RETIREMENT SYSTEMS; DEFINED BENEFIT OPT.

Enrolled HB 78
LAWS OF ALASKA

2026

Source Chapter No.
SCS CSHB 78(FIN) am S(efd fld H) _______

AN ACT

An Act relating to the public employees' retirement system and the teachers' retirement
system; and providing certain employees an opportunity to choose between the defined
benefit and defined contribution plans of the public employees' retirement system and the
teachers' retirement system.

_______________

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:

THE ACT FOLLOWS ON PAGE 1

-1- Enrolled HB 78

AN ACT

An Act relating to the public employees' retirement system and the teachers' retirement 1
system; and providing certain employees an opportunity to choose between the defined 2
benefit and defined contribution plans of the public employees' retirement system and the 3
teachers' retirement system. 4
_______________ 5
* Section 1. AS 14.25.009 is repealed and reenacted to read: 6
Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 7
AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the 8
defined benefit retirement plan under AS 14.25.009 - 14.25.220 and are not members 9
of the defined contribution retirement plan under AS 14.25.310 - 14.25.590. 10
* Sec. 2. AS 14.25.040(a) is amended to read: 11
(a) A teacher or member contracting for service with a participating 12
employer is subject to AS 14.25.009 - 14.25.220 unless the [UNLESS A] teacher or 13
member 14

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(1) participates in a university retirement program under AS 14.40.661 1
- 14.40.799; 2
(2) became a member after June 30, 2006, and before July 1, 2027, 3
is eligible to participate in the defined contribution retirement plan under 4
AS 14.25.310 - 14.25.590, and does not elect to participate in the defined benefit 5
retirement plan under AS 14.25.009 - 14.25.220; or 6
(3) has elected under AS 14.25.540 to participate in the plan 7
established in AS 14.25.310 - 14.25.590 and does not elect to participate in the 8
defined benefit retirement plan under AS 14.25.009 - 14.25.220 [, A TEACHER 9
OR MEMBER CONTRACTING FOR SERVICE WITH A PARTICIPATING 10
EMPLOYER IS SUBJECT TO AS 14.25.009 - 14.25.220]. 11
* Sec. 3. AS 14.25.040 is amended by adding new subsections to read: 12
(f) An active member of this plan who is also employed in a position in the 13
public employees' retirement plan under AS 39.35.095 - 39.35.680 may elect to 14
participate solely in this plan if 15
(1) the member directs the public employees' retirement plan employer 16
in writing to 17
(A) pay into this plan the employer contributions required for a 18
member under AS 14.25.009 - 14.25.220; and 19
(B) deduct from the member's salary and pay into this plan 20
(i) the employee contributions required for a member 21
under AS 14.25.009 - 14.25.220; and 22
(ii) an amount equal to the difference between the total 23
employer and state contributions required for a member under 24
AS 14.25.009 - 14.25.220 and the employer contributions that would be 25
required under AS 39.35.095 - 39.35.680 if the member participated in 26
that plan; and 27
(2) the member provides written notice to the administrator. 28
(g) An active member of this plan who elects to participate solely in this plan 29
under (f) of this section may not, while participating solely in this plan, receive 30
credited service for benefit eligibility for service performed in a position in the public 31

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employees' retirement plan. 1
(h) A teacher who became a member of the system after June 30, 2006, and 2
before July 1, 2027, or who has elected under AS 14.25.540 to participate in the 3
defined contribution retirement plan under AS 14.25.310 - 14.25.590, is subject to 4
AS 14.25.009 - 14.25.220 and is not eligible to participate in the defined contribution 5
retirement plan established in AS 14.25.310 - 14.25.590 if the teacher 6
(1) is not employed by an employer on July 1, 2027; 7
(2) is reemployed by an employer after July 1, 2027; and 8
(3) has, before the date of reemployment, received 9
(A) a distribution, other than a rollover distribution, of the 10
entire balance in the teacher's individual account in the defined contribution 11
retirement plan; or 12
(B) a rollover distribution of the entire balance in the teacher's 13
individual account in the defined contribution retirement plan under 14
AS 14.25.310 - 14.25.590 and has not, within 180 days of reemployment, had 15
all or part of a direct rollover distribution from an eligible retirement plan 16
owned by the teacher paid directly into the teacher's individual account under 17
AS 14.25.310 - 14.25.590. 18
* Sec. 4. AS 14.25 is amended by adding a new section to read: 19
Sec. 14.25.044. Election of defined benefit retirement plan by reemployed 20
teachers. (a) A teacher may make a one-time election to participate in the defined 21
benefit retirement plan under AS 14.25.009 - 14.25.220 if the teacher 22
(1) became a member of the defined contribution retirement plan under 23
AS 14.25.310 - 14.25.590 after June 30, 2006, and before July 1, 2027; 24
(2) is not employed by an employer on July 1, 2027; 25
(3) is reemployed by an employer after July 1, 2027; and 26
(4) before the date of reemployment, 27
(A) has not received a distribution of the entire balance in the 28
teacher's individual account under the defined contribution retirement plan 29
under AS 14.25.310 - 14.25.590; or 30
(B) has received a rollover distribution of the entire balance in 31

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the teacher's individual account in the plan under AS 14.25.310 - 14.25.590 1
and has, within 180 days of reemployment, had all or part of a direct rollover 2
distribution from an eligible retirement plan owned by the teacher paid directly 3
into the teacher's individual account under AS 14.25.310 - 14.25.590. 4
(b) An election under (a) of this section may be made not more than 180 days 5
after the date of reemployment. A reemployed teacher electing to participate under (a) 6
of this section shall use the balance of the teacher's individual account in the plan 7
under AS 14.25.310 - 14.25.590, including any rollover contributions, to purchase 8
credited service in the plan under AS 14.25.009 - 14.25.220. An election made under 9
(a) of this section must be made in writing in the manner prescribed by the 10
administrator. An election made by a teacher who is married is not effective unless the 11
election is signed by the teacher's spouse. The administrator shall provide a teacher 12
who is eligible to make an election under (a) of this section with information about the 13
potential consequences of the teacher's election, including calculations to illustrate the 14
effect of moving the teacher's retirement plan from a defined contribution retirement 15
plan to a defined benefit retirement plan. 16
(c) An election made under (a) of this section to participate in the plan under 17
AS 14.25.009 - 14.25.220 is irrevocable. On the effective date of the election, the 18
teacher shall be enrolled as a member of the plan, and the teacher's participation in the 19
plan shall be governed by the applicable provisions of the plan. The teacher's 20
enrollment in the plan is retroactive to the date of hire. 21
(d) When a teacher makes an election under this section to participate in the 22
plan under AS 14.25.009 - 14.25.220, the administrator shall cause the total amount of 23
the teacher's member and employer contributions to the plan under AS 14.25.310 - 24
14.25.590, with investment earnings and losses through the day of the teacher's 25
election to participate as a member in the plan under AS 14.25.009 - 14.25.220, to be 26
actuarially calculated and, subject to (f) of this section, transferred to the retirement 27
fund in the plan under AS 14.25.009 - 14.25.220. On the effective date of the teacher's 28
participation in the plan under AS 14.25.009 - 14.25.220, the teacher shall be credited 29
with service in the plan. The board shall determine the cost of the teacher's actual 30
service time based on the teacher's accrued actuarial liability of pension benefits in the 31

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plan and credit the teacher with service time equal to the value actuarially calculated 1
and transferred to the retirement fund in the plan under AS 14.25.009 - 14.25.220. The 2
board shall adopt regulations establishing transfer procedures. The transfer may not 3
occur later than 60 days after the date the administrator receives the teacher's election, 4
unless the major financial markets for securities available for a transfer are seriously 5
disrupted by an unforeseen event that also causes the suspension of trading on a 6
national securities exchange in the country where the securities were issued; in that 7
event, the 60-day period may be extended by a resolution of the board. A transfer is 8
not commissionable or subject to a fee and may be in the form of cash or a security as 9
determined by the board. The value of a security shall be assessed on the date the 10
security is received in the teacher's account. 11
(e) When making a transfer under (d) of this section or a transfer for a 12
reemployed teacher subject to the plan under AS 14.25.040(h), the administrator shall 13
transfer 14
(1) an amount equal to the decrease in the accrued actuarial liability of 15
the death and disability trust in the plan established under AS 14.25.310 - 14.25.590 16
resulting from the transfer as of the date of transfer, based on the most recent actuarial 17
valuation of the death and disability trust, from the death and disability trust in the 18
plan established under AS 14.25.310 - 14.25.590 to the retirement fund in the plan 19
established under AS 14.25.009 - 14.25.220; and 20
(2) an amount equal to the increase in the accrued actuarial liability of 21
the health care trust in the plan established under AS 14.25.009 - 14.25.220 resulting 22
from the transfer as of the date of transfer, based on the actuarial assumptions set out 23
in (g) of this section, from the trust established under AS 39.30.097(b) for the 24
prefunding of medical benefits provided by AS 14.25.480 to the trust established 25
under AS 39.30.097(a) for the prefunding of medical benefits provided by 26
AS 14.25.171. 27
(f) If the value actuarially calculated under (d) of this section is insufficient to 28
pay for service credit equal to the teacher's actual service time, the administrator shall 29
allow the teacher the option of purchasing service credit in an amount up to the 30
amount needed to eliminate the insufficiency; however, if that value exceeds the 31

Enrolled HB 78 -6-
amount needed to pay for service credit equal to the teacher's actual service, the 1
administrator shall cause the excess to be paid to the employee as a rollover transfer 2
either to an individual employee annuity account in the Department of Administration 3
under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 4
Plan) or, if the member's employer does not participate in the State of Alaska 5
Supplemental Annuity Plan, to an eligible retirement plan as defined in 6
AS 14.25.360(d). An excess may not be used to purchase additional service credit in 7
the plan under AS 14.25.009 - 14.25.220. When a reemployed teacher enters the plan 8
under AS 14.25.040(h), the administrator shall allow the teacher to pay for a period of 9
service credit up to the teacher's actual service. When a teacher elects to purchase 10
service credit under this section and does not immediately pay for the service credit 11
purchased, an indebtedness is established. Interest as prescribed by regulation accrues 12
on a teacher's indebtedness. If the indebtedness exists when the teacher is appointed to 13
retirement, the administrator shall make a corresponding actuarial adjustment to the 14
benefit payable to the teacher for service in the defined contribution retirement plan. 15
(g) Actuarial assumptions about the plan under AS 14.25.009 - 14.25.220 16
must be based on the most recent actuarial valuation of the plan, except that the 17
retirement rates are computed at 25 percent of the retirement rates used in the most 18
recent actuarial valuation of the retirement fund plus 75 percent of the retirement rates 19
used in the most recent actuarial valuation of the plan under AS 14.25.310 - 14.25.590. 20
(h) The provisions of this section are subject to the requirements of the 21
Internal Revenue Code and the limitations under AS 14.25.010, 14.25.181, 22
14.25.320(c) and (d), and 14.25.490. 23
* Sec. 5. AS 14.25.048(b) is amended to read: 24
(b) An employee or former employee who first became a member of the 25
plan before July 1, 2006, may receive credit for retroactive membership service for 26
employment before June 5, 1988, if the employee or former employee met the 27
requirements listed in (a) of this section at the time of the employment. To receive 28
credit for the retroactive membership service, the employee or former employee shall 29
claim the service and pay the retroactive contributions required under former 30
AS 14.25.061. However, an employee or former employee may not receive retroactive 31

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credit under this subsection if the employee received credited service under AS 39.35 1
for the employment. 2
* Sec. 6. AS 14.25.048(c) is amended to read: 3
(c) An employee or former employee who first became a member of the 4
plan before July 1, 2006, and who received credit under AS 39.35 for service that 5
qualifies under (a) of this section may elect to transfer those periods of employment to 6
the plan. To receive credit for retroactive membership service under this subsection, 7
the employee or former employee shall claim the service and pay the retroactive 8
contributions required under former AS 14.25.061. 9
* Sec. 7. AS 14.25.050(a) is amended to read: 10
(a) Except as provided in (c) and (e) of this section, beginning January 1, 11
1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 12
member's base salary accrued from July 1 to the following June 30. [THE 13
EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 14
SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 15
CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 16
CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 17
FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 18
APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 19
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 20
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 21
INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 22
EMPLOYER.] 23
* Sec. 8. AS 14.25.050 is amended by adding new subsections to read: 24
(e) A member who first participates in the plan after June 30, 2006, shall 25
contribute to the plan an amount equal to eight percent of the member's base salary 26
accrued from July 1 to the following June 30. The board may, from time to time, 27
increase or decrease the contribution under this subsection; however, the contribution 28
may not be decreased to less than eight percent of the member's base salary. 29
(f) The employer shall deduct a contribution under this section from the 30
member's salary at the end of each payroll period, and the contribution shall be 31

