RETIREMENT SYSTEMS; DEFINED BENEFIT OPT.

SB0028A -1- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

34-LS0280\A

SENATE BILL NO. 28

IN THE LEGISLATURE OF THE STATE OF ALASKA

THIRTY-FOURTH LEGISLATURE - FIRST SESSION

BY SENATORS GIESSEL, Gray-Jackson, Kiehl, Claman, Tobin, Kawasaki, Bjorkman, Dunbar, Stevens,
Wielechowski

Introduced: 1/22/25
Referred: Labor and Commerce, Finance

A BILL

FOR AN ACT ENTITLED

"An Act relating to the Public Employees' Retirement System of Alaska and the 1
teachers' retirement system; providing certain employees an opp ortunity to choose 2
between the defined benefit and defined contribution plans of t he Public Employees' 3
Retirement System of Alaska and the teachers' retirement system ; and providing for an 4
effective date." 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 6
* Section 1. AS 14.25.009 is repealed and reenacted to read: 7
Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 8
AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the 9
defined benefit retirement plan under AS 14.25.009 - 14.25.220 and are not members 10
of the defined contribution retirement plan under AS 14.25.310 - 14.25.590. 11
* Sec. 2. AS 14.25.040(a) is amended to read: 12
(a) A teacher or member contracting for service with a participatin g 13
34-LS0280\A
SB 28 -2- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

employer is subject to AS 14.25.009 - 14.25.220 unless the [UNLESS A] teacher or 1
member 2
(1) participates in a university retirement program under AS 14.40. 661 3
- 14.40.799; 4
(2) became a member after June 30, 2006, and before July 1, 20 25, 5
is eligible to participate in the defined contribution retireme nt plan under 6
AS 14.25.310 - 14.25.590, and does not elect to participate in the defined benefit 7
retirement plan under AS 14.25.009 - 14.25.220; or 8
(3) has elected under former AS 14.25.540 to participate in the plan 9
established in AS 14.25.310 - 14.25.590 and does not elect to participate in the 10
defined benefit retirement plan under AS 14.25.009 - 14.25.220 [, A TEACHER 11
OR MEMBER CONTRACTING FOR SERVICE WITH A PARTICIPATING 12
EMPLOYER IS SUBJECT TO AS 14.25.009 - 14.25.220]. 13
* Sec. 3. AS 14.25.040 is amended by adding new subsections to read: 14
(f) An active member of this plan who is also employed in a po sition in the 15
public employees' retirement plan under AS 39.35.095 - 39.35.68 0 may elect to 16
participate solely in this plan if 17
(1) the member directs the public employees' retirement plan e mployer 18
in writing to 19
(A) pay into this plan the empl oyer contributions required for a 20
member under AS 14.25.009 - 14.25.220; and 21
(B) deduct from the member's salary and pay into this plan 22
(i) the employee contributions required for a member 23
under AS 14.25.009 - 14.25.220; and 24
(ii) an amount equal to the di fference between the total 25
employer and state contributions required for a member under 26
AS 14.25.009 - 14.25.220 and the employer contributions that would be 27
required under AS 39.35.095 - 39.35.680 if the member participa ted in 28
that plan; and 29
(2) the member provides written notice to the administrator. 30
(g) An active member of this plan who elects to participate so lely in this plan 31
34-LS0280\A
SB0028A -3- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

under (f) of this section may not, while participating solely i n this plan, receive 1
credited service for benefit eligibility for service performed in a position in the public 2
employees' retirement plan. 3
(h) A teacher who became a member of the system after June 30, 2006, and 4
before July 1, 2025, or who has elected under former AS 14.25.5 40 to participate in 5
the defined contribution retirement plan under AS 14.25.310 - 1 4.25.590, is subject to 6
AS 14.25.009 - 14.25.220 and is not eligible to participate in the defined contribution 7
retirement plan established in AS 14.25.310 - 14.25.590 if the teacher 8
(1) is not employed by an employer on July 1, 2025; 9
(2) is reemployed by an employer after July 1, 2025; and 10
(3) has, before the date of reemployment, received 11
(A) a distribution, other than a rollover distribution, of the 12
entire balance in the teacher's individual account in the defin ed contribution 13
retirement plan; or 14
(B) a rollover distribution of t he entire balance in the teach er's 15
individual account in the defined contribution retirement plan under 16
AS 14.25.310 - 14.25.590 and has not within 180 days of reemplo yment had 17
all or part of a direct rollover distribution from an eligible retirement plan 18
owned by the teacher paid directly into the teacher's individua l account under 19
AS 14.25.310 - 14.25.590. 20
* Sec. 4. AS 14.25 is amended by adding a new section to read: 21
Sec. 14.25.044. Election of defined benefit retirement plan by reemployed 22
teachers. (a) A teacher may make a one-time election to participate in th e defined 23
benefit retirement plan under AS 14.25.009 - 14.25.220 if the teacher 24
(1) became a member of the defined contribution retirement plan under 25
AS 14.25.310 - 14.25.590 after June 30, 2006, and before July 1, 2025; 26
(2) is not employed by an employer on July 1, 2025; 27
(3) is reemployed by an employer after July 1, 2025; and 28
(4) before the date of reemployment, 29
(A) has not received a distribu tion of the entire balance in t he 30
teacher's individual account under the defined contribution ret irement plan 31
34-LS0280\A
SB 28 -4- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

under AS 14.25.310 - 14.25.590; or 1
(B) has received a rollover dist ribution of the entire balance in 2
the teacher's individual account in the plan under AS 14.25.310 - 14.25.590 3
and has within 180 days of reemployment had all or part of a di rect rollover 4
distribution from an eligible retirement plan owned by the teac her paid directly 5
into the teacher's individual account under AS 14.25.310 - 14.25.590. 6
(b) An election under (a) of this section may be made not more than 180 days 7
after the date of reemployment. A reemployed teacher electing t o participate under (a) 8
of this section shall use the ba lance of the member's individua l account in the plan 9
under AS 14.25.310 - 14.25.590, including any rollover contribu tions, to purchase 10
credited service in the plan under AS 14.25.009 - 14.25.220. An election made under 11
(a) of this section must be made in writing in the manner presc ribed by the 12
administrator. An election made by a teacher who is married is not effective unless the 13
election is signed by the teacher's spouse. The administrator s hall provide a teacher 14
who is eligible to make an election under (a) of this section with information about the 15
potential consequences of the teacher's election, including cal culations to illustrate the 16
effect of moving the teacher's retirement plan from a defined c ontribution retirement 17
plan to a defined benefit retirement plan. 18
(c) An election made under (a) of this section to participate in the plan under 19
AS 14.25.009 - 14.25.220 is irrevocable. On the effective date of the election, the 20
teacher shall be enrolled as a member of the plan, and the teac her's participation in the 21
plan shall be governed by the applicable provisions of the plan . The teacher's 22
enrollment in the plan is retroactive to the date of hire. 23
(d) When a teacher makes an election under this section, the a dministrator 24
shall cause the total amount of the teacher's member and employer contributions to the 25
plan under AS 14.25.310 - 14.25.590, with investment earnings a nd losses through the 26
day of the teacher's election to participate as a member in the plan under AS 14.25.009 27
- 14.25.220, to be actuarially calcu lated and, subject to (f) o f this section, transferred 28
to the retirement fund in the plan under AS 14.25.009 - 14.25.2 20. On the effective 29
date of the teacher's particip ation in the plan under AS 14.25. 009 - 14.25.220, the 30
teacher shall be credited with service in the plan. The board shall determine the cost of 31
34-LS0280\A
SB0028A -5- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

the teacher's actual service time based on the teacher's accrue d actuarial liability of 1
pension benefits in the plan, and credit the teacher with servi ce time equal to the value 2
actuarially calculated and transf erred to the retirement fund i n the plan under 3
AS 14.25.009 - 14.25.220. The board shall adopt regulations est ablishing transfer 4
procedures. The transfer may not occur later than 60 days after t h e d a t e t h e 5
administrator receives the teac her's election, unless the major financial markets for 6
securities available for a transfer are seriously disrupted by an unforeseen event that 7
also causes the suspension of trading on a national securities exchange in the country 8
where the securities were issued; in that event, the 60-day per iod may be extended by 9
a resolution of the board. A transfer is not commissionable or subject to a fee and may 10
be in the form of cash or a security as determined by the board. The value of a security 11
shall be assessed on the date the security is received in the teacher's account. 12
(e) When making a transfer under (d) of this section or a tran s f e r f o r a 13
reemployed teacher subject t o the plan under AS 14.25.040(h), t he administrator shall 14
transfer 15
(1) an amount equal to the decrea se in the accrued actuarial l iability of 16
the death and disability trust in the plan established under AS 14.25.310 - 14.25.590 17
resulting from the transfer as of the date of transfer, based o n the most recent actuarial 18
valuation of the death and disability trust, from the death and disability trust in the 19
plan established under AS 14.25.310 - 14.25.590 to the retireme nt fund in the plan 20
established under AS 14.25.009 - 14.25.220; and 21
(2) an amount equal to the incre ase in the accrued actuarial l iability of 22
the health care trust in the plan established under AS 14.25.00 9 - 14.25.220 resulting 23
from the transfer as of the date of transfer, based on the actu arial assumptions set out 24
in (g) of this section, from the trust established under AS 39. 30.097(b) for the 25
prefunding of medical benefits provided by AS 14.25.480 to the trust established 26
under AS 39.30.097(a) for the prefunding of medical benefits pr ovided by 27
AS 14.25.171. 28
(f) If the value actuarially calculated under (d) of this sect ion is insufficient to 29
pay for service credit equal to the teacher's actual service ti me, the administrator shall 30
allow the teacher the option of purchasing service credit in an amount up to the 31
34-LS0280\A
SB 28 -6- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

amount needed to eliminate the insufficiency; however, if that value exceeds the 1
amount needed to pay for service credit equal to the teacher's actual service, the 2
administrator shall cause the excess to be paid to the employee as a rollover transfer to 3
either an individual employee a nnuity account in the Department of Administration 4
under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Su pplemental Annuity 5
Plan) or, if the member's employer does not participate in the State of Alaska 6
Supplemental Annuity Plan, to an eligible retirement plan as de fined in 7
AS 14.25.360(d). An excess may not be used to purchase addition al service credit in 8
the plan under AS 14.25.009 - 14.25.220. When a reemployed teac her enters the plan 9
under AS 14.25.040(h), the administrator shall allow the teache r to pay for a period of 10
service credit up to the teacher's actual service. When a teach er elects to purchase 11
service credit under this section and does not immediately pay for the service credit 12
purchased, an indebtedness is est ablished. Interest as prescribed by regulation accrues 13
on a teacher's indebtedness. If the indebtedness exists when th e teacher is appointed to 14
retirement, the administrator s hall make a corresponding actuar ial adjustment to the 15
benefit payable to the teacher for service in the defined contribution retirement plan. 16
(g) Actuarial assumptions about the plan under AS 14.25.009 - 14.25.220 17
must be based on the most recent actuarial valuation of the pla n, except that the 18
retirement rates are computed at 25 percent of the retirement r a te s u s e d in th e mo s t 19
recent actuarial valuation of the retirement fund plus 75 percent of the retirement rates 20
used in the most recent actuarial valuation of the plan under AS 14.25.310 - 14.25.590. 21
( h ) T h e p r o v i s i o n s o f t h i s s e c t ion are subject to the requirem ents of the 22
Internal Revenue Code and the limitations under AS 14.25.010, 1 4.25.181, 23
14.25.320(c) and (d), and 14.25.490. 24
* Sec. 5. AS 14.25.048(b) is amended to read: 25
( b ) A n e m p l o y e e o r f o r m e r e m p l o y e e who first became a member of the 26
plan before July 1, 2006, may receive credit for retroactive membership service for 27
employment before June 5, 1988 , if the employee or former employee met the 28
requirements listed in (a) of this section at the time of the e mployment. To receive 29
credit for the retroactive membership service, the employee or former employee shall 30
claim the service and pay the retroactive contributions require d under former 31
34-LS0280\A
SB0028A -7- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

