HB 78 — An Act relating to the public employees' retirement system and the teachers' retirement system; and providing certain employees an opportunity to choose between the defined benefit and defined contribution plans of the public employees' retirement system and the teachers' retirement system.

(a) Once each year, the administrator shall increase benefit payments to eligible disabled members, to persons age 60 or older receiving benefits under this HB0078a -13- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A plan in the preceding calendar year, and to persons who have received benefits under -13- Enrolled HB 78 this plan for at least five [EIGHT] years who are not otherwise eligible for an increase under this section.

(b) Subject to (g) and (h) of this section, the [THE] increase in benefit payments applies to total benefit payments except for the cost-of-living allowance under AS 14.25.142.

AS 14.25.143 is amended by adding a new subsectionsubsections to read:

(g) IfSubject theto board(h) determinesof thatthis thesection, portion of the liabilityamount of thean planincrease thatfor is attributable to all members who first became members of the plan after June 30, 2006, isand fundeddo belownot 90meet percent, the boardeligibility mayrequirements reducefor thea amountpermanent offund thedividend increaseunder determinedAS under43.23.005(a) (b)in ofeffect thison sectionJuly that1, 2026, is payableequal to aone-half memberof whothe firstapplicable becamepercentage aunder member(b) afterof Junethis 30,section. 2006.

(h) If the board determines that the portion of the liability of the plan that is attributable to all members who first became members of the plan after June 30, 2006, is funded below 90 percent, the board shall reduce the amount of the increase determined under (b) or (g) of this section that is payable to a member who first became a member after June 30, 2006.

Enrolled HB 78 -14- (B) the spouse and dependent children of the teacher described in (A) of this paragraph;

(C) the surviving spouse of a deceased teacher who is receiving HB 78 -14- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A a monthly benefit from the plan and who has elected coverage;

(a) A teacher who first became a member of the plan after June 30, 2006, receives a monthly benefit from the plan, retired directly from the plan, and has elected benefits under this section is entitled to medical benefits under this section.

A member is eligible to retire from the plan if the member has been an active member for at least 12 months before application for retirement and the member (1) has at least 3025 years of service;

(b) The member's surviving spouse is eligible to elect medical benefits if the member had retired or was eligible for retirement and medical benefits at the time of -15- Enrolled HB 78 the member's death.

(c) The medical benefits available to eligible persons are access to the retiree HB0078a -15- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A major medical insurance plan and access to the health reimbursement arrangement plan under AS 39.30.300.

(h) A person who is eligible for medical benefits under this section must make the irrevocable election to participate or not participate in the retiree major medical insurance plan on or before the date the person reaches 70 1/2 years of age or whenthe date the person applies for retirement and medical benefits, whichever is later.

The benefits payable to those persons 65 years of age or older supplement any benefits provided under the federal oldold-age, age, survivors, and disability insurance program.

(k) The medical and optional insurance premiums owed by the presonperson who elects coverage may be deducted from the health reimbursement arrangement plan.

If the amount of the health reimbursement arrangement plan becomes insufficient to pay Enrolled HB 78 -16- the premiums, the person who elects coverage under (a) of this section shall pay the premiums directly.

HB 78 -16- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (l) The cost of premiums for retiree major medical insurance coverage under this section for an eligible member or surviving spouse who is (1) not eligible for Medicare is an amount equal to the full monthly group premiums for retiree major medical insurance coverage;

(2) eligible for Medicare is the following percentagepercentages of the premium amounts established for retirees who are eligible for Medicare:

and (2) require that a person entitled to retiree major medical insurance -17- Enrolled HB 78 coverage under this section indicate in writing on a form provided by the administrator whether the person has chosen to receive optional health insurance coverage.

HB0078a -17- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (o) The monthly group premiums for retiree major medical insurance coverage under this section are established by the administrator in accordance with AS 39.30.095.

(5) "average base salary" means, (A) for a teacher who first became a member before July 1, 2006, the result obtained by dividing the sum of the member's three highest years' base salary by three, or if a member does not have theearsthree years base salary, then by dividing the sum of all base salaries by the number of years of base salary;

the base salary in a school year Enrolled HB 78 -18- for which the member receives compensation for less than two-thirds of a year may not be used in the computation of the average base salary;

if HB 78 -18- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A compensation is received for more than two-thirds of a year, the full base salary for that school year shall be used in the computation of the average base salary;

or (iv) [(D)][(D)]12 12 school years of part-time membership service or 12 school years in each of which the member earned either part-time or full-time membership service;

-19- Enrolled HB 78 * Sec.

(48) "first became a member after June 30, 2006" and "first became a HB0078a -19- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A member of the plan after June 30, 2006" include a member who elected under former AS 14.25.540 to participate in the defined contribution retirement plan under AS 14.25.310 - 14.25.590 and who elects to participate in the defined benefit retirement plan under AS 14.25.009 - 14.25.220.

The provisions of AS 14.25.310 - 14.25.590 apply only to (1) teachers who first become members [ON OR] after June 30, 2006, and before July 1, 2025,2027, and who are eligible but do not elect to participate in a defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680;

and (2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 - 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBERS] who transferred [TRANSFER] into the defined contribution retirement plan under former AS 14.25.540 and do not elect to participate in the defined benefit retirement plan under AS 14.25.009 - 14.25.220.