Enrolled HB 78 -8-
credited by the plan to the member contribution account. The contributions shall be 1
deducted from member compensation before the computation of applicable federal 2
taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 3
member may not have the option of making the payroll deduction directly in cash 4
instead of having the contribution picked up by the employer. 5
(g) The board shall increase the member contribution under (e) of this section 6
if the board determines that, unless the contribution is increased, the portion of the 7
liability of the plan that is attributable to all members who first became members of 8
the plan after June 30, 2006, will be funded below 90 percent. The board may not 9
increase the member contribution unless the board increases the employer contribution 10
under AS 14.25.070(a)(2) by an equal amount. The board may decrease the 11
contribution under (e) of this section if the board determines that, after the 12
contribution is decreased, the portion of the liability of the plan that is attributable to 13
all members who first became members of the plan after June 30, 2006, will be funded 14
above 90 percent. The board may not decrease the member contribution unless the 15
board decreases the employer contribution under AS 14.25.070(a)(2) by an equal 16
amount. 17
(h) The board may not increase the employer contribution under 18
AS 14.25.070(a) unless the board increases the member contribution under (e) of this 19
section by a comparable amount. 20
* Sec. 9. AS 14.25.065(b) is amended to read: 21
(b) The contributions of employers under AS 14.25.070 must be transmitted to 22
the plan for deposit in the retirement fund and the Alaska retiree health care trust at the 23
close of each pay period. If the contributions are not submitted within the prescribed 24
time limit, interest must be assessed on the outstanding contributions at [ONE AND 25
ONE-HALF TIMES] the most recent actuarially determined rate of earnings for the 26
plan from the date that contributions were originally due. Amounts due from an 27
employer and interest as prescribed in this section may be claimed by the 28
administrator from any agency of the state or political subdivision that has in its 29
possession funds of the employer or that is authorized to disburse funds to the 30
employer that are not restricted by statute or appropriation to a specific purpose. The 31

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amount claimed shall be certified by the administrator as sufficient to pay the 1
contributions and interest due from the employer. The amount claimed shall be 2
submitted to the administrator for deposit in the retirement fund and the Alaska retiree 3
health care trust. 4
* Sec. 10. AS 14.25.070(a) is amended to read: 5
(a) Each employer shall contribute to the system every payroll period the 6
lesser of 7
(1) an amount calculated by applying a rate of 12.56 percent to the 8
total of all base salaries paid by the employer to active members of the system and to 9
members who are retired from the plan and reemployed under AS 14.20.136, 10
including any adjustments to contributions required by AS 14.25.173(a); or 11
(2) an amount calculated by applying a rate established by the 12
board under AS 37.10.220 to the total of all base salaries paid by the employer to 13
active members of the system and to members who are retired from the plan and 14
reemployed under AS 14.20.136, including any adjustments to contributions 15
required by AS 14.25.173(a); the rate must be at least 12 percent and be sufficient 16
to pay the actuarially determined employer normal cost, all contributions 17
required under AS 14.25.350 and AS 39.30.370, and past service cost for 18
members of the system. 19
* Sec. 11. AS 14.25.070 is amended by adding a new subsection to read: 20
(i) If the legislature appropriates funds for the purpose of decreasing an 21
employer's contribution, the employer's contribution under (a) of this section shall 22
decrease by that amount. 23
* Sec. 12. AS 14.25.075(a) is amended to read: 24
(a) An employee who is eligible to purchase credited service under 25
AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 26
under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 27
[14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligible to purchase credited 28
service under AS 14.20.345, AS 14.25.044, 14.25.050 [AS 14.25.050], or 14.25.105, 29
in lieu of making payments directly to the plan, may elect to have the member's 30
employer make payments as provided in this section. 31

Enrolled HB 78 -10-
* Sec. 13. AS 14.25.075(b) is amended to read: 1
(b) A member may elect to have the employer make payments for all or any 2
portion of the amounts payable for the member's purchase of credited service through 3
a salary reduction program as follows: 4
(1) the amounts paid under a salary reduction program are in lieu of 5
contributions by the member making the election; the electing member's salary or 6
other compensation shall be reduced by the amount paid by the employer under this 7
subsection; 8
(2) the member shall make an irrevocable election under this 9
subsection to purchase credited service as permitted in former AS 14.25.061 or in 10
AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 11
14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107 before the member's 12
termination of employment; the irrevocable election must specify the number of 13
payroll periods that deductions will be made from the member's compensation and the 14
dollar amount of deductions for each payroll period during the specified number of 15
payroll periods; the deductions made under this paragraph cease upon the earlier of the 16
member's termination of employment with the employer or the member's death; 17
amounts paid by an employer under (f) of this section may not be applied toward the 18
payment of the dollar amount of the deductions representing the portion of the credited 19
service that is being purchased by the member through payroll deduction in 20
accordance with the member's irrevocable election under this paragraph; 21
(3) amounts paid by an employer under this subsection shall be treated 22
as employer contributions for the purpose of determining tax treatment under 26 23
U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 24
may not be included in the member's gross income for income tax purposes until those 25
amounts are distributed by refund or retirement benefit payments. 26
* Sec. 14. AS 14.25.075(i) is amended to read: 27
(i) On satisfaction of the eligibility requirements of former AS 14.25.061 or 28
of AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 29
14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107, the requirements of this 30
section, and the administrative filing requirements specified by the administrator, the 31

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plan shall adjust the member's credited service history and add any additional service 1
credits acquired. 2
* Sec. 15. AS 14.25 is amended by adding a new section to read: 3
Sec. 14.25.086. Sub-trust for members who first became members after 4
June 30, 2006. The administrator shall deposit a portion of employer contributions 5
under AS 14.25.070 and 14.25.085 in a sub-trust of the retirement fund established by 6
the board for members who first became members after June 30, 2006. The amount 7
deposited, when combined with the amount separately computed for medical benefits 8
under AS 14.25.087, must be sufficient to pay the actuarially determined employer 9
normal cost and past service cost for members of the system who first became 10
members after June 30, 2006. When the amount sufficient to pay the actuarially 11
determined employer normal cost, all contributions required under AS 14.25.350 and 12
AS 39.30.370, and past service cost for members of the system is less than 12 percent 13
of all base salaries paid to active members of the system and to members who are 14
retired from the plan and reemployed under AS 14.20.136, including any adjustments 15
to contributions required by AS 14.25.173(a), the administrator shall deposit the 16
difference in the sub-trust established under this section. 17
* Sec. 16. AS 14.25.087 is amended to read: 18
Sec. 14.25.087. Contributions for medical benefits. Contributions made by 19
an employer under AS 14.25.070 and 14.25.085 must [SHALL] be separately 20
computed for benefits provided by AS 14.25.168 and retiree major medical 21
insurance plan benefits provided under AS 14.25.171 and must [SHALL] be 22
deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 23
* Sec. 17. AS 14.25.110(a) is amended to read: 24
(a) Subject to AS 14.25.167, 25
(1) a member who first became a member of the plan before July 1, 26
2006, is eligible for a normal retirement benefit if the member 27
(A) [(1)] was first hired before July 1, 1975, has attained the 28
age of 55 years, and has at least 15 years of credited service, the last five of 29
which have been membership service, or is otherwise vested in the plan; 30
(B) [(2)] has attained the age of 60 years and has at least eight 31

Enrolled HB 78 -12-
years of membership service; 1
(C) [(3)] has attained the age of 60 years, has at least five years 2
of membership service, and has Alaska BIA service which, when added to the 3
membership service, will equal at least eight years; 4
(D) [(4)] has at least 25 years of credited service, the last five 5
of which have been membership service; 6
(E) [(5)] has at least 20 years of membership service; 7
(F) [(6)] has at least 20 years of combined membership service 8
and Alaska BIA service, the last five of which have been membership service; 9
or 10
(G) [(7)] has, for each of 20 school years, 11
(i) [(A)] at least one-half year of membership service as 12
a part-time teacher; 13
(ii) [(B)] one full year of membership service as a full-14
time teacher; or 15
(iii) [(C)] any combination of service qualified under 16
this subparagraph; 17
(2) a member who first became a member of the plan after 18
June 30, 2006, is eligible for a normal retirement benefit if the member 19
(A) has attained the age of 60 years and has at least five 20
years of membership service; or 21
(B) has at least 30 years of membership service 22
[PARAGRAPH]. 23
* Sec. 18. AS 14.25.110(b) is amended to read: 24
(b) Subject to AS 14.25.167, a member is eligible for an early retirement 25
benefit upon completing the service requirements in (a)(1)(A) [(a)(1)] of this section 26
and attaining the age of 50 years or upon completing the service requirements in 27
(a)(1)(B) or (C) [(a)(2) OR (3)] of this section and attaining the age of 55 years. 28
* Sec. 19. AS 14.25.110(d) is amended to read: 29
(d) The monthly amount of a retirement benefit 30
(1) for a member who first became a member of the plan before 31

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July 1, 2006, and who has paid the full amount of any indebtedness is one-twelfth of 1
the member's average base salary during any three school years of membership service 2
multiplied by 3
(A) [(1)] two percent of the years of credited service earned 4
before June 30, 1990, including credited fractional years, and the years of 5
credited service through a total of 20 years; plus 6
(B) [(2)] two and one-half percent of the years of credited 7
service earned after June 30, 1990, that are more than 20 years of total credited 8
service; 9
(2) for a member who first became a member of the plan after 10
June 30, 2006, and who has paid the full amount of any indebtedness is one-11
twelfth of the member's average base salary during any five school years of 12
membership service multiplied by 13
(A) two percent of the years of credited service through a 14
total of 10 years; plus 15
(B) two and one-quarter percent of the years over 10 years 16
of total credited service through 20 years; plus 17
(C) two and one-half percent of the years of credited service 18
that are more than 20 years of total credited service. 19
* Sec. 20. AS 14.25.142(a) is amended to read: 20
(a) While residing in the state, a person who first became a member of the 21
plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220, 22
and who is at least 65 years of age or a person who first became a member of the 23
plan before July 1, 2006, and who is receiving a disability benefit under 24
AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost-of-living allowance in 25
addition to the basic benefit. The amount of this allowance is 10 percent of the basic 26
benefit. 27
* Sec. 21. AS 14.25.143(a) is amended to read: 28
(a) Once each year, the administrator shall increase benefit payments to 29
eligible disabled members, to persons age 60 or older receiving benefits under this 30
plan in the preceding calendar year, and to persons who have received benefits under 31

Enrolled HB 78 -14-
this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 1
under this section. 2
* Sec. 22. AS 14.25.143(b) is amended to read: 3
(b) Subject to (g) and (h) of this section, the [THE] increase in benefit 4
payments applies to total benefit payments except for the cost-of-living allowance 5
under AS 14.25.142. The amount of the increase is a percentage of the current benefit 6
equal to 7
(1) the lesser of 75 percent of the increase in the cost of living in the 8
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 9
years old and for members receiving disability benefits; and 10
(2) the lesser of 50 percent of the increase in the cost of living in the 11
preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 12
less than 65 years old or for recipients who on July 1 are less than 60 years old but 13
who have received benefits from the plan for at least five [EIGHT] years. 14
* Sec. 23. AS 14.25.143 is amended by adding new subsections to read: 15
(g) Subject to (h) of this section, the amount of an increase for members who 16
first became members of the plan after June 30, 2006, and do not meet the eligibility 17
requirements for a permanent fund dividend under AS 43.23.005(a) in effect on July 1, 18
2026, is equal to one-half of the applicable percentage under (b) of this section. 19
(h) If the board determines that the portion of the liability of the plan that is 20
attributable to all members who first became members of the plan after June 30, 2006, 21
is funded below 90 percent, the board shall reduce the amount of the increase 22
determined under (b) or (g) of this section that is payable to a member who first 23
became a member after June 30, 2006. At any time, the board may terminate a 24
reduction made under this subsection. 25
* Sec. 24. AS 14.25.168(a) is amended to read: 26
(a) Except as provided in AS 14.25.171 and (c) of this section, the following 27
persons are entitled to major medical insurance coverage under this section: 28
(1) for teachers first hired before July 1, 1990, 29
(A) a teacher who is receiving a monthly benefit from the plan 30
and who has elected coverage; 31