AS 14.25.061. However, an employee or former employee may not r eceive retroactive 1
credit under this subsection if t he employee received credited service under AS 39.35 2
for the employment. 3
* Sec. 6. AS 14.25.048(c) is amended to read: 4
(c) An employee or former employee who first became a member of the 5
plan before July 1, 2006, and who received credit under AS 39.35 for service that 6
qualifies under (a) of this section may elect to transfer those periods of employment to 7
the plan. To receive credit for retroactive membership service under this subsection, 8
the employee or former employee shall claim the service and pay t h e r e t r o a c t i v e 9
contributions required under former AS 14.25.061. 10
* Sec. 7. AS 14.25.050(a) is amended to read: 11
( a ) E x c e p t a s p r o v i d e d i n ( c ) and (e) of this section, beginning January 1, 12
1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 13
member's base salary accrued from July 1 to the following June 30. [THE 14
EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 15
SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 16
CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 17
CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 18
FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 19
APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 20
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 21
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 22
INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 23
EMPLOYER.] 24
* Sec. 8. AS 14.25.050 is amended by adding new subsections to read: 25
(e) A member who first participates in the plan after June 30, 2006 , shall 26
contribute to the plan an amount equal to eight percent of the member's base salary 27
accrued from July 1 to the following June 30. The board may, fr om time to time, 28
adjust the contribution under this subsection to an amount that, 29
(1) if decreased, is not less than eight percent of the member 's base 30
salary; and 31
34-LS0280\A
SB 28 -8- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

(2) if increased, is not more than 12 percent of the member's base 1
salary. 2
(f) The employer shall deduct a contribution under this section fro m the 3
member's salary at the end of each payroll period, and the cont ribution shall be 4
credited by the plan to the member contribution account. The co ntributions shall be 5
deducted from member c ompensation before t he computation of app licable federal 6
taxes and shall be treated as employer contributions under 26 U .S.C. 414(h)(2). A 7
member may not have the option of making the payroll deduction directly in cash 8
instead of having the contribution picked up by the employer. 9
(g) The board shall increase the member contribution under (e) of t his section 10
if the board determines that, unless th e contribution is increased, t he portion of the 11
liability of the plan that is attributable to all members who f irst became members of 12
the plan after June 30, 2006, will be funded below 90 percent . The board may not 13
increase the member contribution unless the board increases the employer contribution 14
under AS 14.25.070(a)(2) by an equal amount. The board may decrease the 15
contribution under (e) of this section if the b o a r d d e t e r m i n e s t h a t , a f t e r t h e 16
contribution is decreased, the portion of the liability of the plan that is attributable to 17
all members who first became members of the plan after June 30, 2006, will be funded 18
above 90 percent . The board may not decrease the member contribution unless the 19
board decreases the employer contribution under AS 14.25.070(a) (2) by an equal 20
amount. 21
* Sec. 9. AS 14.25.065(b) is amended to read: 22
(b) The contributions of employers under AS 14.25.070 must be transmitted to 23
the plan for deposit in the retirement fund and the Alaska retiree health care trust at the 24
close of each pay period. If the contributions are not submitte d within the prescribed 25
time limit, interest must be assessed on the outstanding contri butions at [ONE AND 26
ONE-HALF TIMES] the most recent actuarially determined rate of earnings for the 27
plan from the date that contributions were originally due. Amou nts due from an 28
employer and interest as prescribed in this section may be clai med by the 29
administrator from any agency o f the state or political subdivi sion that has in its 30
possession funds of the employer or that is authorized to disbu rse funds to the 31
34-LS0280\A
SB0028A -9- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

employer that are not restricted by statute or appropriation to a specific purpose. The 1
amount claimed shall be certified by the administrator as suffi cient to pay the 2
contributions and interest due from the employer. The amount cl aimed shall be 3
submitted to the administrator for deposit in the retirement fu nd and the Alaska retiree 4
health care trust. 5
* Sec. 10. AS 14.25.070(a) is amended to read: 6
(a) Each employer shall contribute to the system every payroll period the 7
lesser of 8
(1) an amount calculated by applying a rate of 12.56 percent to the 9
total of all base salaries paid by the employer to active membe rs of the system and to 10
members who are retired from the plan and reemployed under AS 1 4.20.136, 11
including any adjustments to contributions required by AS 14.25.173(a); or 12
(2) an amount calculated by applying a rate established by the 13
board under AS 37.10.220 to the total of all base salaries paid by the employer to 14
active members of the system and to members who are retired fro m the plan and 15
reemployed under AS 14.20.136, including any adjustments to con tributions 16
required by AS 14.25.173(a); the rate must be at least 12 percent and be sufficient 17
to pay the actuarially determined employer normal cost, all con tributions 18
required under AS 14.25.350 and AS 39.30.370, and past service cost for 19
members of the system. 20
* Sec. 11. AS 14.25.070 is amended by adding a new subsection to read: 21
(i) If the legislature appropr iates funds for the purpose of d ecreasing an 22
employer's contribution, the em ployer's contribution under (a) of this section shall 23
decrease by that amount. 24
* Sec. 12. AS 14.25.075(a) is amended to read: 25
(a) An employee who is eligible to purchase credited service u nder 26
AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 27
under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 28
[14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligi ble to purchase credited 29
service under AS 14.20.345, AS 14.25.044, 14.25.050 [AS 14.25.050], or 14.25.105, 30
in lieu of making payments directly to the plan, may elect to h ave the member's 31
34-LS0280\A
SB 28 -10- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

employer make payments as provided in this section. 1
* Sec. 13. AS 14.25.075(b) is amended to read: 2
(b) A member may elect to have t he employer make payments for all or any 3
portion of the amounts payable for the member's purchase of cre dited service through 4
a salary reduction program as follows: 5
(1) the amounts paid under a sa lary reduction program are in l ieu of 6
contributions by the member making the election; the electing m ember's salary or 7
other compensation shall be reduc ed by the amount paid by the e mployer under this 8
subsection; 9
(2) the member shall make an irrevocable election under this 10
subsection to purchase credited service as permitted in former AS 14.25.061 or in 11
AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 12
14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107 befo r e t h e m e m b e r ' s 13
termination of employment; the irrevocable election must specif y the number of 14
payroll periods that deductions will be made from the member's compensation and the 15
dollar amount of deductions for each payroll period during the specified number of 16
payroll periods; the deductions made under this paragraph cease upon the earlier of the 17
member's termination of employment with the employer or the mem ber's death; 18
amounts paid by an employer under (f) of this section may not b e applied toward the 19
payment of the dollar amount of the deductions representing the portion of the credited 20
service that is being purchased by the member through payroll d eduction in 21
accordance with the member's irrevocable election under this paragraph; 22
(3) amounts paid by an employer under this subsection shall be treated 23
as employer contributions for the purpose of determining tax tr eatment under 26 24
U.S.C. (Internal Revenue Code); the amounts paid by the employe r under this section 25
may not be included in the member's gross income for income tax purposes until those 26
amounts are distributed by refund or retirement benefit payments. 27
* Sec. 14. AS 14.25.075(i) is amended to read: 28
(i) On satisfaction of the eligibility requirements of former AS 14.25.061 or 29
of AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 30
14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107, the requirements of this 31
34-LS0280\A
SB0028A -11- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

section, and the administrative filing requirements specified b y the administrator, the 1
plan shall adjust the member's credited service history and add any additional service 2
credits acquired. 3
* Sec. 15. AS 14.25 is amended by adding a new section to read: 4
Sec. 14.25.086. Sub-trust for members who first became members after 5
June 30, 2006. The administrator shall deposit a portion of employer contribut ions 6
under AS 14.25.070 and 14.25.085 in a sub- trust of the retirement fund established by 7
the board for members who first became members after June 30, 2 006. The amount 8
deposited, when combined with the amount separately computed fo r medical benefits 9
under AS 14.25.087, must be sufficient to pay the actuarially d etermined employer 10
normal cost and past service cost for members of the system who first became 11
members after June 30, 2006. When the amount sufficient to pay the actuarially 12
determined employer normal cos t, all contributions required und er AS 14.25.350 and 13
AS 39.30.370, and past service cost f or members of the system i s less than 12 percent 14
of all base salaries paid to active members of the system and t o members who are 15
retired from the plan and reemployed under AS 14.20.136, includ ing any adjustments 16
to contributions required by AS 14.25.173(a), the administrator shall deposit the 17
difference in the sub-trust established under this section. 18
* Sec. 16. AS 14.25.087 is amended to read: 19
Sec. 14.25.087. Contributions for medical benefits. Contributions made by 20
an employer under AS 14.25.070 and 14.25.085 must [ S H A L L ] b e s e p a r a t e l y 21
computed for benefits provided by AS 14.25.168 and retiree major medical 22
insurance plan benefit s provided under AS 14.25.171, and must [ S H A L L ] b e 23
deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 24
* Sec. 17. AS 14.25.110(a) is amended to read: 25
(a) Subject to AS 14.25.167, 26
(1) a member who first became a member of the plan before July 1, 27
2006, is eligible for a normal retirement benefit if the member 28
(A) [(1)] was first hired before July 1, 1975, has attained the 29
age of 55 years, and has at least 15 years of credited service, the last five of 30
which have been membership service, or is otherwise vested in the plan; 31
34-LS0280\A
SB 28 -12- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

(B) [(2)] has attained the age of 60 years and has at least eight 1
years of membership service; 2
(C) [(3)] has attained the age of 60 years, has at least five year s 3
of membership service, and has Alaska BIA service which, when a dded to the 4
membership service, will equal at least eight years; 5
(D) [(4)] has at least 25 years of credited service, the last five 6
of which have been membership service; 7
(E) [(5)] has at least 20 years of membership service; 8
(F) [(6)] has at least 20 years of combined membership service 9
and Alaska BIA service, the last five of which have been member ship service; 10
or 11
(G) [(7)] has, for each of 20 school years, 12
(i) [(A)] at least one-half year of membership service as 13
a part-time teacher; 14
(ii) [(B)] one full year of membership service as a full-15
time teacher; or 16
(iii) [(C)] any combination of service qualified under 17
this subparagraph; 18
(2) a member who first became a member of the plan after 19
June 30, 2006, is eligible for a normal retirement benefit if the member 20
( A ) h a s a t t a i n e d t h e a g e o f 6 0 years and has at least five 21
years of membership service; or 22
(B) has at least 30 years of membership service 23
[PARAGRAPH]. 24
* Sec. 18. AS 14.25.110(b) is amended to read: 25
(b) Subject to AS 14.25.167, a member is eligible for an early retirement 26
benefit upon completing the service requirements in (a)(1)(A) [(a)(1)] of this section 27
and attaining the age of 50 y ears or upon completing the servic e requirements in 28
(a)(1)(B) or (C) [(a)(2) OR (3)] of this section and attaining the age of 55 years. 29
* Sec. 19. AS 14.25.110(d) is amended to read: 30
(d) The monthly amount of a retirement benefit 31
34-LS0280\A
SB0028A -13- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

