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24th Legislature(2005-2006)

Bill Text 24th Legislature


00                             SENATE BILL NO. 141                                                                         
01 "An Act relating to the teachers' and public employees' retirement systems and creating                                 
02 defined contribution and health reimbursement plans for members of the teachers'                                        
03 retirement system and the public employees' retirement system who are first hired after                                 
04 July 1, 2005; establishing the Alaska Retirement Management Board to replace the                                        
05 Alaska State Pension Investment Board, the Alaska Teachers' Retirement Board, and                                       
06 the Public Employees' Retirement Board; adding appeals of the decisions of the                                          
07 administrator of the teachers' and public employees' retirement systems to the                                          
08 jurisdiction of the office of administrative hearings; and providing for an effective                                   
09 date."                                                                                                                  
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
11    * Section 1.  AS 14.25 is amended by adding new sections to read:                                                  
12           Article 1.  Administration of the Teachers' Retirement System.                                            
01            Sec. 14.25.001.  Purpose.  The purpose of this chapter is to encourage                                     
02       qualified teachers to enter and remain in service with participating employers by                                 
03       establishing plans for the payment of retirement benefits to or on behalf of the                                  
04       members.                                                                                                          
05            Sec. 14.25.002.  Attorney general.  The attorney general of the state is the                               
06       legal counsel for the system and shall advise the administrator and represent the                                 
07       system in a legal proceeding.                                                                                     
08            Sec. 14.25.003.  Administrator.  (a)  The commissioner of administration or                                
09       the commissioner's designee is the administrator of the system.                                                   
10            (b)  The commissioner of administration shall adopt regulations to govern the                                
11       operation of the system.                                                                                          
12            Sec. 14.25.004.  Powers and duties of the administrator.  (a)  The                                         
13       administrator shall                                                                                               
14                 (1)  establish and maintain an adequate system of accounts;                                             
15                 (2)  transmit the funds deposited in the system to the retirement fund                                  
16       established and maintained by the Alaska Retirement Management Board;                                             
17                 (3)  approve or disapprove claims for retirement benefits;                                              
18                 (4)  make payments for the various purposes specified;                                                  
19                 (5)  submit periodic reports or statements of account that are needed;                                  
20                 (6)  issue a statement of account to an employee not less than once each                                
21       year showing the amount of the employee's contributions to the applicable plan in the                             
22       system;                                                                                                           
23                 (7)  formulate and recommend to the commissioner of administration                                      
24       regulations to govern the operation of the system;                                                                
25                 (8)  as soon as possible after the close of each fiscal year, and not later                             
26       than six months after the close of each fiscal year, send to the governor and the                                 
27       legislature an annual statement on the operations of each of the plans in the system                              
28       containing                                                                                                        
29                      (A)  a balance sheet;                                                                              
30                      (B)  a statement of income and expenditures for the previous                                       
31            fiscal year;                                                                                                 
01                      (C)  a report on valuation of trust fund assets;                                                   
02                      (D)  a summary of assets held in the trust fund listed by the                                      
03            categories of investment, as provided by the Alaska Retirement Management                                    
04            Board;                                                                                                       
05                      (E)  other statistical financial data that are necessary for proper                                
06            understanding of the financial condition of the system as a whole and each plan                              
07            in the system and the result of its operations;                                                              
08                 (9)  engage an independent certified public accountant to conduct an                                    
09       annual audit of each plan's accounts and the annual report of the system's financial                              
10       condition and activity;                                                                                           
11                 (10)  report to the Legislative Budget and Audit Committee concerning                                   
12       the condition and administration of each plan and distribute the report to the members                            
13       of each plan in the system;                                                                                       
14                 (11)  publish an information handbook for each plan in the system at                                    
15       intervals that the administrator considers appropriate;                                                           
16                 (12)  meet at least annually with the board to review the condition and                                 
17       management of the retirement systems and to review significant changes to policies,                               
18       regulations, or benefits; and                                                                                     
19                 (13)  do whatever else may be necessary to carry out the purposes of                                    
20       each plan in the system.                                                                                          
21            (b)  The administrator is authorized to charge fees necessary to members'                                    
22       accounts to cover the ongoing cost of operating each plan in the system.                                          
23            (c)  The administrator is authorized to contract with public and private entities                            
24       to provide record keeping, benefits payments, and other functions necessary for the                               
25       administration of each plan in the system.                                                                        
26            Sec. 14.25.005.  Regulations.  (a)  Regulations adopted by the administrator                               
27       under this chapter relate to the internal management of a state agency, and the                                   
28       adoption of the regulations is not subject to AS 44.62 (Administrative Procedure Act).                            
29            (b)  Notwithstanding (a) of this section, a regulation adopted under this chapter                            
30       shall be published in the Alaska Administrative Register and Code for informational                               
31       purposes.                                                                                                         
01            (c)  Each regulation adopted under this chapter must conform to the style and                                
02       format requirements of the drafting manual for administrative regulations that is                                 
03       published under AS 44.62.050.                                                                                     
04            (d)  At least 30 days before the adoption, amendment, or repeal of a regulation                              
05       under this chapter, the board shall provide notice of the action that is being considered.                        
06       The notice shall be                                                                                               
07                 (1)  posted in public buildings throughout the state;                                                   
08                 (2)  published in one or more newspapers of general circulation in each                                 
09       judicial district of the state;                                                                                   
10                 (3)  mailed to each person or group that has filed a request for notice of                              
11       proposed action with the board; and                                                                               
12                 (4)  furnished to each member of the legislature and to the Legislative                                 
13       Affairs Agency.                                                                                                   
14            (e)  Failure to mail notice to a person as required under (d)(3) of this section                             
15       does not invalidate an action taken by the board.                                                                 
16            (f)  The board may hold a hearing on a proposed regulation.                                                  
17            (g)  A regulation adopted under this chapter takes effect 30 days after adoption                             
18       by the board.                                                                                                     
19            (h)  Notwithstanding the other provisions of this section, a regulation may be                               
20       adopted, amended, or repealed, effective immediately, as an emergency regulation by                               
21       the unanimous vote of a quorum of the board.  For an emergency regulation to be                                   
22       effective the board must find that the adoption, amendment, or repeal of the regulation                           
23       is necessary for the immediate preservation of the orderly operation of the system or                             
24       the business of the board.  The board shall, within 10 days after adoption of an                                  
25       emergency regulation, give notice of the adoption under (d) of this section.  An                                  
26       emergency regulation adopted under this subsection may not remain in effect past the                              
27       date of the next regular meeting of the board unless the board complies with the                                  
28       procedures set out in this section and adopts the regulation as a permanent regulation.                           
29            (i)  In this section, "regulation" has the meaning given in AS 44.62.640(a).                                 
30            Sec. 14.25.006.  Appeals.  An employer, member, annuitant, or beneficiary                                  
31       may appeal a decision made by the administrator to the office of administrative                                   
01       hearings established under AS 44.64.  An aggrieved party may appeal a final decision                              
02       to the superior court.                                                                                            
03            Sec. 14.25.007.  Investment management of retirement system funds.  The                                    
04       Alaska Retirement Management Board established under AS 37.10.210 is the                                          
05       fiduciary of the system funds.                                                                                    
06            Sec. 14.25.008.  Definitions.  In  AS 14.25.001 - 14.24.008,                                               
07                 (1)  "plan" means the retirement plan established in AS 14.25.009 -                                     
08       14.25.200 or the retirement plan established in AS 14.25.310 - 14.25.590;                                         
09                 (2)  "system" means all retirement plans established under the teachers'                                
10       retirement system.                                                                                                
11               Article 2.  Teachers First Hired before July 1, 2005.                                                 
12            Sec. 14.25.009.  Applicability of AS 14.25.009 - 14.25.220.  The provisions of                             
13       AS 14.25.009 - 14.25.220 apply only to members first hired before July 1, 2005.                                   
14    * Sec. 2.  AS 14.25.010 is amended to read:                                                                        
15            Sec. 14.25.010.  Retirement plan [SYSTEM] established; federal                                           
16       qualification requirements.  (a)  A joint-contributory retirement plan [SYSTEM] for                         
17       teachers of the state is created.                                                                                 
18            (b)  The retirement plan [SYSTEM] established by AS 14.25.009 - 14.25.220                            
19       [THIS CHAPTER] is intended to qualify under 26 U.S.C. 401(a) and 414(d) (Internal                                 
20       Revenue Code) as a qualified retirement plan established and maintained by the state                              
21       for its employees, for the employees of school districts and regional educational                                 
22       attendance areas in the state, and for the employees of other employers whose                                     
23       participation is authorized by AS 14.25.009 - 14.25.220 [THIS CHAPTER] and who                                
24       participate in this plan [SYSTEM].                                                                            
25            (c)  An amendment to AS 14.25.009 - 14.25.220 [THIS CHAPTER] does not                                    
26       provide a person with a vested right to a benefit if the Internal Revenue Service                                 
27       determines that the amendment will result in disqualification of the plan under the                               
28       Internal Revenue Code.                                                                                            
29    * Sec. 3.  AS 14.25.012(b) is amended to read:                                                                     
30            (b)  The plan [SYSTEM] created in AS 14.25.009 - 14.25.220 became                                    
31       effective as of July 1, 1955, at which time contributions by the participating employers                          
01       and members began.                                                                                                
02    * Sec. 4.  AS 14.25.012 is amended by adding a new subsection to read:                                             
03            (c)  Employees first hired after June 30, 2005, are not eligible to participate in                           
04       the plan established in AS 14.25.009 - 14.25.220.                                                                 
05    * Sec. 5.  AS 14.25.040(a) is amended to read:                                                                     
06            (a)  Unless a teacher or member has elected to participate in the optional                                   
07       university retirement program under AS 14.40.661 - 14.40.799, [OR] has filed an                               
08       election under AS 14.25.043(b), or has elected to participate in the plan established                         
09       in AS 14.25.310 - 14.25.590, a teacher or member contracting for service with a                               
10       participating employer is subject to AS 14.25.009 - 14.25.220 [THIS CHAPTER].                                 
