Enrolled SB 97: Relating to pension obligation bonds.
00Enrolled SB 97 01 Relating to pension obligation bonds. 02 _______________ 03 * Section 1. AS 18.56.086 is amended to read: 04 Sec. 18.56.086. Creation of subsidiaries. The corporation may create 05 subsidiary corporations for the purpose of financing or facilitating the financing of 06 school construction, facilities for the University of Alaska, facilities for ports and 07 harbors, the acquisition, development, management, or operation of affordable 08 housing, prepayment of all or a portion of a governmental employer's share of 09 unfunded accrued actuarial liability of retirement systems, or other capital projects. A 10 subsidiary corporation created under this section may be incorporated under 11 AS 10.20.146 - 10.20.166. The corporation may transfer assets of the corporation to a 12 subsidiary created under this section. A subsidiary created under this section may 13 borrow money and issue bonds as evidence of that borrowing, and has all the powers 14 of the corporation that the corporation grants to it. However, a subsidiary created for 15 the purpose of financing or facilitating the financing of prepayment of a governmental
01 employer's share of unfunded accrued actuarial liability of retirement systems may 02 borrow money and issue bonds only after submitting a proposal to the Legislative 03 Budget and Audit Committee under (b) of this section, if the state bond rating is 04 the equivalent of AA- or better, and subject to AS 37.15.903. Unless otherwise 05 provided by the corporation, the debts, liabilities, and obligations of a subsidiary 06 corporation created under this section are not the debts, liabilities, or obligations of the 07 corporation. 08 * Sec. 2. AS 18.56.086 is amended by adding a new subsection to read: 09 (b) Before the issuance of bonds under this section, the subsidiary corporation 10 shall submit a proposal to the Legislative Budget and Audit Committee for review, 11 and 45 days shall elapse before bonds are issued, unless the Legislative Budget and 12 Audit Committee earlier recommends that the subsidiary corporation proceed with the 13 issuance. Should the Legislative Budget and Audit Committee recommend within the 14 45-day period that the subsidiary corporation not proceed with the issuance of bonds, 15 the subsidiary corporation shall again review the proposal, and, if the subsidiary 16 corporation decides to issue the bonds, the subsidiary corporation shall provide the 17 Legislative Budget and Audit Committee with a statement of the subsidiary 18 corporation's reasons for doing so before issuance under this section. 19 * Sec. 3. AS 37.15.900(a) is amended to read: 20 (a) For purposes of financing prepayment of all or a portion of a governmental 21 employer's share of unfunded accrued actuarial liability of retirement systems, 22 including the costs of issuance and administration, the issuance and sale of bonds of 23 the state by the committee is authorized as provided in this section and AS 37.15.903 - 24 37.15.955, but only after submitting a proposal to the Legislative Budget and 25 Audit Committee under (e) of this section and if the state bond rating is the 26 equivalent of AA- or better. The net proceeds of the sale of the bonds remaining after 27 payment of costs of issuance and administration shall be transferred to the 28 commissioner of administration for the account of the governmental employer whose 29 share of unfunded accrued actuarial liability is to be prepaid for application to that 30 liability. Accrued interest paid on the bonds shall be paid into the pension obligation 31 bond redemption fund.
01 * Sec. 4. AS 37.15.900 is amended by adding a new subsection to read: 02 (e) Before the issuance and sale of bonds under this section, the committee 03 shall submit a proposal to the Legislative Budget and Audit Committee for review, 04 and 45 days shall elapse before bonds are issued and sold, unless the Legislative 05 Budget and Audit Committee earlier recommends that the committee proceed with the 06 issuance. Should the Legislative Budget and Audit Committee recommend within the 07 45-day period that the committee not proceed with the issuance and sale of bonds, the 08 committee shall again review the proposal, and, if the committee decides to issue and 09 sell the bonds, the committee shall provide the Legislative Budget and Audit 10 Committee with a statement of the committee's reasons for doing so before issuance 11 under this section. 12 * Sec. 5. AS 37.15.903 is amended to read: 13 Sec. 37.15.903. Pension obligation bond limit. The total unpaid principal 14 amount of bonds, including refunding bonds, but excluding refunded bonds, issued by 15 all state entities added together, for the purposes of financing prepayment of all or a 16 portion of a governmental employer's share of unfunded accrued liability of retirement 17 systems, may not exceed $1,500,000,000 or a funding ratio of actuarial assets to 18 accrued liability greater than 85 percent, whichever is less [$5,000,000,000]. 