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SENATE BILL NO. 11
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - FIRST SESSION
BY SENATOR KIEHL
Introduced: 1/18/23
Referred: Labor & Commerce, Finance
A BILL
FOR AN ACT ENTITLED
1 "An Act relating to restoration of tenure for certain disabled individuals; relating to the
2 Public Employees' Retirement System of Alaska and the teachers' retirement system;
3 providing certain employees an opportunity to choose between the defined benefit and
4 defined contribution plans of the Public Employees' Retirement System of Alaska and
5 the teachers' retirement system; and providing for an effective date."
6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
7 * Section 1. AS 14.20.165 is amended to read:
8 Sec. 14.20.165. Restoration of tenure rights. A teacher who held tenure
9 rights and who was retired due to disability under AS 14.25.130, but whose disability
10 (1) has been removed, and the removal of that disability is certified by a competent
11 physician following a physical or mental examination, or (2) has been compensated
12 for by rehabilitation or other appropriate restorative education or training, and that
13 rehabilitation or restoration to health has been certified by the commissioner of
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1 administration [DIVISION OF VOCATIONAL REHABILITATION OF THE
2 DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT], shall be
3 restored to full tenure rights in the district from which the teacher was retired, at such
4 time as an opening for which the teacher is qualified becomes available.
5 * Sec. 2. AS 14.25.009 is repealed and reenacted to read:
6 Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. (a) The provisions
7 of AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the
8 teachers' retirement system under AS 14.25.009 - 14.25.220 and are not members of
9 the defined contribution retirement plan under AS 14.25.310 - 14.25.590.
10 (b) An employer that participates in the plan shall also participate in the
11 defined contribution retirement plan under AS 14.25.310 - 14.25.590.
12 * Sec. 3. AS 14.25.040(a) is amended to read:
13 (a) Unless a teacher or member participates in a university retirement program
14 under AS 14.40.661 - 14.40.799 or has elected under AS 14.25.330 or former
15 AS 14.25.540 to participate in the plan established in AS 14.25.310 - 14.25.590, a
16 teacher or member contracting for service with a participating employer is subject to
17 AS 14.25.009 - 14.25.220.
18 * Sec. 4. AS 14.25.050(a) is amended to read:
19 (a) Except as provided in (c) and (e) of this section, beginning January 1,
20 1991, each member shall contribute to the plan an amount equal to 8.65 percent of the
21 member's base salary accrued from July 1 to the following June 30. [THE
22 EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S
23 SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE
24 CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER
25 CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED
26 FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF
27 APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER
28 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE
29 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH
30 INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE
31 EMPLOYER.]
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1 * Sec. 5. AS 14.25.050 is amended by adding new subsections to read:
2 (e) Except as provided in (c) of this section, a member who first participates in
3 the plan after June 30, 2006, shall contribute to the plan an amount equal to eight
4 percent of the employee's base salary accrued from July 1 to the following June 30.
5 (f) The employer shall deduct the contributions under (a) and (e) of this
6 section from the member's salary at the end of each payroll period, and the
7 contributions shall be credited by the plan to the member contribution account. The
8 contributions shall be deducted from employee compensation before the computation
9 of applicable federal taxes and shall be treated as employer contributions under 26
10 U.S.C. 414(h)(2). A member may not have the option of making the payroll deduction
11 directly in cash instead of having the contribution picked up by the employer.
12 * Sec. 6. AS 14.25.130(c) is repealed and reenacted to read:
13 (c) A disabled member receiving a benefit under this section shall undergo a
14 medical examination as often as the administrator considers advisable, but not more
15 frequently than once each year. The administrator shall determine the place of the
16 examination and engage the physician or physicians. If the administrator determines
17 that the examination indicates that the disabled member is no longer incapacitated
18 because of a total and apparently permanent occupational disability, the administrator
19 may not issue further disability benefits to the disabled member.
