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SENATE BILL NO. 35
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - FIRST SESSION
BY SENATORS KAWASAKI, Gray-Jackson, Claman
Introduced: 1/18/23
Referred: Labor & Commerce, Finance
A BILL
FOR AN ACT ENTITLED
1 "An Act relating to participation of certain peace officers and firefighters in the defined
2 benefit and defined contribution plans of the Public Employees' Retirement System of
3 Alaska; relating to eligibility of peace officers and firefighters for medical, disability,
4 and death benefits; relating to liability of the Public Employees' Retirement System of
5 Alaska; and providing for an effective date."
6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
7 * Section 1. AS 37.10.220(a) is amended to read:
8 (a) The board shall
9 (1) hold regular and special meetings at the call of the chair or of at
10 least five members; meetings are open to the public, and the board shall keep a full
11 record of all its proceedings;
12 (2) after reviewing recommendations from the Department of
13 Revenue, adopt investment policies for each of the funds entrusted to the board;
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1 (3) determine the appropriate investment objectives for the defined
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 operation of the
5 systems and take other actions necessary to carry out the intent 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 rules by
8 which participants can direct their investments among those options 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 credited 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 interest that shall be annually credited to each member's
21 account in the health reimbursement arrangement plan under AS 39.30.300 -
22 39.30.495; the rate of interest shall be adopted on the basis of 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 retirement system administrator to have an
26 annual actuarial valuation of each retirement system prepared to 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 service liability; in this subparagraph, the appropriate contribution rate for
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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 defined benefit
3 retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level
4 percent of pay method based on amortization of the past service liability for a
5 closed term of 25 years;
6 (C) an appropriate monthly employer contribution rate
7 under AS 39.35.255(j); and
8 (D) appropriate adjustments, if any, under AS 39.35.160(e)
9 and 39.35.475;
10 (9) review actuarial assumptions prepared and certified by a member
11 of the American Academy of Actuaries and conduct experience analyses 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 shall 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 audit of the state's performance
19 consultant not less than once every four years;
20 (12) obtain an external performance review to evaluate the investment
21 policies of each fund entrusted to the board and report the results of the review to the
22 appropriate fund fiduciary;
23 (13) by the first day of each regular legislative session, report to the
24 governor, the legislature, and the individual employers participating 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 (E) the return projections for the next calendar year;
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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 understanding
4 of the financial status of the systems;
5 (14) submit quarterly updates of the investment performance reports to
6 the Legislative Budget and Audit Committee;
7 (15) develop an annual operating budget; [AND]
8 (16) administer pension forfeitures required under AS 37.10.310 using
9 the procedures of AS 44.62 (Administrative Procedure Act); and
10 (17) determine the amount of the monthly employer contribution
11 under AS 39.35.255(j).
12 * Sec. 2. AS 37.10.220(b) is amended to read:
13 (b) The board may
14 (1) employ outside investment advisors to review investment policies;
15 (2) enter into an agreement with the fiduciary of another state fund in
16 order to assume the management and investment of those assets;
17 (3) contract for other services necessary to execute the board's powers
18 and duties;
19 (4) enter into confidentiality agreements that would exempt records
20 from AS 40.25.110 and 40.25.120 if the records contain information that could affect
21 the value of investment by the board or that could impair the ability of the board to
22 acquire, maintain, or dispose of investments;
23 (5) adjust the amount of the increase in benefits payable to a peace
24 officer or firefighter who first becomes a member after June 30, 2006, as
25 provided under AS 39.35.475;
26 (6) adjust employee contribution rates under AS 39.35.160(e).
27 * Sec. 3. AS 37.10.390 is amended by adding a new paragraph to read:
28 (5) "peace officer" or "firefighter" has the meaning given in
29 AS 39.35.680.
30 * Sec. 4. AS 39.30.090(a) is amended to read:
31 (a) The Department of Administration may obtain a policy or policies of group
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1 insurance covering state employees, persons entitled to coverage under AS 14.25.168,
2 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former
3 AS 39.37.145, employees of other participating governmental units, or persons
4 entitled to coverage under AS 23.15.136, subject to the following conditions:
5 (1) a group insurance policy shall provide one or more of the following
6 benefits: life insurance, accidental death and dismemberment insurance, weekly
7 indemnity insurance, hospital expense insurance, surgical expense insurance, dental
8 expense insurance, audiovisual insurance, or other medical care insurance;
9 (2) each eligible employee of the state, the spouse and the unmarried
10 children chiefly dependent on the eligible employee for support, and each eligible
11 employee of another participating governmental unit shall be covered by the group
12 policy, unless exempt under regulations adopted by the commissioner of
13 administration;
14 (3) a governmental unit may participate under a group policy if
15 (A) its governing body adopts a resolution authorizing
16 participation and payment of required premiums;
17 (B) a certified copy of the resolution is filed with the
18 Department of Administration; and
19 (C) the commissioner of administration approves the
20 participation in writing;
21 (4) in procuring a policy of group health or group life insurance as
22 provided under this section or excess loss insurance as provided in AS 39.30.091, the
23 Department of Administration shall comply with the dual choice requirements of
24 AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to
25 transact business in the state under AS 21.09, a hospital or medical service corporation
26 authorized to transact business in this state under AS 21.87, or a health maintenance
27 organization authorized to operate in this state under AS 21.86; an excess loss
28 insurance policy may be obtained from a life or health insurer authorized to transact
29 business in this state under AS 21.09 or from a hospital or medical service corporation
30 authorized to transact business in this state under AS 21.87;
31 (5) the Department of Administration shall make available bid
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1 specifications for desired insurance benefits or for administration of benefit claims and
2 payments to (A) all insurance carriers authorized to transact business in this state
3 under AS 21.09 and all hospital or medical service corporations authorized to transact
4 business under AS 21.87 who are qualified to provide the desired benefits; and (B)
5 insurance carriers authorized to transact business in this state under AS 21.09, hospital
6 or medical service corporations authorized to transact business under AS 21.87, and
7 third-party administrators licensed to transact business in this state and qualified to
8 provide administrative services; the specifications shall be made available at least once
9 every five years; the lowest responsible bid submitted by an insurance carrier, hospital
10 or medical service corporation, or third-party administrator with adequate servicing
11 facilities shall govern selection of a carrier, hospital or medical service corporation, or
12 third-party administrator under this section or the selection of an insurance carrier or a
13 hospital or medical service corporation to provide excess loss insurance as provided in
14 AS 39.30.091;
15 (6) if the aggregate of dividends payable under the group insurance
16 policy exceeds the governmental unit's share of the premium, the excess shall be
17 applied by the governmental unit for the sole benefit of the employees;
18 (7) a person receiving benefits under AS 14.25.110, AS 22.25,
19 AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in
20 effect under this section at the time of termination of employment with the state or
21 participating governmental unit;
22 (8) a person electing to have insurance under (7) of this subsection
23 shall pay the cost of this insurance;
24 (9) for each permanent part-time employee electing coverage under
25 this section, the state shall contribute one-half the state contribution rate for permanent
26 full-time state employees, and the permanent part-time employee shall contribute the
27 other one-half;
28 (10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35,
29 or former AS 39.37 may obtain auditory, visual, and dental insurance for that person
30 and eligible dependents under this section; the level of coverage for persons over 65
31 shall be the same as that available before reaching age 65 except that the benefits
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1 payable shall be supplemental to any benefits provided under the federal old age,
2 survivors, and disability insurance program; a person electing to have insurance under
3 this paragraph shall pay the cost of the insurance; the commissioner of administration
4 shall adopt regulations implementing this paragraph;
5 (11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35,
6 or former AS 39.37 may obtain long-term care insurance for that person and eligible
7 dependents under this section; a person who elects insurance under this paragraph
8 shall pay the cost of the insurance premium; the commissioner of administration shall
9 adopt regulations to implement this paragraph;
10 (12) each licensee holding a current operating agreement for a vending
11 facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that
12 applies to governmental units other than the state.
13 * Sec. 5. AS 39.30.097(a) is amended to read:
14 (a) The commissioner of administration is authorized to prefund medical
15 benefits provided by AS 14.25.168, AS 22.25.090, [AND] AS 39.35.535, and
16 39.35.537 by establishing an irrevocable trust that is exempt from federal income tax
17 under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, and
18 actuarial requirements of the Governmental Accounting Standards Board.
19 * Sec. 6. AS 39.30.097(b) is amended to read:
20 (b) The commissioner of administration is authorized to prefund medical
21 benefits provided by AS 14.25.480, AS 39.30.300, AS 39.35.537, and 39.35.880
22 [AS 39.35.880] by establishing an irrevocable trust that is exempt from federal income
23 tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure,
24 and actuarial requirements of the Governmental Accounting Standards Board.
25 * Sec. 7. AS 39.30.300 is amended to read:
26 Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree
27 Health Reimbursement Arrangement Plan established. The State of Alaska
28 Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is