(1) for a member who first became a member of the plan before 1
July 1, 2006, and who has paid the full amount of any indebtedness is one-twelft h of 2
the member's average base salary during any three school years of membership service 3
multiplied by 4
(A) [(1)] two percent of the years of credited service earned 5
before June 30, 1990, including cre dited fractional years, and the years of 6
credited service through a total of 20 years; plus 7
(B) [(2)] two and one-half percent of the years of credited 8
service earned after June 30, 1990, that are more than 20 years of total credited 9
service; 10
( 2 ) f o r a m e m b e r w h o f i r s t b e c a m e a m e m b e r o f t h e p l a n a f t e r 11
June 30, 2006, and who has paid the full amount of any indebted ness is one-12
twelfth of the member's average base salary during any five sch o o l y e a r s o f 13
membership service multiplied by 14
(A) two percent of the years of credited service through a 15
total of 10 years; plus 16
(B) two and one-quarter percent of the years over 10 years 17
of total credited service through 20 years; plus 18
(C) two and one-half percent of the years of credited service 19
that are more than 20 years of total credited service. 20
* Sec. 20. AS 14.25.142(a) is amended to read: 21
(a) While residing in the state, a person who first became a member of the 22
plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220 , 23
and who is at least 65 years of age or a person who first became a member of the 24
plan before July 1, 2006, and who is receiving a disability benefit under 25
AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost- of-living allowance in 26
addition to the basic benefit. T he amount of this allowance is 10 percent of the basic 27
benefit. 28
* Sec. 21. AS 14.25.143(a) is amended to read: 29
(a) Once each year, the administrator shall increase benefit p ayments to 30
eligible disabled members, to persons age 60 or older receiving benefits under this 31
34-LS0280\A
SB 28 -14- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

plan in the preceding calendar year, and to persons who have re ceived benefits under 1
this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 2
under this section. 3
* Sec. 22. AS 14.25.143(b) is amended to read: 4
(b) Subject to (g) and (h) of this section, the [ T H E ] i n c r e a s e i n b e n e f i t 5
payments applies to total benefit payments except for the cost- of-living allowance 6
under AS 14.25.142. The amount of the increase is a percentage of the current benefit 7
equal to 8
(1) the lesser of 75 percent of the increase in the cost of li ving in the 9
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 10
years old and for members receiving disability benefits; and 11
(2) the lesser of 50 percent of the increase in the cost of li ving in the 12
preceding calendar year or six percent, for recipients who on J uly 1 are at least 60 but 13
less than 65 years old or for recipients who on July 1 are less than 60 years old but 14
who have received benefits from the plan for at least five [EIGHT] years. 15
* Sec. 23. AS 14.25.143 is amended by adding new subsections to read: 16
(g) Subject to (h) of this sec tion, the amount of an increase for members who 17
first became members of the plan after June 30, 2006, and do no t meet the eligibility 18
requirements for a permanent fund dividend in effect on July 1, 2025, under 19
AS 43.23.005(a) is equal to one-half of the applicable percenta ge under (b) of this 20
section. 21
(h) If the board determines that the portion of the liability of the plan that is 22
attributable to all members who first became members of the pla n after June 30, 2006, 23
is funded below 90 percent, the board may reduce the amount of the increase 24
determined under (b) or (g) of this section that is payable to a member who first 25
became a member after June 30, 2006. At any time, the board may terminate a 26
reduction made under this subsection. 27
* Sec. 24. AS 14.25.168(a) is amended to read: 28
(a) Except as provided in AS 14.25.171 and (c) of this section, the following 29
persons are entitled to major medical insurance coverage under this section: 30
(1) for teachers first hired before July 1, 1990, 31
34-LS0280\A
SB0028A -15- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

(A) a teacher who is receiving a monthly benefit from the plan 1
and who has elected coverage; 2
(B) the spouse and dependent children of the teacher described 3
in (A) of this paragraph; 4
(C) the surviving spouse of a deceased teacher who is receiving 5
a monthly benefit from the plan and who has elected coverage; 6
(D) the dependent children of a deceased teacher who are 7
dependent on the surviving spouse described in (C) of this paragraph; 8
(2) for teachers first hired [ON OR] after June 30 [JULY 1], 1990, 9
(A) a teacher who is receiving a monthly benefit from the plan 10
and who has elected coverage for the teacher; 11
(B) the spouse of the teacher described in (A) of this paragra ph 12
if the teacher elected coverage for the spouse; 13
(C) the dependent children of the teacher described in (A) of 14
this paragraph if the teacher elected coverage for the dependent children; 15
(D) the surviving spouse of a deceased teacher who is receiving 16
a monthly benefit from the plan and who has elected coverage; 17
(E) the dependent children of a deceased teacher who are 18
dependent on the surviving spouse described in (D) of this para graph if the 19
surviving spouse has elected coverage for the dependent children. 20
* Sec. 25. AS 14.25 is amended by adding a new section to read: 21
Sec. 14.25.171. Medical benefit; eligibility of employees first h i r e d a f t e r 22
June 30, 2006; surviving spouses and dependents. (a) A teacher who first became a 23
member of the plan after June 30, 2006, receives a monthly bene fit from the plan, 24
retired directly from the plan, and has elected benefits under this section is entitled to 25
medical benefits under this section. A member who applies for m edical benefits under 26
this section shall apply on the f orms and in the manner prescri bed by the 27
administrator. A member is eligible to retire from the plan if the member has been an 28
active member for at least 12 months before application for retirement and the member 29
(1) has at least 30 years of service; or 30
(2) reaches the age set for Medicare eligibility and has at least 10 years 31
34-LS0280\A
SB 28 -16- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

of service. 1
(b) The member's surviving spouse is eligible to elect medical benefits if the 2
member had retired or was eligible for retirement and medical b enefits at the time of 3
the member's death. 4
(c) The medical benefits available to eligible persons are acc ess to the retiree 5
major medical insurance plan a nd access to the health reimburse ment arrangement 6
plan under AS 39.30.300. Access to the retiree major medical in surance plan means 7
that an eligible person may not be denied insurance coverage ex cept for failure to pay 8
the required premium. 9
(d) Retiree major medical insurance plan coverage elected by a n eligible 10
member under this section covers the eligible member, the spous e of the eligible 11
member, and the dependent children of the eligible member. 12
(e) Retiree major medical insurance plan coverage elected by a surviving 13
spouse of an eligible member under this section covers the surv iving spouse and the 14
dependent children of the eligible member who are dependent on the surviving spouse. 15
(f) Participation in the retiree major medical insurance plan is not required in 16
order to participate in the health reimbursement arrangement plan. 17
(g) A person eligible for medical benefits under this section is not required to 18
participate in the health reimbursement arrangement plan in ord er to participate in the 19
retiree major medical insurance plan. 20
(h) A person who is eligible for medical benefits under this s ection must make 21
the irrevocable election to participate or not participate in t he retiree major medical 22
insurance plan on or before the date the person reaches 70 1/2 years of age or when the 23
person applies for retirement and medical benefits, whichever is later. 24
(i) Major medical insurance coverage takes effect on the first day of the month 25
following the date of the administrator's approval of the elect ion and stops when the 26
person who elects coverage dies or fails to make a required premium payment. 27
(j) The coverage for persons 65 years of age or older is the s ame as that 28
available for persons under 65 ye ars of age. The benefits payab le to those persons 65 29
years of age or older supplement any benefits provided under th e federal old age, 30
survivors, and disability insurance program. 31
34-LS0280\A
SB0028A -17- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

( k ) T h e m e d i c a l a n d o p t i o n a l i n s u r a n c e p r e m i u m s o w e d by t h e p erson who 1
elects coverage may be deducted from the health reimbursement a rrangement plan. If 2
the amount of the health reimbur sement arrangement plan becomes insufficient to pay 3
the premiums, the person who elects coverage under (a) of this section shall pay the 4
premiums directly. 5
(l) The cost of premiums for retiree major medical insurance cov erage under 6
this section for an eligible member or surviving spouse who is 7
(1) not eligible for Medicare is an amount equal to the full m onthly 8
group premiums for retiree major medical insurance coverage; 9
(2) elig ible for Medicare is the following percentage of the premium 10
amounts established for retirees who are eligible for Medicare: 11
(A) 30 percent if the member ha d 10 or more, but less than 15, 12
years of service; 13
(B) 25 percent if the member had 15 or more, but less than 20, 14
years of service; 15
(C) 20 percent if the member had 20 or more, but less than 25, 16
years of service; 17
(D) 15 percent if the member ha d 25 or more, but less than 30, 18
years of service; 19
(E) 10 percent if the member had 30 or more years of service. 20
(m) The eligibility for retiree major medical insurance covera g e f o r a n 21
alternate payee under a qualified domestic relations order shal l be determined based 22
on the eligibility of the member to elect coverage. The alterna te payee shall pay the 23
full monthly premium for retiree major medical insurance coverage. 24
(n) The administrator shall 25
(1) inform a person entitled to retiree major medical insuranc e 26
coverage under this section in writing 27
(A) that the health insurance coverage available to retired 28
members may be different from the health insurance coverage pro vided to 29
employees; 30
(B) of time limits for selecting optional health insurance 31
34-LS0280\A
SB 28 -18- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

coverage; and 1
(C) whether the election is irrevocable; and 2
(2) require that a person entitled to retiree major medical in surance 3
coverage under this section indicate in writing on a form provided by the administrator 4
whether the person has chosen to receive optional health insurance coverage. 5
(o) The monthly group premiums for retiree major medical insurance coverage 6
under this section are establishe d by the administrator in acco rdance with 7
AS 39.30.095. Nothing in this chapter guarantees a person who e lects coverage under 8
(a) of this section a monthly group premium rate for retiree ma jor medical insurance 9
coverage other than the premium in effect for the month in whic h the premium is due 10
for coverage for that month. 11
(p) In this section, "health re imbursement arrangement plan" m eans the State 12
of Alaska Teachers' and Public Employees' Retiree Health Reimbu rsement 13
Arrangement Plan established in AS 39.30.300. 14
* Sec. 26. AS 14.25.220(5) is amended to read: 15
(5) "average base salary" means, 16
(A) for a teacher who first b ecame a member before July 1, 17
2006, the result obtained by dividing the sum of the member's three highest 18
y e a r s ' b a s e s a l a r y b y t h r e e , o r i f a m e m b e r d o e s n o t h a v e t h r e e years base 19
salary, then by dividing the sum of all base salaries by the nu mber of years of 20
base salary; the base salary for a year in which credit is gran ted for disability 21
totaling more than one-third of a year may not be used in the c omputation of 22
the average base salary; the base salary in a school year for w hich the member 23
receives compensation for less than two-thirds of a year may no t be used in the 24
computation of the average base salary; if compensation is rece ived for more 25
than two-thirds of a year, the full base salary for that school year shall be used 26
in the computation of the average base salary; 27
(B) for a teacher who first became a member after June 30, 28
2006, the result obtained by dividi ng the sum of the member's f ive highest 29
years' base salary by five, or if a member does not have five y ears' base 30
salary, then by dividing the sum of all base salaries by the nu mber of 31
34-LS0280\A
SB0028A -19- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

years of base salary; the base s alary for a year in which credi t is granted 1
for disability totaling more than one-third of a year may not be used in the 2
computation of the average base salary; the base salary in a sc hool year 3
for which the member receives compensation for less than two-th irds of a 4
year may not be used in the computation of the average base sal ary; if 5
compensation is received for more than two-thirds of a year, th e full base 6
salary for that school year shall be used in the computation of the average 7
base salary; 8
* Sec. 27. AS 14.25.220(6) is amended to read: 9
(6) "base salary" 10
(A) means the total remunerati on payable under contract for a 11
full year of membership service, including addenda to the contr act and, for a 12
member who elects to participate solely in this plan under AS 1 4.25.040(f), 13
remuneration paid by the public employees' retirement plan empl oyer, 14
but, for a member first hired on or after July 1, 1996, does no t include 15
remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17); 16
(B) has the same meaning as "compensation" under 17
AS 39.35.680(9) when applied to a sta te legislator who elects m embership 18
under AS 14.25.040(b); 19
* Sec. 28. AS 14.25.220(46) is amended to read: 20
(46) "vested member" or "vested teacher" means an active membe r 21
who [HAS COMPLETED EITHER] 22
(A) first became a member before July 1, 2006, and has 23
completed 24
(i) 15 years of service, the last five of which have been 25
membership service, for a member first hired before July 1, 1975; 26
(ii) [(B)] eight years of membership service; 27
(iii) [(C)] five years of membership and three years of 28
BIA service; or 29
(iv) [(D)] 12 school years of part-time membership 30
service or 12 school years in each of which the member earned e ither 31
34-LS0280\A
SB 28 -20- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