20 * Sec. 7. AS 14.25.130 is amended by adding a new subsection to read:
21 (g) A person who first becomes a member after June 30, 2006, and who is
22 appointed to disability benefits shall, within 30 days after the date disability benefits
23 begin, provide the administrator with proof that the member has applied for enrollment
24 in a vocational rehabilitation program approved by the administrator. Unless the
25 member demonstrates cause, the benefits terminate at the end of the first month in
26 which the member
27 (1) fails to provide the administrator with the required proof of
28 application for enrollment;
29 (2) is certified by the administrator as failing to enroll in or cooperate
30 with a vocational rehabilitation program approved under this subsection;
31 (3) fails to interview for a job; or
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1 (4) fails to accept a job offered.
2 * Sec. 8. AS 14.25.168(d) is amended to read:
3 (d) A benefit recipient who first became a member before July 1, 2006, or
4 the benefit recipient's surviving spouse may elect major medical insurance coverage
5 in accordance with regulations and under the following conditions:
6 (1) a benefit recipient [PERSON] who has less than 25 years of
7 membership service and who is younger than 60 years of age must pay an amount
8 equal to the full monthly group premium for retiree major medical insurance coverage;
9 (2) a disabled member, a disabled member who is appointed to normal
10 retirement, a person 60 years of age or older, or a person who has at least 25 years of
11 membership service is not required to make premium payments.
12 * Sec. 9. AS 14.25.168 is amended by adding new subsections to read:
13 (g) A benefit recipient, or the surviving spouse of a benefit recipient, who first
14 becomes a member after June 30, 2006, may elect major medical insurance coverage
15 that was in effect before July 1, 2006, in accordance with this section and applicable
16 regulations and under the following conditions:
17 (1) if the participating member or surviving spouse is not eligible for
18 Medicare, the cost of a monthly premium for retiree major medical insurance coverage
19 elected under this section is equal to the full monthly group premium for retiree major
20 medical insurance coverage;
21 (2) if the participating member or surviving spouse is eligible for
22 Medicare, the cost of a monthly premium for retiree major medical insurance coverage
23 is a percentage of the full monthly group premium, as follows:
24 (A) 30 percent if the member had 10 or more, but less than 15,
25 years of service;
26 (B) 25 percent if the member had 15 or more, but less than 20,
27 years of service;
28 (C) 20 percent if the member had 20 or more, but less than 25,
29 years of service;
30 (3) the cost of a monthly premium paid by the participating member or
31 the surviving spouse for retiree major medical insurance coverage is
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1 (A) 15 percent of the full monthly group premium if the
2 participating member has 25 or more, but less than 30, years of service;
3 (B) 10 percent of the full monthly group premium if the
4 participating member has 30 or more years of service;
5 (4) a disabled member or a disabled member who is appointed to
6 normal retirement is not required to make premium payments.
7 (h) On or after July 1, 2028, and every five years thereafter, the administrator
8 shall adjust the percentages under (g)(2) and (3) of this section as needed to maintain,
9 but not to exceed, over the succeeding five years, an employer normal cost rate for
10 persons who first became participating members after June 30, 2006, and the surviving
11 spouses of those persons that does not exceed the combined total of the rates under
12 AS 14.25.350(a), (b), (d), and (e) minus the employer normal cost rate attributable to
13 persons who first became participating members after June 30, 2006, for benefits
14 under AS 14.25.009 - 14.25.167. An adjustment made under this subsection shall
15 remain in effect for five years. In making an adjustment under this subsection, the
16 administrator shall maintain the five percent differences between the percentages in
17 (g)(2)(A), (B), and (C) of this section and the five percent differences between the
18 percentages in (g)(3)(A) and (B) of this section.
19 (i) When a member is appointed to retirement, the member obtains a vested
20 right to the applicable percentage under (g)(2) or (3) of this section, as adjusted under
21 (h) of this section, that is in effect when the member is appointed to retirement. A
22 member does not obtain a vested right to a percentage under (g)(2) or (3) of this
23 section, as adjusted under (h) of this section, before the member is appointed to
24 retirement.