(a) A teacher who first becomes a member [ON OR] after June 30, 2006, and before July 1, 2025,2027, and who does not participate in a defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contribution retirement plan.

AS 14.25.470(a) is amended to read:

(a) In order to obtain medical benefits under AS 14.25.480, a member must Enrolled HB 78 -20- retire [DIRECTLY] from the plan.

A member is eligible to retire from the plan if [THE MEMBER HAS BEEN AN ACTIVE MEMBER FOR AT LEAST 12 MONTHS BEFORE APPLICATION FOR RETIREMENT AND] (1) the member has at least 25 [30] years of service;

or (2) the member reaches the normal retirement age, [AND] has at least 10 years of service, and has been an active member for at least 12 months immediately before application for retirement.

* Sec.

34.

7, Constitution of the State of Alaska, the [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to time, in whole or in part, including the right to make retroactive amendments referred HB 78 -20- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A to in 26 U.S.C.

34.35.

35.36.

36.37.

-21- Enrolled HB 78 * Sec.

38.

AS 14.25.540(a) is amended to read:

(a) An [SUBJECT TO (i) OF THIS SECTION, AN] active member of the defined benefit retirement plan of the teachers' retirement system is eligible to participate in the defined contribution retirement plan established under AS 14.25.310 - 14.25.590 if that member has not vested.

Participation in the defined contribution retirement plan is in lieu of participation in the defined benefit retirement plan established under AS 14.25.009 - 14.25.220.

37.39.

AS 14.25.540(c) is amended to read:

(c) Each eligible member who elects to participate in the defined contribution retirement plan shall have transferred to a new account the member contribution account balance held in trust for the member under the defined benefit retirement plan of the teachers' retirement system.

An [A MATCHING] employer contribution equal to 88 percent of the transferred account balance shall be made on behalf of that employee to the new account.

The administrator [EMPLOYER] shall make the payment for that purpose [MATCHING CONTRIBUTION] from [FUNDS OTHER THAN] the sub-trust established under AS 14.25.086 [TRUST FUNDS OF THE DEFINED BENEFIT RETIREMENT PLAN].

The amount of the [MATCHING] employer contribution is subject to, and may not exceed, the limitation of 26 U.S.C.

415(c) during the applicable limitation year as defined in AS 14.25.590.

If the [MATCHING] employer contribution would exceed the limits during the limitation year in which the transfer occurs, the remaining amount of the [MATCHING] employer contribution shall be made in the next limitation year, if the limits during that year would not be exceeded.

* Sec.

40.

AS 14.25.540(h) is amended to read:

(h) An [A MEMBER WHO IS ELIGIBLE TO ELECT TRANSFER TO THE DEFINED CONTRIBUTION RETIREMENT PLAN MUST MAKE THE ELECTION NOT LATER THAN 12 MONTHS AFTER THE FIRST DAY OF THE MONTH FOLLOWING THE ADMINISTRATOR'S RECEIPT OF THE NOTIFICATION THAT THE MEMBER'S EMPLOYER CONSENTS TO TRANSFERS OF ITS MEMBERS UNDER (i) OF THIS SECTION.

THE] election to participate in the defined contribution retirement plan must be made in writing on Enrolled HB 78 -22- forms and in the manner prescribed by the administrator.

Before accepting an election to participate in the defined contribution retirement plan, the administrator must provide the employee planning on making an election to participate in the defined contribution retirement plan with information, including calculations to illustrate the effect of moving the employee's retirement plan from the defined benefit retirement plan to the defined contribution retirement plan as well as other information to clearly inform the employee of the potential consequences of the employee's election.

An election made under this subsection to participate in the defined contribution retirement plan is irrevocable.

Upon making the election, the participant shall be enrolled as a member of the defined contribution retirement plan, the member's participation in the plan shall be governed by the provisions of AS 14.25.310 - 14.25.590, and the member's participation in the defined benefit retirement plan under AS 14.25.009 - 14.25.220 shall terminate.

The participant's enrollment in the defined contribution retirement plan shall be effective the first day of the month after the administrator receives the completed enrollment forms.

An election made by an eligible member who is married is not effective unless the election is signed by the individual's spouse.

* Sec.

41.