11    * Sec. 6.  AS 14.25.040(d) is amended to read:                                                                     
12            (d)  A person who is employed at least half-time in the plan [SYSTEM] during                             
13       the same period that the person is employed at least half-time in a position in the                               
14       public employees' retirement plan [SYSTEM] under AS 39.35.010 - 39.35.680                                 
15       [AS 39.35] shall receive credited service under each plan [SYSTEM] for half-time                              
16       employment.  However, the amount of credited service a person receives under the                                  
17       public employees' retirement plan [SYSTEM] during a school year may not exceed                                
18       the amount necessary, when added to the amount of credited service earned during the                              
19       school year under the plan [SYSTEM], to equal one year of credited service.  A                                
20       person who was employed at least half-time in a position in the public employees'                                 
21       retirement plan [SYSTEM] under AS 39.35.010 - 39.35.680 [AS 39.35] in the same                            
22       period that the person was employed at least half-time in a position in this plan                             
23       [SYSTEM] may claim credited service in both plans [SYSTEMS] for employment                                    
24       before May 31, 1989.  To obtain this credited service, the person shall claim the                                 
25       service and verify the period of half-time employment.  When eligibility for half-time                            
26       service credit has been established, an indebtedness shall be determined to the                                   
27       retirement plan [SYSTEM] in which the person did not participate.  The amount of                              
28       the indebtedness is the full actuarial cost of providing benefits for the credited service                        
29       claimed.  Interest as prescribed by regulation accrues on that indebtedness beginning                             
30       on the later of July 1, 1989, or the date on which the member is first eligible to claim                          
31       the service.  Any outstanding indebtedness existing at the time the person retires will                           
01       require an actuarial adjustment to the benefits payable based on that service.                                    
02    * Sec. 7.  AS 14.25.050(a) is amended to read:                                                                     
03            (a)  Except as provided in (c) of this section, beginning July 1, 2005                                   
04       [JANUARY 1, 1991], each member shall contribute to the plan a percentage                                      
05       [SYSTEM AN AMOUNT EQUAL TO 8.65 PERCENT] of the member's base salary                                              
06       accrued from July 1 to the following June 30, as determined under AS 14.25.052.                               
07       The employer shall deduct the contribution from the member's salary at the end of                                 
08       each payroll period, and the contribution shall be credited by the plan [SYSTEM] to                           
09       the member contribution account.  The contributions shall be deducted from employee                               
10       compensation before the computation of applicable federal taxes and shall be treated                              
11       as employer contributions under 26 U.S.C. 414(h)(2).  A member may not have the                                   
12       option of making the payroll deduction directly in cash instead of having the                                     
13       contribution picked up by the employer.                                                                           
14    * Sec. 8.  AS 14.25 is amended by adding new sections to read:                                                     
15            Sec. 14.25.052.  Calculation of member contribution rate.  (a)  Each active                                
16       member shall contribute a percentage of the member's base salary to be determined                                 
17       annually in advance by the administrator.  The employee contribution rate is the                                  
18       greater of                                                                                                        
19                 (1)  8.65 percent; or                                                                                   
20                 (2)  one-half of the normal cost rate actuarially calculated to fund the                                
21       benefits expected to be earned by active members during the fiscal year.                                          
22            (b)  The maximum increase in the contribution rate for a member from one                                     
23       year to the next may not be more than five percentage points, as actuarially calculated.                          
24    * Sec. 9.  AS 14.25.070 is amended to read:                                                                        
25            Sec. 14.25.070.  Contributions by employer.  An employer shall contribute to                               
26       the plan [SYSTEM] an amount equal to the percentage, as certified by the board                            
27       [ADMINISTRATOR], of the sum total of the base salaries of all members that is                                     
28       required in addition to member contributions to provide the benefits of AS 14.25.009 -                        
29       14.25.220 [THIS CHAPTER] times the sum total of the base salaries paid to members,                            
30       including any adjustments to contributions required by AS 14.25.173(a), by the                                    
31       employer.                                                                                                         
01    * Sec. 10.  AS 14.25.070 is amended by adding a new subsection to read:                                            
02            (b)  When added to the member contribution rate calculated under                                             
03       AS 14.25.052, the employer contribution may not be less than the amount required to                               
04       fully fund the future liabilities of active members as determined by the board.                                   
05    * Sec. 11.  AS 14.25.075(a) is amended to read:                                                                    
06            (a)  An employee who is eligible to purchase credited service under                                          
07       AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service                                  
08       under AS 14.25.048, 14.25.050, 14.25.060, 14.25.061, [14.25.062,] 14.25.100, or                                   
09       14.25.107, or a teacher who is eligible to purchase credited service under                                        
10       AS 14.20.345, AS 14.25.050, [14.25.062,] or 14.25.105, in lieu of making payments                                 
11       directly to the plan, may elect to have the member's employer make payments as                                    
12       provided in this section.                                                                                         
13    * Sec. 12.  AS 14.25.075(b) is amended to read:                                                                    
14            (b)  A member may elect to have the employer make payments for all or any                                    
15       portion of the amounts payable for the member's purchase of credited service through                              
16       a salary reduction program as follows:                                                                            
17                 (1)  the amounts paid under a salary reduction program are in lieu of                                   
18       contributions by the member making the election; the electing member's salary or                                  
19       other compensation shall be reduced by the amount paid by the employer under this                                 
20       subsection;                                                                                                       
21                 (2)  the member shall make an irrevocable election under this                                           
22       subsection to purchase credited service as permitted in AS 14.20.345, AS 14.25.047,                               
23       14.25.048, 14.25.050, 14.25.060, 14.25.061, [14.25.062,] 14.25.100, 14.25.105, or                                 
24       14.25.107 before the member's termination of employment; the irrevocable election                                 
25       must specify the number of payroll periods that deductions will be made from the                                  
26       member's compensation and the dollar amount of deductions for each payroll period                                 
27       during the specified number of payroll periods; the deductions made under this                                    
28       paragraph cease upon the earlier of the member's termination of employment with the                               
29       employer or the member's death; amounts paid by an employer under (f) of this                                     
30       section may not be applied toward the payment of the dollar amount of the deductions                              
31       representing the portion of the credited service that is being purchased by the member                            
01       through payroll deduction in accordance with the member's irrevocable election under                              
02       this paragraph;                                                                                                   
03                 (3)  amounts paid by an employer under this subsection shall be treated                                 
04       as employer contributions for the purpose of determining tax treatment under 26                                   
05       U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section                               
06       may not be included in the member's gross income for income tax purposes until those                              
07       amounts are distributed by refund or retirement benefit payments.                                                 
08    * Sec. 13.  AS 14.25.075(e) is amended to read:                                                                    
09            (e)  Contributions to the plan [SYSTEM] to purchase credited service under                               
10       this section do not qualify for treatment under this section if recognition of that service                       
11       would cause a member to receive a retirement benefit for the same service from the                                
12       plan [SYSTEM] and from one or more other retirement plans or systems of the state.                            
13    * Sec. 14.  AS 14.25.075(f) is amended to read:                                                                    
14            (f)  The administrator may accept rollover contributions from a member [,                                    
15       AND DIRECT TRANSFERS AS DESCRIBED IN THIS SUBSECTION, FOR THE                                                     
16       PURCHASE, IN WHOLE OR IN PART, OF FORFEITED CREDITED SERVICE                                                      
17       UNDER THIS SECTION FOR THE REINSTATEMENT, IN WHOLE OR IN PART,                                                    
18       OF FORFEITED CREDITED SERVICE UNDER AS 14.25.062].  Contributions                                                 
19       made under this subsection may not be applied to purchase service being paid under                                
20       (b) of this section.  A rollover contribution [OR TRANSFER] as described in this                                  
21       subsection shall be treated as employer contributions for the purpose of determining                              
22       tax treatment under the Internal Revenue Code and may be made by any one or a                                     
23       combination of the following methods:                                                                             
24                 (1)  subject to the limitations prescribed in 26 U.S.C. 402(c), accepting                               
25       eligible rollover distributions directly from one or more retirement programs of                                  
26       another employer that are qualified under 26 U.S.C. 401(a) or accepting rollovers                                 
27       directly from a member;                                                                                           
28                 (2)  subject to the limitations prescribed in 26 U.S.C. 408(d)(3)(A)(ii),                               
29       accepting from a member conduit rollover contributions that are received by the                                   
30       member from one or more conduit rollover individual retirement accounts previously                                
31       established by the member;                                                                                        
01                 (3)  subject to the limitations prescribed in 26 U.S.C. 403(b)(13),                                     
02       accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the                          
03       member, on or after January 1, 2002, from a tax sheltered annuity described in 26                                 
04       U.S.C. 403(b);                                                                                                    
05                 (4)  subject to the limitations prescribed in 26 U.S.C. 457(e)(17),                                     
06       accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the                          
07       member, on or after January 1, 2002, from an eligible deferred compensation plan of a                             
08       tax-exempt organization or a state or local government described in 26 U.S.C. 457(b);                             
09                 (5)  accepting direct trustee-to-trustee transfer from an account                                       
10       established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska                                     
11       Supplemental Annuity Plan).                                                                                       
12    * Sec. 15.  AS 14.25.075(i) is amended to read:                                                                    
13            (i)  On satisfaction of the eligibility requirements of AS 14.20.345,                                        
14       AS 14.25.047, 14.25.048, 14.25.050, 14.25.060, 14.25.061, [14.25.062,] 14.25.100,                                 
15       14.25.105, or 14.25.107, the requirements of this section, and the administrative filing                          
16       requirements specified by the administrator, the plan shall adjust the member's                                   
17       credited service history and add any additional service credits acquired.                                         
18    * Sec. 16.  AS 14.25.145 is amended to read:                                                                       
19            Sec. 14.25.145.  Interest on individual accounts.  Interest shall be credited to                           
20       each teacher's account at the end of each school year at the rate prescribed by the                           
21       board [REGULATION] for that year.                                                                             
22    * Sec. 17.  AS 14.25.150 is amended by adding a new subsection to read:                                            
23            (c)  A member who has received a refund of contributions in accordance with                                  
24       this section forfeits corresponding credited service under AS 14.25.009 - 14.25.220.                              