25 * Sec. 10. AS 14.25.310 is amended to read:
26 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of
27 AS 14.25.310 - 14.25.590 apply only to
28 (1) teachers who first become members on or after July 1, 2006, and
29 before the effective date of this section who do not transfer to a defined benefit
30 retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680;
31 (2) teachers described in AS 14.25.330 who elect under that section
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1 to become [TO MEMBERS WHO ARE EMPLOYED BY EMPLOYERS THAT DO
2 NOT PARTICIPATE IN THE DEFINED BENEFIT RETIREMENT PLAN
3 ESTABLISHED UNDER AS 14.25.009 - 14.25.220, TO FORMER MEMBERS
4 UNDER AS 14.25.220, OR TO] members; and
5 (3) teachers who transferred [TRANSFER] into the defined contribution
6 retirement plan under former AS 14.25.540.
7 * Sec. 11. AS 14.25.310 is amended by adding a new subsection to read:
8 (b) An employer that participates in the plan shall also participate in the
9 defined benefit retirement plan under AS 14.25.009 - 14.25.220.
10 * Sec. 12. AS 14.25.330 is repealed and reenacted to read:
11 Sec. 14.25.330. Retirement plan election option. (a) A teacher who is first
12 hired on or after the effective date of this section may make a one-time election to
13 participate in the defined contribution retirement plan under AS 14.25.310 - 14.25.590
14 retroactive to the date of hire and may transfer to that plan employee contributions, if
15 any, and employer contributions, if any, that have been made to the defined benefit
16 retirement plan under AS 14.25.009 - 14.25.220. Before employer contributions are
17 transferred under this subsection, the administrator shall recalculate them under
18 AS 14.25.070.
19 (b) The election to participate in the defined contribution retirement plan
20 under (a) of this section must be made within 90 days after the date of hire and be
21 made in writing on a form and in the manner prescribed by the administrator. Before
22 accepting an election to participate in the defined contribution retirement plan, the
23 administrator shall, within 20 days after the administrator receives notification of the
24 teacher's date of hire, provide the teacher eligible to make an election to participate in
25 the defined contribution retirement plan under AS 14.25.310 - 14.25.590 with
26 (1) information, including calculations to illustrate the effect of
27 moving the teacher's retirement plan from the defined benefit retirement plan to the
28 defined contribution retirement plan; and
29 (2) other information clearly to inform the teacher of the potential
30 consequences of the teacher's election.
31 (c) An election made under (a) of this section to participate in the defined
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1 contribution retirement plan is irrevocable. Retroactive to the date of hire, the teacher
2 shall be enrolled in the defined contribution retirement plan under AS 14.25.310 -
3 14.25.590, the teacher's participation in the plan shall be governed by the provisions
4 for the defined contribution retirement plan, and the teacher's participation in the
5 defined benefit retirement plan under AS 14.25.009 - 14.25.220 shall terminate.
6 (d) When an eligible teacher makes an election under (a) of this section, the
7 administrator shall cause the total amount of the teacher's employee and employer
8 contributions, with investment earnings and losses through the final day of the
9 teacher's participation in the defined benefit retirement plan, to be actuarially
10 calculated and transferred to the teacher's designated account in the defined
11 contribution retirement plan. The administrator shall establish transfer procedures by
12 regulation, but the actual transfer may not be later than 30 days after the date the
13 administrator receives the teacher's completed election form under (b) of this section,
14 unless the major financial markets for securities available for a transfer are seriously
15 disrupted by an unforeseen event that also causes the suspension of trading on any
16 national securities exchange in the country where the securities were issued. In that
17 event, the 30-day period may be extended by a resolution of the board. Transfers are
18 not commissionable or subject to other fees and may be in the form of securities or
19 cash as determined by the board. Securities shall be valued on the date of receipt in the
20 teacher's account.
21 (e) An election made under (a) of this section by an eligible teacher who is
22 married may not take effect unless the election is signed by the teacher's spouse. An
23 eligible teacher whose accounts are subject to a qualified domestic relations order may
24 not make an election to participate in the defined contribution retirement plan under
25 this section unless the qualified domestic relations order is amended or vacated and
26 court-certified copies of the order are received by the administr