-15- Enrolled HB 78
(B) the spouse and dependent children of the teacher described 1
in (A) of this paragraph; 2
(C) the surviving spouse of a deceased teacher who is receiving 3
a monthly benefit from the plan and who has elected coverage; 4
(D) the dependent children of a deceased teacher who are 5
dependent on the surviving spouse described in (C) of this paragraph; 6
(2) for teachers first hired [ON OR] after June 30 [JULY 1], 1990, 7
(A) a teacher who is receiving a monthly benefit from the plan 8
and who has elected coverage for the teacher; 9
(B) the spouse of the teacher described in (A) of this paragraph 10
if the teacher elected coverage for the spouse; 11
(C) the dependent children of the teacher described in (A) of 12
this paragraph if the teacher elected coverage for the dependent children; 13
(D) the surviving spouse of a deceased teacher who is receiving 14
a monthly benefit from the plan and who has elected coverage; 15
(E) the dependent children of a deceased teacher who are 16
dependent on the surviving spouse described in (D) of this paragraph if the 17
surviving spouse has elected coverage for the dependent children. 18
* Sec. 25. AS 14.25 is amended by adding a new section to read: 19
Sec. 14.25.171. Medical benefit; eligibility of employees first hired after 20
June 30, 2006; surviving spouses and dependents. (a) A teacher who first became a 21
member of the plan after June 30, 2006, receives a monthly benefit from the plan, 22
retired from the plan, and has elected benefits under this section is entitled to medical 23
benefits under this section. A member who applies for medical benefits under this 24
section shall apply on the forms and in the manner prescribed by the administrator. A 25
member is eligible to retire from the plan if the member 26
(1) has at least 25 years of service; or 27
(2) reaches the age set for Medicare eligibility and has at least 10 years 28
of service. 29
(b) The member's surviving spouse is eligible to elect medical benefits if the 30
member had retired or was eligible for retirement and medical benefits at the time of 31

Enrolled HB 78 -16-
the member's death. 1
(c) The medical benefits available to eligible persons are access to the retiree 2
major medical insurance plan and access to the health reimbursement arrangement 3
plan under AS 39.30.300. Access to the retiree major medical insurance plan means 4
that an eligible person may not be denied insurance coverage except for failure to pay 5
the required premium. 6
(d) Retiree major medical insurance plan coverage elected by an eligible 7
member under this section covers the eligible member, the spouse of the eligible 8
member, and the dependent children of the eligible member. 9
(e) Retiree major medical insurance plan coverage elected by a surviving 10
spouse of an eligible member under this section covers the surviving spouse and the 11
dependent children of the eligible member who are dependent on the surviving spouse. 12
(f) Participation in the retiree major medical insurance plan is not required in 13
order to participate in the health reimbursement arrangement plan. 14
(g) A person eligible for medical benefits under this section is not required to 15
participate in the health reimbursement arrangement plan in order to participate in the 16
retiree major medical insurance plan. 17
(h) A person who is eligible for medical benefits under this section must make 18
the irrevocable election to participate or not participate in the retiree major medical 19
insurance plan on or before the date the person reaches 70 1/2 years of age or the date 20
the person applies for retirement and medical benefits, whichever is later. 21
(i) Major medical insurance coverage takes effect on the first day of the month 22
following the date of the administrator's approval of the election and stops when the 23
person who elects coverage dies or fails to make a required premium payment. 24
(j) The coverage for persons 65 years of age or older is the same as that 25
available for persons under 65 years of age. The benefits payable to those persons 65 26
years of age or older supplement any benefits provided under the federal old-age, 27
survivors, and disability insurance program. 28
(k) The medical and optional insurance premiums owed by the person who 29
elects coverage may be deducted from the health reimbursement arrangement plan. If 30
the amount of the health reimbursement arrangement plan becomes insufficient to pay 31

-17- Enrolled HB 78
the premiums, the person who elects coverage under (a) of this section shall pay the 1
premiums directly. 2
(l) The cost of premiums for retiree major medical insurance coverage under 3
this section for an eligible member or surviving spouse who is 4
(1) not eligible for Medicare is an amount equal to the full monthly 5
group premiums for retiree major medical insurance coverage; 6
(2) eligible for Medicare is the following percentages of the premium 7
amounts established for retirees who are eligible for Medicare: 8
(A) 30 percent if the member had 10 or more, but less than 15, 9
years of service; 10
(B) 25 percent if the member had 15 or more, but less than 20, 11
years of service; 12
(C) 20 percent if the member had 20 or more, but less than 25, 13
years of service; 14
(D) 15 percent if the member had 25 or more, but less than 30, 15
years of service; 16
(E) 10 percent if the member had 30 or more years of service. 17
(m) The eligibility for retiree major medical insurance coverage for an 18
alternate payee under a qualified domestic relations order shall be determined based 19
on the eligibility of the member to elect coverage. The alternate payee shall pay the 20
full monthly premium for retiree major medical insurance coverage. 21
(n) The administrator shall 22
(1) inform a person entitled to retiree major medical insurance 23
coverage under this section in writing 24
(A) that the health insurance coverage available to retired 25
members may be different from the health insurance coverage provided to 26
employees; 27
(B) of time limits for selecting optional health insurance 28
coverage; and 29
(C) whether the election is irrevocable; and 30
(2) require that a person entitled to retiree major medical insurance 31

Enrolled HB 78 -18-
coverage under this section indicate in writing on a form provided by the administrator 1
whether the person has chosen to receive optional health insurance coverage. 2
(o) The monthly group premiums for retiree major medical insurance coverage 3
under this section are established by the administrator in accordance with 4
AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 5
(a) of this section a monthly group premium rate for retiree major medical insurance 6
coverage other than the premium in effect for the month in which the premium is due 7
for coverage for that month. 8
(p) In this section, "health reimbursement arrangement plan" means the State 9
of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 10
Arrangement Plan established in AS 39.30.300. 11
* Sec. 26. AS 14.25.220(5) is amended to read: 12
(5) "average base salary" means, 13
(A) for a teacher who first became a member before July 1, 14
2006, the result obtained by dividing the sum of the member's three highest 15
years' base salary by three, or if a member does not have three years base 16
salary, then by dividing the sum of all base salaries by the number of years of 17
base salary; the base salary for a year in which credit is granted for disability 18
totaling more than one-third of a year may not be used in the computation of 19
the average base salary; the base salary in a school year for which the member 20
receives compensation for less than two-thirds of a year may not be used in the 21
computation of the average base salary; if compensation is received for more 22
than two-thirds of a year, the full base salary for that school year shall be used 23
in the computation of the average base salary; 24
(B) for a teacher who first became a member after June 30, 25
2006, the result obtained by dividing the sum of the member's five highest 26
years' base salary by five, or if a member does not have five years' base 27
salary, then by dividing the sum of all base salaries by the number of 28
years of base salary; the base salary for a year in which credit is granted 29
for disability totaling more than one-third of a year may not be used in the 30
computation of the average base salary; the base salary in a school year 31

-19- Enrolled HB 78
for which the member receives compensation for less than two-thirds of a 1
year may not be used in the computation of the average base salary; if 2
compensation is received for more than two-thirds of a year, the full base 3
salary for that school year shall be used in the computation of the average 4
base salary; 5
* Sec. 27. AS 14.25.220(6) is amended to read: 6
(6) "base salary" 7
(A) means the total remuneration payable under contract for a 8
full year of membership service, including addenda to the contract and, for a 9
member who elects to participate solely in this plan under AS 14.25.040(f), 10
remuneration paid by the public employees' retirement plan employer, 11
but, for a member first hired on or after July 1, 1996, does not include 12
remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17); 13
(B) has the same meaning as "compensation" under 14
AS 39.35.680(9) when applied to a state legislator who elects membership 15
under AS 14.25.040(b); 16
* Sec. 28. AS 14.25.220(46) is amended to read: 17
(46) "vested member" or "vested teacher" means an active member 18
who [HAS COMPLETED EITHER] 19
(A) first became a member before July 1, 2006, and has 20
completed 21
(i) 15 years of service, the last five of which have been 22
membership service, for a member first hired before July 1, 1975; 23
(ii) [(B)] eight years of membership service; 24
(iii) [(C)] five years of membership and three years of 25
BIA service; or 26
(iv) [(D)] 12 school years of part-time membership 27
service or 12 school years in each of which the member earned either 28
part-time or full-time membership service; 29
(B) first became a member after June 30, 2006, and has 30
completed five years of membership service; 31

Enrolled HB 78 -20-
* Sec. 29. AS 14.25.220 is amended by adding a new paragraph to read: 1
(48) "first became a member after June 30, 2006" and "first became a 2
member of the plan after June 30, 2006" include a member who elected under 3
AS 14.25.540 to participate in the defined contribution retirement plan under 4
AS 14.25.310 - 14.25.590 and who elects to participate in the defined benefit 5
retirement plan under AS 14.25.009 - 14.25.220. 6
* Sec. 30. AS 14.25.310 is amended to read: 7
Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 8
AS 14.25.310 - 14.25.590 apply only to 9
(1) teachers who first become members [ON OR] after June 30, 2006, 10
and before July 1, 2027, and who are eligible but do not elect to participate in a 11
defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 12
39.35.680; and 13
(2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 14
EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 15
DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 16
- 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBERS] 17
who transferred [TRANSFER] into the defined contribution retirement plan under 18
AS 14.25.540 and do not elect to participate in the defined benefit retirement plan 19
under AS 14.25.009 - 14.25.220. 20
* Sec. 31. AS 14.25.310 is amended by adding a new subsection to read: 21
(b) An employer that participates in the plan shall also participate in the 22
defined benefit retirement plan under AS 14.25.009 - 14.25.220. 23
* Sec. 32. AS 14.25.330(a) is amended to read: 24
(a) A teacher who first becomes a member [ON OR] after June 30, 2006, and 25
before July 1, 2027, and who does not participate in a defined benefit retirement 26
plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, 27
SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contribution 28
retirement plan. 29
* Sec. 33. AS 14.25.470(a) is amended to read: 30
(a) In order to obtain medical benefits under AS 14.25.480, a member must 31

-21- Enrolled HB 78
retire [DIRECTLY] from the plan. A member is eligible to retire from the plan if 1
[THE MEMBER HAS BEEN AN ACTIVE MEMBER FOR AT LEAST 12 2
MONTHS BEFORE APPLICATION FOR RETIREMENT AND] 3
(1) the member has at least 25 [30] years of service; or 4
(2) the member reaches the normal retirement age, [AND] has at least 5
10 years of service, and has been an active member for at least 12 months 6
immediately before application for retirement. 7
* Sec. 34. AS 14.25.490(a) is amended to read: 8
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 9
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 10
time, in whole or in part, including the right to make retroactive amendments referred 11
to in 26 U.S.C. 401(b). 12
* Sec. 35. AS 14.25.490(b) is amended to read: 13
(b) The plan administrator may not modify or amend the plan retroactively [IN 14
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 15
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 16
MADE] before the modification or amendment except to the extent that the reduction 17
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 18
Revenue Code. 19
* Sec. 36. AS 14.25.490(c) is amended to read: 20
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 21
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 22
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 23
is terminated, all investments at the time of termination remain in force until all 24
individual accounts have been completely distributed under the plan. After [, AND, 25
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 26
employer. 27
* Sec. 37. AS 14.25.490(d) is repealed and reenacted to read: 28
(d) Within one year after determining that a contribution to the plan by an 29
employer was the result of a mistake of fact, the administrator shall return the 30
contribution to the employer. 31

Enrolled HB 78 -22-
* Sec. 38. AS 14.25.540(a) is amended to read: 1
(a) An [SUBJECT TO (i) OF THIS SECTION, AN] active member of the 2
defined benefit retirement plan of the teachers' retirement system is eligible to 3
participate in the defined contribution retirement plan established under AS 14.25.310 4
- 14.25.590 if that member has not vested. Participation in the defined contribution 5
retirement plan is in lieu of participation in the defined benefit retirement plan 6
established under AS 14.25.009 - 14.25.220. 7
* Sec. 39. AS 14.25.540(c) is amended to read: 8
(c) Each eligible member who elects to participate in the defined contribution 9
retirement plan shall have transferred to a new account the member contribution 10
account balance held in trust for the member under the defined benefit retirement plan 11
of the teachers' retirement system. An [A MATCHING] employer contribution equal 12
to 88 percent of the transferred account balance shall be made on behalf of that 13
employee to the new account. The administrator [EMPLOYER] shall make the 14
payment for that purpose [MATCHING CONTRIBUTION] from [FUNDS OTHER 15
THAN] the sub-trust established under AS 14.25.086 [TRUST FUNDS OF THE 16
DEFINED BENEFIT RETIREMENT PLAN]. The amount of the [MATCHING] 17
employer contribution is subject to, and may not exceed, the limitation of 26 U.S.C. 18
415(c) during the applicable limitation year as defined in AS 14.25.590. If the 19
[MATCHING] employer contribution would exceed the limits during the limitation 20
year in which the transfer occurs, the remaining amount of the [MATCHING] 21
employer contribution shall be made in the next limitation year, if the limits during 22
that year would not be exceeded. 23
* Sec. 40. AS 14.25.540(h) is amended to read: 24
(h) An [A MEMBER WHO IS ELIGIBLE TO ELECT TRANSFER TO THE 25
DEFINED CONTRIBUTION RETIREMENT PLAN MUST MAKE THE 26
ELECTION NOT LATER THAN 12 MONTHS AFTER THE FIRST DAY OF THE 27
MONTH FOLLOWING THE ADMINISTRATOR'S RECEIPT OF THE 28
NOTIFICATION THAT THE MEMBER'S EMPLOYER CONSENTS TO 29
TRANSFERS OF ITS MEMBERS UNDER (i) OF THIS SECTION. THE] election to 30
participate in the defined contribution retirement plan must be made in writing on 31