25    * Sec. 18.  AS 14.25.173(c) is amended to read:                                                                    
26            (c)  At least quarterly, [AT EACH REGULARLY SCHEDULED MEETING                                            
27       OF THE TEACHERS' RETIREMENT BOARD,] the administrator shall report to the                                         
28       commissioner of administration [BOARD] on all situations since the administrator's                            
29       last report in which an adjustment has been prohibited under (b) of this section.  If the                         
30       commissioner of administration [BOARD] finds that there is reason to believe that                             
31       one or more of the conditions set out in (b) of this section have not been met, the                               
01       administrator shall notify the member or beneficiary that an adjustment will be made                              
02       to recover the overpayment.  A member or beneficiary who receives notice of                                       
03       adjustment under this subsection may file a request with the commissioner of                                  
04       administration [APPEAL TO THE BOARD] for a waiver of the adjustment under                                     
05       AS 14.25.175.  An adjustment that requires the repayment of benefits may not be                                   
06       required while the waiver request [APPEAL] is pending.                                                        
07    * Sec. 19.  AS 14.25.175(a) is amended to read:                                                                    
08            (a)  Upon request [APPEAL] by an affected member or beneficiary under (b)                                
09       of this section, the commissioner of administration [BOARD] may waive an                                      
10       adjustment or a portion of an adjustment made under AS 14.25.173 if, in the opinion                               
11       of the commissioner of administration [BOARD],                                                                
12                 (1)  the adjustment or portion of the adjustment will cause undue                                       
13       hardship to the member or beneficiary;                                                                            
14                 (2)  the adjustment was not the result of erroneous information supplied                                
15       by the member or beneficiary;                                                                                     
16                 (3)  before the adjustment was made, the member or beneficiary                                          
17       received confirmation from the administrator that the member's or beneficiary's                                   
18       records were correct; and                                                                                         
19                 (4)  the member or beneficiary had no reasonable grounds to believe                                     
20       the records were incorrect before the adjustment was made.                                                        
21    * Sec. 20.  AS 14.25.175(b) is amended to read:                                                                    
22            (b)  In order to obtain consideration of a waiver under this section, the affected                           
23       member or beneficiary shall file a request with [MUST APPEAL TO] the                                          
24       commissioner of administration [BOARD] in writing within 30 days after receipt of                             
25       notice that the records have been adjusted.  The ruling of the commissioner of                                
26       administration [BOARD] shall be in writing.                                                                   
27    * Sec. 21.  AS 14.25.175(c) is repealed and reenacted to read:                                                     
28            (c)  A ruling of the commissioner of administration to deny a waiver under (b)                               
29       of this section may be appealed to the office of administrative hearings.                                         
30    * Sec. 22.  AS 14.25.175(d) is amended to read:                                                                    
31            (d)  The office of administrative hearings [BOARD] may reverse the                                   
01       commissioner of administration's decision to deny a waiver and may impose                                     
02       conditions on granting a waiver that it considers equitable.  These conditions may                                
03       include requiring the member or beneficiary to make additional contributions to the                               
04       plan [SYSTEM].                                                                                                
05    * Sec. 23.  AS 14.25.220(2) is amended to read:                                                                    
06                 (2)  "actuarial adjustment" means the adjustment necessary to obtain                                    
07       equality in value of the aggregate expected payments under two different forms of                                 
08       pension payments, considering expected mortality and interest earnings on the basis of                            
09       assumptions, factors, and methods specified in regulations issued under the plan                              
10       [SYSTEM] that are formally adopted [UNDER AS 14.25.022] by the board and that                                     
11       clearly preclude employer discretion in the determination of the amount of any                                    
12       member's benefit;                                                                                                 
13    * Sec. 24.  AS 14.25.220(3) is amended to read:                                                                    
14                 (3)  "administrator" means the [PERSON APPOINTED BY THE]                                                
15       commissioner of administration or the commissioner's designee under AS 14.25.003                          
16       [AS 14.25.015];                                                                                                   
17    * Sec. 25.  AS 14.25.220(9) is amended to read:                                                                    
18                 (9)  "board" means the Alaska Retirement Management [ALASKA                                         
19       TEACHERS' RETIREMENT] Board established under AS 37.10.210 [AS 14.25.035];                                    
20    * Sec. 26.  AS 14.25.220(40) is amended to read:                                                                   
21                 (40)  "supplemental contribution account" means the account                                             
22       maintained by the plan [SYSTEM] to record the supplemental contributions of each                              
23       member, including interest and adjustments to the account [IN ACCORDANCE                                          
24       WITH AS 14.25.170];                                                                                               
25    * Sec. 27.  AS 14.25.220 is amended by adding a new paragraph to read:                                             
26                 (46)  "plan" means the retirement benefit plan established under                                        
27       AS 14.25.009 - 14.25.220.                                                                                         
28    * Sec. 28.  AS 14.25 is amended by adding new sections to read:                                                    
29              Article 3.  Teachers First Hired on or after July 1, 2005.                                             
30            Sec. 14.25.310.  Applicability of AS 14.25.310 - 14.25.590.  The provisions of                             
31       AS 14.25.310 - 14.25.590 apply only to teachers who first become members on or                                    
01       after July 1, 2005.                                                                                               
02            Sec. 14.25.320.  Defined contribution retirement plan established.  (a)  A                                 
03       defined contribution retirement plan for teachers of the state is created.                                        
04            (b)  The defined contribution retirement plan includes a plan in which savings                               
05       are accumulated in an individual retirement account for the exclusive benefit of the                              
06       member or beneficiaries.  The plan is established effective July 1, 2005, at which time                           
07       contributions by employers and employees begin.                                                                   
08            (c)  The defined contribution retirement plan is intended to qualify under 26                                
09       U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified retirement plan                                   
10       established and maintained by the state for its employees and for the employees of                                
11       school districts and regional educational attendance areas in the state.                                          
12            (d)  An amendment to the defined contribution retirement plan does not                                       
13       provide a person with a vested right to a benefit if the Internal Revenue Service                                 
14       determines that the amendment will result in disqualification of the plan under the                               
15       Internal Revenue Code.                                                                                            
16            Sec. 14.25.330.  Membership.  (a)  A teacher first hired after July 1, 2005,                               
17       shall participate in the plan as a member of the defined contribution retirement plan.                            
18            (b)  A teacher who has elected to participate in the optional university                                     
19       retirement program under AS 14.40.661 - 14.40.799 may not participate as a member                                 
20       of the defined contribution retirement plan.                                                                      
21            Sec. 14.25.340.  Contributions by members.  (a)  Each member shall                                         
22       contribute to the member's individual account an amount equal to eight percent of the                             
23       member's compensation from July 1 to the following June 30.                                                       
24            (b)  Subject to the limitations on contributions under AS 14.25.380, a member                                
25       may elect to make additional contributions to the member's individual account.                                    
26            (c)  The employer shall deduct the contribution from the member's                                            
27       compensation at the end of each payroll period, and the contribution shall be credited                            
28       by the administrator to the member's individual account.  The contributions shall be                              
29       deducted from member's compensation before the computation of applicable federal                                  
30       taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2).  A                                
31       member may not have the option of making the payroll deduction directly in cash                                   
01       instead of having the contribution picked up by the employer.                                                     
02            Sec. 14.25.348.  Teachers of Alaska Native language and culture.  An                                       
03       employee employed by a participating employer shall participate in the plan if the                                
04       employee                                                                                                          
05                 (1)  teaches Alaska Native language or culture in a permanent full-time                                 
06       or permanent part-time position;                                                                                  
07                 (2)  learned about the subject to be taught by living in the culture or                                 
08       using the language in daily life; and                                                                             
09                 (3)  is qualified to teach the subject to elementary or secondary students                              
10       as required by regulations adopted by the Department of Education and Early                                       
11       Development.                                                                                                      
12            Sec. 14.25.350.  Contributions by employers.  (a)  An employer shall                                     
13       contribute to the member's individual account an amount equal to 3.5 percent of each                              
14       member's compensation from July 1 to the following June 30.                                                       
15            (b)  An employer shall also contribute an amount equal to 3.75 percent of each                               
16       member's compensation from July 1 to the following June 30 to pay for retiree major                               
17       medical insurance.  This contribution shall be paid into the group health and life                                
18       benefits fund established by the commissioner of administration under AS 39.30.095                                
19       and shall be accounted for in accordance with regulations established by the                                      
20       commissioner.                                                                                                     
21            (c)  An employer shall also make contributions to the health reimbursement                                   
22       arrangement plan under AS 39.30.300.                                                                              
23            Sec. 14.25.360.  Rollover contributions and distributions.  (a)  A teacher                                 
24       entering the plan may elect, at the time and in the manner prescribed by the                                      
25       administrator, to have all or part of a direct rollover distribution from an eligible                             
26       retirement plan owned by the member paid directly into the member's individual                                    
27       account.                                                                                                          
28            (b)  Rollover contributions do not count as a purchase of membership service                                 
29       for the purpose of determining years of service.                                                                  
30            (c)  A distributee may elect, at the time and in the manner prescribed by the                                
31       administrator, to have all or part of a direct rollover distribution paid directly to an                          
01       eligible retirement plan specified by the distributee in the direct rollover.                                     