19 * Sec. 6. AS 37.16.030(a) is amended to read: 20 (a) For purposes of financing prepayment of all or a portion of a governmental 21 employer's share of unfunded accrued actuarial liability of retirement systems, 22 including the costs of issuance and administration, the issuance and sale of bonds by 23 the corporation is authorized as provided in this section and AS 37.16.040 - 37.16.900, 24 but only after submitting a proposal to the Legislative Budget and Audit 25 Committee under (e) of this section and if the state bond rating is the equivalent of 26 AA- or better. The net proceeds of the sale of the bonds remaining after payment of 27 costs of issuance and administration shall be transferred to the commissioner of 28 administration for the account of the governmental employer whose share of unfunded 29 accrued actuarial liability is to be prepaid for application to that liability. Accrued 30 interest paid on the bonds shall be paid into the reserve fund. 31 * Sec. 7. AS 37.16.030 is amended by adding a new subsection to read:
01 (e) Before the issuance and sale of bonds under this section, the corporation 02 shall submit a proposal to the Legislative Budget and Audit Committee for review, 03 and 45 days shall elapse before bonds are issued and sold, unless the Legislative 04 Budget and Audit Committee earlier recommends that the corporation proceed with 05 the issuance. Should the Legislative Budget and Audit Committee recommend within 06 the 45-day period that the corporation not proceed with the issuance and sale of bonds, 07 the corporation shall again review the proposal, and, if the corporation decides to issue 08 and sell the bonds, the corporation shall provide the Legislative Budget and Audit 09 Committee with a statement of the corporation's reasons for doing so before issuance 10 under this section. 11 * Sec. 8. AS 44.85.010(a) is amended to read: 12 (a) It is the policy of the state to 13 (1) foster and promote by all reasonable means the provision of 14 adequate capital markets and facilities for borrowing money by municipalities in the 15 state to finance capital improvements or for other authorized purposes, to assist these 16 municipalities in fulfilling their capital needs and requirements by use of borrowed 17 money within statutory interest rate or cost of borrowing limitations, to the greatest 18 extent possible to reduce costs of borrowed money to taxpayers and residents of the 19 state, and equally to encourage continued investor interest in the purchase of bonds or 20 notes of municipalities as sound and preferred securities for investment; 21 (2) encourage municipalities to continue their independent 22 undertakings and financing of capital improvements and other authorized purposes 23 and to assist them by making capital funds available at reduced interest costs for 24 orderly financing of capital improvements and other purposes especially during 25 periods of restricted credit or money supply, particularly for those municipalities not 26 otherwise able to borrow for capital needs; 27 (3) assist municipalities to provide for adequate insurance coverage by 28 authorizing the Alaska Municipal Bond Bank Authority to issue negotiable or 29 nonnegotiable revenue bonds, notes, or certificates of participation either directly or 30 through an entity it may create for the purpose of providing a self-insurance program 31 for municipalities or municipal joint insurance arrangements organized under
01 AS 21.76; 02 (4) assist governmental employers to prepay all or a portion of their 03 share of unfunded accrued actuarial liabilities of retirement systems in an effort to 04 reduce their costs of satisfying their contractual obligations to provide retirement and 05 other benefits to public employees through the issuance of bonds, notes, commercial 06 paper, or other obligations by the bond bank authority or by a subsidiary corporation 07 created by the bond bank authority under AS 44.85.085, but only after submitting a 08 proposal to the Legislative Budget and Audit Committee and if the state bond 09 rating is the equivalent of AA- or better; this assistance is limited as provided in 10 AS 37.15.903; 11 (5) assist the University of Alaska to provide heating or energy 12 projects by providing capital funds through loans that minimize costs and the effects 13 on the debt capacity of the University of Alaska; 14 (6) assist regional health organizations to provide health care facilities 15 by providing capital funds through loans that minimize costs and the effects on the 16 debt capacity of regional health organizations when the commissioner of health and 17 social services anticipates a state financial benefit and an increase in regional quality 18 of care; 19 (7) assist joint action agencies in providing public utilities, including 20 hydroelectric power projects, through loans and bonds that minimize costs and the 21 effects on the debt capacity of public utilities and joint action agencies. 22 * Sec. 9. AS 44.85.085(c) is amended to read: 23 (c) A subsidiary corporation created under (a) of this section may, after 24 submitting a proposal to the Legislative Budget and Audit Committee under (e) 25 of this section, if the state bond rating is the equivalent of AA- or better, and subject 26 to AS 37.15.903, borrow money and issue bonds, notes, commercial paper, or other 27 obligations as evidence of that borrowing and may have all the powers of the bond 28 bank authority that the bond bank authority grants to it. The provisions of 29 AS 44.85.130 - 44.85.170 and 44.85.270 - 44.85.390 apply to the subsidiary 30 corporation and to bonds, notes, commercial paper, or other obligations issued by the 31 subsidiary corporation. Unless otherwise provided by the bond bank authority, the