-23- Enrolled HB 78
forms and in the manner prescribed by the administrator. Before accepting an election 1
to participate in the defined contribution retirement plan, the administrator must 2
provide the employee planning on making an election to participate in the defined 3
contribution retirement plan with information, including calculations to illustrate the 4
effect of moving the employee's retirement plan from the defined benefit retirement 5
plan to the defined contribution retirement plan as well as other information to clearly 6
inform the employee of the potential consequences of the employee's election. An 7
election made under this subsection to participate in the defined contribution 8
retirement plan is irrevocable. Upon making the election, the participant shall be 9
enrolled as a member of the defined contribution retirement plan, the member's 10
participation in the plan shall be governed by the provisions of AS 14.25.310 - 11
14.25.590, and the member's participation in the defined benefit retirement plan under 12
AS 14.25.009 - 14.25.220 shall terminate. The participant's enrollment in the defined 13
contribution retirement plan shall be effective the first day of the month after the 14
administrator receives the completed enrollment forms. An election made by an 15
eligible member who is married is not effective unless the election is signed by the 16
individual's spouse. 17
* Sec. 41. AS 37.10.220(a) is amended to read: 18
(a) The board shall 19
(1) hold regular and special meetings at the call of the chair or of at 20
least five members; meetings are open to the public, and the board shall keep a full 21
record of all its proceedings; 22
(2) after reviewing recommendations from the Department of 23
Revenue, adopt investment policies for each of the funds entrusted to the board, 24
including a policy to prevent each fund from having an unfunded liability greater 25
than 10 percent; 26
(3) determine the appropriate investment objectives for the defined 27
benefit plans established under the teachers' retirement system under AS 14.25 and the 28
public employees' retirement system under AS 39.35; 29
(4) assist in prescribing the policies for the proper operation of the 30
systems and take other actions necessary to carry out the intent and purpose of the 31

Enrolled HB 78 -24-
systems in accordance with AS 37.10.210 - 37.10.390; 1
(5) provide a range of investment options and establish the rules by 2
which participants can direct their investments among those options with respect to 3
accounts established under 4
(A) AS 14.25.340 - 14.25.350 (teachers' retirement system 5
defined contribution individual accounts); 6
(B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 7
Annuity Plan); 8
(C) AS 39.35.730 - 39.35.750 (public employees' retirement 9
system defined contribution individual accounts); and 10
(D) AS 39.45.010 - 39.45.060 (public employees' deferred 11
compensation program); 12
(6) establish the rate of interest that shall be annually credited to each 13
member's individual contribution account in accordance with AS 14.25.145 and 14
AS 39.35.100 and the rate of interest that shall be annually credited to each member's 15
account in the health reimbursement arrangement plan under AS 39.30.300 - 16
39.30.495; the rate of interest shall be adopted on the basis of the probable effective 17
rate of interest on a long-term basis, and the rate may be changed from time to time; 18
(7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 19
(8) coordinate with the retirement system administrator to have an 20
annual actuarial valuation of each retirement system prepared to determine system 21
assets, accrued liabilities, and funding ratios and to certify to the appropriate 22
budgetary authority of each employer in the system 23
(A) an appropriate contribution rate for normal costs; [AND] 24
(B) an appropriate contribution rate for liquidating any past 25
service liability; in this subparagraph, the appropriate contribution rate for 26
liquidating the past service liability of the defined benefit retirement plan under 27
AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 28
retirement plan under AS 39.35.095 - 39.35.680 must be [DETERMINED BY 29
A LEVEL PERCENT OF PAY METHOD] based on amortization of the past 30
service liability for a closed term of 25 years; 31

-25- Enrolled HB 78
(C) an appropriate monthly employer contribution under 1
AS 14.25.070 and AS 39.35.255; and 2
(D) appropriate adjustments, if any, under AS 14.25.050(e) 3
and AS 39.35.160(e); 4
(9) review actuarial assumptions prepared and certified by a member 5
of the American Academy of Actuaries and conduct experience analyses of the 6
retirement systems not less than once every four years, except for health cost 7
assumptions, which shall be reviewed annually; the results of all actuarial assumptions 8
prepared under this paragraph shall be reviewed and certified by a second member of 9
the American Academy of Actuaries before presentation to the board; 10
(10) contract for an independent audit of the state's actuary not less 11
than once every four years; 12
(11) contract for an independent audit of the state's performance 13
consultant not less than once every four years; 14
(12) obtain an external performance review to evaluate the investment 15
policies of each fund entrusted to the board and report the results of the review to the 16
appropriate fund fiduciary; 17
(13) by the first day of each regular legislative session, report to the 18
governor, the legislature, and the individual employers participating in the state's 19
retirement systems on the financial condition of the systems in regard to 20
(A) the valuation of trust fund assets and liabilities; 21
(B) current investment policies adopted by the board; 22
(C) a summary of assets held in trust listed by the categories of 23
investment; 24
(D) the income and expenditures for the previous fiscal year; 25
(E) the return projections for the next calendar year; 26
(F) one-year, three-year, five-year, and 10-year investment 27
performance for each of the funds entrusted to the board; and 28
(G) other statistical data necessary for a proper understanding 29
of the financial status of the systems; 30
(14) submit quarterly updates of the investment performance reports to 31

Enrolled HB 78 -26-
the Legislative Budget and Audit Committee; 1
(15) develop an annual operating budget; [AND] 2
(16) administer pension forfeitures required under AS 37.10.310 using 3
the procedures of AS 44.62 (Administrative Procedure Act); 4
(17) establish one or more sub-trusts of the pension fund to hold 5
employer contributions deposited under AS 14.25.086 and AS 39.35.281, 6
employee contributions, assets, and earnings attributable to members of the 7
defined benefit retirement plan under AS 14.25.009 - 14.25.220 or the defined 8
benefit retirement plan under AS 39.35.095 - 39.35.680 who first became 9
members of the respective plan after June 30, 2006; and 10
(18) account for and track employer contributions, employee 11
contributions, assets, and earnings in each trust fund or sub-trust attributable to 12
members who first became members after June 30, 2006, of the defined benefit 13
retirement plan under AS 14.25.009 - 14.25.220 and members who first became 14
members after June 30, 2006, of the defined benefit retirement plan under 15
AS 39.35.095 - 39.35.680; employer contributions that exceed those assigned to 16
members who first became members after June 30, 2006, of the defined benefit 17
retirement plan under AS 14.25.009 - 14.25.220 and members who first became 18
members after June 30, 2006, of the defined benefit retirement plan under 19
AS 39.35.095 - 39.35.680 shall be transferred or retained in trusts or sub-trusts 20
with liability allocated toward employer normal costs for members who became 21
members of the respective defined benefit retirement plan before July 1, 2027, 22
past service costs, the health reimbursement arrangement plan under 23
AS 39.30.300 - 39.30.495, and employer contributions under AS 14.25.350 and 24
AS 39.35.750. 25
* Sec. 42. AS 37.10.220(b) is amended to read: 26
(b) The board may 27
(1) employ outside investment advisors to review investment policies; 28
(2) enter into an agreement with the fiduciary of another state fund in 29
order to assume the management and investment of those assets; 30
(3) contract for other services necessary to execute the board's powers 31

-27- Enrolled HB 78
and duties; 1
(4) enter into confidentiality agreements that would exempt records 2
from AS 40.25.110 and 40.25.120 if the records contain information that could affect 3
the value of investment by the board or that could impair the ability of the board to 4
acquire, maintain, or dispose of investments; 5
(5) adjust the amount of the increase in benefits payable to a 6
member who first became a member after June 30, 2006, as provided under 7
AS 14.25.143 and AS 39.35.475; 8
(6) adjust contributions under AS 14.25.050(e) and 9
AS 39.35.160(e). 10
* Sec. 43. AS 39.30.090(a) is amended to read: 11
(a) The Department of Administration may obtain a policy or policies of group 12
insurance covering state employees, persons entitled to coverage under AS 14.25.168, 13
14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 14
AS 39.37.145, employees of other participating governmental units, or persons 15
entitled to coverage under AS 23.15.136, subject to the following conditions: 16
(1) a group insurance policy shall provide one or more of the following 17
benefits: life insurance, accidental death and dismemberment insurance, weekly 18
indemnity insurance, hospital expense insurance, surgical expense insurance, dental 19
expense insurance, audiovisual insurance, or other medical care insurance; 20
(2) each eligible employee of the state, the spouse and the unmarried 21
children chiefly dependent on the eligible employee for support, and each eligible 22
employee of another participating governmental unit shall be covered by the group 23
policy, unless exempt under regulations adopted by the commissioner of 24
administration; 25
(3) a governmental unit may participate under a group policy if 26
(A) its governing body adopts a resolution authorizing 27
participation and payment of required premiums; 28
(B) a certified copy of the resolution is filed with the 29
Department of Administration; and 30
(C) the commissioner of administration approves the 31

Enrolled HB 78 -28-
participation in writing; 1
(4) in procuring a policy of group health or group life insurance as 2
provided under this section or excess loss insurance as provided in AS 39.30.091, the 3
Department of Administration shall comply with the dual choice requirements of 4
AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 5
transact business in the state under AS 21.09, a hospital or medical service corporation 6
authorized to transact business in this state under AS 21.87, or a health maintenance 7
organization authorized to operate in this state under AS 21.86; an excess loss 8
insurance policy may be obtained from a life or health insurer authorized to transact 9
business in this state under AS 21.09 or from a hospital or medical service corporation 10
authorized to transact business in this state under AS 21.87; 11
(5) the Department of Administration shall make available bid 12
specifications for desired insurance benefits or for administration of benefit claims and 13
payments to (A) all insurance carriers authorized to transact business in this state 14
under AS 21.09 and all hospital or medical service corporations authorized to transact 15
business under AS 21.87 who are qualified to provide the desired benefits; and (B) 16
insurance carriers authorized to transact business in this state under AS 21.09, hospital 17
or medical service corporations authorized to transact business under AS 21.87, and 18
third-party administrators licensed to transact business in this state and qualified to 19
provide administrative services; the specifications shall be made available at least once 20
every five years; the lowest responsible bid submitted by an insurance carrier, hospital 21
or medical service corporation, or third-party administrator with adequate servicing 22
facilities shall govern selection of a carrier, hospital or medical service corporation, or 23
third-party administrator under this section or the selection of an insurance carrier or a 24
hospital or medical service corporation to provide excess loss insurance as provided in 25
AS 39.30.091; 26
(6) if the aggregate of dividends payable under the group insurance 27
policy exceeds the governmental unit's share of the premium, the excess shall be 28
applied by the governmental unit for the sole benefit of the employees; 29
(7) a person receiving benefits under AS 14.25.110, AS 22.25, 30
AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 31

-29- Enrolled HB 78
effect under this section at the time of termination of employment with the state or 1
participating governmental unit; 2
(8) a person electing to have insurance under (7) of this subsection 3
shall pay the cost of this insurance; 4
(9) for each permanent part-time employee electing coverage under 5
this section, the state shall contribute one-half the state contribution rate for permanent 6
full-time state employees, and the permanent part-time employee shall contribute the 7
other one-half; 8
(10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 9
or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 10
and eligible dependents under this section; the level of coverage for persons over 65 11
shall be the same as that available before reaching age 65 except that the benefits 12
payable shall be supplemental to any benefits provided under the federal old age, 13
survivors, and disability insurance program; a person electing to have insurance under 14
this paragraph shall pay the cost of the insurance; the commissioner of administration 15
shall adopt regulations implementing this paragraph; 16
(11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 17
or former AS 39.37 may obtain long-term care insurance for that person and eligible 18
dependents under this section; a person who elects insurance under this paragraph 19
shall pay the cost of the insurance premium; the commissioner of administration shall 20
adopt regulations to implement this paragraph; 21
(12) each licensee holding a current operating agreement for a vending 22
facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 23
applies to governmental units other than the state. 24
* Sec. 44. AS 39.30.097(a) is amended to read: 25
(a) The commissioner of administration is authorized to prefund medical 26
benefits provided by AS 14.25.168, 14.25.171, AS 22.25.090, [AND] AS 39.35.535, 27
and 39.35.537 by establishing an irrevocable trust that is exempt from federal income 28
tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 29
and actuarial requirements of the Governmental Accounting Standards Board. 30
* Sec. 45. AS 39.30.097(b) is amended to read: 31