(2) after reviewing recommendations from the Department of Revenue, adopt investment policies for each of the funds entrusted to the board;board, including a policy to prevent each fund from having an unfunded liability greater than 10 percent;

(4) assist in prescribing the policies for the proper operation of the HB0078a -21- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A systems and take other actions necessary to carry out the intent and purpose of the -23- Enrolled HB 78 systems in accordance with AS 37.10.210 - 37.10.390;

in this subparagraph, the appropriate contribution rate for liquidating the past service liability of the defined benefit retirement plan under AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit retirement plan under AS 39.35.095 - 39.35.680 must be determined[DETERMINED byBY aA levelLEVEL percentPERCENT ofOF payPAY methodMETHOD] based on amortization of the past service liability for a HB 78 -22- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A closed term of 25 years;

Enrolled HB 78 -24- (C) an appropriate monthly employer contribution under AS 14.25.070 and AS 39.35.255;

(11) contract for an independent audit of the state's performnceperformance consultant not less than once every four years;

HB0078a -23- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (14) submit quarterly updates of the investment performance reports to -25- Enrolled HB 78 the Legislative Budget and Audit Committee;

employer contributions that exceed those assigned to members who first became members after June 30, 2006, of the defined benefit retirement plan under AS 14.25.009 - 14.25.220 and members who first became members after June 30, 2006, of the defined benefit retirement plan under AS 39.35.095 - 39.35.680 shall be transferred or retained in trusts or sub-trusts with liability allocated toward employer normal costs for members who became members of the respective defined benefit retirement plan before July 1, 2025,2027, past service costs, the Statehealth ofreimbursement Alaskaarrangement Teachers'plan and Public ployees' Retiree Health Reimbursement Arrangement Plan under AS 39.30.300 - 39.30.495, and employer contributions under AS 14.25.350 and AS 39.35.750.

38.42.

HB 78 -24- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (3) contract for other services necessary to execute the board's powers Enrolled HB 78 -26- and duties;

39.43.

and HB0078a -25- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (C) the commissioner of administration approves the -27- Enrolled HB 78 participation in writing;

(7) a person receiving benefits under AS 14.25.110, AS 22.25, HB 78 -26- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in Enrolled HB 78 -28- effect under this section at the time of termination of employment with the state or participating governmental unit;

40.44.

HB0078a -27- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A * Sec.

41.45.

-29- Enrolled HB 78 (b) The commissioner of administration is authorized to prefund medical benefits provided by AS 14.25.480 [, AS 39.30.300,] and AS 39.35.880 by establishing an irrevocable trust that is exempt from federal income tax under 26 U.S.C.

42.46.

43.47.

The State of Alaska Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is established for (1) teachers who first become members of the [DEFINED CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 - 14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], and teachers who elected under former AS 14.25.540 to participate in the plan under AS 14.25.310 - 14.25.590;

and (2) employees of the state, political subdivisions of the state, and public organizations of the state who first become members [OF THE DEFINED CONTRIBUTION PLAN] of the Publicpublic Employees'employees' Retirementretirement Systemsystem of Alaska (AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER AS 39.35.700 - 39.35.990 ON OR] after June 30, 2006, and employees of the state, political subdivisions of the state, and public organizations of the state who elected under former AS 39.35.940 to participate in the plan established under AS 39.35.700 - 39.35.990 [JULY 1, 2006].

44.48.

HB 78 -28- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A Sec.

The administrator Enrolled HB 78 -30- shall establish a teachers' and public employees' retiree health reimbursement arrangement plan trust fund under AS 39.30.097(f) in which the assets of the plan shall be deposited and held.

45.49.

46.50.

(b) For each member of the plan who is a peace officer or iehter,firefighter, an employer shall contribute to the teachers' and public employees' retiree health reimbursement arrangement plan trust fund an amount equal to four percent of the average annual compensation of all employees of all employers in the teachers' retirement system and public employees' retirement system.

The board shalshall establish by regulation the rate of interest to be applied annually to the amount in a member's individual account.

HB0078a -29- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A * Sec.

47.51.

-31- Enrolled HB 78 Sec.

48.52.

Persons who meet the eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the individual account established for a member under the plan,plan except[, membersEXCEPT doMEMBERS notDO haveNOT toHAVE retireTO directlyRETIRE fromDIRECTLY theFROM system.THE SYSTEM].

49.53.

50.54.

51.55.

Enrolled HB 78 -30--32- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (b) The plan administrator may not modify or amend the plan retroactively [IN SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS MADE] before the modification or amendment except to the extent that the reduction is permitted by art.

52.56.

53.57.

54.58.

55.59.

HB0078a-33- -31-Enrolled HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A * Sec.

56.60.

(9) "member" means a member of the Stateplan of Alaska Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan established in AS 39.30.300 - 39.30.495 [DEFINED CONTRIBUTION PLAN OF THE TEACHERS' RETIREMENT SYSTEM IN AS 14.25.310 - 14.25.590 OR A MEMBER OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM IN AS 39.35.700 - 39.35.990];

57.61.

The [FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply only to (1) members first hired (1) before July 1, 2006, who have (A) have not elected under former AS 39.35.940 to participate in the defined contribution retirement plan under AS 39.35.700 - 39.35.990;

or (B) have elected under former AS 39.35.940 to participate in the defined contribution retirement plan under AS 39.35.700 - 39.35.990 and are former members of the defined contribution retirement plan under AS 39.35.700 - 39.35.990;

(2) aftermembers Junehired 30,by 2006,the andstate, beforeor Julyby 1,an 2025,employer that is a political subdivision or public organization of the state that elects to provide defined benefits under AS 39.35.095 - 39.35.680 to employees who first become members of the plan after June 30, 2006, who are (A) former members of the defined contribution retirement plan under AS 39.35.700 - 39.35.990;39.35.990 first hired after June 30, 2006, and before July 1, 2027;

or (3)(B) onmembers orfirst hired after JulyJune 1,30, 20252027 [:

58.62.