part-time or full-time membership service; 1
(B) first became a member after June 30, 2006, and has 2
completed five years of membership service; 3
* Sec. 29. AS 14.25.220 is amended by adding a new paragraph to read: 4
(48) "first became a member after June 30, 2006" and "first be came a 5
member of the plan after June 30, 2006" include a member who el ected under former 6
AS 14.25.540 to participate in the defined contribution retirem ent plan under 7
AS 14.25.310 - 14.25.590 and who elects to participate in the d efined benefit 8
retirement plan under AS 14.25.009 - 14.25.220. 9
* Sec. 30. AS 14.25.310 is amended to read: 10
Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 11
AS 14.25.310 - 14.25.590 apply only to 12
(1) teachers who first become members [ON OR] after June 30, 2006, 13
and before July 1, 2025, and who are eligible but do not elect to participate in a 14
defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 15
39.35.680; and 16
(2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 17
EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 18
DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 19
- 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBER S] 20
who transferred [TRANSFER] into the defined c ontribution retirement plan under 21
former AS 14.25.540 and do not elect to participate in the defined benefit 22
retirement plan under AS 14.25.009 - 14.25.220. 23
* Sec. 31. AS 14.25.310 is amended by adding a new subsection to read: 24
(b) An employer that participat es in the plan shall also parti cipate in the 25
defined benefit retirement plan under AS 14.25.009 - 14.25.220. 26
* Sec. 32. AS 14.25.330(a) is amended to read: 27
(a) A teacher who first becomes a member [ON OR] after June 30, 2006, and 28
before July 1, 2025, and who does not participate in a defined benefit retirement 29
plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, 30
SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contr ibution 31
34-LS0280\A
SB0028A -21- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

retirement plan. 1
* Sec. 33. AS 14.25.490(a) is amended to read: 2
(a) Subject to art. XII, sec. 7, Constitution of the State of Alask a, the 3
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 4
time, in whole or in part, including the right to make retroact ive amendments referred 5
to in 26 U.S.C. 401(b). 6
* Sec. 34. AS 14.25.490(b) is amended to read: 7
(b) The plan administrator may not modify or amend the plan retroactively [IN 8
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 9
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 10
MADE] before the modification or amendment except to the extent that the reduction 11
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 12
Revenue Code. 13
* Sec. 35. AS 14.25.490(c) is amended to read: 14
(c) Subject to art. XII, sec. 7, Constitution of the State of Alask a, and the 15
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 16
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 17
is terminated, all investments at the time of termination remain in force until all 18
individual accounts have been com pletely distributed under the plan. After [, AND, 19
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 20
employer. 21
* Sec. 36. AS 14.25.490(d) is repealed and reenacted to read: 22
(d) Within one year after determining that a contribution to t he plan by an 23
employer was the result of a mistake of fact, the administrator shall return the 24
contribution to the employer. 25
* Sec. 37. AS 37.10.220(a) is amended to read: 26
(a) The board shall 27
(1) hold regular and special meetings at the call of the chair or of at 28
least five members; meetings are open to the public, and the bo ard shall keep a full 29
record of all its proceedings; 30
(2) after reviewing recommendations from the Department of 31
34-LS0280\A
SB 28 -22- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

Revenue, adopt investment policies for each of the funds entrusted to the board; 1
(3) determine the appropriate i nvestment objectives for the de fined 2
benefit plans established under the teachers' retirement system under AS 14.25 and the 3
public employees' retirement system under AS 39.35; 4
(4) assist in prescribing the policies for the proper operatio n of the 5
systems and take other actions n ecessary to carry out the inten t and purpose of the 6
systems in accordance with AS 37.10.210 - 37.10.390; 7
(5) provide a range of investment options and establish the ru les by 8
which participants can direct t heir investments among those opt ions with respect to 9
accounts established under 10
(A) AS 14.25.340 - 14.25.350 (teachers' retirement system 11
defined contribution individual accounts); 12
(B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 13
Annuity Plan); 14
(C) AS 39.35.730 - 39.35.750 (public employees' retirement 15
system defined contribution individual accounts); and 16
(D) AS 39.45.010 - 39.45.060 (public employees' deferred 17
compensation program); 18
(6) establish the rate of interest that shall be annually cred ited to each 19
member's individual contribution account in accordance with AS 14.25.145 and 20
AS 39.35.100 and the rate of intere st that shall be annually cr edited to each member's 21
account in the health reimburseme nt arrangement plan under AS 3 9.30.300 - 22
39.30.495; the rate of interest shall be adopted on the basis o f the probable effective 23
rate of interest on a long-term basis, and the rate may be changed from time to time; 24
(7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 25
(8) coordinate with the retiremen t system administrator to hav e an 26
annual actuarial valuation of each retirement system prepared t o determine system 27
assets, accrued liabilities, and funding ratios and to certify to the appropriate 28
budgetary authority of each employer in the system 29
(A) an appropriate contribution rate for normal costs; [AND] 30
(B) an appropriate contribution rate for liquidating any past 31
34-LS0280\A
SB0028A -23- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

service liability; in this subpa ragraph, the appropriate contri bution rate for 1
liquidating the past service liability of the defined benefit retirement plan under 2
AS 14.25.009 - 14.25.220 or the past service liability of the d efined benefit 3
retirement plan under AS 39.35.095 - 39.35.680 must be determin ed by a level 4
percent of pay method based on am ortization of the past service liability for a 5
closed term of 25 years; 6
(C) an appropriate monthly employer contribution under 7
AS 14.25.070 and AS 39.35.255; and 8
(D) appropriate adjustment s, if any, under AS 14.25.050(e) 9
and AS 39.35.160(e); 10
(9) review actuarial assumptions prepared and certified by a m ember 11
of the American Academy of Actua ries and conduct experience ana lyses of the 12
retirement systems not less than once every four years, except for health cost 13
assumptions, which shall be reviewed annually; the results of all actuarial assumptions 14
prepared under this paragraph sh all be reviewed and certified by a second member of 15
the American Academy of Actuaries before presentation to the board; 16
(10) contract for an independent audit of the state's actuary not less 17
than once every four years; 18
(11) contract for an independent a u d i t o f t h e s t a t e ' s p e r f o r m ance 19
consultant not less than once every four years; 20
(12) obtain an external perform ance review to evaluate the inv estment 21
policies of each fund entrusted to the board and report the res ults of the review to the 22
appropriate fund fiduciary; 23
(13) by the first day of each regular legislative session, rep ort to the 24
governor, the legislature, and the individual employers partici pating in the state's 25
retirement systems on the financial condition of the systems in regard to 26
(A) the valuation of trust fund assets and liabilities; 27
(B) current investment policies adopted by the board; 28
(C) a summary of assets held in trust listed by the categories of 29
investment; 30
(D) the income and expenditures for the previous fiscal year; 31
34-LS0280\A
SB 28 -24- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

(E) the return projections for the next calendar year; 1
(F) one-year, three-year, five-year, and 10-year investment 2
performance for each of the funds entrusted to the board; and 3
(G) other statistical data necessary for a proper understandin g 4
of the financial status of the systems; 5
(14) submit quarterly updates of the investment performance re ports to 6
the Legislative Budget and Audit Committee; 7
(15) develop an annual operating budget; [AND] 8
(16) administer pension forfeitures required under AS 37.10.31 0 using 9
the procedures of AS 44.62 (Administrative Procedure Act); 10
(17) establish one or more sub-trusts of the pension fund to h old 11
employer contributions dep osited under AS 14.25.086 and AS 39.3 5.281, 12
employee contributions, assets, and earnings attributable to me mbers of the 13
defined benefit retiremen t plan under AS 14.25.009 - 14.25.220 o r t h e d e f i n e d 14
benefit retirement plan under AS 39.35.095 - 39.35.680 who firs t became 15
members of the respective plan after June 30, 2006; and 16
(18) account for and track employer contributions, employee 17
contributions, assets, and earnings in each trust fund or sub-t rust attributable to 18
members who first became members after June 30, 2006, of the de fined benefit 19
retirement plan under AS 14.25.009 - 14.25.220 and members who first became 20
members after June 30, 2006, of the defined benef it retirement plan under 21
AS 39.35.095 - 39.35.680; employer contributions that exceed th ose assigned to 22
members who first became members after June 30, 2006, of the de fined benefit 23
retirement plan under AS 14.25.009 - 14.25.220 and members who first became 24
members after June 30, 2006, of the defined benef it retirement plan under 25
AS 39.35.095 - 39.35.680 shall be transferred or retained in tr usts or sub-trusts 26
with liability allocated toward employer normal costs for membe rs who became 27
members of the respective defined benefit retirement plan befor e July 1, 2025, 28
past service costs, the State of Alaska Teachers' and P ublic Em ployees' Retiree 29
Health Reimbursement Arrang ement Plan under AS 39.30.300 - 39.3 0.495, and 30
employer contributions under AS 14.25.350 and AS 39.35.750. 31
34-LS0280\A
SB0028A -25- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

* Sec. 38. AS 37.10.220(b) is amended to read: 1
(b) The board may 2
(1) employ outside investment advisors to review investment policies; 3
(2) enter into an agreement with the fiduciary of another stat e fund in 4
order to assume the management and investment of those assets; 5
(3) contract for other services necessary to execute the board 's powers 6
and duties; 7
(4) enter into confidentiality agreements that would exempt re cords 8
from AS 40.25.110 and 40.25.120 if the records contain informat ion that could affect 9
the value of investment by the board or that could impair the a bility of the board to 10
acquire, maintain, or dispose of investments; 11
(5) adjust the amount of the in crease in benefits payable to a 12
member who first became a member after June 30, 2006, as provid ed under 13
AS 14.25.143 and AS 39.35.475; 14
(6) adjust contributio ns under AS 14.25.050(e) and 15
AS 39.35.160(e). 16
* Sec. 39. AS 39.30.090(a) is amended to read: 17
(a) The Department of Administration may obtain a policy or policies of group 18
insurance covering state employees, persons entitled to coverag e under AS 14.25.168, 19
14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 20
AS 39.37.145, employees of other participating governmental uni ts, or persons 21
entitled to coverage under AS 23.15.136, subject to the following conditions: 22
(1) a group insurance policy shall provide one or more of the following 23
benefits: life insurance, accidental death and dismemberment in surance, weekly 24
indemnity insurance, hospital ex pense insurance, surgical expen se insurance, dental 25
expense insurance, audiovisual insurance, or other medical care insurance; 26
(2) each eligible employee of the state, the spouse and the un married 27
children chiefly dependent on the eligible employee for support , and each eligible 28
employee of another participatin g governmental unit shall be co vered by the group 29
policy, unless exempt under regulations adopted by the commissi oner of 30
administration; 31
34-LS0280\A
SB 28 -26- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

(3) a governmental unit may participate under a group policy if 1
(A) its governing body adopts a resolution authorizing 2
participation and payment of required premiums; 3
(B) a certified copy of the resolution is filed with the 4
Department of Administration; and 5
(C) the commissioner of ad ministration approves the 6
participation in writing; 7
(4) in procuring a policy of group health or group life insura nce as 8
provided under this section or ex cess loss insurance as provide d in AS 39.30.091, the 9
Department of Administration shall comply with the dual choice requirements of 10
AS 21.86.310, and shall obtain the insurance policy from an ins urer authorized to 11
transact business in the state under AS 21.09, a hospital or medical service corporation 12
authorized to transact busin ess in this state under AS 21.87, o r a health maintenance 13
organization authorized to ope rate in this state under AS 21.86 ; an excess loss 14
insurance policy may be obtaine d from a life or health insurer authorized to transact 15
business in this state under AS 21.09 or from a hospital or med ical service corporation 16
authorized to transact business in this state under AS 21.87; 17
(5) the Department of Administration shall make available bid 18
specifications for desired insurance benefits or for administration of benefit claims and 19
payments to (A) all insurance carriers authorized to transact b usiness in this state 20
under AS 21.09 and all hospital or m edical service corporations authorized to transact 21
business under AS 21.87 who are qualif ied to provide the desire d benefits; and (B) 22
insurance carriers authorized to transact business in this stat e under AS 21.09, hospital 23
or medical service corporations a uthorized to transact business under AS 21.87, and 24
third-party administrators licensed to transact business in thi s state and qualified to 25
provide administrative services; the specifications shall be made available at least once 26
every five years; the lowest responsible bid submitted by an in surance carrier, hospital 27
or medical service corporation, or third-party administrator wi th adequate servicing 28
facilities shall govern selection of a carrier, hospital or med ical service corporation, or 29
third-party administrator under this section or the selection of an insurance carrier or a 30
hospital or medical service corporation to provide excess loss insurance as provided in 31
34-LS0280\A
SB0028A -27- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