Enrolled HB 78 -30-
(b) The commissioner of administration is authorized to prefund medical 1
benefits provided by AS 14.25.480 [, AS 39.30.300,] and AS 39.35.880 by 2
establishing an irrevocable trust that is exempt from federal income tax under 26 3
U.S.C. 115 and subject to the applicable financial reporting, disclosure, and actuarial 4
requirements of the Governmental Accounting Standards Board. 5
* Sec. 46. AS 39.30.097 is amended by adding a new subsection to read: 6
(f) The commissioner of administration is authorized to prefund medical 7
benefits provided by AS 39.30.300 by establishing an irrevocable trust that is exempt 8
from federal income tax under 26 U.S.C. 115 and subject to the applicable financial 9
reporting, disclosure, and actuarial requirements of the Governmental Accounting 10
Standards Board. 11
* Sec. 47. AS 39.30.300 is amended to read: 12
Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 13
Health Reimbursement Arrangement Plan established. The State of Alaska 14
Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 15
established for 16
(1) teachers who first become members of the [DEFINED 17
CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 - 18
14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], 19
and teachers who elected under AS 14.25.540 to participate in the plan under 20
AS 14.25.310 - 14.25.590; and 21
(2) employees of the state, political subdivisions of the state, and 22
public organizations of the state who first become members [OF THE DEFINED 23
CONTRIBUTION PLAN] of the public employees' retirement system (AS 39.35) 24
[PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER AS 39.35.700 - 25
39.35.990 ON OR] after June 30, 2006, and employees of the state, political 26
subdivisions of the state, and public organizations of the state who elected under 27
AS 39.35.940 to participate in the plan established under AS 39.35.700 - 39.35.990 28
[JULY 1, 2006]. 29
* Sec. 48. AS 39.30.340 is amended to read: 30
Sec. 39.30.340. Powers and duties of the administrator. The administrator 31

-31- Enrolled HB 78
shall establish a teachers' and public employees' retiree health reimbursement 1
arrangement plan trust fund under AS 39.30.097(f) in which the assets of the plan 2
shall be deposited and held. [THE RETIREE HEALTH REIMBURSEMENT 3
ARRANGEMENT PLAN TRUST FUND MAY BE A SUB-TRUST OF THE 4
ALASKA RETIREE HEALTH CARE TRUST ESTABLISHED UNDER 5
AS 39.30.097(b).] The administrator has the same powers and duties with regard to 6
the plan and the trust fund as provided in AS 14.25.003 and 14.25.004. 7
* Sec. 49. AS 39.30.370 is amended to read: 8
Sec. 39.30.370. Contributions by employers. Except as required under (b) 9
of this section, for [FOR] each member of the plan, an employer shall contribute to 10
the teachers' and public employees' retiree health reimbursement arrangement plan 11
trust fund an amount equal to three percent of the average annual compensation of all 12
employees of all employers in the teachers' retirement system and public employees' 13
retirement system. [THE ADMINISTRATOR SHALL MAINTAIN A RECORD FOR 14
EACH MEMBER TO ACCOUNT FOR EMPLOYER CONTRIBUTIONS ON 15
BEHALF OF THAT MEMBER. THE BOARD SHALL ESTABLISH BY 16
REGULATION THE RATE OF INTEREST TO BE APPLIED ANNUALLY TO 17
THE AMOUNT IN A MEMBER'S INDIVIDUAL ACCOUNT.] 18
* Sec. 50. AS 39.30.370 is amended by adding new subsections to read: 19
(b) For each member of the plan who is a peace officer or firefighter, an 20
employer shall contribute to the teachers' and public employees' retiree health 21
reimbursement arrangement plan trust fund an amount equal to four percent of the 22
average annual compensation of all employees of all employers in the teachers' 23
retirement system and public employees' retirement system. 24
(c) The administrator shall maintain a record for each member to account for 25
employer contributions on behalf of that member. The board shall establish by 26
regulation the rate of interest to be applied annually to the amount in a member's 27
individual account. 28
(d) In this section, "peace officer" and "firefighter" have the meaning given in 29
AS 39.35.990. 30
* Sec. 51. AS 39.30.380 is amended to read: 31

Enrolled HB 78 -32-
Sec. 39.30.380. Termination of employment. A person who terminates 1
employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470, 2
AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 3
contributions made on behalf of the person to the teachers' and public employees' 4
retiree health reimbursement arrangement trust fund. If a person returns to 5
employment with a participating employer by December 31 of the year in which the 6
person reaches 65 years of age, the person's account balance shall be restored in the 7
amount recorded on the date of termination from the trust, adjusted for inflation at the 8
rate of the Consumer Price Index for Anchorage, Alaska. The earlier period of 9
employment with a participating employer shall be credited toward eligibility for 10
medical benefits. 11
* Sec. 52. AS 39.30.390 is amended to read: 12
Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 13
eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 14
[AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the 15
individual account established for a member under the plan [, EXCEPT MEMBERS 16
DO NOT HAVE TO RETIRE DIRECTLY FROM THE SYSTEM]. A person who is 17
the dependent child of an eligible member is eligible for reimbursements if the eligible 18
member and surviving spouse have both died so long as the person meets the 19
definition of dependent child. 20
* Sec. 53. AS 39.30.400(a) is amended to read: 21
(a) The administrator may deduct the cost of monthly premiums from the 22
individual account for retiree major medical insurance on behalf of an eligible person 23
who elected retiree major medical insurance under AS 14.25.171, 14.25.480, 24
AS 39.35.537, or 39.35.880 [AS 14.25.480 OR AS 39.35.880]. 25
* Sec. 54. AS 39.30.420(a) is amended to read: 26
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 27
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 28
time, in whole or in part, including the right to make retroactive amendments referred 29
to in 26 U.S.C. 401(b). 30
* Sec. 55. AS 39.30.420(b) is amended to read: 31

-33- Enrolled HB 78
(b) The plan administrator may not modify or amend the plan retroactively [IN 1
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 2
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 3
MADE] before the modification or amendment except to the extent that the reduction 4
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 5
Revenue Code. 6
* Sec. 56. AS 39.30.420(c) is amended to read: 7
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 8
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 9
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 10
is terminated, all investments at the time of termination remain in force until all 11
individual accounts have been completely distributed under the plan. After [, AND, 12
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 13
employer. 14
* Sec. 57. AS 39.30.420(d) is repealed and reenacted to read: 15
(d) Within one year after determining that a contribution to the plan by an 16
employer was the result of a mistake of fact, the administrator shall return the 17
contribution to the employer. 18
* Sec. 58. AS 39.30.495(5) is amended to read: 19
(5) "eligible person" means a person who meets the eligibility 20
requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 21
OR AS 39.35.870]; 22
* Sec. 59. AS 39.30.495(6) is amended to read: 23
(6) "employer" has the meaning given in AS 14.25.220 for employers 24
of teachers in the defined benefit retirement plan established in AS 14.25.009 - 25
14.25.220, has the meaning given in AS 14.25.590 for employers of teachers in the 26
defined contribution plan established in AS 14.25.310 - 14.25.590, has the meaning 27
given in AS 39.35.680 for employers of public employees in the defined benefit 28
retirement plan established in AS 39.35.095 - 39.35.680, and has the meaning given 29
in AS 39.35.990 for employers of public employees in the defined contribution plan 30
established in AS 39.35.700 - 39.35.990; 31

Enrolled HB 78 -34-
* Sec. 60. AS 39.30.495(9) is amended to read: 1
(9) "member" means a member of the plan [DEFINED 2
CONTRIBUTION PLAN OF THE TEACHERS' RETIREMENT SYSTEM IN 3
AS 14.25.310 - 14.25.590 OR A MEMBER OF THE PUBLIC EMPLOYEES' 4
RETIREMENT SYSTEM IN AS 39.35.700 - 39.35.990]; 5
* Sec. 61. AS 39.35.095 is amended to read: 6
Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 7
[FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 8
only to 9
(1) members first hired before July 1, 2006, who 10
(A) have not elected under AS 39.35.940 to participate in 11
the defined contribution retirement plan under AS 39.35.700 - 39.35.990; 12
or 13
(B) have elected under AS 39.35.940 to participate in the 14
defined contribution retirement plan under AS 39.35.700 - 39.35.990 and 15
are former members of the defined contribution retirement plan under 16
AS 39.35.700 - 39.35.990; 17
(2) members hired by the state, or by an employer that is a 18
political subdivision or public organization of the state that elects to provide 19
defined benefits under AS 39.35.095 - 39.35.680 to employees who first become 20
members of the plan after June 30, 2006, who are 21
(A) former members of the defined contribution retirement 22
plan under AS 39.35.700 - 39.35.990 first hired after June 30, 2006, and 23
before July 1, 2027; or 24
(B) members first hired after June 30, 2027 [: AS 39.35.095 25
- 39.35.680]. 26
* Sec. 62. AS 39.35.095 is amended by adding a new subsection to read: 27
(b) An employee who became a member of the system after June 30, 2006, 28
and before July 1, 2027, or who has elected under AS 39.35.940 to participate in the 29
defined contribution retirement plan under AS 39.35.700 - 39.35.990, is subject to 30
AS 39.35.095 - 39.35.680 if the employee 31

-35- Enrolled HB 78
(1) is not employed by an employer on July 1, 2027; 1
(2) is reemployed after July 1, 2027, by an employer that provides 2
defined benefits under AS 39.35.095 - 39.35.680 to employees who first become 3
members of the plan after June 30, 2006; and 4
(3) has, before the date of reemployment, received 5
(A) a distribution, other than a rollover distribution, of the 6
entire balance in the member's individual account in the defined contribution 7
retirement plan; or 8
(B) a rollover distribution of the entire balance in the member's 9
individual account in the defined contribution retirement plan and has not, 10
within 180 days of reemployment, had all or part of a direct rollover 11
distribution from an eligible retirement plan owned by the member paid 12
directly into the member's individual account. 13
* Sec. 63. AS 39.35.100(b) is amended to read: 14
(b) An individual account shall be maintained for each employee to record the 15
amount of the employee's mandatory contributions collected under AS 39.35.160 16
[AS 39.35.160(a)]. As of the last day of each calendar year and of each fiscal year, this 17
account shall be credited with interest by applying the prescribed rate of interest, as 18
determined by the board, to the balance in the account as of that date. When the 19
employee is appointed to retirement, the amount held in the individual account shall 20
be used first to fully finance the benefits paid. Once this account has been exhausted, 21
the plan shall fully finance the benefits paid that were not financed by the employee's 22
individual account. 23
* Sec. 64. AS 39.35 is amended by adding a new section to article 3 to read: 24
Sec. 39.35.159. Election of defined benefit retirement plan by reemployed 25
employees. (a) An employee of an employer that provides defined benefits under 26
AS 39.35.095 - 39.35.680 to employees who first become members of the plan after 27
June 30, 2006, may make a one-time election to participate in the plan under 28
AS 39.35.095 - 39.35.680 if the employee was first hired after June 30, 2006, and 29
before July 1, 2027, and, if not employed by an employer on July 1, 2027, is 30
reemployed by an employer after July 1, 2027, and, before the date of reemployment, 31

Enrolled HB 78 -36-
(1) has not received a distribution of the entire balance in the 1
employee's individual account under the defined contribution retirement plan 2
established in AS 39.35.700 - 39.35.990; or 3
(2) has received a rollover distribution of the entire balance in the 4
member's individual account in the defined contribution retirement plan and has, 5
within 180 days of reemployment, had all or part of a direct rollover distribution from 6
an eligible retirement plan owned by the member paid directly into the member's 7
individual account. 8
(b) An election under (a) of this section may be made not more than 180 days 9
after the date of reemployment. A reemployed employee electing to participate under 10
(a) of this section shall use the balance of the employee's individual account in the 11
plan under AS 39.35.700 - 39.35.990, including any rollover contributions, to 12
purchase credited service in the plan under AS 39.35.095 - 39.35.680. An election 13
made under (a) of this section must be made in writing in the manner prescribed by the 14
administrator. An election made by an employee who is married is not effective unless 15
the election is signed by the employee's spouse. The administrator shall provide an 16
employee who is eligible to make an election under (a) of this section with 17
information about the potential consequences of the employee's election, including 18
calculations to illustrate the effect of moving the employee's retirement plan from a 19
defined contribution retirement plan to a defined benefit retirement plan. 20
(c) An election made under (a) of this section to participate in the plan under 21
AS 39.35.095 - 39.35.680 is irrevocable. On the effective date of the election, an 22
eligible employee shall be enrolled as a member of the plan, and the employee's 23
participation in the plan shall be governed by the applicable provisions of the plan. 24
The employee's enrollment in the plan is retroactive to the date of hire. 25
(d) When an eligible employee makes an election under this section to 26
participate in the plan under AS 39.35.095 - 39.35.680, the administrator shall cause 27
the total amount of the employee's employee and employer contributions to the plan 28
under AS 39.35.700 - 39.35.990, with investment earnings and losses through the day 29
of the employee's election to participate as a member in the plan under AS 39.35.095 - 30
39.35.680, to be actuarially calculated and, subject to (f) of this section, transferred to 31