(b) An employee who became a member of the system after June 30, 2006, and before July 1, 2025,2027, or who has elected under former AS 39.35.940 to participate in the defined contribution retirement plan under AS 39.35.700 - 39.35.990, is subject to AS 39.35.095 - 39.35.680 if the employee Enrolled HB 78 -34- (1) is not employed by an employer on July 1, 2025;2027;

(2) is reemployed after July 1, 2027, by an employer that provides defined benefits under AS 39.35.095 - 39.35.680 to employees who first become members of the plan after JulyJune 1,30, 2025;2006;

and (3) has, before the date of reemployment, received HB 78 -32- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (A) a distribution, other than a rollover distribution, of the entire balance in the member's individual account in the defined contribution retirement plan;

or (B) a rollover distribution of the entire balance in the member's individual account in the defined contribution retirement plan and has notnot, within 180 days of reemploymentreemployment, had all or part of a direct rollover distribution from an eligible retirement plan owned by the member paid directly into the member's individual account.

59.63.

60.64.

(a) An employee of an employer that provides defined benefits under AS 39.35.095 - 39.35.680 to employees who first become members of the plan after June 30, 2006, may make a one-time election to participate in the plan under AS 39.35.095 - 39.35.680 if the employee was first hired after June 30, 2006, and before July 1, 2027, and, if not employed by an employer on July 1, 2027, is reemployed by an employer after July 1, 2027, and, before the date of reemployment, -35- Enrolled HB 78 (1) becamehas not received a memberdistribution of the definedentire contributionbalance retirementin planthe underemployee's ASindividual 39.35.700account -under 39.35.990the afterdefined Junecontribution 30,retirement 2006,plan andestablished beforein JulyAS 1,39.35.700 2025;- 39.35.990;

or (2) ishas notreceived employeda byrollover distribution of the entire balance in the member's individual account in the defined contribution retirement plan and has, within 180 days of reemployment, had all or part of a direct rollover distribution from an employereligible onretirement Julyplan 1,owned 2025;by the member paid directly into the member's individual account.

(3) is reemployed by an employer after July 1, 2025;

and (4) before the date of reemployment, (A) has not received a distribution of the entire balance in the employee's individual account under the defined contribution retirement plan established in AS 39.35.700 - 39.35.990;

or (B) has received a rollover distribution of the entire balance in HB0078a -33- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A the member's individual account in the defined contribution retirement plan and has within 180 days of reemployment had all or part of a direct rollover distribution from an eligible retirement plan owned by the member paid directly into the member's individual account.

(d) When an eligible employee makes an election under this section,section to participate in the plan under AS 39.35.095 - 39.35.680, the administrator shall cause the total amount of the employee's employee and employer contributions to the plan under AS 39.35.700 - 39.35.990, with investment earnings and losses through the day of the employee's election to participate as a member in the plan under AS 39.35.095 - 39.35.680, to be actuarially calculated and, subject to (f) of this section, transferred to Enrolled HB 78 -36- the pension fund in the plan under AS 39.35.095 - 39.35.680.

The board shall determine the cost of the employee's actual service time based on the employee's accrued actuarial liability of pension benefits in the plan,plan and credit the HB 78 -34- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A employee with service time equal to the value actuarially calculated and transferred to the pension fund in the plan under AS 39.35.095 - 39.35.680.

(f) If the value actuarially calculated under (d) of this section is insufficient to -37- Enrolled HB 78 pay for service credit equal to the employee's actual service, the administrator shall allow the employee the option of purchasing service credit in an amount up to the amount needed to eliminate the insufficiency;

however, if that value exceeds the amount needed to pay for service credit equal to the employee's actual service, the HB0078a -35- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A administrator shall cause the excess to be paid to the employee as a rollover transfer either to an individual employee annuity account in the Department of Administration under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity Plan) or, if the member's employer does not participate in the State of Alaska Supplemental Annuity Plan, to an eligible retirement plan as defined in AS 39.35.760(d).

61.65.

(a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, Enrolled HB 78 -38- each peace officer or firefighter shall contribute to the plan an amount equal to seven and one-half percent of the peace officer's or firefighter's compensation, and, except [.

EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, each other employee shall contribute to the plan an amount equal to six and three- HB 78 -36- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A quarters percent of the employee's compensation.

62.66.

The board may, from time to time, adjustincrease theor employeedecrease the contribution under this subsectionsubsection; to an amount that, (1) if decreased, is not less than eight percent of the employee's compensation;

andhowever, (2)the ifcontribution increased,may is not morebe decreased to less than 12eight percent of the employee's compensation.

(g) The board mayshall increase the employee contribution under (e) of this section if the board determines that, unless the contribution is increased, the portion of the liability of the plan that is attributable to employees who first participate in the plan after June 30, 2006, will be funded below 90 percent.

The board may not increase the employee contribution unless the board increases the employer contribution under AS 39.35.255(a)(2)39.35.255(k)(2) by an equal amount.