02            (d)  In this section,                                                                                        
03                 (1)  "direct rollover" means the payment of an eligible rollover                                        
04       distribution by the system to an eligible retirement plan specified by a distributee who                          
05       is eligible to elect a direct rollover;                                                                           
06                 (2)  "distributee" means a member, or a beneficiary who is the                                          
07       surviving spouse of the member, or an alternate payee;                                                            
08                 (3)  "eligible retirement plan" means                                                                   
09                      (A)  a conduit individual retirement account described in 26                                       
10            U.S.C. 408(d)(3)(A);                                                                                         
11                      (B)  an annuity plan described in 26 U.S.C. 403(a);                                                
12                      (C)  a qualified trust described in 26 U.S.C. 401(a);                                              
13                      (D)  an annuity plan described in 26 U.S.C. 403(b); or                                             
14                      (E)  a governmental plan described in 26 U.S.C. 457(b);                                            
15                 (4)  "eligible rollover distribution" means a distribution of all or part of                            
16       a total account to a distributee, except for                                                                      
17                      (A)  a distribution that is one of a series of substantially equal                                 
18            installments payable not less frequently than annually over the life expectancy                              
19            of the distributee or the joint and last survivor life expectancy of the distributee                         
20            and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9);                             
21                      (B)  a distribution that is one of a series of substantially equal                                 
22            installments payable not less frequently than annually over a specified period                               
23            of 10 years or more;                                                                                         
24                      (C)  a distribution that is required under 26 U.S.C. 401(a)(9);                                    
25                      (D)  the portion of any distribution that is not includable in                                     
26            gross income;                                                                                                
27                      (E)  a distribution that is on account of hardship; and                                            
28                      (F)  other distributions that are reasonably expected to total less                                
29            than $200 during a year.                                                                                     
30            Sec. 14.25.370.  Transmittal of contributions.  All contributions deducted in                              
31       accordance with AS 14.25.310 - 14.25.590 shall be transmitted to the plan for deposit                             
01       in the trust fund as soon as administratively feasible, but in no event later than 15 days                        
02       following the close of the payroll period.                                                                        
03            Sec. 14.25.380.  Limitations on contributions.  Notwithstanding any other                                  
04       provisions of this plan, the annual additions to each member's individual account                                 
05       under this plan and under all defined contribution plans of the employer required to be                           
06       aggregated with the contributions from this plan under the provisions of 26 U.S.C. 415                            
07       may not exceed, for any limitation year, the amount permitted under 26 U.S.C. 415 at                              
08       any time.  If the amount of a contribution to a member's account exceeds the limitation                           
09       of 26 U.S.C. 415(c) for any limitation year, the administrator shall take any necessary                           
10       remedial action to correct an excess contribution.  The provisions of 26 U.S.C. 415,                              
11       and the regulations adopted under that statute, as applied to qualified defined                                   
12       contribution plans of governmental employees are incorporated as part of the terms                                
13       and conditions of the plan.                                                                                       
14            Sec. 14.25.390.  Vesting.  (a)  A participating member is immediately and                                
15       fully vested in that member's contributions and related earnings.                                                 
16            (b)  A member is fully vested in the employer contributions made on that                                     
17       member's behalf, and related earnings, after five years of service.  A member is                                  
18       partially vested in the employer contributions made on that member's behalf, and the                              
19       related earnings, in the ratio of                                                                                 
20                 (1)  25 percent with two years of service;                                                              
21                 (2)  50 percent with three years of service; and                                                        
22                 (3)  75 percent with four years of service.                                                             
23            Sec. 14.25.400.  Investment of individual accounts.  (a)  The board shall                                  
24       provide a range of investment options and permit a participant to exercise investment                             
25       control over the participant's assets in the member's individual account as provided in                           
26       this section.  If a participant exercises control over the assets in the individual account,                      
27       the participant is not considered a fiduciary for any reason on the basis of exercising                           
28       that control.                                                                                                     
29            (b)  A participant may direct investment of plan funds held in an account                                    
30       among available investment funds in accordance with rules established by the board.                               
31            (c)  A participant may elect to change or transfer all or a portion of the                                   
01       participant's existing account balance among available investment funds not more                                  
02       often than once each day in accordance with the rules established by the administrator.                           
03       Only the last election received by the administrator before the transmittal of                                    
04       contributions to the trust fund for allocation to the individual account will be used to                          
05       direct the investment of the contributions received.                                                              
06            (d)  Except to the extent clearly set out in the terms of the investment plans                               
07       offered by the employer to the employee, the employer is not liable to the participant                            
08       for investment losses if the prudent investment standard has been met.                                            
09            (e)  The employer, administrator, state, board, or a person or entity who is                                 
10       otherwise a fiduciary is not liable by reason for any participant's investment loss that                          
11       results from the participant's directing the investment of plan assets allocated to the                           
12       participant's account.                                                                                            
13            (f)  To the extent that a member's individual account has been divided as                                    
14       provided in a qualified domestic relations order between participants, each participant                           
15       shall be treated as the holder of a separate individual account for purposes of                                   
16       investment yields, decisions, transfers, and time limitations imposed by this section.                            
17            Sec. 14.25.410.  Distribution election at termination.  (a)  A member is                                   
18       eligible to elect distribution of the member's account in accordance with this section                            
19       60 days after termination of employment.                                                                          
20            (b)  Notwithstanding (a) of this section, distribution of all or a portion of the                            
21       individual account of a member may take place before the 60th day after termination                               
22       of employment with the approval of the administrator if the member makes a written                                
23       request for a distribution under this subsection.  The member's spouse must consent to                            
24       the request in writing if the member is married.  Distribution of an individual account                           
25       can only be made on account of an immediate and heavy financial need of the member                                
26       for the following reasons and in the amount the need is demonstrated for                                          
27                 (1)  medical care described in 26 U.S.C. 213(d) incurred by the                                         
28       member, the member's spouse, or the member's dependent, or necessary to obtain that                               
29       medical care;                                                                                                     
30                 (2)  the purchase of a principal residence for the member;                                              
31                 (3)  postsecondary education tuition and related educational fees for the                               
01       next 12-month period for the member, the member's spouse, or a dependent of the                                   
02       member; in this paragraph, "dependent" has the meaning given in 26 U.S.C. 152;                                    
03                 (4)  prevention of the eviction of the member from the member's                                         
04       principal residence or foreclosure on the mortgage of the member's principal                                      
05       residence; or                                                                                                     
06                 (5)  any need prescribed by the United States Department of the                                         
07       Treasury, Internal Revenue Service, in a revenue ruling, notice, or other document of                             
08       general applicability that satisfies the safe harbor definition of hardship under                                 
09       regulations adopted under 26 U.S.C. 401(k).                                                                       
10            (c)  If a member dies before benefits commence, the member's beneficiary is                                  
11       immediately eligible to elect distribution of the member's share of the member's                                  
12       individual account.                                                                                               
13            (d)  Distributions are payable to an alternate payee in accordance with the                                  
14       terms and conditions of a qualified domestic relations order that is received and                                 
15       approved by the administrator as specified in AS 14.25.460.                                                       
16            (e)  Distributions that are being paid to a member may not be affected by the                                
17       member's subsequent reemployment with the employer.  Upon reemployment, a new                                     
18       individual account shall be established for the member to which any future                                        
19       contributions shall be allocated.  Upon subsequent termination of employment, the                                 
20       member's new individual account shall be distributed in accordance with this section.                             
21            Sec. 14.25.420.  Forms of distribution.  (a)  A participant may elect to receive                           
22       distribution of the participant's share of the individual account in a                                            
23                 (1)  lump sum payment, which is a single payment of the entire balance                                  
24       in the account;                                                                                                   
25                 (2)  periodic lump sum payment, which is a payment of a portion of the                                  
26       balance in the account, not more than twice each year;                                                            
27                 (3)  period certain annuity payment, which is an annuity payable in a                                   
28       fixed number of monthly installments for a duration of 60, 120, or 180 months;                                    
29                 (4)  life annuity with a period certain payment, which is an annuity                                    
30       payable until the later of the first day of the month in which the annuitant's death                              
31       occurs, or the date on which the payment of a fixed number of monthly installments is                             
01       completed; the period certain for installments is 120 or 180 months;                                              
02                 (5)  single life annuity payment, which is an annuity payable monthly                                 
03       until the first of the month in which the annuitant's death occurs; or                                            
04                 (6)  joint and survivor annuity payment, which is an annuity payable                                    
05       monthly to the member until the first of the month in which the member's death                                    
06       occurs; after the member's death, a survivor annuity equal to 50 percent or 100 percent                           
07       of the member's benefit, as previously elected by the member, shall be paid monthly to                            
08       the joint annuitant for the remainder of the survivor's lifetime.                                                 
09            (b)  Upon the death of an annuitant whose payments have commenced, an                                        
10       annuitant's beneficiary shall receive further payments only to the extent provided in                             
11       accordance with the form of payment that was being made to the annuitant.  The                                    
12       remaining portion of the interest will continue to be distributed at least as rapidly as                          
13       under the method of distribution being used before the annuitant's death.                                         
14            (c)  If  a participant dies before the distribution commencement date,                                       
15       distribution of the participant's entire interest to a beneficiary shall be payable in any                        
16       form other than a joint and survivor annuity.                                                                     
17            (d)  If an unmarried member or other participant fails to elect a form of                                    
18       payment before the distribution commencement date, the account shall be paid to a                                 
19       beneficiary in the form of a lump sum to the extent required by the minimum                                       
20       distribution requirements set out in the Internal Revenue Code.  If a married member                              
21       fails to elect a form of payment before the distribution commencement date, the                                   
22       account shall be paid in the form of a 50 percent joint and survivor annuity, with the                            
23       member's spouse as the joint annuitant.                                                                           
24            Sec. 14.25.430.  Manner of electing distributions.  (a)  Any election or any                               
25       alteration or revocation of a prior election by a participant for any purpose under this                          
26       plan shall be on forms or made in a manner prescribed for that purpose by the plan                                
27       administrator.  To be effective, the forms required or the required action for any                                
28       purpose under this plan must be completed and received in accordance with rules,                                  
29       regulations, and policies adopted by the administrator.                                                           
30            (b)  At any time, but not less than seven days before the distribution                                       
31       commencement date, a member, alternate payee, or beneficiary may change                                           
01                 (1)  the form of payment election;                                                                      
02                 (2)  an election to commence benefits; or                                                               
03                 (3)  the joint annuitant designation.                                                                   
04            (c)  Changes in elections are not allowed on or after seven days before the                                  
05       distribution commencement date.                                                                                   
06            Sec. 14.25.440.  Distribution requirements.  (a)  Payments to a participant                                
07       shall commence as soon as administratively feasible following the distribution                                    
08       commencement date.  The distribution commencement date is the first date on which                                 
09       one of the following occurs:                                                                                      
10                 (1)  a member meets the requirements of AS 14.25.410 and has made a                                     
11       complete application for payment under AS 14.25.420;                                                              
12                 (2)  a participant has elected to defer receipt of the account to a date                                
13       specified, the date has been attained, and the participant has made a complete                                    
14       application for payment;                                                                                          
15                 (3)  a member attains normal retirement age and has not made an                                         
16       application for payment or elected to defer receipt of the account to a date later than                           
17       normal retirement age;                                                                                            
18                 (4)  a member's beneficiary does not make an application for benefits                                   
19       and five years have elapsed since the member's death;                                                             
20                 (5)  notwithstanding AS 14.25.420, a participant whose account has a                                    
21       balance of $1,000 or less meets the requirements of AS 14.25.410, at which time the                               
22       participant must take payment of the participant's account.                                                       
23            (b)  The entire interest of a participant must be distributed or must begin to be                            
24       distributed not later than the member's required beginning date.                                                  
25            (c)  If a member dies after the distribution of the member's interest has begun                              
26       but before the distribution has been completed, the remaining portion of the interest                             
27       shall continue to be distributed at least as rapidly as under the method of distribution                          
28       being used before the member's death.                                                                             
29            (d)  If a member has made a distribution election and dies before the                                        
30       distribution commencement date, distribution of the member's entire interest shall be                             
31       completed by December 31 of the calendar year containing the fifth anniversary of the                             
01       member's death.  However, if any portion of the member's interest is payable to a                                 
02       designated beneficiary, distributions may be made over the life of the designated                                 
03       beneficiary or over a period certain not greater than the life expectancy of the                                  
04       designated beneficiary, commencing on or before December 31 of the calendar year                                  
05       immediately following the calendar year in which the member died, and, if the                                     
06       designated beneficiary is the member's surviving spouse, the date distributions are                               
07       required to begin may not be earlier than the later of December 31 of the calendar year                           
08       (1) immediately following the calendar year in which the member died, or (2) in which                             
09       the member would have attained 70 1/2 years of age, whichever is earlier.  If the                                 
10       surviving spouse dies after the member but before payments to the spouse have begun,                              
11       the provisions of this subsection apply as if the surviving spouse were the member.                               