-37- Enrolled HB 78
the pension fund in the plan under AS 39.35.095 - 39.35.680. On the effective date of 1
the employee's participation in the plan under AS 39.35.095 - 39.35.680, the employee 2
shall be credited with service in the plan. The board shall determine the cost of the 3
employee's actual service time based on the employee's accrued actuarial liability of 4
pension benefits in the plan and credit the employee with service time equal to the 5
value actuarially calculated and transferred to the pension fund in the plan under 6
AS 39.35.095 - 39.35.680. The board shall adopt regulations establishing transfer 7
procedures. The transfer may not occur later than 60 days after the date the 8
administrator receives the employee's election, unless the major financial markets for 9
securities available for a transfer are seriously disrupted by an unforeseen event that 10
also causes the suspension of trading on a national securities exchange in the country 11
where the securities were issued; in that event, the 60-day period may be extended by 12
a resolution of the board. A transfer is not commissionable or subject to a fee and may 13
be in the form of cash or a security as determined by the board. The value of a security 14
shall be assessed on the date the security is received in the employee's account. 15
(e) When making a transfer under (d) of this section or a transfer for a 16
reemployed employee subject to the plan under AS 39.35.095(b), the administrator 17
shall transfer 18
(1) an amount equal to the decrease in the accrued actuarial liability of 19
the death and disability trust in the plan under AS 39.35.700 - 39.35.990 resulting 20
from the transfer as of the date of transfer, based on the most recent actuarial valuation 21
of the death and disability trust, from the death and disability trust in the plan under 22
AS 39.35.700 - 39.35.990 to the pension fund in the plan under AS 39.35.095 - 23
39.35.680; and 24
(2) an amount equal to the increase in the accrued actuarial liability of 25
the health care trust in the plan under AS 39.35.095 - 39.35.680 resulting from the 26
transfer as of the date of transfer, based on the actuarial assumptions set out in (g) of 27
this section, from the trust established under AS 39.30.097(b) for the prefunding of 28
medical benefits provided by AS 39.35.880 to the trust established under 29
AS 39.30.097(a) for the prefunding of medical benefits provided by AS 39.35.537. 30
(f) If the value actuarially calculated under (d) of this section is insufficient to 31

Enrolled HB 78 -38-
pay for service credit equal to the employee's actual service, the administrator shall 1
allow the employee the option of purchasing service credit in an amount up to the 2
amount needed to eliminate the insufficiency; however, if that value exceeds the 3
amount needed to pay for service credit equal to the employee's actual service, the 4
administrator shall cause the excess to be paid to the employee as a rollover transfer 5
either to an individual employee annuity account in the Department of Administration 6
under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 7
Plan) or, if the member's employer does not participate in the State of Alaska 8
Supplemental Annuity Plan, to an eligible retirement plan as defined in 9
AS 39.35.760(d). An excess may not be used to purchase additional service credit in 10
the plan under AS 39.35.095 - 39.35.680. When a reemployed employee enters the 11
plan under AS 39.35.095(b), the administrator shall allow the employee to pay for a 12
period of service credit up to the employee's actual service. When an employee elects 13
to purchase service credit under this section and does not immediately pay for the 14
service credit purchased, an indebtedness is established. Interest as prescribed by 15
regulation accrues on an employee's indebtedness. If the indebtedness exists when the 16
employee is appointed to retirement, the administrator shall make a corresponding 17
actuarial adjustment to the benefit payable to the employee for service in the defined 18
contribution retirement plan. 19
(g) Actuarial assumptions about the plan under AS 39.35.095 - 39.35.680 20
must be based on the most recent actuarial valuation of the plan, except that the 21
retirement rates are computed at 25 percent of the retirement rates used in the most 22
recent actuarial valuation of the pension fund for the plan plus 75 percent of the 23
retirement rates used in the most recent actuarial valuation of the plan under 24
AS 39.35.700 - 39.35.990. 25
(h) The provisions of this section are subject to the requirements of the 26
Internal Revenue Code and the limitations under AS 39.35.115, 39.35.678, 27
39.35.710(c) and (d), and 39.35.895. In this subsection, "Internal Revenue Code" has 28
the meaning given in AS 39.35.990. 29
* Sec. 65. AS 39.35.160(a) is amended to read: 30
(a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 31

-39- Enrolled HB 78
each peace officer or firefighter shall contribute to the plan an amount equal to seven 1
and one-half percent of the peace officer's or firefighter's compensation, and, except [. 2
EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, 3
each other employee shall contribute to the plan an amount equal to six and three-4
quarters percent of the employee's compensation. [THE CONTRIBUTIONS SHALL 5
BE DEDUCTED BY THE EMPLOYER AT THE END OF EACH PAYROLL 6
PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 7
COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 8
TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 9
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 10
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 11
OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 12
* Sec. 66. AS 39.35.160 is amended by adding new subsections to read: 13
(e) An employee who first participates in the plan after June 30, 2006, shall 14
contribute to the plan an amount equal to eight percent of the employee's 15
compensation. The board may, from time to time, increase or decrease the contribution 16
under this subsection; however, the contribution may not be decreased to less than 17
eight percent of the employee's compensation. 18
(f) Contributions under (a) and (e) of this section shall be deducted by the 19
employer at the end of each payroll period. The contributions shall be deducted from 20
employee compensation before computation of applicable federal taxes, and the 21
contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 22
member may not have the option of making the payroll deduction directly instead of 23
having the contribution picked up by the employer. 24
(g) The board shall increase the employee contribution under (e) of this 25
section if the board determines that, unless the contribution is increased, the portion of 26
the liability of the plan that is attributable to employees who first participate in the 27
plan after June 30, 2006, will be funded below 90 percent. The board may not increase 28
the employee contribution unless the board increases the employer contribution under 29
AS 39.35.255(k)(2) by an equal amount. The board may decrease the contribution 30
under (e) of this section if the board determines that, after the contribution is 31

Enrolled HB 78 -40-
decreased, the portion of the liability of the plan that is attributable to all members 1
who first became members of the plan after June 30, 2006, will be funded above 90 2
percent. The board may not decrease the employee contribution required unless the 3
board decreases the employer contribution under AS 39.35.255(k)(2) by an equal 4
amount. 5
(h) The board may not increase the employer contribution under 6
AS 39.35.255(k) unless the board increases the member contribution under (e) of this 7
section by a comparable amount. 8
* Sec. 67. AS 39.35.165(a) is amended to read: 9
(a) An employee who is eligible to purchase credited service under 10
AS 39.35.159, 39.35.310 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 11
39.35.360, or 39.35.370, a member who is eligible to purchase credited service under 12
AS 39.35.375, or an elected public official who is eligible to purchase credited service 13
under AS 39.35.381 is an employee for purposes of this section. An employee may, in 14
lieu of making payments directly to the plan, elect to have the employee's employer 15
make payments as provided in this section. 16
* Sec. 68. AS 39.35.165(b) is amended to read: 17
(b) An employee may elect to have the employer make payments for all or any 18
portion of the amounts payable for the employee's purchase of credited service 19
through a salary reduction program as follows: 20
(1) the amounts paid under a salary reduction program are in lieu of 21
contributions by the employee making the election; the electing employee's salary or 22
other compensation shall be reduced by the amount paid by the employer under this 23
subsection; 24
(2) the employee shall make an irrevocable election under this section 25
to purchase credited service as permitted in AS 39.35.159, 39.35.310 [AS 39.35.310], 26
39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 39.35.375, or 27
39.35.381 and before the employee's termination of employment; the irrevocable 28
election must specify the number of payroll periods that deductions will be made from 29
the employee's compensation and the dollar amount of deductions for each payroll 30
period during the specified number of payroll periods; the deductions made under this 31

-41- Enrolled HB 78
paragraph cease upon the earlier of the member's termination of employment with the 1
employer or the member's death; amounts paid by an employer under (f) of this 2
section may not be applied toward the payment of the dollar amount of the deductions 3
representing the portion of the credited service that is being purchased by the member 4
through payroll deduction in accordance with the member's irrevocable election under 5
this subsection; 6
(3) amounts paid by an employer under this subsection shall be treated 7
as employer contributions for the purpose of determining tax treatment under the 8
Internal Revenue Code; the amounts paid by the employer under this section may not 9
be included in the member's gross income for income tax purposes until those amounts 10
are distributed by refund or retirement benefit payments. 11
* Sec. 69. AS 39.35.165(g) is amended to read: 12
(g) Payments made under this section shall be applied to reduce the 13
employee's outstanding indebtedness described in AS 39.35.159, 39.35.310 14
[AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 15
39.35.375, or 39.35.381 at the time that the contributions are received by the plan. 16
* Sec. 70. AS 39.35.165(i) is amended to read: 17
(i) On satisfaction of the eligibility requirements of AS 39.35.159, 39.35.310 18
[AS 39.35.310], 39.35.330, 39.35.340, 39.35.341, 39.35.345, 39.35.360, 39.35.370, 19
39.35.375, or 39.35.381, the requirements of this section, and the administrative filing 20
requirements specified by the commissioner, the plan shall adjust the employee's 21
credited service history and add any additional service credits acquired. 22
* Sec. 71. AS 39.35.255(a) is amended to read: 23
(a) Each employer, except as provided in (h) and (k) of this section, shall 24
contribute to the system every payroll period an amount calculated by applying a rate 25
of 22 percent of the greater of the total of all base salaries 26
(1) paid by the employer to employees who are active members of the 27
system and who first became members of the retirement plan under AS 39.35.095 28
- 39.35.680 before July 1, 2006, including any adjustments to contributions required 29
by AS 39.35.520; or 30
(2) paid by the employer to employees who were active members of 31

Enrolled HB 78 -42-
the system during the corresponding payroll period for the fiscal year ending 1
(A) June 30, 2008; or 2
(B) June 30, 2012, if that total is less than the total under (A) of 3
this paragraph, and the employer is a municipality in which the population 4
decreased by more than 25 percent between 2000 and 2010, according to the 5
decennial census conducted by the United States Bureau of the Census. 6
* Sec. 72. AS 39.35.255(d) is amended to read: 7
(d) Notwithstanding (a) and (k) of this section, the annual employer 8
contribution rate may not be less than the rate sufficient to allow payment of the 9
employer normal cost and the employer contributions required under AS 39.30.370 10
and AS 39.35.750. 11
* Sec. 73. AS 39.35.255 is amended by adding new subsections to read: 12
(j) If the legislature appropriates funds for the purpose of decreasing an 13
employer's contribution, the employer's contribution under (a) and (k) of this section 14
shall decrease by that amount. 15
(k) Notwithstanding (a) of this section, and except as provided in (h) of this 16
section, the state and each employer that elects to provide defined benefits under 17
AS 39.35.095 - 39.35.680 to employees who first become members of the plan after 18
June 30, 2006, shall contribute to the system every payroll period the lesser of 19
(1) an amount calculated by applying a rate of 22.5 percent of the 20
greater of the total of all base salaries 21
(A) paid by the employer to employees who are active 22
members of the system, including any adjustments to contributions required by 23
AS 39.35.520; or 24
(B) paid by the employer to employees who were active 25
members of the system during the corresponding payroll period for the fiscal 26
year ending 27
(i) June 30, 2008; or 28
(ii) June 30, 2012, if that total is less than the total 29
under (i) of this subparagraph, and the employer is a municipality in 30
which the population decreased by more than 25 percent between 2000 31

-43- Enrolled HB 78
and 2010, according to the decennial census conducted by the United 1
States Bureau of the Census; or 2
(2) an amount calculated by applying a rate established by the board 3
under AS 37.10.220 to the total of all base salaries paid by the employer to active 4
members of the system; the rate must be at least 12 percent and be sufficient to pay the 5
actuarially determined employer normal cost, all contributions required under 6
AS 39.30.370 and AS 39.35.750, and the past service cost attributable to active 7
members of the system who first became members of the retirement plan under 8
AS 39.35.095 - 39.35.680 after June 30, 2006. 9
* Sec. 74. AS 39.35 is amended by adding a new section to read: 10
Sec. 39.35.281. Sub-trust for members who first became members after 11
June 30, 2006. The administrator shall deposit a portion of employer contributions 12
under AS 39.35.255 and 39.35.280 in a sub-trust of the retirement fund established by 13
the board for members who first became members after June 30, 2006. The amount 14
deposited, when combined with the amount separately computed for medical benefits 15
under AS 39.35.282, must be sufficient to pay the actuarially determined employer 16
normal cost and past service cost for members of the system who first became 17
members after June 30, 2006. When the amount sufficient to pay the actuarially 18
determined employer normal cost, all contributions required under AS 39.30.370 and 19
AS 39.35.750, and past service cost for members of the system is less than 12 percent 20
of all base salaries paid to active members of the system, the administrator shall 21
deposit the difference in the sub-trust established under this section. 22
* Sec. 75. AS 39.35.282 is amended to read: 23
Sec. 39.35.282. Contributions for medical benefits. Contributions made by 24
an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 25
computed for benefits provided by AS 39.35.535 and retiree major medical 26
insurance plan benefits provided under AS 39.35.537 and must [SHALL] be 27
deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 28
* Sec. 76. AS 39.35.340(i) is amended to read: 29
(i) Notwithstanding (d) of this section, a member who retires as a peace officer 30
or firefighter may elect to use five or fewer years of credited service granted under this 31