01 debts, liabilities, and obligations of the subsidiary corporation are not the debts, 02 liabilities, or obligations of the bond bank authority. 03 * Sec. 10. AS 44.85.085 is amended by adding a new subsection to read: 04 (e) Before the issuance of bonds, notes, commercial paper, or other obligations 05 under this section or under AS 44.85.086, the subsidiary corporation shall submit a 06 proposal to the Legislative Budget and Audit Committee for review, and 45 days shall 07 elapse before bonds, notes, commercial paper, or other obligations are issued, unless 08 the Legislative Budget and Audit Committee earlier recommends that the subsidiary 09 corporation proceed with the issuance. Should the Legislative Budget and Audit 10 Committee recommend within the 45-day period that the subsidiary corporation not 11 proceed with the issuance of bonds, notes, commercial paper, or other obligations, the 12 subsidiary corporation shall again review the proposal, and, if the subsidiary 13 corporation decides to issue the bonds, notes, commercial paper, or other obligations, 14 the subsidiary corporation shall provide the Legislative Budget and Audit Committee 15 with a statement of the subsidiary corporation's reasons for doing so before issuance 16 under this section. 17 * Sec. 11. AS 44.85.086 is amended to read: 18 Sec. 44.85.086. Powers of subsidiary corporation. A subsidiary corporation 19 created under AS 44.85.085 has the following powers in addition to those granted to it 20 under AS 44.85.085(c): 21 (1) to make loans to and enter into contracts with governmental 22 employers; 23 (2) to incur debt, subject to AS 37.15.903, in furtherance of its 24 purposes, in the form of bonds, notes, commercial paper, or other obligations as the 25 subsidiary corporation considers appropriate, but only after submitting a proposal to 26 the Legislative Budget and Audit Committee under AS 44.85.085(e) and if the 27 state bond rating is the equivalent of AA- or better; 28 (3) to secure its debt with a pledge of any assets that are available to 29 the subsidiary corporation for the purpose, including identified revenue and 30 contractual payments from participating governmental employers, and the general 31 assets and revenue of the subsidiary corporation; and
01 (4) to enter into contracts with underwriters, bond counsel, financial 02 advisors, accountants, actuaries, and other contractors to provide assistance as the 03 subsidiary corporation considers desirable to accomplish its purposes. 04 * Sec. 12. AS 44.85.180(a) is amended to read: 05 (a) Subject to AS 44.85.100(b), the bond bank authority may issue its bonds or 06 notes in principal amounts that it considers necessary to provide funds for any 07 purposes under this chapter, including 08 (1) the purchase of municipal bonds; 09 (2) the making of loans through the purchase of municipal bonds, 10 notes, or certificates of participation secured by an agreement between the bond bank 11 authority and a municipality or a municipal joint insurance arrangement organized 12 under AS 21.76; 13 (3) the payment, funding, or refunding of the principal of, or interest or 14 redemption premiums on, bonds or notes issued by it whether the bonds or notes or 15 interest to be funded or refunded have or have not become due; 16 (4) the establishment or increase of reserves to secure or to pay bonds 17 or notes or interest on bonds or notes and all other costs or expenses of the bond bank 18 authority incident to and necessary or convenient to carry out its corporate purposes 19 and powers; 20 (5) assisting governmental employers to prepay all or a portion of their 21 share of the unfunded accrued actuarial liabilities of retirement systems, with security 22 as the bond bank authority considers reasonable; however, to carry out this paragraph, 23 bonds and other obligations may only be issued after submitting a proposal to the 24 Legislative Budget and Audit Committee under (f) of this section and if the state 25 bond rating is the equivalent of AA- or better; bonds issued under this paragraph are 26 subject to AS 37.15.903. 27 * Sec. 13. AS 44.85.180 is amended by adding a new subsection to read: 28 (f) Before the issuance of bonds or other obligations under this section, the 29 bond bank authority shall submit a proposal to the Legislative Budget and Audit 30 Committee for review, and 45 days shall elapse before bonds or other obligations are 31 issued, unless the Legislative Budget and Audit Committee earlier recommends that
01 the bond bank authority proceed with the issuance. Should the Legislative Budget and 02 Audit Committee recommend within the 45-day period that the bond bank authority 03 not proceed with the issuance of bonds or other obligations, the bond bank authority 04 shall again review the proposal, and, if the bond bank authority decides to issue the 05 bonds or other obligations, the bond bank authority shall provide the Legislative 06 Budget and Audit Committee with a statement of the bond bank authority's reasons for 07 doing so before issuance under this section.