12       An amount paid to a child of the member will be treated as if it were paid to the                                 
13       surviving spouse if the amount becomes payable to the surviving spouse when the                                   
14       child reaches the age of majority.                                                                                
15            (e)  If a member has not made a distribution election before the member's                                    
16       death, the member's designated beneficiary must elect the method of distribution not                              
17       later than December 31 of the calendar year (1) in which distributions would be                                   
18       required to begin under this section, or (2) that contains the fifth anniversary of the                           
19       date of death of the member, whichever is earlier.  If the member does not have a                                 
20       designated beneficiary or if the designated beneficiary does not elect a method of                                
21       distribution, distribution of the member's entire interest must be completed by                                   
22       December 31 of the calendar year containing the fifth anniversary of the member's                                 
23       death.                                                                                                            
24            (f)  For purposes of (b) of this section, distribution of a member's interest is                             
25       considered to begin (1) on the member's required beginning date, or (2) if the                                    
26       designated beneficiary is the member's surviving spouse and the surviving spouse dies                             
27       after the member but before payments to the spouse have begun, on the date                                        
28       distribution is required to begin to the surviving spouse.  If distribution in the form of                        
29       an annuity irrevocably commences to the member before the required beginning date,                                
30       the date distribution is considered to begin is the date that the distribution actually                           
31       commences.                                                                                                        
01            (g)  Notwithstanding any contrary provisions of AS 14.25.310 - 14.25.590, the                                
02       requirements of this section apply to all distributions of a member's interest and take                           
03       precedence over any inconsistent provisions of AS 14.25.310 - 14.25.590.                                          
04            (h)  All distributions required under this section are determined and made in                                
05       accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute,                                   
06       including any minimum distribution incidental benefit requirement.                                                
07            (i)  In this section,                                                                                        
08                 (1)  "designated beneficiary" means the individual who is designated as                                 
09       the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and                                       
10       regulations adopted under that statute;                                                                           
11                 (2)  "required beginning date" means the first day of April of the                                      
12       calendar year following the calendar year in which the member either attains 70 1/2                               
13       years of age or actually retires, whichever is later.                                                             
14            Sec. 14.25.450.  Designation of beneficiary.  (a)  Each participant shall have                             
15       the right to designate a beneficiary and shall have the right, at any time, to revoke the                         
16       designation or to substitute another beneficiary, subject to the following limitation:  in                        
17       the event a married member elects a nonspouse beneficiary, the actuarial equivalent                               
18       value of the benefit payable to the beneficiary may not exceed 50 percent of the                                  
19       member's portion of the account balance, and the member's spouse shall automatically                              
20       be considered the beneficiary for the remaining 50 percent of the account balance,                                
21       unless the spouse consents to the beneficiary designation in a writing that is notarized                          
22       or witnessed by the administrator.  If the spouse consents in this manner, a married                              
23       member may designate a nonspouse beneficiary for the entire benefit or any portion of                             
24       the benefit as part of an available form of payment contained in this plan,                                       
25                 (1)  except to the extent a qualified domestic relations order filed with                               
26       the administrator provides for payment to a former spouse or other dependent of the                               
27       member; or                                                                                                        
28                 (2)  unless the member filed a revocation of beneficiary accompanied                                    
29       by a written consent to the revocation from the present spouse and each person entitled                           
30       under the order; however, consent of the present spouse is not required if the member                             
31       and the present spouse had been married for less than one year on the date of the                                 
01       member's death and if the member established when filing the revocation that the                                  
02       member and the present spouse were not cohabiting.                                                                
03            (b)  Except as provided in (a) of this section, the member may change or                                     
04       revoke the designation without notice to the beneficiary or beneficiaries at any time.                            
05       If a member designates more than one beneficiary, each shares equally unless the                                  
06       member specifies a different allocation or preference.  The designation of a                                      
07       beneficiary, a change or revocation of a beneficiary, and a consent to revocation of a                            
08       beneficiary shall be made on a form provided by the administrator and is not effective                            
09       until filed with the administrator.                                                                               
10            (c)  If a member fails to designate a beneficiary, or if no designated beneficiary                           
11       survives the member, the death benefit shall be paid                                                              
12                 (1)  to the surviving spouse or, if there is none surviving;                                            
13                 (2)  to the surviving children in equal parts or, if there are none                                     
14       surviving;                                                                                                        
15                 (3)  to the surviving parents in equal parts or, if there are none                                      
16       surviving;                                                                                                        
17                 (4)  to the estate.                                                                                     
18            (d)  A person claiming entitlement to benefits payable under AS 14.25.310 -                                  
19       14.25.590 as a consequence of a member's death shall provide the administrator with a                             
20       marriage certificate, divorce or dissolution judgment, or other evidence of entitlement.                          
21       Documents establishing entitlement may be filed with the administrator immediately                                
22       after a change in the member's marital status.  If the administrator does not receive                             
23       notification of a claim before the date 10 days after the member's death, the person                              
24       claiming entitlement is not entitled to receive from the division of retirement and                               
25       benefits any benefit already paid by the administrator.                                                           
26            Sec. 14.25.460.  Rights under qualified domestic relations order.  (a)                                   
27       Notwithstanding the nonalienation provisions in AS 14.25.500(a), the administrator                                
28       may direct that benefits be paid to someone other than a member or beneficiary under                              
29       a valid qualified domestic relations order that is executed by the judge of a competent                           
30       court in accordance with applicable state law and that has been accepted by the                                   
31       administrator.                                                                                                    
01            (b)  The administrator shall determine whether an order meets the requirements                               
02       of this section within a reasonable period after receiving an order.  The administrator                           
03       shall notify the member and any alternate payee that an order has been received and                               
04       indicate to the member and any alternate payee when the order is accepted.  A separate                            
05       account for the alternate payee portion shall be established as soon as administratively                          
06       feasible after the order has been accepted by the administrator.                                                  
07            Sec. 14.25.470.  Retirement.  (a)  In order to obtain medical benefits under                               
08       AS 14.25.480 and access to the health reimbursement arrangement plan under                                        
09       AS 39.30.300, a member must retire directly from the plan.  A member is eligible to                               
10       retire from the plan if                                                                                           
11                 (1)  the member has at least 30 years of service;                                                       
12                 (2)  the member reaches the normal retirement age of 65 years of age                                    
13       and has at least 10 years of service; and                                                                         
14                 (3)  the member has been an active member for the whole school year                                     
15       during the 12 months before application for retirement.                                                           
16            (b)  A member must apply to the administrator for retirement and medical                                     
17       benefits enrollment.  Application shall be made on forms and in the manner prescribed                             
18       by the administrator.                                                                                             
19            (c)  A member who continues in the employ of the employer after reaching                                     
20       normal retirement age shall continue to participate in the plan and to have                                       
21       contributions allocated to the member's account.                                                                  
22            Sec. 14.25.480.  Medical benefits.  (a)  The medical benefits available to                                 
23       eligible persons are access to the retiree major medical insurance plan and to the                                
24       health reimbursement arrangement.  Access to the retiree major medical insurance                                  
25       plan means that an eligible person may not be denied insurance coverage except for                                
26       failure to pay the required premium.                                                                              
27            (b)  The following persons are eligible for the retiree major medical insurance                              
28       plan provided under this section and the health reimbursement arrangement:                                        
29                 (1)  a member with at least 30 years of service and who retires directly                                
30       from the plan;                                                                                                    
31                 (2)  the surviving spouse of a member who elected coverage under (1)                                    
01       of this subsection;                                                                                               
02                 (3)  a member who reaches the normal retirement age of 65 years of                                      
03       age, has at least 10 years of service, and retires directly from the plan;                                        
04                 (4)  the surviving spouse of a member who elected coverage under (3)                                    
05       of this subsection.                                                                                               
06            (c)  Retiree major medical insurance plan coverage elected by an eligible                                    
07       member under this section covers the eligible member, the spouse of the eligible                                  
08       member, and the dependent children of the eligible member.                                                        
09            (d)  Retiree major medical insurance plan coverage elected by a surviving                                    
10       spouse of an eligible member under this section covers the surviving spouse and the                               
11       dependent children of the surviving spouse.                                                                       
12            (e)  Major medical insurance coverage takes effect on the first day of the                                   
13       month following the date of the election and stops when the person who elects                                     
14       coverage under (b) of this section dies or fails to make a required premium payment.                              