The board may decrease the contribution under (e) of this section if the board determines that, after the contribution is -39- Enrolled HB 78 decreased, the portion of the liability of the plan that is attributable to all members HB0078a -37- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A who first became members of the plan after June 30, 2006, will be funded above 90 percent.

The board may not decrease the employee contribution required unless the board decreases the employer contribution under AS 39.35.255(a)(2)39.35.255(k)(2) by an equal amount.

(h) The board may not increase the employer contribution under AS 39.35.255(k) unless the board increases the member contribution under (e) of this section by a comparable amount.

63.67.

64.68.

the deductions made under this Enrolled HB 78 -40- paragraph cease upon the earlier of the member's termination of employment with the employer or the member's death;

amounts paid by an employer under (f) of this section may not be applied toward the payment of the dollar amount of the deductions representing the portion of the credited service that is being purchased by the member through payroll deduction in accordance with the member's irrevocable election under HB 78 -38- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A this subsection;

65.69.

66.70.

67.71.

(a) Each employer, except as provided in (h) and (k) of this section, shall contribute to the system every payroll period the lesser of (1) an amount calculated by applying a rate of 22 percent of the greater of the total of all base salaries (A)(1) [(1)] paid by the employer to employees who are active members of the system,system and who first became members of the retirement plan under AS 39.35.095 - 39.35.680 before July 1, 2006, including any adjustments to contributions required by AS 39.35.520;

or (B)(2) [(2)] paid by the employer to employees who were active members of -41- Enrolled HB 78 the system during the corresponding payroll period for the fiscal year ending (i)(A) [(A)] June 30, 2008;

or (ii)(B) [(B)] June 30, 2012, if that total is less than the total under (i)(A) of this subparagraphparagraph, [(A) OF THIS PARAGRAPH], and the HB0078a -39- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A employer is a municipality in which the population decreased by more than 25 percent between 2000 and 2010, according to the decennial census conducted by the United States Bureau of the Census;Census.

or (2) an amount calculated by applying a rate established by the board under AS 37.10.220 to the total of all base salaries paid by the employer to active members of the system;

the rate must be at least 12 percent and be sufficient to pay the actuarially determined employer normal cost, all contributions required under AS 39.30.370 and AS 39.35.750, and past service cost for members of the system.

68.72.

AS 39.35.25539.35.255(d) is amended by adding a new subsection to read:

(j)(d) IfNotwithstanding the(a) legislatureand appropriates(k) fundsof forthis section, the purposeannual ofemployer decreasingcontribution anrate employer'smay contribution,not be less than the employer'srate contributionsufficient underto (a)allow payment of thisthe sectionemployer shallnormal decreasecost byand thatthe amount.employer contributions required under AS 39.30.370 and AS 39.35.750.

69.73.

AS 39.35.255 is amended by adding new subsections to read:

(j) If the legislature appropriates funds for the purpose of decreasing an employer's contribution, the employer's contribution under (a) and (k) of this section shall decrease by that amount.

(k) Notwithstanding (a) of this section, and except as provided in (h) of this section, the state and each employer that elects to provide defined benefits under AS 39.35.095 - 39.35.680 to employees who first become members of the plan after June 30, 2006, shall contribute to the system every payroll period the lesser of (1) an amount calculated by applying a rate of 22.5 percent of the greater of the total of all base salaries (A) paid by the employer to employees who are active members of the system, including any adjustments to contributions required by AS 39.35.520;

or (B) paid by the employer to employees who were active members of the system during the corresponding payroll period for the fiscal year ending (i) June 30, 2008;

or (ii) June 30, 2012, if that total is less than the total under (i) of this subparagraph, and the employer is a municipality in which the population decreased by more than 25 percent between 2000 Enrolled HB 78 -42- and 2010, according to the decennial census conducted by the United States Bureau of the Census;

or (2) an amount calculated by applying a rate established by the board under AS 37.10.220 to the total of all base salaries paid by the employer to active members of the system;

the rate must be at least 12 percent and be sufficient to pay the actuarially determined employer normal cost, all contributions required under AS 39.30.370 and AS 39.35.750, and the past service cost attributable to active members of the system who first became members of the retirement plan under AS 39.35.095 - 39.35.680 after June 30, 2006.

* Sec.

74.

70.75.

Contributions made by an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately computed for benefits provided by AS 39.35.535 and retiree major medical insurance plan benefits provided under AS 39.35.537,39.35.537 and must [SHALL] be HB 78 -40- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A deposited in the Alaska retiree health care trust established under AS 39.30.097(a).

71.76.

(i) Notwithstanding (d) of this section, a member who retires as a peace officer or firefighter may elect to use five or fewer years of credited service granted under this -43- Enrolled HB 78 section in computing years of credited service under AS 39.35.535(c) or 39.35.537.

72.77.

(d) An employee may choose whether the credited service granted under this section is used to satisfy the credited service requirements for normal retirement under AS 39.35.370(a)(1)(B) or (C),(C) 39.35.370(a)(2)(B),or (a)(2)(B), (C), or (D),(D) [AS 39.35.370(a)(2) OR (3)] or 39.35.385(f) or is only used for the calculation of benefits.