AS 39.30.091; 1
(6) if the aggregate of dividends payable under the group insu rance 2
policy exceeds the governmental unit's share of the premium, th e excess shall be 3
applied by the governmental unit for the sole benefit of the employees; 4
(7) a person receiving benefits under AS 14.25.110, AS 22.25, 5
AS 39.35, or former AS 39.37 may con tinue the life insurance co verage that was in 6
effect under this section at the time of termination of employm ent with the state or 7
participating governmental unit; 8
(8) a person electing to have insurance under (7) of this subs ection 9
shall pay the cost of this insurance; 10
(9) for each permanent part-time employee electing coverage un der 11
this section, the state shall contribute one-half the state contribution rate for permanent 12
full-time state employees, and the permanent part-time employee shall contribute the 13
other one-half; 14
(10) a person receiving be nefits under AS 14.25, AS 22.25, AS 39.35, 15
or former AS 39.37 may obtain auditory, visual, and dental insu rance for that person 16
and eligible dependents under th is section; the level of covera ge for persons over 65 17
shall be the same as that available before reaching age 65 exce pt that the benefits 18
payable shall be supplemental to any benefits provided under th e federal old age, 19
survivors, and disability insurance program; a person electing to have insurance under 20
this paragraph shall pay the cost of the insurance; the commiss ioner of administration 21
shall adopt regulations implementing this paragraph; 22
(11) a person receiving be nefits under AS 14.25, AS 22.25, AS 39.35, 23
or former AS 39.37 may obtain long -term care insurance for that person and eligible 24
dependents under this section; a p erson who elects insurance un der this paragraph 25
shall pay the cost of the insurance premium; the commissioner o f administration shall 26
adopt regulations to implement this paragraph; 27
(12) each licensee holding a current operating agreement for a vending 28
facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 29
applies to governmental units other than the state. 30
* Sec. 40. AS 39.30.097(a) is amended to read: 31
34-LS0280\A
SB 28 -28- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

(a) The commissioner of adminis tration is authorized to prefun d medical 1
benefits provided by AS 14.25.168, 14.25.171, AS 22.25.090, [AND] AS 39.35.535 , 2
and 39.35.537 by establishing an irrevocable trust that is exempt from feder al income 3
tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 4
and actuarial requirements of the Governmental Accounting Standards Board. 5
* Sec. 41. AS 39.30.097(b) is amended to read: 6
(b) The commissioner of adminis tration is authorized to prefun d medical 7
benefits provided by AS 14.25.480 [, AS 39.30.300,] and AS 39.3 5.880 by 8
establishing an irrevocable trust that is exempt from federal i ncome tax under 26 9
U.S.C. 115 and subject to the applicable financial reporting, d isclosure, and actuarial 10
requirements of the Governmental Accounting Standards Board. 11
* Sec. 42. AS 39.30.097 is amended by adding a new subsection to read: 12
(f) The commissioner of administr ation is authorized to prefun d medical 13
benefits provided by AS 39.30.300 by establishing an irrevocabl e trust that is exempt 14
from federal income tax under 26 U.S.C. 115 and subject to the applicable financial 15
reporting, disclosure, and actua rial requirements of the Govern mental Accounting 16
Standards Board. 17
* Sec. 43. AS 39.30.300 is amended to read: 18
Sec. 39.30.300. State of Alaska Teac hers' and Public Employees' Retiree 19
Health Reimbursement Arrangement Plan established. The State of Alaska 20
Teachers' and Public Employees' Retiree Health Reimbursement Ar rangement Plan is 21
established for 22
(1) teachers who first become members of the [DEFINED 23
CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 - 24
14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], 25
and teachers who elected under fo rmer AS 14.25.540 to participate i n the plan 26
under AS 14.25.310 - 14.25.590; and 27
(2) employees of the state, political subdivisions of the state, an d 28
public organizations of the state who first become members [OF THE DEFINED 29
CONTRIBUTION PLAN] of the Public Employees' Retirement System of Alaska 30
(AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER 31
34-LS0280\A
SB0028A -29- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

AS 39.35.700 - 39.35.990 ON OR] after June 30, 2006, and employees of the state, 1
political subdivisions of the state, and public organizations o f the state who 2
elected under former AS 39.35.940 to p articipate in the plan es tablished under 3
AS 39.35.700 - 39.35.990 [JULY 1, 2006]. 4
* Sec. 44. AS 39.30.340 is amended to read: 5
Sec. 39.30.340. Powers and duties of the administrator. The administrator 6
shall establish a teachers' and public employees' retiree healt h reimbursement 7
arrangement plan trust fund under AS 39.30.097(f) in which the assets of the plan 8
shall be deposited and held. [THE RETIREE HEALTH REIMBURSEMENT 9
ARRANGEMENT PLAN TRUST FUND MAY BE A SUB-TRUST OF THE 10
ALASKA RETIREE HEALTH CARE TRUST ESTABLISHED UNDER 11
AS 39.30.097(b).] The administrator has the same powers and dut ies with regard to 12
the plan and the trust fund as provided in AS 14.25.003 and 14.25.004. 13
* Sec. 45. AS 39.30.380 is amended to read: 14
Sec. 39.30.380. Termination of employment. A person who terminates 15
employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470, 16
AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 17
contributions made on behalf of the person to the teachers' and public employees' 18
retiree health reimbursement arr angement trust fund. If a perso n returns to 19
employment with a participating employer by December 31 of the year in which the 20
person reaches 65 years of age, the person's account balance sh all be restored in the 21
amount recorded on the date of termination from the trust, adju sted for inflation at the 22
rate of the Consumer Price Index for Anchorage, Alaska. The ear lier period of 23
employment with a participating employer shall be credited towa rd eligibility for 24
medical benefits. 25
* Sec. 46. AS 39.30.390 is amended to read: 26
Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 27
eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 28
[AS 14.25.470 AND AS 39.35.870] are eligib le for reimbursements from the 29
individual account established for a member under the plan, exc ept members do not 30
have to retire directly from the system. A person who is the de pendent child of an 31
34-LS0280\A
SB 28 -30- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

eligible member is eligible for reimbursements if the eligible member and surviving 1
spouse have both died so long as the person meets the definition of dependent child. 2
* Sec. 47. AS 39.30.400(a) is amended to read: 3
(a) The administrator may deduct the cost of monthly premiums from the 4
individual account for retiree maj or medical insurance on behal f of an eligible person 5
who elected retiree major medical insurance under AS 14.25.171, 14.25.480, 6
AS 39.35.537, or 39.35.880 [AS 14.25.480 OR AS 39.35.880]. 7
* Sec. 48. AS 39.30.420(a) is amended to read: 8
(a) Subject to art. XII, sec. 7, Constitution of the State of Alask a, 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 retroact ive amendments referred 11
to in 26 U.S.C. 401(b). 12
* Sec. 49. AS 39.30.420(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. 50. AS 39.30.420(c) is amended to read: 20
(c) Subject to art. XII, sec. 7, Constitution of the State of Alask a, 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 com pletely 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. 51. AS 39.30.420(d) is repealed and reenacted to read: 28
(d) Within one year after determining that a contribution to t he plan by an 29
employer was the result of a mistake of fact, the administrator shall return the 30
contribution to the employer. 31
34-LS0280\A
SB0028A -31- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

* Sec. 52. AS 39.30.495(5) is amended to read: 1
(5) "eligible person" means a person who meets the eligibility 2
requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 3
OR AS 39.35.870]; 4
* Sec. 53. AS 39.30.495(6) is amended to read: 5
(6) "employer" has the meaning given in AS 14.25.220 for employers 6
of teachers in the defined benefit retirement plan established in AS 14.25.009 - 7
14.25.220, has the meaning given in AS 14.25.590 for employers of teachers in the 8
defined contribution plan established in AS 14.25.310 - 14.25.5 90, has the meaning 9
given in AS 39.35.680 for employers of public employees in the defined benefit 10
retirement plan established in AS 39.35.095 - 39.35.680, and has the meaning given 11
in AS 39.35.990 for employers of public employees in the define d contribution plan 12
established in AS 39.35.700 - 39.35.990; 13
* Sec. 54. AS 39.30.495(9) is amended to read: 14
(9) "member" means a member of the State of Alaska Teachers' and 15
Public Employees' Retiree Health Reimbursement Arrangement Plan established 16
in AS 39.30.300 - 39.30.495 [DEFINED CONTRIBUTION PLAN OF THE 17
TEACHERS' RETIREMENT SYSTEM IN AS 14.25.310 - 14.25.590 OR A 18
MEMBER OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM IN 19
AS 39.35.700 - 39.35.990]; 20
* Sec. 55. AS 39.35.095 is amended to read: 21
Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 22
[FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 23
only to members first hired 24
(1) before July 1, 2006, who have 25
(A) not elected under form er AS 39.35.940 to participate in 26
the defined contribution ret irement plan under AS 39.35.700 - 3 9.35.990; 27
or 28
(B) elected under former A S 39.35.940 to participate in the 29
defined contribution retirement plan under AS 39.35.700 - 39.35 .990 and 30
are former members of the defined contribution retirement plan under 31
34-LS0280\A
SB 28 -32- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

AS 39.35.700 - 39.35.990; 1
(2) after June 30, 2006, and before July 1, 2025, who are form er 2
members of the defined contribution retirement plan under AS 39 .35.700 - 3
39.35.990; or 4
(3) on or after July 1, 2025 [: AS 39.35.095 - 39.35.680]. 5
* Sec. 56. AS 39.35.095 is amended by adding a new subsection to read: 6
(b) An employee who became a member of the system after June 3 0, 2006, 7
and before July 1, 2025, or who has elected under former AS 39. 35.940 to participate 8
in the defined contribution retirement plan under AS 39.35.700 - 39.35.990, is subject 9
to AS 39.35.095 - 39.35.680 if the employee 10
(1) is not employed by an employer on July 1, 2025; 11
(2) is reemployed by an employer after July 1, 2025; and 12
(3) has, before the date of reemployment, received 13
(A) a distribution, other than a rollover distribution, of the 14
entire balance in the member's individual account in the define d contribution 15
retirement plan; or 16
(B) a rollover distribution of the entire balance in the membe r's 17
individual account in the defined contribution retirement plan and has not 18
within 180 days of reemployment had all or part of a direct rol lover 19
distribution from an eligible retirement plan owned by the memb er paid 20
directly into the member's individual account. 21
* Sec. 57. AS 39.35.100(b) is amended to read: 22
(b) An individual account shall be maintained for each employe e to record the 23
amount of the employee's mandato ry contributions collected unde r AS 39.35.160 24
[AS 39.35.160(a)]. As of the last day of each calendar year and of each fiscal year, this 25
account shall be credited with int erest by applying the prescri bed rate of interest, as 26
determined by the board, to the balance in the account as of th at date. When the 27
employee is appointed to retirem ent, the amount held in the ind ividual account shall 28
be used first to fully finance the benefits paid. Once this acc ount has been exhausted, 29
the plan shall fully finance the benefits paid that were not fi nanced by the employee's 30
individual account. 31
34-LS0280\A
SB0028A -33- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