Enrolled HB 78 -44-
section in computing years of credited service under AS 39.35.535(c) or 39.35.537. 1
When eligibility for credited service for military service has been established and an 2
election under this subsection has been made, an indebtedness in addition to the 3
indebtedness determined under (b) of this section shall be determined for each year of 4
military service used under this subsection, in an amount based on the increase, if any, 5
in the present value of future benefits for that year as determined by the department. 6
* Sec. 77. AS 39.35.345(d) is amended to read: 7
(d) An employee may choose whether the credited service granted under this 8
section is used to satisfy the credited service requirements for normal retirement under 9
AS 39.35.370(a)(1)(B) or (C) or (a)(2)(B), (C), or (D) [AS 39.35.370(a)(2) OR (3)] 10
or 39.35.385(f) or is only used for the calculation of benefits. An election under this 11
subsection is irrevocable and applies to all temporary credited service that the 12
employee has accrued when the employee retires. An election under this subsection 13
does not change the date that an employee is considered to have commenced 14
participation in the plan under AS 39.35.120. 15
* Sec. 78. AS 39.35.370(a) is amended to read: 16
(a) Subject to AS 39.35.450, a terminated employee 17
(1) who first became a member before July 1, 2006, is eligible for a 18
normal retirement benefit 19
(A) [(1)] at age 60 with at least five years of credited service; 20
(B) [(2)] with at least 20 years of credited service as a peace 21
officer or firefighter; or 22
(C) [(3)] with at least 30 years of credited service; 23
(2) who first became a member of the plan after June 30, 2006, is 24
eligible for a normal retirement benefit 25
(A) at age 60 with at least five years of credited service; 26
(B) at age 55 with at least 20 years of credited service as a 27
peace officer or firefighter; 28
(C) at age 50 with at least 25 years of credited service as a 29
peace officer or firefighter; or 30
(D) with at least 30 years of credited service [FOR ALL 31

-45- Enrolled HB 78
OTHER EMPLOYEES]. 1
* Sec. 79. AS 39.35.381(e) is amended to read: 2
(e) A person who retires under this section is not entitled to disability or death 3
benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 4
to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 5
section may not be used for vesting under AS 39.35.095 - 39.35.680. 6
* Sec. 80. AS 39.35.475(b) is amended to read: 7
(b) Subject to (g) and (h) of this section, the [THE] increase in benefit 8
payments applies to total benefit payments except for the cost-of-living allowance 9
under AS 39.35.480. The amount of the increase is a percentage of the current benefit 10
equal to 11
(1) the lesser of 75 percent of the increase in the cost of living in the 12
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 13
years old and for members receiving disability benefits; and 14
(2) the lesser of 50 percent of the increase in the cost of living in the 15
preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 16
less than 65 years old or for recipients who are less than 60 years old on July 1 but 17
who have received benefits from the plan for at least five years. 18
* Sec. 81. AS 39.35.475 is amended by adding new subsections to read: 19
(g) Subject to (h) of this section, the amount of an increase for members who 20
first became members of the plan after June 30, 2006, and do not meet the eligibility 21
requirements for a permanent fund dividend under AS 43.23.005(a) in effect on July 1, 22
2026, is equal to one-half of the applicable percentage under (b) of this section. 23
(h) If the board determines that the portion of the liability of the plan that is 24
attributable to all members who first became members of the plan after June 30, 2006, 25
is funded below 90 percent, the board shall reduce the amount of the increase 26
determined under (b) or (g) of this section that is payable to a member who first 27
became a member after June 30, 2006. At any time, the board may terminate a 28
reduction made under this subsection. 29
* Sec. 82. AS 39.35.480(a) is amended to read: 30
(a) While residing in the state, a person who first became a member of the 31

Enrolled HB 78 -46-
plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680, 1
and who is 65 years of age or older or a person who first became a member of the 2
plan before July 1, 2006, and who is receiving a disability benefit is entitled to 3
receive a monthly cost-of-living allowance in addition to the basic benefit. The 4
amount of this allowance shall be $50 or 10 percent of the basic benefit, whichever is 5
greater. 6
* Sec. 83. AS 39.35.530 is amended to read: 7
Sec. 39.35.530. Service credit and limit [LIMIT] on pension benefits. An 8
employee may not simultaneously receive a pension under more than one section of 9
AS 39.35.095 - 39.35.680. However, benefits under AS 39.35.420(b), 39.35.430, 10
39.35.440, [OR] 39.35.450, or the defined contribution retirement plan under 11
AS 39.35.700 - 39.35.990 shall be paid in addition to the benefits or service credit a 12
person is entitled to receive because of the person's own membership in the defined 13
benefit retirement plan. An employee may not (1) receive duplicate credit under the 14
defined benefit retirement [THIS] plan for the same period of service, (2) receive 15
more than one year of service credit in the course of any calendar year, or (3) receive a 16
benefit while accruing service credit under the [THIS] plan, except as provided in this 17
section. 18
* Sec. 84. AS 39.35.535(a) is amended to read: 19
(a) Except as provided in (d) and (g) of this section, the following persons are 20
entitled to major medical insurance coverage under this section: 21
(1) for employees first hired before July 1, 1986, 22
(A) an employee who is receiving a monthly benefit from the 23
plan and who has elected coverage; 24
(B) the spouse and dependent children of the employee 25
described in (A) of this paragraph; 26
(C) the surviving spouse of a deceased employee who is 27
receiving a monthly benefit from the plan and who has elected coverage; 28
(D) the dependent children of a deceased employee who are 29
dependent on the surviving spouse described in (C) of this paragraph; 30
(2) for members first hired [ON OR] after June 30 [JULY 1], 1986, 31

-47- Enrolled HB 78
(A) an employee who is receiving a monthly benefit from the 1
plan and who has elected coverage for the employee; 2
(B) the spouse of the employee described in (A) of this 3
paragraph if the employee elected coverage for the spouse; 4
(C) the dependent children of the employee described in (A) of 5
this paragraph if the employee elected coverage for the dependent children; 6
(D) the surviving spouse of a deceased employee who is 7
receiving a monthly benefit from the plan and who has elected coverage; 8
(E) the dependent children of a deceased employee who are 9
dependent on the surviving spouse described in (D) of this paragraph if the 10
surviving spouse has elected coverage for the dependent children. 11
* Sec. 85. AS 39.35.535(c) is amended to read: 12
(c) A benefit recipient who became a member before July 1, 2006, or the 13
surviving spouse of the member may elect major medical insurance coverage in 14
accordance with regulations and under the following conditions: 15
(1) a person, other than a disabled member or a disabled member who 16
is appointed to normal retirement, shall [MUST] pay an amount equal to the full 17
monthly group premium for retiree major medical insurance coverage if the person is 18
(A) younger than 60 years of age and has less than 19
(i) 25 years of credited service as a peace officer under 20
AS 39.35.360 and 39.35.370; or 21
(ii) 30 years of credited service under AS 39.35.360 and 22
39.35.370 that is not service as a peace officer; or 23
(B) of any age and has less than 10 years of credited service; 24
(2) a person is not required to make premium payments for retiree 25
major medical coverage if the person 26
(A) is a disabled member; 27
(B) is a disabled member who is appointed to normal 28
retirement; 29
(C) is 60 years of age or older and has at least 10 years of 30
credited service; or 31

Enrolled HB 78 -48-
(D) has at least 1
(i) 25 years of credited service as a peace officer under 2
AS 39.35.360 and 39.35.370; or 3
(ii) 30 years of credited service under AS 39.35.360 and 4
39.35.370 not as a peace officer. 5
* Sec. 86. AS 39.35.535 is amended by adding a new subsection to read: 6
(g) A benefit recipient who first became a member after June 30, 2006, or a 7
surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 8
under this section but may elect medical benefits under AS 39.35.537. 9
* Sec. 87. AS 39.35 is amended by adding a new section to read: 10
Sec. 39.35.537. Medical benefit; eligibility of employees first hired after 11
June 30, 2006; surviving spouses and dependents. (a) An employee who first 12
became a member of the plan after June 30, 2006, receives a monthly benefit from the 13
plan, retired from the plan, and has elected benefits under this section is entitled to 14
medical benefits under this section. A member who applies for medical benefits under 15
this section shall apply on the forms and in the manner prescribed by the 16
administrator. A member is eligible to retire from the plan if the member 17
(1) has at least 20 years of membership service as a peace officer or 18
firefighter; 19
(2) has at least 25 years of membership; or 20
(3) reaches the age set for Medicare eligibility and has at least 10 years 21
of membership service. 22
(b) The member's surviving spouse is eligible to elect medical benefits if the 23
member had retired or was eligible for retirement and medical benefits at the time of 24
the member's death. 25
(c) The medical benefits available to eligible persons are access to the retiree 26
major medical insurance plan and access to the health reimbursement arrangement 27
plan under AS 39.30.300. Access to the retiree major medical insurance plan means 28
that an eligible person may not be denied insurance coverage except for failure to pay 29
the required premium. 30
(d) Retiree major medical insurance plan coverage elected by an eligible 31

-49- Enrolled HB 78
member under this section covers the eligible member, the spouse of the eligible 1
member, and the dependent children of the eligible member. 2
(e) Retiree major medical insurance plan coverage elected by a surviving 3
spouse of an eligible member under this section covers the surviving spouse and the 4
dependent children of the eligible member who are dependent on the surviving spouse. 5
(f) Participation in the retiree major medical insurance plan is not required in 6
order to participate in the health reimbursement arrangement plan. 7
(g) A person eligible for medical benefits under this section is not required to 8
participate in the health reimbursement arrangement plan in order to participate in the 9
retiree major medical insurance plan. 10
(h) A person who is eligible for medical benefits under this section must make 11
the irrevocable election to participate or not participate in the retiree major medical 12
insurance plan on or before the date the person reaches 70 1/2 years of age or the date 13
the person applies for retirement and medical benefits, whichever is later. 14
(i) Major medical insurance coverage takes effect on the first day of the month 15
following the date of the administrator's approval of the election and stops when the 16
person who elects coverage dies or fails to make a required premium payment. 17
(j) The coverage for persons 65 years of age or older is the same as that 18
available for persons under 65 years of age. The benefits payable to those persons 65 19
years of age or older supplement any benefits provided under the federal old-age, 20
survivors, and disability insurance program. 21
(k) The medical and optional insurance premiums owed by the person who 22
elects coverage may be deducted from the health reimbursement arrangement plan. If 23
the amount of the health reimbursement arrangement plan becomes insufficient to pay 24
the premiums, the person who elects coverage under (a) of this section shall pay the 25
premiums directly. 26
(l) The cost of premiums for retiree major medical insurance coverage under 27
this section for an eligible member or surviving spouse who is 28
(1) not eligible for Medicare is an amount equal to the full monthly 29
group premiums for retiree major medical insurance coverage; 30
(2) eligible for Medicare is the following percentages of the premium 31

Enrolled HB 78 -50-
amounts established for retirees who are eligible for Medicare: 1
(A) 30 percent if the member had 10 or more, but less than 15, 2
years of service; 3
(B) 25 percent if the member had 15 or more, but less than 20, 4
years of service; 5
(C) 20 percent if the member had 20 or more, but less than 25, 6
years of service; 7
(D) 15 percent if the member had 25 or more, but less than 30, 8
years of service; 9
(E) 10 percent if the member had 30 or more years of service. 10
(m) The eligibility for retiree major medical insurance coverage for an 11
alternate payee under a qualified domestic relations order shall be determined based 12
on the eligibility of the member to elect coverage. The alternate payee shall pay the 13
full monthly premium for retiree major medical insurance coverage. 14
(n) The administrator shall 15
(1) inform a person entitled to retiree major medical insurance 16
coverage under this section in writing 17
(A) that the health insurance coverage available to retired 18
members may be different from the health insurance coverage provided to 19
employees; 20
(B) of time limits for selecting optional health insurance 21
coverage; and 22
(C) whether the election is irrevocable; and 23
(2) require that a person entitled to retiree major medical insurance 24
coverage under this section indicate in writing on a form provided by the administrator 25
whether the person has chosen to receive optional health insurance coverage. 26
(o) The monthly group premiums for retiree major medical insurance coverage 27
under this section are established by the administrator in accordance with 28
AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 29
(a) of this section a monthly group premium rate for retiree major medical insurance 30
coverage other than the premium in effect for the month in which the premium is due 31