73.78.

(2) who first became a member of the plan after June 30, 2006, is eligible for a normal retirement benefit (A) at age 60 with at least five years of credited service;

(B) at age 55 with at least 20 years of credited service as a HB0078a -41- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A peace officer or firefighter;

or (D) with at least 30 years of credited service [FOR ALL Enrolled HB 78 -44- OTHER EMPLOYEES].

74.79.

75.80.

(b) Subject to (g) and (h) of this section, the [THE] increase in benefit payments applies to total benefit payments except for the cost-of-living allowance under AS 39.35.480.

76.81.

AS 39.35.475 is amended by adding a new subsectionsubsections to read:

(g) IfSubject theto board(h) determinesof thatthis thesection, portion of the liabilityamount of thean planincrease thatfor is attributable to all members who first became members of the plan after June 30, 2006, isand fundeddo belownot 90meet percent, the boardeligibility mayrequirements reducefor thea amountpermanent offund thedividend increaseunder determinedAS under43.23.005(a) (b)in ofeffect thison sectionJuly that1, 2026, is payableequal to aone-half memberof whothe firstapplicable becamepercentage aunder member(b) afterof Junethis 30,section. 2006.

(h) If the board determines that the portion of the liability of the plan that is attributable to all members who first became members of the plan after June 30, 2006, is funded below 90 percent, the board shall reduce the amount of the increase determined under (b) or (g) of this section that is payable to a member who first became a member after June 30, 2006.

77.82.

(a) While residing in the state, a person who first became a member of the HB-45- 78Enrolled -42-HB HB0078a78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680, and who is 65 years of age or older or a person who first became a member of the plan before July 1, 2006, and who is receiving a disability benefit is entitled to receive a monthly cost-of-living allowance in addition to the basic benefit.

78.83.

AS 39.35.530 is amended to read:

Sec.

39.35.530.

Service credit and limit [LIMIT] on pension benefits.

An employee may not simultaneously receive a pension under more than one section of AS 39.35.095 - 39.35.680.

However, benefits under AS 39.35.420(b), 39.35.430, 39.35.440, [OR] 39.35.450, or the defined contribution retirement plan under AS 39.35.700 - 39.35.990 shall be paid in addition to the benefits or service credit a person is entitled to receive because of the person's own membership in the defined benefit retirement plan.

An employee may not (1) receive duplicate credit under the defined benefit retirement [THIS] plan for the same period of service, (2) receive more than one year of service credit in the course of any calendar year, or (3) receive a benefit while accruing service credit under the [THIS] plan, except as provided in this section.

* Sec.

84.

(2) for members first hired [ON OR] after June 30 [JULY 1], 1986, Enrolled HB 78 -46- (A) an employee who is receiving a monthly benefit from the plan and who has elected coverage for the employee;

79.85.

HB0078a -43- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (c) A benefit recipient who became a member before July 1, 2006, or the surviving spouse of the member may elect major medical insurance coverage in accordance with regulations and under the following conditions:

or -47- Enrolled HB 78 (D) has at least (i) 25 years of credited service as a peace officer under AS 39.35.360 and 39.35.370;

80.86.

81.87.

(a) An employee who first HB 78 -44- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A became a member of the plan after June 30, 2006, receives a monthly benefit from the plan, retired directly from the plan, and has elected benefits under this section is entitled to medical benefits under this section.

A member is eligible to retire from the plan if the member has been an active member for at least 12 months before application for retirement and the member (1) is at least (A) 50 years of age and has at least 2520 years of membership service as a peace officer or firefighter;

(B)(2) 55 years of age and has at least 2025 years of membershipmembership; service as a peace officer or firefighter;

(2) has at least 30 years of membership;

(d) Retiree major medical insurance plan coverage elected by an eligible Enrolled HB 78 -48- member under this section covers the eligible member, the spouse of the eligible member, and the dependent children of the eligible member.

HB0078a -45- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (g) A person eligible for medical benefits under this section is not required to participate in the health reimbursement arrangement plan in order to participate in the retiree major medical insurance plan.

(h) A person who is eligible for medical benefits under this section must make the irrevocable election to participate or not participate in the retiree major medical insurance plan on or before the date the person reaches 70 1/2 years of age or whenthe date the person applies for retirement and medical benefits, whichever is later.

The benefits payable to those persons 65 years of age or older supplement any benefits provided under the federal oldold-age, age, survivors, and disability insurance program.

(k) The medical and optional insurance premiums owed by the presonperson who elects coverage may be deducted from the health reimbursement arrangement plan.

(2) eligible for Medicare is the following percentagepercentages of the premium -49- Enrolled HB 78 amounts established for retirees who are eligible for Medicare:

HB 78 -46- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (D) 15 percent if the member had 25 or more, but less than 30, years of service;

Nothing in this chapter guarantees a person who elects coverage under (a) of this section a monthly group premium rate for retiree major medical insurance coverage other than the premium in effect for the month in which the premium is due Enrolled HB 78 -50- for coverage for that month.

82.88.