* Sec. 58. AS 39.35 is amended by adding a new section to article 3 to read: 1
Sec. 39.35.159. Election of defined benefit retirement plan by reemployed 2
employees. (a) An employee may make a one-time election to participate in the plan 3
under AS 39.35.095 - 39.35.680 if the employee 4
(1) became a member of the defined contribution retirement plan under 5
AS 39.35.700 - 39.35.990 after June 30, 2006, and before July 1, 2025; 6
(2) is not employed by an employer on July 1, 2025; 7
(3) is reemployed by an employer after July 1, 2025; and 8
(4) before the date of reemployment, 9
(A) has not received a distribu tion of the entire balance in t he 10
employee's individual account unde r the defined contribution re tirement plan 11
established in AS 39.35.700 - 39.35.990; or 12
(B) has received a rollover dist ribution of the entire balance in 13
the member's individual account in the defined contribution ret irement plan 14
and has within 180 days of reemployment had all or part of a di rect rollover 15
distribution from an eligible retirement plan owned by the memb er paid 16
directly into the member's individual account. 17
(b) An election under (a) of this section may be made not more than 180 days 18
after the date of reemployment. A reemployed employee electing to participate under 19
(a) of this section shall use th e balance of the employee's ind ividual account in the 20
plan under AS 39.35.700 - 39.35.990, including any rollover con tributions, to 21
purchase credited service in the plan under AS 39.35.095 - 39.3 5.680. An election 22
made under (a) of this section must be made in writing in the manner prescribed by the 23
administrator. An election made by an employee who is married is not effective unless 24
the election is signed by the employee's spouse. The administra tor shall provide an 25
employee who is eligible to mak e an election under (a) of this section with 26
information about the potential c onsequences of the employee's election, including 27
calculations to illustrate the effect of moving the employee's retirement plan from a 28
defined contribution retirement plan to a defined benefit retirement plan. 29
(c) An election made under (a) of this section to participate in the plan under 30
AS 39.35.095 - 39.35.680 is irrevocable. On the effective date of the election, an 31
34-LS0280\A
SB 28 -34- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

eligible employee shall be enrolled as a member of the plan, an d the employee's 1
participation in the plan shall be governed by the applicable p rovisions of the plan. 2
The employee's enrollment in the plan is retroactive to the date of hire. 3
(d) When an eligible employee makes an election under this sec tion, the 4
administrator shall cause the total amount of the employee's em ployee and employer 5
contributions to the plan under AS 39.35.700 - 39.35.990, with investment earnings 6
and losses through the day of the employee's election to partic ipate as a member in the 7
plan under AS 39.35.095 - 39.35.680, to be actuarially calculat ed and, subject to (f) of 8
this section, transferred to the pension fund in the plan under AS 39.35.095 - 9
39.35.680. On the effective date of the employee's participatio n in the plan under 10
AS 39.35.095 - 39.35.680, the employee shall be credited with service in the plan. The 11
board shall determine the cost of the employee's actual service time based on the 12
employee's accrued actuarial liability of pension benefits in t he plan, and credit the 13
employee with service time equal to the value actuarially calcu lated and transferred to 14
the pension fund in the plan under AS 39.35.095 - 39.35.680. Th e board shall adopt 15
regulations establishing transfer procedures. The transfer may not occur later than 60 16
days after the date the administrator receives the employee's e lection, unless the major 17
financial markets for securities available for a transfer are s eriously disrupted by an 18
unforeseen event that also causes the suspension of trading on a national securities 19
exchange in the country where the securities were issued; in th at event, the 60-day 20
period may be extended by a resolution of the board. A transfer is not commissionable 21
or subject to a fee and may be in the form of cash or a securit y as determined by the 22
board. The value of a security shall be assessed on the date th e security is received in 23
the employee's account. 24
(e) When making a transfer under (d) of this section or a tran s f e r f o r a 25
reemployed employee subject to the plan under AS 39.35.095(b), the administrator 26
shall transfer 27
(1) an amount equal to the decrea se in the accrued actuarial l iability of 28
the death and disability tr ust in the plan under AS 39.35.700 - 39.35.990 resulting 29
from the transfer as of the date of transfer, based on the most recent actuarial valuation 30
of the death and disability trust, from the death and disabilit y trust in the plan under 31
34-LS0280\A
SB0028A -35- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

AS 39.35.700 - 39.35.990 to the pension fund in the plan under AS 39.35.095 - 1
39.35.680; and 2
(2) an amount equal to the incre ase in the accrued actuarial l iability of 3
the health care trust in the plan under AS 39.35.095 - 39.35.68 0 resulting from the 4
transfer as of the date of transfer, based on the actuarial ass umptions set out in (g) of 5
this section, from the trust established under AS 39.30.097(b) for the prefunding of 6
medical benefits provided by AS 39.35.880 to the trust establis hed under 7
AS 39.30.097(a) for the prefunding of medical benefits provided by AS 39.35.537. 8
(f) If the value actuarially calculated under (d) of this sect ion is insufficient to 9
pay for service credit equal to the employee's actual service, the administrator shall 10
allow the employee the option of purchasing service credit in a n amount up to the 11
amount needed to eliminate the insufficiency; however, if that value exceeds the 12
amount needed to pay for service credit equal to the employee's actual service, the 13
administrator shall cause the excess to be paid to the employee as a rollover transfer to 14
either an individual employee a nnuity account in the Department of Administration 15
under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Su pplemental Annuity 16
Plan) or, if the member's employer does not participate in the State of Alaska 17
Supplemental Annuity Plan, to an eligible retirement plan as de fined in 18
AS 39.35.760(d). An excess may not be used to purchase addition al service credit in 19
the plan under AS 39.35.095 - 39.35.680. When a reemployed empl oyee enters the 20
plan under AS 39.35.095(b), the admin istrator shall allow the e mployee to pay for a 21
period of service credit up to the employee's actual service. W hen an employee elects 22
to purchase service credit under this section and does not imme diately pay for the 23
service credit purchased, an i ndebtedness is established. Inter est as prescribed by 24
regulation accrues on an employee's indebtedness. If the indebt edness exists when the 25
employee is appointed to retirem ent, the administrator shall ma ke a corresponding 26
actuarial adjustment to the benefit payable to the employee for service in the defined 27
contribution retirement plan. 28
(g) Actuarial assumptions about the plan under AS 39.35.095 - 39.35.680 29
must be based on the most recent actuarial valuation of the pla n, except that the 30
retirement rates are computed at 25 percent of the retirement r a te s u s e d in th e mo s t 31
34-LS0280\A
SB 28 -36- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

recent actuarial valuation of the pension fund for the plan plu s 75 percent of the 1
retirement rates used in the most recent actuarial valuation of the plan under 2
AS 39.35.700 - 39.35.990. 3
( h ) T h e p r o v i s i o n s o f t h i s s e c t ion are subject to the requirem ents of the 4
Internal Revenue Code and the limitations under AS 39.35.115, 3 9.35.678, 5
39.35.710(c) and (d), and 39.35.895. In this subsection, "Inter nal Revenue Code" has 6
the meaning given in AS 39.35.990. 7
* Sec. 59. AS 39.35.160(a) is amended to read: 8
(a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 9
each peace officer or firefighter shall contribute to the plan an amount equal to seven 10
and one-half percent of the peace officer's or firefighter's compensation, and, except [. 11
EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, 12
each other employee shall contribute to the plan an amount equa l t o s i x a n d t h r e e -13
quarters percent of the employee's compensation. [THE CONTRIBUT IONS SHALL 14
BE DEDUCTED BY THE EMPLOYER AT THE END OF EACH PAYROLL 15
PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 16
COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 17
TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 18
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 19
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 20
OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 21
* Sec. 60. AS 39.35.160 is amended by adding new subsections to read: 22
(e) An employee who first participates in the plan after June 30, 2006, shall 23
contribute to the plan an amount equal to eight percent of the employee's 24
compensation. The board may, from time to time, adjust the empl oyee contribution 25
under this subsection to an amount that, 26
(1) if decreased, is not less than eight percent of the employ ee's 27
compensation; and 28
(2) if increased, is not more th an 12 percent of the employee' s 29
compensation. 30
(f) Contributions under (a) and (e ) of this section shall be d educted by the 31
34-LS0280\A
SB0028A -37- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

employer at the end of each payroll period. The contributions s hall be deducted from 1
employee compensation before com putation of applicable federal taxes, and the 2
contributions shall be treated a s employer contributions under 26 U.S.C. 414(h)(2). A 3
member may not have the option of making the payroll deduction directly instead of 4
having the contribution picked up by the employer. 5
(g) The board shall increase the employee contribution under ( e) of this 6
section if the board determines that, unless the contribution is increased, the portion of 7
the liability of the plan that is attributable to employees who f ir s t p a r t ic i p a t e i n t h e 8
plan after June 30, 2006, will be funded below 90 percent. The board may not increase 9
the employee contribution unless the board increases the employ er contribution under 10
AS 39.35.255(a)(2) by an equal amount. The board may decrease the contribution 11
under (e) of this section if the board determines that, after the contribution is 12
decreased, the portion of the liability of the plan that is att ributable to all members 13
who first became members of t he plan after June 30, 2006, will be funded above 90 14
percent. The board may not decr ease the employee contribution u nless the board 15
decreases the employer contribution under AS 39.35.255(a)(2) by an equal amount. 16
* Sec. 61. AS 39.35.165(a) is amended to read: 17
(a) An employee who is eligible to purchase credited service u nder 18
AS 39.35.159, 39.35.310 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 19
39.35.360, or 39.35.370, a member who is eligible to purchase c redited service under 20
AS 39.35.375, or an elected public official who is eligible to purchase credited service 21
under AS 39.35.381 is an employee for purposes of this section. An employee may, in 22
lieu of making payments directly to the plan, elect to have the employee's employer 23
make payments as provided in this section. 24
* Sec. 62. AS 39.35.165(b) is amended to read: 25
(b) An employee may elect to have the employer make payments for all or any 26
portion of the amounts payable for the employee's purchase of c redited service 27
through a salary reduction program as follows: 28
(1) the amounts paid under a sa lary reduction program are in l ieu of 29
contributions by the employee making the election; the electing employee's salary or 30
other compensation shall be reduc ed by the amount paid by the e mployer under this 31
34-LS0280\A
SB 28 -38- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

subsection; 1
(2) the employee shall make a n irrevocable election under this section 2
to purchase credited service as permitted in AS 39.35.159, 39.35.310 [AS 39.35.310], 3
39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.37 0, 39.35.375, or 4
39.35.381 and before the employee's termination of employment; the irrevocable 5
election must specify the number of payroll periods that deduct ions will be made from 6
the employee's compensation and the dollar amount of deductions f o r e a c h p a y r o l l 7
period during the specified number of payroll periods; the dedu ctions made under this 8
paragraph cease upon the earlier of the member's termination of employment with the 9
employer or the member's death; amounts paid by an employer und er (f) of this 10
section may not be applied toward the payment of the dollar amo unt of the deductions 11
representing the portion of the c redited service that is being purchased by the member 12
through payroll deduction in accordance with the member's irrev ocable election under 13
this subsection; 14
(3) amounts paid by an employer under this subsection shall be treated 15
as employer contributions for the purpose of determining tax tr eatment under the 16
Internal Revenue Code; the amounts paid by the employer under t his section may not 17
be included in the member's gross income for income tax purposes until those amounts 18
are distributed by refund or retirement benefit payments. 19
* Sec. 63. AS 39.35.165(g) is amended to read: 20
(g) Payments made under this s ection shall be applied to reduc e the 21
employee's outstanding indebtedness described in AS 39.35.159, 39.35.310 22
[AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39. 35.360, 39.35.370, 23
39.35.375, or 39.35.381 at the time that the contributions are received by the plan. 24
* Sec. 64. AS 39.35.165(i) is amended to read: 25
(i) On satisfaction of the eligibility requirements of AS 39.35.159, 39.35.310 26
[AS 39.35.310], 39.35.330, 39.35.340, 39.35.341, 39.35.345, 39. 35.360, 39.35.370, 27
39.35.375, or 39.35.381, the requirements of this section, and the administrative filing 28
requirements specified by the c ommissioner, the plan shall adju s t t h e e m p l o y e e ' s 29
credited service history and add any additional service credits acquired. 30
* Sec. 65. AS 39.35.255(a) is amended to read: 31
34-LS0280\A
SB0028A -39- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