15            (f)  The coverage for persons 65 years of age or older is the same as that                                   
16       available for persons under 65 years of age.  The benefits payable to those persons 65                            
17       years of age or older supplement any benefits provided under the federal old age,                                 
18       survivors and disability insurance program.                                                                       
19            (g)  The medical and optional insurance premiums owed by the person who                                      
20       elects coverage under (b) of this section maybe deducted from the health                                          
21       reimbursement arrangement.  If the amount of the health reimbursement arrangement                                 
22       becomes insufficient to pay the premiums, the person who elects coverage under (a) of                             
23       this section shall pay the premiums directly.                                                                     
24            (h)  The cost of premiums for retiree major medical insurance coverage for an                                
25       eligible member or surviving spouse who is                                                                        
26                 (1)  not eligible for Medicare is an amount equal to the full monthly                                   
27       group premiums for retiree major medical insurance coverage;                                                      
28                 (2)  eligible for Medicare, is the following percentage of the premium                                  
29       amounts established for retirees who are eligible for Medicare:                                                   
30                      (A)  30 percent if the member had 10 or more, but less than 15,                                    
31            years of service;                                                                                            
01                      (B)  25 percent if the member had 15 or more, but less than 20,                                    
02            years of service;                                                                                            
03                      (C)  20 percent if the member had 20 or more, but less than 25,                                    
04            years of service;                                                                                            
05                      (D)  15 percent if the member had 25 or more, but less than 30,                                    
06            years of service;                                                                                            
07                      (E)  10 percent if the member had 30 or more years of service.                                     
08            (i)  The eligibility for and cost of premiums for retiree major medical insurance                            
09       coverage for an alternate payee under a qualified domestic relations order shall be                               
10       determined based on the years of service of the member to which the alternate payee is                            
11       entitled under the order.                                                                                         
12            (j)  A person who is entitled to retiree major medical insurance coverage shall                              
13                 (1)  be informed by the administrator in writing                                                        
14                      (A)  that the health insurance coverage available to retired                                       
15            members may be different from the health insurance coverage provided to                                      
16            employees;                                                                                                   
17                      (B)  of time limits for selecting optional health insurance                                        
18            coverage and whether the election is irrevocable; and                                                        
19                 (2)  indicate in writing on a form provided by the administrator that the                               
20       person has received the information required by this subsection and whether the                                   
21       person has chosen to receive optional health insurance coverage.                                                  
22            (k)  The monthly group premiums for retiree major medical insurance coverage                                 
23       are established by the administrator in accordance with AS 39.30.095.  Nothing in                                 
24       AS 14.25.310 - 14.25.590 guarantees a person who elects coverage under (a) of this                                
25       section a monthly group premium rate for retiree major medical insurance coverage                                 
26       other than the premium in effect for the month in which the premium is due for                                    
27       coverage for that month.                                                                                          
28            (l)  In this section,                                                                                        
29                 (1)  "health reimbursement arrangement" means the plan established in                                   
30       AS 39.30.300;                                                                                                     
31                 (2)  "retires directly from the plan" means that the member is an active                                
01       member at the time that the member applies to the administrator for retirement and                                
02       medical benefits enrollment and that the member continues as an active member up                                  
03       through the day before the day the member is eligible for medical benefits enrollment.                            
04            Sec. 14.25.490.  Amendment and termination of plan.  (a)  The state has the                                
05       right to amend the plan at any time and from time to time, in whole or in part,                                   
06       including the right to make retroactive amendments referred to in 26 U.S.C. 401(b).                               
07            (b)  The plan administrator may not modify or amend the plan retroactively in                                
08       such a manner as to reduce the benefits of any member accrued to date under the plan                              
09       by reason of contributions made before the modification or amendment except to the                                
10       extent that the reduction is permitted by the Internal Revenue Code.                                              
11            (c)  The state may, in its discretion, terminate the plan in whole or part at any                            
12       time without liability for the termination.  If the plan is terminated, all investments                           
13       remain in force until all individual accounts have been completely distributed under                              
14       the plan, and, after all plan liabilities are satisfied, excess assets revert to the employer.                    
15            (d)  Any contribution made by an employer to the plan because of a mistake of                                
16       fact must be returned to the employer by the administrator within one year after the                              
17       contribution or discovery, whichever is later.                                                                    
18            Sec. 14.25.500.  Exclusive benefit.  (a)  The corpus or income of the assets                               
19       held in trust as required by the plan may not be diverted or used for other than the                              
20       exclusive benefit of the participants.                                                                            
21            (b)  If plan benefits are provided through the distribution of annuity or                                    
22       insurance contracts, any refunds or credits in excess of plan benefits due to dividends,                          
23       earnings, or other experience rating credits, or surrender or cancellation credits, will be                       
24       paid to the trust fund.                                                                                           
25            (c)  The assets of the plan may not be used to pay premiums or contributions of                              
26       the employer under another plan maintained by the employer.                                                       
27            Sec. 14.25.510.  Nonguarantee of returns, rates, or benefit amounts.  The                                  
28       plan created by AS 14.25.310 - 14.25.590 is a defined contribution plan, not a defined                            
29       benefit plan.  The amount of money in the account of a participant depends on the                                 
30       amount of contributions and the rate of return from investments of the account that                               
31       varies over time.  If benefits are paid in the form of an annuity, the benefit amount                             
01       payable is dependent on the amount of money in the account and the interest rates                                 
02       applied and service fees charged by the annuity payor at the time benefits are first                              
03       paid.  Nothing in this plan guarantees a participant                                                              
04                 (1)  a rate of return or interest rate other than that actually earned by the                           
05       account of the participant, less applicable administrative expenses; and                                          
06                 (2)  an annuity based on interest rates or service charges other than                                   
07       interest rates available from and service charges by the annuity payor in effect at the                           
08       time the annuity is paid.                                                                                         
09            Sec. 14.25.520.  Nonguarantee of employment.  The provisions of                                            
10       AS 14.25.310 - 14.25.590 are not a contract of employment between an employer and                                 
11       an employee, nor do they confer a right of an employee to be continued in the                                     
12       employment of an employer, nor are they a limitation of the right of an employer to                               
13       discharge an employee with or without cause.                                                                      
14            Sec. 14.25.530.  Fraud.  A person who knowingly makes a false statement or                                 
15       falsifies or permits to be falsified a record of this plan in an attempt to defraud the plan                      
16       is guilty of a class A misdemeanor.                                                                               
17            Sec. 14.25.590.  Definitions.  In AS 14.25.310 - 14.25.590, unless the context                             
18       requires otherwise,                                                                                               
19                 (1)  "active member" means a member who is employed by an                                               
20       employer, is receiving compensation on a full-time or part-time basis, and is making                              
21       contributions to the plan, or a member making contributions under AS 14.20.330 or                                 
22       14.20.345;                                                                                                        
23                 (2)  "administrator" has the meaning given in AS 14.25.220;                                             
24                 (3)  "alternate payee" means a person entitled to a portion of the                                    
25       distribution from an individual account under a qualified domestic relations order;                               
26                 (4)  "annuitant" means a retired member who is receiving a benefit                                      
27       under this plan;                                                                                                  
28                 (5)  "beneficiary" means a person designated by a member to receive                                     
29       benefits that may be due from the plan upon the member's death;                                                   
30                 (6)  "board" has the meaning given in AS 14.25.220;                                                     
31                 (7)  "commissioner" means the commissioner of administration;                                           
01                 (8)  "compensation"                                                                                     
02                      (A)  means                                                                                         
03                           (i)  the total remuneration earned by an employee for                                         
04                 personal services rendered, including cost-of-living differentials, as                                  
05                 reported on the employee's Federal Income Tax Withholding Statement                                     
06                 (Form W-2) from the employer for the calendar year;                                                     
07                           (ii)  the teacher contribution to the teachers' retirement                                    
08                 system under AS 14.25.340, employee deferrals under AS 39.45.010,                                       
09                 the wage reduction amount contributed to the Alaska Supplemental                                        
10                 Annuity Plan under AS 39.30.150(a), and the wage reduction amount                                       
11                 contributed to the Alaska Supplemental Benefit Plan under                                               
12                 AS 39.30.150(c), as those statutes may be amended from time to time;                                    
13                      (B)  does not include retirement benefits, severance pay or other                                  
14            separation bonuses, welfare benefits, per diem, expense allowances, workers'                                 
15            compensation payments, payments for leave not used whether those leave                                       
16            payments are scheduled payments, lump-sum payments, donations, or cash-ins,                                  
17            any remuneration contributed by the employer for or on account of the                                        
18            employee under this plan or under any other qualified or nonqualified                                        
19            employee benefit plan, any remuneration not specifically included above                                      
20            which would have been excluded under 26 U.S.C. 3121(a) (Internal Revenue                                     
21            Code) if the employer had remained in the Federal Social Security System, or                                 
22            any remuneration paid by the employer in excess of the Social Security                                       
23            Taxable Wage Base for the calendar year;                                                                     
24                      (C)  includes any amount that is contributed by the employer                                       
25            under a salary reduction agreement and that is not includible in the gross                                   
26            income of the employee under 26 U.S.C. 125, 132(f)(4), 402(e)(3),                                            
27            402(h)(I)(B) or 403(b) (Internal Revenue Code); the annual compensation                                      
28            limitation for the member, which is so taken into account for those purposes,                                
29            may not exceed $200,000, as adjusted for the cost of living in accordance with                               
30            26 U.S.C. 401(a)(17)(B) (Internal Revenue Code), with the limitation for a                                   
31            fiscal year being the limitation in effect for the calendar year within which the                            
01            fiscal year begins;                                                                                          
02                 (9)  "dependent child" has the meaning given in AS 14.25.220;                                           
03                 (10)  "distribution commencement date" has the meaning given in                                         
04       AS 14.25.440(a);                                                                                                  
05                 (11)  "employer" means a public school district, the Board of Regents                                   
06       of the University of Alaska, the Department of Education and Early Development, or                                
07       the regional resource centers;                                                                                    
08                 (12)  "fund" means the assets of the plan;                                                              
09                 (13)  "individual account" means the total maintained by the plan in an                                 
10       investment account within the trust fund, established for each member for the purposes                            