-51- Enrolled HB 78
for coverage for that month. 1
(p) In this section, "health reimbursement arrangement plan" means the State 2
of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 3
Arrangement Plan established in AS 39.30.300. 4
* Sec. 88. AS 39.35.610(a) is amended to read: 5
(a) The contributions of an employer and the contributions of its employees 6
shall be transmitted to the administrator as soon as practicable after the close of the 7
payroll period for which the contributions are made. Subject to (c) of this section, if an 8
employer is delinquent in transferring the contributions for more than 15 days, interest 9
shall be assessed on the outstanding contributions at [ONE AND ONE-HALF TIMES] 10
the most recent actuarially determined rate of earnings for the retirement plan from the 11
date that the contributions were originally due. 12
* Sec. 89. AS 39.35.680(4) is amended to read: 13
(4) "average monthly compensation" means the result obtained by 14
dividing the compensation earned by an employee during a considered period by the 15
number of months, including fractional months, for which compensation was earned; 16
an employee must have at least 115 days of credited service in the last payroll year in 17
order for that year to be used as part of the consecutive payroll years; the considered 18
period consists of 19
(A) for employees first hired before July 1, 1996, the three 20
consecutive payroll years during the period of credited service that yield the 21
highest average; 22
(B) for employees who first become members of the plan 23
[FIRST HIRED ON OR] after June 30 [JULY 1], 1996, the five consecutive 24
payroll years during the period of credited service that yield the highest 25
average; 26
(C) if the employee does not have the number of consecutive 27
payroll years required by (A) or (B) of this paragraph, the actual number of 28
months, including fractional months, that the employee worked; 29
(D) for an employee who has made an election under 30
AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 31

Enrolled HB 78 -52-
fractional months, that the employee worked; 1
(E) for a peace officer or firefighter hired before July 1, 2006 2
[AT ANY TIME], the three consecutive payroll years during the period of 3
credited service that yield the highest average; 4
(F) for a peace officer or firefighter who first becomes a 5
member of the plan after June 30, 2006, the five consecutive payroll years 6
during the period of credited service that yield the highest average; 7
* Sec. 90. AS 39.35.680(18) is amended to read: 8
(18) "employer" means 9
(A) the State of Alaska; 10
(B) a political subdivision or public organization of the state 11
that participates in the plan based on a resolution to participate in the plan that 12
was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or 13
(C) a political subdivision or public organization of the state 14
that, as a result of consolidation or reorganization [THAT OCCURS ON OR 15
AFTER JULY 1, 2006], assumes liability under the plan of a political 16
subdivision or public organization described in (B) of this paragraph; 17
* Sec. 91. AS 39.35.680 is amended by adding a new paragraph to read: 18
(44) "first became a member after June 30, 2006" and "first became a 19
member of the plan after June 30, 2006" include a member who elected under 20
AS 39.35.940 to participate in the plan under AS 39.35.700 - 39.35.990 and who 21
elects to participate in the defined benefit retirement plan under AS 39.35.095 - 22
39.35.680. 23
* Sec. 92. AS 39.35.700 is amended to read: 24
Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 25
AS 39.35.700 - 39.35.990 apply only to 26
(1) members first hired [ON OR] after June 30, 2006, who are not 27
active members of a defined benefit retirement plan under AS 14.25.009 - 28
14.25.220 or AS 39.35.095 - 39.35.680; and 29
(2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 30
EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 31

-53- Enrolled HB 78
RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 1
FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who 2
transferred [TRANSFER] into the defined contribution retirement plan under 3
AS 39.35.940 and are not active members of the defined benefit retirement plan 4
under AS 39.35.095 - 39.35.680. 5
* Sec. 93. AS 39.35.720 is amended to read: 6
Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 7
after June 30, 2006, and before July 1, 2027, who does not participate in a defined 8
benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 9
39.35.680 [JULY 1, 2006,] shall participate in the plan set out in AS 39.35.700 - 10
39.35.990. 11
* Sec. 94. AS 39.35.870(a) is amended to read: 12
(a) In order to obtain medical benefits under AS 39.35.880, an active member 13
must retire [DIRECTLY] from the plan. A member is eligible to retire from the plan if 14
[THE MEMBER HAS BEEN AN ACTIVE MEMBER FOR AT LEAST 12 15
MONTHS BEFORE APPLICATION FOR RETIREMENT AND] 16
(1) the member has at least 20 [25] years of membership service as a 17
peace officer or firefighter or at least 25 [30] years of membership service for all other 18
employees; or 19
(2) the member reaches the normal retirement age, [AND] has at least 20
10 years of membership service, and has been an active member for at least 12 21
months immediately before application for retirement. 22
* Sec. 95. AS 39.35.895(a) is amended to read: 23
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 24
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 25
time, in whole or in part, including the right to make retroactive amendments referred 26
to in 26 U.S.C. 401(b). 27
* Sec. 96. AS 39.35.895(b) is amended to read: 28
(b) The plan administrator may not modify or amend the plan retroactively [IN 29
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 30
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 31

Enrolled HB 78 -54-
MADE] before the modification or amendment except to the extent that the reduction 1
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 2
Revenue Code. 3
* Sec. 97. AS 39.35.895(c) is amended to read: 4
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 5
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 6
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 7
is terminated, all investments at the time of termination remain in force until all 8
individual accounts have been completely distributed under the plan. After [, AND, 9
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 10
employer. 11
* Sec. 98. AS 39.35.895(d) is repealed and reenacted to read: 12
(d) Within one year after determining that a contribution to the plan by an 13
employer was the result of a mistake of fact, the administrator shall return the 14
contribution to the employer. 15
* Sec. 99. AS 39.35.940(a) is amended to read: 16
(a) An employee may not be an active member of the defined contribution 17
retirement plan and the defined benefit retirement plan at the same time, except 18
as provided in this subsection. An [SUBJECT TO (i) OF THIS SECTION, AN] 19
active member of the defined benefit retirement plan of the public employees' 20
retirement system is eligible to participate in the defined contribution retirement plan 21
established under AS 39.35.700 - 39.35.990 if that member 22
(1) has not vested in the defined benefit retirement plan; or 23
(2) was first hired after June 30, 2006, and is employed by an 24
employer that is a political subdivision or public organization of the state that 25
does not elect to provide defined benefits under AS 39.35.095 - 39.35.680 to 26
employees who first become members of the plan after June 30, 2006 [. 27
PARTICIPATION IN THE DEFINED CONTRIBUTION RETIREMENT PLAN IS 28
IN LIEU OF PARTICIPATION IN THE DEFINED BENEFIT RETIREMENT PLAN 29
ESTABLISHED UNDER AS 39.35.095 - 39.35.680]. 30
* Sec. 100. AS 39.35.940(c) is amended to read: 31

-55- Enrolled HB 78
(c) Each eligible member who elects to participate in the defined contribution 1
retirement plan shall have transferred to a new account the employee contribution 2
account balance held in trust for the member under the defined benefit retirement plan 3
of the public employees' retirement system. An [A MATCHING] employer 4
contribution equal to 63 percent of the transferred account balance shall be made 5
on behalf of that employee to the new account. The administrator [EMPLOYER] 6
shall make the payment for that purpose [MATCHING CONTRIBUTION] from 7
[FUNDS OTHER THAN] the sub-trust [TRUST FUNDS OF THE DEFINED 8
BENEFIT RETIREMENT PLAN] established under AS 39.35.281 [AS 39.35.095 - 9
39.35.680]. The amount of the [MATCHING] employer contribution shall be subject 10
to, and may not exceed, the limitation of 26 U.S.C. 415(c) during the applicable 11
limitation year as defined by AS 39.35.990. If the [MATCHING] employer 12
contribution would exceed the limits during the limitation year in which the transfer 13
occurs, the remaining amount of the [MATCHING] employer contribution shall be 14
made in the next limitation year, if the limits during that year would not be exceeded. 15
* Sec. 101. AS 39.35.940(h) is amended to read: 16
(h) An [EMPLOYEE WHO IS ELIGIBLE TO ELECT TRANSFER TO THE 17
DEFINED CONTRIBUTION RETIREMENT PLAN MUST MAKE THE 18
ELECTION NOT LATER THAN 12 MONTHS AFTER THE FIRST DAY OF THE 19
MONTH FOLLOWING THE ADMINISTRATOR'S RECEIPT OF THE 20
NOTIFICATION THAT THE EMPLOYEE'S EMPLOYER CONSENTS TO 21
TRANSFERS OF ITS EMPLOYEES UNDER (i) OF THIS SECTION. THE] election 22
to participate in the defined contribution retirement plan must be made in writing on 23
forms and in the manner prescribed by the administrator. Before accepting an election 24
to participate in the defined contribution retirement plan, the administrator must 25
provide the employee planning on making an election to participate in the defined 26
contribution retirement plan with information, including calculations to illustrate the 27
effect of moving the employee's retirement plan from the defined benefit retirement 28
plan to the defined contribution retirement plan as well as other information to clearly 29
inform the employee of the potential consequences of the employee's election. An 30
election made under this subsection to participate in the defined contribution 31

Enrolled HB 78 -56-
retirement plan is irrevocable. Upon making the election, the participant shall be 1
enrolled as a member of the defined contribution retirement plan, the member's 2
participation in the plan shall be governed by the provisions of AS 39.35.700 - 3
39.35.990, and the member's participation in the defined benefit retirement plan under 4
AS 39.35.115 shall terminate. The participant's enrollment in the defined contribution 5
retirement plan shall be effective the first day of the month after the administrator 6
receives the completed enrollment forms. An election made by an eligible member 7
who is married is not effective unless the election is signed by the individual's spouse. 8
* Sec. 102. AS 14.25.012(c), 14.25.061, 14.25.540(i); and AS 39.35.940(i) are repealed. 9
* Sec. 103. The uncodified law of the State of Alaska is amended by adding a new section 10
to read: 11
TRANSITION: RETIREMENT PLAN ELECTION. (a) A teacher who became a 12
member of the defined contribution retirement plan of the teachers' retirement system after 13
June 30, 2006, and before July 1, 2027, and who, on July 1, 2027, is a member employed by 14
an employer in the defined contribution retirement plan of the teachers' retirement system 15
may, before January 1, 2028, make a one-time election to participate in the defined benefit 16
retirement plan and to transfer all contributions that have been made or should be made to the 17
defined contribution retirement plan for service the member completes before the effective 18
date of the member's participation in the defined benefit retirement plan. The transferred 19
contributions shall be used to purchase credited service in the defined benefit retirement plan 20
on an actuarial equivalent basis determined by the Alaska Retirement Management Board 21
established under AS 37.10.210. The provisions of AS 14.25.044, enacted by sec. 4 of this 22
Act, apply to an election made under this subsection. 23
(b) An employee who became a member of the defined contribution retirement plan 24
of the public employees' retirement system after June 30, 2006, and before July 1, 2027, and 25
who, on July 1, 2027, is a member employed by an employer in the defined contribution 26
retirement plan of the public employees' retirement system may, before January 1, 2028, make 27
a one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 28
39.35.680 and to transfer all contributions that have been made or should be made to the 29
defined contribution retirement plan for service the member completes before the effective 30
date of the member's participation in the defined benefit retirement plan, unless the member's 31

-57- Enrolled HB 78
employer elects under sec. 104 of this Act not to provide defined benefits under AS 39.35.095 1
- 39.35.680. The transferred contributions shall be used to purchase credited service in the 2
defined benefit retirement plan on an actuarial equivalent basis determined by the Alaska 3
Retirement Management Board established under AS 37.10.210. The provisions of 4
AS 39.35.159, enacted by sec. 64 of this Act, apply to an election made under this subsection. 5
* Sec. 104. The uncodified law of the State of Alaska is amended by adding a new section 6
to read: 7
TRANSITION: EMPLOYER PARTICIPATION IN THE DEFINED BENEFIT 8
RETIREMENT PLAN. An employer that is a political subdivision or public organization of 9
the state may, during the period beginning January 1, 2027 , and ending June 30, 2027 , elect 10
not to provide defined benefits under AS 39.35.095 - 39.35.680 to employees who first 11
become members of the plan after June 30, 2006. 12
* Sec. 105. The uncodified law of the State of Alaska is amended by adding a new section 13
to read: 14
ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 15
established under AS 37.10.210 may adopt regulations necessary to implement secs. 41 and 16
42 of this Act. Regulations adopted by the Alaska Retirement Management Board under this 17
Act relate to the internal management of a state agency and are not subject to AS 44.62 18
(Administrative Procedure Act) under AS 37.10.240. 19
(b) The commissioner of administration may adopt regulations necessary to 20
implement secs. 1 - 40 and 42 - 104 of this Act. Regulations adopted by the commissioner of 21
administration under this Act relate to the internal management of a state agency and are not 22
subject to AS 44.62 (Administrative Procedure Act) under AS 14.25.005, AS 39.30.098, and 23
AS 39.35.005. 24
(c) Regulations adopted under this section may not take effect before the effective 25
date of the law being implemented by the regulation. 26