(a) Each employer, except as provided in (h) of this section, shall contribute to 1
the system every payroll period the lesser of 2
(1) an amount calculated by applying a rate of 22 percent of the greater 3
of the total of all base salaries 4
(A) [(1)] paid by the employer to employees who are active 5
members of the system, including any adjustments to contributions required by 6
AS 39.35.520; or 7
(B) [(2)] paid by the employer to employees who were active 8
members of the system during th e corresponding payroll period f or the fiscal 9
year ending 10
(i) [(A)] June 30, 2008; or 11
(ii) [(B)] June 30, 2012, if that total is less than the total 12
under (i) of this subparagraph [(A) OF THIS PARAGRAPH], and the 13
employer is a municipality in which the population decreased by more 14
than 25 percent between 2000 and 2010, according to the decenni al 15
census conducted by the United States Bureau of the Census; or 16
(2) an amount calculated by applying a rate established by the 17
board under AS 37.10.220 to the total of all base salaries paid by the employer to 18
active members of the system; the rate must be at least 12 perc ent and be 19
sufficient to pay the actuarially determined employer normal co st, all 20
contributions required under AS 39.30.370 and AS 39.35.750, and past service 21
cost for members of the system. 22
* Sec. 66. AS 39.35.255 is amended by adding a new subsection to read: 23
(j) If the legislature appropr iates funds for the purpose of d ecreasing an 24
employer's contribution, the em ployer's contribution under (a) of this section shall 25
decrease by that amount. 26
* Sec. 67. AS 39.35 is amended by adding a new section to read: 27
Sec. 39.35.281. Sub-trust for members who first became members after 28
June 30, 2006. The administrator shall deposit a portion of employer contribut ions 29
under AS 39.35.255 and 39.35.280 in a sub- trust of the retirement fund established by 30
the board for members who first became members after June 30, 2 006. The amount 31
34-LS0280\A
SB 28 -40- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

deposited, when combined with the amount separately computed fo r medical benefits 1
under AS 39.35.282, must be sufficient to pay the actuarially d etermined employer 2
normal cost and past service cost for members of the system who first became 3
members after June 30, 2006. When the amount sufficient to pay the actuarially 4
determined employer normal cos t, all contributions required und er AS 39.30.370 and 5
AS 39.35.750, and past service cost f or members of the system i s less than 12 percent 6
of all base salaries paid to active members of the system, the administrator shall 7
deposit the difference in the sub-trust established under this section. 8
* Sec. 68. AS 39.35.282 is amended to read: 9
Sec. 39.35.282. Contributions for medical benefits. Contributions made by 10
an employer under AS 39.35.255 and 39.35.280 must [ S H A L L ] b e s e p a r a t e l y 11
computed for benefits provided by AS 39.35.535 and retiree major medical 12
insurance plan benefit s provided under AS 39.35.537, and must [ S H A L L ] b e 13
deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 14
* Sec. 69. AS 39.35.340(i) is amended to read: 15
(i) Notwithstanding (d) of this section, a member who retires as a peace officer 16
or firefighter may elect to use five or fewer years of credited service granted under this 17
section in computing years of credited service under AS 39.35.5 35(c) or 39.35.537 . 18
When eligibility for credited service for military service has been established and an 19
election under this subsection has been made, an indebtedness i n addition to the 20
indebtedness determined under (b) of this section shall be dete rmined for each year of 21
military service used under this subsection, in an amount based on the increase, if any, 22
in the present value of future benefits for that year as determined by the department. 23
* Sec. 70. AS 39.35.345(d) is amended to read: 24
(d) An employee may choose whet her the credited service grante d under this 25
section is used to satisfy the credited service requirements fo r normal retirement under 26
AS 39.35.370(a)(1)(B) or (C), 39.35.370(a)(2)(B), (C), or (D), [AS 39.35.370(a)(2) 27
OR (3)] or 39.35.385(f) or is only used for the calculation of benefits. An election 28
under this subsection is irrevocab le and applies to all tempora ry credited service that 29
the employee has accrued when the employee retires. An election under this 30
subsection does not change the dat e that an employee is conside red to have 31
34-LS0280\A
SB0028A -41- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

commenced participation in the plan under AS 39.35.120. 1
* Sec. 71. AS 39.35.370(a) is amended to read: 2
(a) Subject to AS 39.35.450, a terminated employee 3
(1) who first became a member before July 1, 2006, is eligible for a 4
normal retirement benefit 5
(A) [(1)] at age 60 with at least five years of credited service; 6
(B) [(2)] with at least 20 years of credited service as a peace 7
officer or firefighter; or 8
(C) [(3)] with at least 30 years of credited service; 9
(2) who first became a member after June 30, 2006, is eligible for a 10
normal retirement benefit 11
(A) at age 60 with at least five years of credited service; 12
(B) at age 55 with at least 20 years of credited service as a 13
peace officer or firefighter; 14
(C) at age 50 with at least 25 years of credited service as a 15
peace officer or firefighter; or 16
(D) with at least 30 ye ars of credited service [FOR ALL 17
OTHER EMPLOYEES]. 18
* Sec. 72. AS 39.35.381(e) is amended to read: 19
(e) A person who retires under this section is not entitled to disability or death 20
benefits under AS 39.35.400 - 39.35.440, a minimum benefit unde r AS 39.35.485, or 21
to medical benefits under AS 39.35.535 or 39.35.537 . Service earned under this 22
section may not be used for vesting under AS 39.35.095 - 39.35.680. 23
* Sec. 73. AS 39.35.475(b) is amended to read: 24
(b) Subject to (g) and (h) of this section, the [ T H E ] i n c r e a s e i n b e n e f i t 25
payments applies to total benefit payments except for the cost- of-living allowance 26
under AS 39.35.480. The amount of the increase is a percentage of the current benefit 27
equal to 28
(1) the lesser of 75 percent of the increase in the cost of li ving in the 29
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 30
years old and for members receiving disability benefits; and 31
34-LS0280\A
SB 28 -42- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

(2) the lesser of 50 percent of the increase in the cost of li ving in the 1
preceding calendar year or six percent, for recipients who on J uly 1 are at least 60 but 2
less than 65 years old or for recipients who are less than 60 y ears old on July 1 but 3
who have received benefits from the plan for at least five years. 4
* Sec. 74. AS 39.35.475 is amended by adding new subsections to read: 5
(g) Subject to (h) of this sec tion, the amount of an increase for members who 6
first became members of the plan after June 30, 2006, and do no t meet the eligibility 7
requirements for a permanent fund dividend in effect on July 1, 2025, under 8
AS 43.23.005(a) is equal to one-half of the applicable percenta ge under (b) of this 9
section. 10
(h) If the board determines that the portion of the liability of the plan that is 11
attributable to all members who first became members of the pla n after June 30, 2006, 12
is funded below 90 percent, the board may reduce the amount of the increase 13
determined under (b) or (g) of this section that is payable to a member who first 14
became a member after June 30, 2006. At any time, the board may terminate a 15
reduction made under this subsection. 16
* Sec. 75. AS 39.35.480(a) is amended to read: 17
(a) While residing in the state, a person who first became a member of the 18
plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680 , 19
and who is 65 years of age or older or a person who first became a member of the 20
plan before July 1, 2006, and who is receiving a disability benefit is entitled to 21
receive a monthly cost-of-living allowance in addition to the b asic benefit. The 22
amount of this allowance shall be $50 or 10 percent of the basi c benefit, whichever is 23
greater. 24
* Sec. 76. AS 39.35.535(a) is amended to read: 25
(a) Except as provided in (d) and (g) of this section, the following persons are 26
entitled to major medical insurance coverage under this section: 27
(1) for employees first hired before July 1, 1986, 28
(A) an employee who is receiving a monthly benefit from the 29
plan and who has elected coverage; 30
(B) the spouse and dependent children of the employee 31
34-LS0280\A
SB0028A -43- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

described in (A) of this paragraph; 1
(C) the surviving spouse of a deceased employee who is 2
receiving a monthly benefit from the plan and who has elected coverage; 3
(D) the dependent children of a deceased employee who are 4
dependent on the surviving spouse described in (C) of this paragraph; 5
(2) for members first hired [ON OR] after June 30 [JULY 1], 1986, 6
(A) an employee who is receiving a monthly benefit from the 7
plan and who has elected coverage for the employee; 8
(B) the spouse of the employee described in (A) of this 9
paragraph if the employee elected coverage for the spouse; 10
(C) the dependent children of the employee described in (A) of 11
this paragraph if the employee elected coverage for the dependent children; 12
(D) the surviving spouse of a deceased employee who is 13
receiving a monthly benefit from the plan and who has elected coverage; 14
(E) the dependent children of a deceased employee who are 15
dependent on the surviving spouse described in (D) of this para graph if the 16
surviving spouse has elected coverage for the dependent children. 17
* Sec. 77. AS 39.35.535(c) is amended to read: 18
(c) A benefit recipient who became a member before July 1, 2006, or the 19
surviving spouse of the member m a y e l e c t m a j o r m e d i c a l i n s u r a n c e c o v e r a g e i n 20
accordance with regulations and under the following conditions: 21
(1) a person, other than a disab led member or a disabled membe r who 22
is appointed to normal retirement, shall [MUST] pay an amount equal to the full 23
monthly group premium for retiree major medical insurance coverage if the person is 24
(A) younger than 60 years of age and has less than 25
(i) 25 years of credited service as a peace officer under 26
AS 39.35.360 and 39.35.370; or 27
(ii) 30 years of credited service under AS 39.35.360 and 28
39.35.370 that is not service as a peace officer; or 29
(B) of any age and has less than 10 years of credited service; 30
(2) a person is not required to make premium payments for reti ree 31
34-LS0280\A
SB 28 -44- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

major medical coverage if the person 1
(A) is a disabled member; 2
(B) is a disabled member who is appointed to normal 3
retirement; 4
(C) is 60 years of age or older and has at least 10 years of 5
credited service; or 6
(D) has at least 7
(i) 25 years of credited service as a peace officer under 8
AS 39.35.360 and 39.35.370; or 9
(ii) 30 years of credited service under AS 39.35.360 and 10
39.35.370 not as a peace officer. 11
* Sec. 78. AS 39.35.535 is amended by adding a new subsection to read: 12
(g) A benefit recipient who first became a member after June 3 0, 2006, or a 13
surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 14
under this section but may elect medical benefits under AS 39.35.537. 15
* Sec. 79. AS 39.35 is amended by adding a new section to read: 16
Sec. 39.35.537. Medical benefit; eligibility of employees first h i r e d a f t e r 17
June 30, 2006; surviving spo uses and dependents. (a) An employee who first 18
became a member of the plan after June 30, 2006, receives a mon thly benefit from the 19
plan, retired directly from the pl an, and has elected benefits under this section is 20
entitled to medical benefits under this section. A member who a pplies for medical 21
benefits under this section sha ll apply on the forms and in the manner prescribed by 22
the administrator. A member is eligible to retire from the plan if the member has been 23
an active member for at least 12 months before application for retirement and the 24
member 25
(1) is at least 26
(A) 50 years of age and has at least 25 years of membership 27
service as a peace officer or firefighter; 28
(B) 55 years of age and has at least 20 years of membership 29
service as a peace officer or firefighter; 30
(2) has at least 30 years of membership; or 31
34-LS0280\A
SB0028A -45- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