11       of allocation of the member's mandatory contributions, employer contributions on                                  
12       behalf of the employee, and earnings credited to each of those, investment gains and                              
13       losses, and expenses, as well as reporting of the member's benefit under the plan;                                
14                 (14)  "Internal Revenue Code" has the meaning given in AS 14.25.220;                                    
15                 (15)  "investment funds" means those separate funds that are provided                                 
16       within and that make up the trust fund and that are established for the purpose of                                
17       directing investment through the exercise of the sole control of a member, beneficiary,                           
18       or alternate payee under the terms of the plan and trust agreement;                                               
19                 (16)  "normal retirement age" means 65 years of age;                                                  
20                 (17)  "participant" means the person who has a vested right to an                                       
21       individual account, such as a member, an alternate payee if the account is subject to a                           
22       qualified domestic relations order, the member's beneficiary if the member is                                     
23       deceased, or an alternate payee's beneficiary if the alternate payee is deceased;                                 
24                 (18)  "plan" means the retirement benefit plan established under                                        
25       AS 14.25.310 - 14.25.590;                                                                                         
26                 (19)  "qualified domestic relations order" means a divorce or                                           
27       dissolution judgment under AS 25.24, including an order approving a property                                      
28       settlement, that                                                                                                  
29                      (A)  creates or recognizes the existence of an alternate payee's                                   
30            right to, or assigns to an alternate payee the right to, receive all or a portion of                         
31            the individual account, health reimbursement arrangement or medical benefits                                 
01            payable with respect to a member;                                                                            
02                      (B)  sets out the name and last known mailing address, if any, of                                  
03            the member and of each alternate payee covered by the order;                                                 
04                      (C)  sets out the amount or percentage of the member's benefit,                                    
05            or of any survivor's benefit, to be paid to the alternate payee, or sets out the                             
06            manner in which that amount or percentage is to be determined;                                               
07                      (D)  sets out the number of payments or period to which the                                        
08            order applies;                                                                                               
09                      (E)  sets out the retirement plan to which the order applies;                                      
10                      (F)  does not require any type or form of benefit or any option                                    
11            not otherwise provided by AS 14.25.310 - 14.25.590;                                                          
12                      (G)  does not require an increase of benefits in excess of the                                     
13            amount provided by AS 14.25.310 - 14.25.590, determined on the basis of                                      
14            actuarial value; and                                                                                         
15                      (H)  does not require the payment, to an alternate payee, of                                       
16            benefits that are required to be paid to another alternate payee under another                               
17            order previously determined to be a qualified domestic relations order;                                      
18                 (20)  "retirement fund" or "fund" means the fund in which the assets of                                 
19       the plan, including income and interest derived from the investment of money, are                                 
20       deposited and held;                                                                                               
21                 (21)  "school year" has the meaning given in AS 14.25.220;                                              
22                 (22)  "system" has the meaning given in AS 14.25.220;                                                   
23                 (23)  "teacher" and "member" are used interchangeably under                                             
24       AS 14.25.310 - 14.25.590 and mean a person eligible to participate in the plan and                                
25       who is covered by the plan, limited to                                                                            
26                      (A)  a certificated full-time or part-time elementary or                                           
27            secondary teacher, a certificated school nurse, or a certificated person in a                                
28            position requiring a teaching certificate as a condition of employment in a                                  
29            public school of the state, the Department of Education and Early                                            
30            Development, or the Department of Labor and Workforce Development;                                           
31                      (B)  a full-time or part-time teacher of the University of Alaska                                  
01            or a person occupying a full-time administrative position at the University of                               
02            Alaska that requires academic standing; the approval of the administrator must                               
03            be obtained before an administrative position qualifies for membership in the                                
04            plan; however, a teacher or administrative person at the university who is                                   
05            participating in the optional university retirement program under AS 14.40.661                               
06            - 14.40.799 is not a member under this plan;                                                                 
07                 (24)  "year of service" means service during the dates set for the school                               
08       year; partial-year service credit is given for membership service as follows:                                     
09                      (A)  during any school year,                                                                       
10                           (i)  less than nine days, no credit;                                                          
11                           (ii)  nine days or more but less than 27 days, 0.1 years;                                     
12                           (iii)  27 days or more but less than 45 days, 0.2 years;                                      
13                           (iv)  45 days or more but less than 63 days, 0.3 years;                                       
14                           (v)  63 days or more but less than 81 days, 0.4 years;                                        
15                           (vi)  81 days or more but less than 100 days, 0.5 years;                                      
16                           (vii)  100 days or more but less than 118 days, 0.6 years;                                    
17                           (viii)  118 days or more but less than 136 days, 0.7                                          
18                 years;                                                                                                  
19                           (ix)  136 days or more but less than 154 days, 0.8 years;                                     
20                           (x)  154 days or more but less than 172 days, 0.9 years;                                      
21                           (xi)  172 days or more, 1.0 years;                                                            
22                      (B)  service performed on a part-time basis of half time or more                                   
23            will be credited in proportion to the amount of credit that would have been                                  
24            received for service performed on a full-time basis.                                                         
25    * Sec. 29.  AS 14.40.280(c) is amended to read:                                                                    
26            (c)  Except as provided by (b) of this section, the monetary gifts, bequests, or                             
27       endowments that are made to the University of Alaska shall be managed and invested                                
28       by the Board of Regents.  In carrying out its management and investment                                           
29       responsibilities under this subsection, the Board of Regents has the same power and                               
30       obligations to carry out duties with respect to the endowments of the University of                               
31       Alaska as are provided to and required of the Alaska Retirement Management                                    
01       [STATE PENSION INVESTMENT] Board under AS 37.10.210 [AS 14.25.180].                                           
02    * Sec. 30.  AS 14.40.400(b) is amended to read:                                                                    
03            (b)  The Board of Regents is the fiduciary of the fund.  The Board of Regents                                
04       shall account for and invest the fund.  In carrying out its investment responsibilities                           
05       under this subsection, the Board of Regents has the same powers and duties with                                   
06       respect to the fund as are provided to and required of the Alaska Retirement                                  
07       Management [STATE PENSION INVESTMENT] Board under AS 37.10.210                                            
08       [AS 14.25.180].                                                                                                   
09    * Sec. 31.  AS 14.40.671(e) is amended to read:                                                                    
10            (e)  An employee whose rights to transfer assets out of a state retirement                                   
11       system are subject to a qualified domestic relations order is entitled to transfer assets                         
12       from the state retirement system to the program only if the requirements for receiving                            
13       a refund under AS 14.25.150(b), 14.25.390, [OR] AS 39.35.200(c), or 39.35.760, as                         
14       appropriate, are met.                                                                                             
15    * Sec. 32.  AS 22.25.048(c) is amended to read:                                                                    
16            (c)  The Alaska Retirement Management [STATE PENSION                                                     
17       INVESTMENT] Board is the fiduciary of the fund and has the same powers and                                        
18       duties under this section in regard to the judicial retirement trust fund as are provided                         
19       in AS 37.10.210 [AS 14.25.180].                                                                               
20    * Sec. 33.  AS 22.25.900(1) is amended to read:                                                                    
21                 (1)  "actuarial equivalent" means the adjustment necessary to obtain                                    
22       equality in value of the aggregate expected payments under two different forms of                                 
23       pension payments, considering expected mortality and interest earnings on the basis of                            
24       assumptions, factors, and methods specified in regulations issued under the system                                
25       that are formally adopted [UNDER AS 22.25.027] by the Alaska Retirement                                       
26       Management Board [COMMISSIONER OF ADMINISTRATION] that clearly                                                
27       preclude employer discretion in the determination of the amount of any justice's,                                 
28       judge's, or member's benefit;                                                                                     
29    * Sec. 34.  AS 26.05.226(a) is amended to read:                                                                    
30            (a)  The Department of Military and Veterans' Affairs shall contribute to the                                
31       Alaska National Guard and Alaska Naval Militia retirement system the amounts                                      
01       determined by the Alaska Retirement Management Board [COMMISSIONER OF                                         
02       ADMINISTRATION] as necessary to                                                                                   
03                 (1)  fund the system based on the actuarial requirements of the system                                  
04       as established by the Alaska Retirement Management Board [COMMISSIONER                                        
05       OF ADMINISTRATION]; and                                                                                           
06                 (2)  administer the system.                                                                             
07    * Sec. 35.  AS 26.05.228(c) is amended to read:                                                                    
08            (c)  The Alaska Retirement Management [STATE PENSION                                                     
09       INVESTMENT] Board is the fiduciary of the fund and has the same powers and                                        
10       duties under this section in regard to the fund as are provided under AS 37.10.210                            
11       [AS 14.25.180].                                                                                                   
12    * Sec. 36.  AS 36.30.015(f) is amended to read:                                                                    
13            (f)  The board of directors of the Alaska Housing Finance Corporation,                                       
14       notwithstanding AS 18.56.088, and the board of directors of the Knik Arm Bridge and                               
15       Toll Authority under AS 19.75.111, shall adopt regulations under AS 44.62                                         
16       (Administrative Procedure Act) and the board of trustees of the Alaska Retirement                             
17       Management [STATE PENSION INVESTMENT] Board shall adopt regulations                                           
18       under AS 37.10.240 to govern the procurement of supplies, services, professional                                  
19       services, and construction for the respective public corporation and board.  The                                  
20       regulations must reflect competitive bidding principles and provide vendors                                       
21       reasonable and equitable opportunities to participate in the procurement process and                              
22       must include procurement methods to meet emergency and extraordinary                                              
23       circumstances.  Notwithstanding the other provisions of this subsection, the Alaska                               
24       Housing Finance Corporation, the Knik Arm Bridge and Toll Authority, and the                                      
25       Alaska Retirement Management [STATE PENSION INVESTMENT] Board shall                                           
26       comply with AS 36.30.170(b).                                                                                      
27    * Sec. 37.  AS 36.30.990(1) is amended to read:                                                                    
28                 (1)  "agency"                                                                                           
29                      (A)  means a department, institution, board, commission,                                           
30            division, authority, public corporation, the Alaska Pioneers' Home, the Alaska                               
31            Veterans' Home, or other administrative unit of the executive branch of state                                
01            government;                                                                                                  
02                      (B)  does not include                                                                              
03                           (i)  the University of Alaska;                                                                
04                           (ii)  the Alaska Railroad Corporation;                                                        
05                           (iii)  the Alaska Housing Finance Corporation;                                                
06                           (iv)  a regional Native housing authority created under                                       
