D) sets out the number of payments or period to which the 23 order applies; 24  (E) does not require any type or form of benefit or any option 25 not otherwise provided by this chapter; 26  (F) does not require an increase of benefits in excess of the 27 amount provided by this chapter, determined on the basis of actuarial value; 28 and 29  (G) does not require the payment to an alternate payee of 30 benefits that are required to be paid to another alternate payee under another 31 order previously determined to be a qualified domestic relations order ; [.]

01 * Sec. 58. AS 39.50.200(a)(8) is amended to read: 02  (8) "public official" means 03  (A) a judicial officer; 04  (B) the governor or the lieutenant governor; 05  (C) a person hired or appointed in a department in the executive 06 branch as 07  (i) the head or deputy head of the department; 08  (ii) the director or deputy director of a division; 09  (iii) a special assistant to the head of the department; 10  (iv) a person serving as the legislative liaison for the 11 department; 12  (D) an assistant to the governor or the lieutenant governor; 13  (E) the chair or a member of a state commission or board other 14 than physician members or alternates of the Alaska Teachers' Retirement 15 Board appointed under AS 14.25.035(a)(2) or of the Public Employees' 16 Retirement Board appointed under AS 39.35.030(d) ; 17  (F) state investment officers and the state comptroller in the 18 Department of Revenue; 19  (G) the executive director of the Alaska Tourism Marketing 20 Council; 21  (H) the chief procurement officer appointed under 22 AS 36.30.010; 23  (I) the executive director of the Alaska Human Resource 24 Investment Council; and 25  (J) each appointed or elected municipal officer; 26 * Sec. 59. AS 39.35.522(f) and 39.35.522(g) are repealed. 27 * Sec. 60. The uncodified law of the State of Alaska is amended by adding a new section 28 to read: 29 ELECTED PUBLIC OFFICERS RETIREMENT SYSTEM PROVISIONS. (a) The 30 individual account maintained for an elected public officer under former AS 39.37.120(b) shall 31 include principal and interest payments on a member's indebtedness credited as of the date

01 of payment. 02 (b) Notwithstanding former AS 39.37.140, an elected public officer who was a 03 member of the elected public officers retirement system under former AS 39.37, who has 04 withdrawn the balance of the officer's individual account, who returns to service as the 05 governor, lieutenant governor, or as a member of the legislature, and who repays the refunded 06 contributions and interest in full before appointment to retirement may reinstate membership 07 in former AS 39.37 and, if otherwise eligible, be appointed to retirement under the provisions 08 of that former chapter. 09 * Sec. 61. The uncodified law of the State of Alaska is amended by adding a new section 10 to read: 11 ELECTED PUBLIC OFFICERS RETIREMENT SYSTEM QUALIFIED DOMESTIC 12 RELATIONS ORDER PROVISIONS. (a) Notwithstanding former AS 39.37.060, a former 13 spouse who was married for at least one year to an elected public officer who is a member 14 of the retirement system under former AS 39.37 shall be treated as a spouse or surviving 15 spouse to the extent required by a qualified domestic relations order. Rights under the order 16 do not take effect until the order is filed with the administrator. 17 (b) Notwithstanding former AS 39.37.130, an elected public officer who is a member 18 of the retirement system under former AS 39.37 and whose rights to a refund are subject to 19 a qualified domestic relations order is entitled to receive a refund of the total amount of 20 contributions together with interest credited on the amount only if the elected public officer's 21 present spouse, if any, and each person entitled under the order consent to the refund in 22 writing on a form provided by the administrator. The administrator may waive written 23 consent from the person entitled to benefits under the order if the administrator determines that 24 the person cannot be located or for other reasons established by regulation. The administrator 25 may waive written consent from the spouse if the administrator determines that 26 (1) the elected public officer was not married to the spouse during any period 27 of the public officer's membership in the system; 28 (2) the spouse has no right to benefits under former AS 39.37 because of the 29 terms of a qualified domestic relations order; 30 (3) the spouse cannot be located; 31 (4) the elected public officer and spouse have been married for less than two

01 years and the elected public officer establishes that they are not cohabiting; or 02 (5) another reason established by regulation exists. 03 (c) Except as provided in this subsection, amounts held in the retirement system under 04 former AS 39.37 on behalf of an elected public officer or other person who is or may become 05 eligible for benefits under the system are exempt from Alaska state and municipal taxes and 06 are not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or 07 charge of any kind, either voluntary or involuntary, before they are received by the person 08 entitled to the amount under the terms of the system, and any attempt to anticipate, alienate, 09 sell, transfer, assign, pledge, encumber, charge, or otherwise dispose of any right to amounts 10 accrued in the system is void. Amounts held in the system and benefits payable under former 11 AS 39.37 are exempt from garnishment, execution, or levy as provided in AS 09.38 (Alaska 12 Exemptions Act). However, 13 (1) the right of an elected public officer who is a member of the retirement 14 system under former AS 39.37 to receive benefits or the contributions and interest may be 15 assigned 16  (A) under a qualified domestic relations order; or 17  (B) to a trust or similar legal device that meets the requirements for a 18 Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4) (Title 19 XIX, Social Security Act); 20 (2) an elected public officer who is a member of the retirement system under 21 former AS 39.37 may elect to have the taxable portion of the qualifying distributions 22 transferred directly to another qualified plan or an individual retirement account that accepts 23 the transfer. 24 (d) Notwithstanding former AS 39.37.145, receipt under a qualified domestic relations 25 order of a monthly benefit under former AS 39.37 (elected public officer retirement system) 26 does not entitle a person or the person's spouse or child to insurance coverage. However, an 27 elected public officer's former spouse who receives a monthly benefit from the former elected 28 public officer retirement system under a qualified domestic relations order is entitled to 29 receive major medical insurance coverage if the former spouse 30 (1) elects the coverage within 60 days after the first monthly benefit paid under 31 the order is mailed first class or otherwise delivered; and

01 (2) pays the premium established by the administrator for the coverage. 02 (e) In this section, "qualified domestic relations order" has the same meaning given 03 in AS 39.35.680. 04 * Sec. 62. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 INITIAL APPOINTMENT OF PUBLIC MEMBERS OF THE PUBLIC EMPLOYEES' 07 RETIREMENT BOARD. Notwithstanding AS 39.35.030(b), as repealed and reenacted by 08 sec. 26 of this Act, persons serving on the Public Employees' Retirement Board under 09 AS 39.35.030(b) on the day before the effective date of this Act shall continue to serve on the 10 board until the expiration of their current terms on the board. When a vacancy on the board 11 occurs, it shall be filled as provided in AS 39.35.030(b), as repealed and reenacted by sec. 26 12 of this Act.