(3) reaches the age set for Medicare eligibility and has at least 10 years 1
of membership service. 2
(b) The member's surviving spouse is eligible to elect medical benefits if the 3
member had retired or was eligible for retirement and medical b enefits at the time of 4
the member's death. 5
(c) The medical benefits available to eligible persons are acc ess to the retiree 6
major medical insurance plan a nd access to the health reimburse ment arrangement 7
plan under AS 39.30.300. Access to the retiree major medical in surance plan means 8
that an eligible person may not be denied insurance coverage ex cept for failure to pay 9
the required premium. 10
(d) Retiree major medical insurance plan coverage elected by a n eligible 11
member under this section covers the eligible member, the spous e of the eligible 12
member, and the dependent children of the eligible member. 13
(e) Retiree major medical insurance plan coverage elected by a surviving 14
spouse of an eligible member under this section covers the surv iving spouse and the 15
dependent children of the eligible member who are dependent on the surviving spouse. 16
(f) Participation in the retiree major medical insurance plan is not required in 17
order to participate in the health reimbursement arrangement plan. 18
(g) A person eligible for medical benefits under this section is not required to 19
participate in the health reimbursement arrangement plan in ord er to participate in the 20
retiree major medical insurance plan. 21
(h) A person who is eligible for medical benefits under this s ection must make 22
the irrevocable election to participate or not participate in t he retiree major medical 23
insurance plan on or before the date the person reaches 70 1/2 years of age or when the 24
person applies for retirement and medical benefits, whichever is later. 25
(i) Major medical insurance coverage takes effect on the first day of the month 26
following the date of the administrator's approval of the elect ion and stops when the 27
person who elects coverage dies or fails to make a required premium payment. 28
(j) The coverage for persons 65 years of age or older is the s ame as that 29
available for persons under 65 ye ars of age. The benefits payab le to those persons 65 30
years of age or older supplement any benefits provided under th e federal old age, 31
34-LS0280\A
SB 28 -46- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

survivors, and disability insurance program. 1
( k ) T h e m e d i c a l a n d o p t i o n a l i n s u r a n c e p r e m i u m s o w e d by t h e p erson who 2
elects coverage may be deducted from the health reimbursement a rrangement plan. If 3
the amount of the health reimbur sement arrangement plan becomes insufficient to pay 4
the premiums, the person who elects coverage under (a) of this section shall pay the 5
premiums directly. 6
(l) The cost of premiums for retiree major medical insurance cov erage under 7
this section for an eligible member or surviving spouse who is 8
(1) not eligible for Medicare is an amount equal to the full m onthly 9
group premiums for retiree major medical insurance coverage; 10
(2) elig ible for Medicare is the following percentage of the premium 11
amounts established for retirees who are eligible for Medicare: 12
(A) 30 percent if the member ha d 10 or more, but less than 15, 13
years of service; 14
(B) 25 percent if the member had 15 or more, but less than 20, 15
years of service; 16
(C) 20 percent if the member had 20 or more, but less than 25, 17
years of service; 18
(D) 15 percent if the member ha d 25 or more, but less than 30, 19
years of service; 20
(E) 10 percent if the member had 30 or more years of service. 21
(m) The eligibility for retiree major medical insurance covera g e f o r a n 22
alternate payee under a qualified domestic relations order shal l be determined based 23
on the eligibility of the member to elect coverage. The alterna te payee shall pay the 24
full monthly premium for retiree major medical insurance coverage. 25
(n) The administrator shall 26
(1) inform a person entitled to retiree major medical insuranc e 27
coverage under this section in writing 28
(A) that the health insurance coverage available to retired 29
members may be different from the health insurance coverage pro vided to 30
employees; 31
34-LS0280\A
SB0028A -47- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

(B) of time limits for selecting optional health insurance 1
coverage; and 2
(C) whether the election is irrevocable; and 3
(2) require that a person entitled to retiree major medical in surance 4
coverage under this section indicate in writing on a form provided by the administrator 5
whether the person has chosen to receive optional health insurance coverage. 6
(o) The monthly group premiums for retiree major medical insurance coverage 7
under this section are establishe d by the administrator in acco rdance with 8
AS 39.30.095. Nothing in this chapter guarantees a person who e lects coverage under 9
(a) of this section a monthly group premium rate for retiree ma jor medical insurance 10
coverage other than the premium in effect for the month in whic h the premium is due 11
for coverage for that month. 12
(p) In this section, "health re imbursement arrangement plan" m eans the State 13
of Alaska Teachers' and Public Employees' Retiree Health Reimbu rsement 14
Arrangement Plan established in AS 39.30.300. 15
* Sec. 80. AS 39.35.610(a) is amended to read: 16
(a) The contributions of an emp loyer and the contributions of its employees 17
shall be transmitted to the administrator as soon as practicabl e after the close of the 18
payroll period for which the contributions are made. Subject to (c) of this section, if an 19
employer is delinquent in transferring the contributions for more than 15 days, interest 20
shall be assessed on the outstanding contributions at [ONE AND ONE-HALF TIMES] 21
the most recent actuarially determined rate of earnings for the retirement plan from the 22
date that the contributions were originally due. 23
* Sec. 81. AS 39.35.680(4) is amended to read: 24
(4) "average monthly compensation" means the result obtained b y 25
dividing the compensation earne d by an employee during a consid ered period by the 26
number of months, including frac tional months, for which compen sation was earned; 27
an employee must have at least 115 days of credited service in the last payroll year in 28
order for that year to be used as part of the consecutive payro ll years; the considered 29
period consists of 30
(A) for employees first hired before July 1, 1996, the three 31
34-LS0280\A
SB 28 -48- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

consecutive payroll years during the period of credited service that yield the 1
highest average; 2
(B) for employees first hired [ON OR] after June 30 [JULY 1], 3
1996, the five consecutive payroll years during the period of c redited service 4
that yield the highest average; 5
(C) if the employee does not have the number of consecutive 6
payroll years required by (A) or (B) of this paragraph, the act ual number of 7
months, including fractional months, that the employee worked; 8
(D) for an employee who has made an election under 9
AS 39.35.300(c) or 39.35.310(c), the actual number of months, i ncluding 10
fractional months, that the employee worked; 11
(E) for a peace officer or firefighter hired before July 1, 2006 12
[AT ANY TIME], the three consecutive payroll years during the p eriod of 13
credited service that yield the highest average; 14
* Sec. 82. AS 39.35.680(18) is amended to read: 15
(18) "employer" means 16
(A) the State of Alaska; 17
(B) a political subdivision or pub lic organization of the stat e 18
that participates in the plan based on a resolution to particip ate in the plan that 19
was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or 20
(C) a political subdivision or pub lic organization of the stat e 21
that, as a result of consolidation or reorganization [THAT OCCU RS ON OR 22
AFTER JULY 1, 2006], assumes liability under the plan of a poli tical 23
subdivision or public organization described in (B) of this paragraph; 24
* Sec. 83. AS 39.35.680 is amended by adding a new paragraph to read: 25
(44) "first became a member after June 30, 2006" and "first be came a 26
member of the plan after June 30, 2006" include a member who el ected under former 27
AS 39.35.940 to participate in the plan under AS 39.35.700 - 39 .35.990 and who 28
elects to participate in the defined benefit retirement plan un der AS 39.35.095 - 29
39.35.680. 30
* Sec. 84. AS 39.35.700 is amended to read: 31
34-LS0280\A
SB0028A -49- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 1
AS 39.35.700 - 39.35.990 apply only to 2
(1) members first hired [ON OR] after June 30, 2006, and before 3
July 1, 2025, who do not participa te in a defined benefit retir ement plan under 4
AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; and 5
(2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 6
EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 7
RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 8
FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who 9
transferred [TRANSFER] into the defined contribution retirement plan under former 10
AS 39.35.940 and do not elect to participate in the defined benefit retirement plan 11
under AS 39.35.095 - 39.35.680. 12
* Sec. 85. AS 39.35.700 is amended by adding a new subsection to read: 13
(b) A public organization as defined in AS 39.35.680 or a muni cipality or 14
other political subdivision of the state that participates in the plan shall also participate 15
in the defined benefit retirement plan under AS 39.35.095 - 39.35.680. 16
* Sec. 86. AS 39.35.720 is amended to read: 17
Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 18
after June 30, 2006, and before July 1, 2025, who does not participat e in a defined 19
benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39 .35.095 - 20
39.35.680 [JULY 1, 2006,] shall participat e in the plan set out in AS 39 .35.700 - 21
39.35.990. 22
* Sec. 87. AS 39.35.895(a) is amended to read: 23
(a) Subject to art. XII, sec. 7, Constitution of the State of Alask a, 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 retroact ive amendments referred 26
to in 26 U.S.C. 401(b). 27
* Sec. 88. 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
34-LS0280\A
SB 28 -50- SB0028A
New Text Underlined [DELETED TEXT BRACKETED]

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. 89. AS 39.35.895(c) is amended to read: 4
(c) Subject to art. XII, sec. 7, Constitution of the State of Alask a, 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 com pletely 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. 90. AS 39.35.895(d) is repealed and reenacted to read: 12
(d) Within one year after determining that a contribution to t he 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. 91. AS 14.25.012(c), 14.25.061, 14.25.540; and AS 39.35.940 are repealed. 16
* Sec. 92. The uncodified law of the State of Alaska is amended by adding a new section to 17
read: 18
TRANSITION: RETIREMENT PLAN ELECTION. (a) A teacher who became a 19
member of the defined contribution retirement plan of the teach ers' retirement system after 20
June 30, 2006, and before July 1, 2025, and who, on July 1, 202 5, is a member employed by 21
an employer in the defined contribution retirement plan of the teachers' retirement system 22
may, before January 1, 2026, make a one-time election to partic ipate in the defined benefit 23
retirement plan and to transfer all contributions that have been made or should be made to the 24
defined contribution retirement pl an for service the member com pletes before the effective 25
date of the member's participation in the defined benefit retir ement plan. The transferred 26
contributions shall be used to purchase credited service in the defined benefit retirement plan 27
on an actuarial equivalent basis determined by the Alaska Retir ement Management Board 28
established under AS 37.10.210. The provisions of AS 14.25.044 apply to an election made 29
under this subsection. 30
(b) An employee who became a member of the defined contributio n retirement plan 31
34-LS0280\A
SB0028A -51- SB 28
New Text Underlined [DELETED TEXT BRACKETED]

of the public employees' retir ement system after June 30, 2006, and before July 1, 2025, and 1
who, on July 1, 2025, is a member employed by an employer in th e defined contribution 2
retirement plan of the public employees' retirement system may, before January 1, 2026, make 3
a one-time election to participate in the defined benefit retir ement plan under AS 39.35.095 - 4
39.35.680 and to transfer all contributions that have been made o r s h o u l d b e m a d e t o t h e 5
defined contribution retirement pl an for service the member com pletes before the effective 6
date of the member's participation in the defined benefit retir ement plan. The transferred 7
contributions shall be used to purchase credited service in the defined benefit retirement plan 8
on an actuarial equivalent basis determined by the Alaska Retir ement Management Board 9
established under AS 37.10.210. The provisions of AS 39.35.159 apply to an election made 10
under this subsection. 11
* Sec. 93. The uncodified law of the State of Alaska is amended by adding a new section to 12
read: 13
ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management B oard 14
may adopt regulations necessary to implement secs. 37 and 38 of this Act. Regulations 15
adopted by the Alaska Retirement Management Board under this Ac t relate to the internal 16
management of a state agency and are not subject to AS 44.62 (Administrative Procedure Act) 17
under AS 37.10.240. 18
(b) The commissioner of adminis tration may adopt regulations n ecessary to 19
implement secs. 1 - 36 and 39 - 92 of this Act. Regulations ado pted by the commissioner of 20
administration under this Act rel ate to the internal management of a state agency and are not 21
subject to AS 44.62 (Administrativ e Procedure Act) under AS 14. 25.005, AS 39.30.098, and 22
AS 39.35.005. 23
(c) Regulations adopted under this section may not take effect before the effective 24
date of the law being implemented by the regulation. 25
* Sec. 94. Section 93 of this Act takes effect immediately under AS 01.10.070(c). 26
* Sec. 95. Except as provided in sec. 94 of this Act, this Act takes effect July 1, 2025. 27