(a) The contributions of an employer and the contributions of its employees shall be transmitted to the administrator as soon as practicable after the close of the HB0078a -47- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A payroll period for which the contributions are made.

83.89.

(B) for employees who first hiredbecome [ONmembers of the plan [FIRST HIRED ON OR] after June 30 [JULY 1], 1996, the five consecutive payroll years during the period of credited service that yield the highest average;

(D) for an employee who has made an election under AS 39.35.300(c) or 39.35.310(c), the actual number of months, including -51- Enrolled HB 78 fractional months, that the employee worked;

(E) for a peace officer or firefighter hiredbeforehired before July 1, 2006 [AT ANY TIME], the three consecutive payroll years during the period of credited service that yield the highest average;

(F) for a peace officer or firefighter who first becomes a member of the plan after June 30, 2006, the five consecutive payroll years during the period of credited service that yield the highest average;

84.90.

(B) a political subdivision or public organization of the state HB 78 -48- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A that participates in the plan based on a resolution to participate in the plan that was approved by the administrator [ON OR BEFORE JULY 1, 2006];

85.91.

(44) "first became a member after June 30, 2006" and "first became a member of the plan after June 30, 2006" include a member who elected under former AS 39.35.940 to participate in the plan under AS 39.35.700 - 39.35.990 and who elects to participate in the defined benefit retirement plan under AS 39.35.095 - 39.35.680.

86.92.

The provisions of AS 39.35.700 - 39.35.990 apply only to (1) members first hired [ON OR] after June 30, 2006, and before July 1, 2025, who doare not participateactive inmembers of a defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680;

and (2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT Enrolled HB 78 -52- RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who transferred [TRANSFER] into the defined contribution retirement plan under former AS 39.35.940 and doare not electactive tomembers participateof in the defined benefit retirement plan under AS 39.35.095 - 39.35.680.

87.93.

AS 39.35.700 is amended by adding a new subsection to read:

(b) A public organization as defined in AS 39.35.680 or a municipality or other political subdivision of the state that participates in the plan shall also participate in the defined benefit retirement plan under AS 39.35.095 - 39.35.680.

* Sec.

88.

An employee who becomes a member [ON OR] HB0078a -49- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A after June 30, 2006, and before July 1, 2025,2027, who does not participate in a defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 [JULY 1, 2006,] shall participate in the plan set out in AS 39.35.700 - 39.35.990.

89.94.

AS 39.35.870(a) is amended to read:

(a) In order to obtain medical benefits under AS 39.35.880, an active member must retire [DIRECTLY] from the plan.

A member is eligible to retire from the plan if [THE MEMBER HAS BEEN AN ACTIVE MEMBER FOR AT LEAST 12 MONTHS BEFORE APPLICATION FOR RETIREMENT AND] (1) the member has at least 20 [25] years of membership service as a peace officer or firefighter or at least 25 [30] years of membership service for all other employees;

or (2) the member reaches the normal retirement age, [AND] has at least 10 years of membership service, and has been an active member for at least 12 months immediately before application for retirement.

* Sec.

95.

90.96.

(b) The plan administrator may not modify or amend the plan retroactively [IN SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS -53- Enrolled HB 78 MADE] before the modification or amendment except to the extent that the reduction is permitted by art.

91.97.

92.98.

93.99.

AS 14.25.012(c),39.35.940(a) 14.25.061,is 14.25.540;amended to read:

(a) An employee may not be an active member of the defined contribution retirement plan and ASthe 39.35.940defined arebenefit repealed.retirement plan at the same time, except as provided in this subsection.

An [SUBJECT TO (i) OF THIS SECTION, AN] active member of the defined benefit retirement plan of the public employees' retirement system is eligible to participate in the defined contribution retirement plan established under AS 39.35.700 - 39.35.990 if that member (1) has not vested in the defined benefit retirement plan;

or (2) was first hired after June 30, 2006, and is employed by an employer that is a political subdivision or public organization of the state that does not elect to provide defined benefits under AS 39.35.095 - 39.35.680 to employees who first become members of the plan after June 30, 2006 [.

PARTICIPATION IN THE DEFINED CONTRIBUTION RETIREMENT PLAN IS IN LIEU OF PARTICIPATION IN THE DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680].

94.100.

AS 39.35.940(c) is amended to read:

Enrolled HB 78 -54- (c) Each eligible member who elects to participate in the defined contribution retirement plan shall have transferred to a new account the employee contribution account balance held in trust for the member under the defined benefit retirement plan of the public employees' retirement system.

An [A MATCHING] employer contribution equal to 63 percent of the transferred account balance shall be made on behalf of that employee to the new account.

The administrator [EMPLOYER] shall make the payment for that purpose [MATCHING CONTRIBUTION] from [FUNDS OTHER THAN] the sub-trust [TRUST FUNDS OF THE DEFINED BENEFIT RETIREMENT PLAN] established under AS 39.35.281 [AS 39.35.095 - 39.35.680].

The amount of the [MATCHING] employer contribution shall be subject to, and may not exceed, the limitation of 26 U.S.C.

415(c) during the applicable limitation year as defined by AS 39.35.990.

If the [MATCHING] employer contribution would exceed the limits during the limitation year in which the transfer occurs, the remaining amount of the [MATCHING] employer contribution shall be made in the next limitation year, if the limits during that year would not be exceeded.

* Sec.

101.

AS 39.35.940(h) is amended to read:

(h) An [EMPLOYEE WHO IS ELIGIBLE TO ELECT TRANSFER TO THE DEFINED CONTRIBUTION RETIREMENT PLAN MUST MAKE THE ELECTION NOT LATER THAN 12 MONTHS AFTER THE FIRST DAY OF THE MONTH FOLLOWING THE ADMINISTRATOR'S RECEIPT OF THE NOTIFICATION THAT THE EMPLOYEE'S EMPLOYER CONSENTS TO TRANSFERS OF ITS EMPLOYEES UNDER (i) OF THIS SECTION.

THE] election to participate in the defined contribution retirement plan must be made in writing on forms and in the manner prescribed by the administrator.

Before accepting an election to participate in the defined contribution retirement plan, the administrator must provide the employee planning on making an election to participate in the defined contribution retirement plan with information, including calculations to illustrate the effect of moving the employee's retirement plan from the defined benefit retirement plan to the defined contribution retirement plan as well as other information to clearly inform the employee of the potential consequences of the employee's election.

An election made under this subsection to participate in the defined contribution -55- Enrolled HB 78 retirement plan is irrevocable.

Upon making the election, the participant shall be enrolled as a member of the defined contribution retirement plan, the member's participation in the plan shall be governed by the provisions of AS 39.35.700 - 39.35.990, and the member's participation in the defined benefit retirement plan under AS 39.35.115 shall terminate.

The participant's enrollment in the defined contribution retirement plan shall be effective the first day of the month after the administrator receives the completed enrollment forms.

An election made by an eligible member who is married is not effective unless the election is signed by the individual's spouse.

* Sec.

102.

AS 14.25.012(c), 14.25.061, 14.25.540(i);

and AS 39.35.940(i) are repealed.

* Sec.

103.

HB 78 -50- HB0078a New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A TRANSITION:

(a) A teacher who became a member of the defined contribution retirement plan of the teachers' retirement system after June 30, 2006, and before July 1, 2025,2027, and who, on July 1, 2025,2027, is a member employed by an employer in the defined contribution retirement plan of the teachers' retirement system may, before January 1, 2026,2028, make a one-time election to participate in the defined benefit retirement plan and to transfer all contributions that have been made or should be made to the defined contribution retirement plan for service the member completes before the effective date of the member's participation in the defined benefit retirement plan.

The provisions of AS 14.25.04414.25.044, applyenacted toby ansec. election made under this subsection.

(b)4 An employee who became a member of thethis definedAct, contributionapply retirementto plan of the public employees' retirement system after June 30, 2006, and before July 1, 2025, and who, on July 1, 2025, is a member employed by an employer in the defined contribution retirement plan of the public employees' retirement system may, before January 1, 2026, make a one-time election tomade participate in the defined benefit retirement plan under ASthis 39.35.095subsection. - 39.35.680 and to transfer all contributions that have been made or should be made to the defined contribution retirement plan for service the member completes before the effective date of the member's participation in the defined benefit retirement plan.

(b) An employee who became a member of the defined contribution retirement plan of the public employees' retirement system after June 30, 2006, and before July 1, 2027, and who, on July 1, 2027, is a member employed by an employer in the defined contribution retirement plan of the public employees' retirement system may, before January 1, 2028, make a one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 39.35.680 and to transfer all contributions that have been made or should be made to the defined contribution retirement plan for service the member completes before the effective date of the member's participation in the defined benefit retirement plan, unless the member's Enrolled HB 78 -56- employer elects under sec.

104 of this Act not to provide defined benefits under AS 39.35.095 - 39.35.680.

The provisions of AS 39.35.15939.35.159, applyenacted toby ansec. election made under this subsection.

64 of this Act, apply to an election made under this subsection.

95.104.

TRANSITION:

EMPLOYER PARTICIPATION IN THE DEFINED BENEFIT RETIREMENT PLAN.

An employer that is a political subdivision or public organization of the state may, during the period beginning January 1, 2027, and ending June 30, 2027, elect not to provide defined benefits under AS 39.35.095 - 39.35.680 to employees who first become members of the plan after June 30, 2006.

* Sec.

105.

The uncodified law of the State of Alaska is amended by adding a new section to read:

(a) The Alaska Retirement Management Board established under AS 37.10.210 may adopt regulations necessary to implement secs.

3741 and 3842 of this Act.

HB0078a -51- HB 78 New Text Underlined [DELETED TEXT BRACKETED] 34-LS0493\A (b) The commissioner of administration may adopt regulations necessary to implement secs.

1 - 3640 and 3942 - 94104 of this Act.

*-57- Sec.Enrolled HB 78

96.

Section 95 of this Act takes effect immediately under AS 01.10.070(c).

* Sec.

97.

Except as provided in sec.

96 of this Act, this Act takes effect July 1, 2025.

HB 78 -52- HB0078a New Text Underlined [DELETED TEXT BRACKETED]