07                 AS 18.55.996 or a regional electrical authority created under                                           
08                 AS 18.57.020;                                                                                           
09                           (v)  the Department of Transportation and Public                                              
10                 Facilities, in regard to the repair, maintenance, and reconstruction of                                 
11                 vessels, docking facilities, and passenger and vehicle transfer facilities                              
12                 of the Alaska marine highway system;                                                                    
13                           (vi)  the Alaska Aerospace Development Corporation;                                           
14                           (vii)  the Alaska Retirement Management [STATE                                            
15                 PENSION INVESTMENT] Board;                                                                              
16                           (viii)  the Alaska Seafood Marketing Institute;                                               
17    * Sec. 38.  AS 37.10.071(d) is amended to read:                                                                    
18            (d)  In exercising investment, custodial, or depository powers or duties under                               
19       this section, the fiduciary or the fiduciary's designee is liable for a breach of a duty                          
20       that is assigned or delegated under this section, or under [AS 14.25.180,]                                        
21       AS 14.40.255, 14.40.280(c), 14.40.400(b), AS 37.10.070, AS 37.14.110(c), 37.14.160,                               
22       or 37.14.170 [, OR AS 39.35.080].  However, the fiduciary or the designee is not                              
23       liable for a breach of a duty that has been delegated to another person if the delegation                         
24       is prudent under the applicable standard of prudence set out in statute or if the duty is                         
25       assigned by law to another person, except to the extent that the fiduciary or designee                            
26                 (1)  knowingly participates in, or knowingly undertakes to conceal, an                                  
27       act or omission of another person knowing that the act or omission is a breach of that                            
28       person's duties under this chapter;                                                                               
29                 (2)  by failure to comply with this section in the administration of                                    
30       specific responsibilities, enables another person to commit a breach of duty; or                                  
31                 (3)  has knowledge of a breach of duty by another person, unless the                                    
01       fiduciary or designee makes reasonable efforts under the circumstances to remedy the                              
02       breach.                                                                                                           
03    * Sec. 39.  AS 37.10.071(f) is amended to read:                                                                    
04            (f)  In this section, "fiduciary of a state fund" or "fiduciary" means                                       
05                 (1)  the commissioner of revenue for investments under AS 37.10.070;                                    
06       or                                                                                                            
07                 (2)  with respect to the Alaska Retirement Management [STATE                                        
08       PENSION INVESTMENT] Board, for investments of the collective funds that it                                    
09       manages and administers [UNDER OR SUBJECT TO AS 14.25.180],                                                   
10                      (A)  each trustee who serves on the board of trustees; and                                         
11                      (B)  any other person who exercises control or authority with                                      
12            respect to management or disposition of assets for which the board is                                        
13            responsible or who gives investment advice to the board; or                                                  
14                 (3)  the person or body provided by law to manage the investments for                                   
15       investments not subject to [AS 14.25.180 OR] AS 37.10.070.                                                        
16    * Sec. 40.  AS 37.10.210 is repealed and reenacted to read:                                                        
17            Sec. 37.10.210.  Alaska Retirement Management Board.  (a)  The Alaska                                      
18       Retirement Management Board is established in the Department of Revenue.  The                                     
19       board's primary mission is to serve as the trustee of the assets of the state's retirement                        
20       systems.  Consistent with standards of prudence, the board has the fiduciary obligation                           
21       to manage and invest these assets in a manner that is sufficient to meet the liabilities                          
22       and pension obligations of the systems.  The board may, with the approval of the                                  
23       commissioner of revenue and upon agreement with the responsible fiduciary, manage                                 
24       and invest other state funds so long as the activity does not interfere with the board's                          
25       primary mission.  In making investments, the board shall exercise the powers and                                  
26       duties of a fiduciary of a state fund under AS 37.10.071.                                                         
27            (b)  The Alaska Retirement Management Board consists of nine trustees.  The                                  
28       commissioner of administration and the commissioner of revenue shall serve on the                                 
29       board.  The governor shall appoint seven additional trustees who meet the eligibility                             
30       requirements for an Alaska permanent fund dividend and who are professionally                                     
31       credentialed or have recognized competence in investment management, finance,                                     
01       banking, economics, accounting, pension administration, or actuarial analysis as                                  
02       follows:                                                                                                          
03                 (1)  three trustees shall be appointed from the general public;  a trustee                              
04       appointed under this paragraph may not hold another state office, position, or                                    
05       employment and may not be a member or beneficiary of a retirement system managed                                  
06       by the board;                                                                                                     
07                 (2)  one trustee shall be employed as a finance officer for a political                                 
08       subdivision participating in the public employees' retirement system;                                             
09                 (3)  one trustee shall be employed as a finance officer for a political                                 
10       subdivision participating in the teachers' retirement system;                                                     
11                 (4)  one trustee shall be a member of the public employees' retirement                                  
12       system;                                                                                                           
13                 (5)  one trustee shall be a member of the teachers' retirement system.                                  
14            (c)  The trustees, other than the two commissioners, shall serve for staggered                               
15       terms of three years and may be reappointed to the board for a total of three                                     
16       consecutive terms.  A person who has served three consecutive terms may not be                                    
17       reappointed to the board for at least one year.                                                                   
18            (d)  The governor may, by written notice to the trustee, remove a trustee for                                
19       cause.  After a trustee receives written notice of removal, the trustee may not                                   
20       participate in board business and may not be counted for purposes of establishing a                               
21       quorum.                                                                                                           
22            (e)  A vacancy on the board of trustees shall be promptly filled.  A person                                  
23       filling a vacancy holds office for the balance of the unexpired term of the person's                              
24       predecessor, and the balance of the unexpired term served is not included in the three-                           
25       term limitation under (c) of this section.  A vacancy on the board does not impair the                            
26       authority of a quorum of the board to exercise all the powers and perform all the duties                          
27       of the board.                                                                                                     
28            (f)  Five trustees constitute a quorum for the transaction of business and the                               
29       exercise of the powers and duties of the board.                                                                   
30            (g)  A trustee may not designate another person to serve on the board in the                                 
31       absence of the trustee.                                                                                           
01            (h)  The board shall provide annual training to its members on the duties and                                
02       powers of a fiduciary of a state fund and other training as necessary to keep the                                 
03       members of the board educated about pension management and investment.                                            
04            (i)  The board shall elect a trustee to serve as chair and a trustee to serve as                             
05       vice-chair for one-year terms.  A trustee may be reelected to serve additional terms as                           
06       chair or vice-chair.                                                                                              
07    * Sec. 41.  AS 37.10 is amended by adding a new section to read:                                                   
08            Sec. 37.10.215.  Attorney general.  The attorney general is the legal counsel                              
09       for the board and shall advise the board and represent it in a legal proceeding.                                  
10    * Sec. 42.  AS 37.10.220 is repealed and reenacted to read:                                                        
11            Sec. 37.10.220.  Powers and duties of the board.  (a)  The board shall                                     
12                 (1)  establish a series of accounts in which the assets of the funds                                    
13       entrusted to the board shall be deposited and held;                                                               
14                 (2)  hold regular and special meetings at the call of the chair or of at                                
15       least five members; meetings are open to the public, and the board shall keep a full                              
16       record of all its proceedings;                                                                                    
17                 (3)  adopt investment policies for each of the funds entrusted to the                                   
18       board;                                                                                                            
19                 (4)  select and retain investment managers and custodians for the funds                                 
20       entrusted to the board;                                                                                           
21                 (5)  provide a range of investment options and establish the rules by                                   
22       which participants can direct their investments among those options with respect to                               
23       accounts established under                                                                                        
24                      (A)  AS 14.25.340 and 14.25.350 (teachers' retirement system                                       
25            defined contribution individual accounts);                                                                   
26                      (B)  AS 39.30.150 - 39.30.180 (State of Alaska Supplementary                                       
27            Annuity Plan);                                                                                               
28                      (C)  AS 39.35.730 - 39.35.750  (public employees' retirement                                       
29            system defined contribution individual accounts); and                                                        
30                      (D)  AS 39.45.010 - 39.45.060 (public employees' deferred                                          
31            compensation program);                                                                                       
01                 (6)  establish the rate of interest that shall be annually credited to each                             
02       member's individual contribution account in accordance with AS 14.25.145 and                                      
03       AS 39.35.100 and the rate of interest that shall be annually credited to each member's                            
04       account in the health reimbursement arrangement plan under AS 39.30.300 -                                         
05       39.30.495; the rate of interest shall be adopted on the basis of the probable effective                           
06       rate of interest on a long-term basis, and the rate may be changed from time to time;                             
07                 (7)  adopt a contribution surcharge as necessary under AS 39.35.160(c);                                 
08                 (8)  coordinate with the retirement system administrator to have an                                     
09       annual actuarial valuation of each retirement system prepared to determine system                                 
10       assets, accrued liabilities, and funding ratios and to certify to the appropriate                                 
11       budgetary authority of each employer in the system                                                                
12                      (A)  an appropriate contribution rate for normal costs; and                                        
13                      (B)  an appropriate contribution rate for liquidating any past                                     
14            service liability;                                                                                           
15                 (9)  review actuarial assumptions prepared and certified by a member                                    
16       of the American Academy of Actuaries and conduct experience analyses of the                                       
17       retirement systems not less than once every four years, except for health cost                                    
18       assumptions, which shall be reviewed annually;                                                                    
19                 (10)  contract for an independent audit of the state's actuary not less                                 
20       than once every four years;                                                                                       
21                 (11)  obtain an external performance review to evaluate the investment                                  
22       policies and performance of each fund entrusted to the board and report the results of                            
23       the review to the appropriate fund fiduciary;                                                                     
24                 (12)  engage an independent certified public accountant to conduct an                                   
25       annual audit of each fund entrusted to the board and report the findings of the audit to                          
26       the appropriate fund fiduciary;                                                                                   
27                 (13)  by the first day of each regular legislative session, report to the                               
28       governor, the legislature, and the individual employers participating in the state's                              
29       retirement systems on the financial condition of the systems in regard to                                         
30                      (A)  the valuation of trust fund assets and liabilities;                                           
31                      (B)  current investment policies adopted by the board;                                             
01                      (C)  a summary of assets held in trust listed by the categories of                                 
02            investment;                                                                                                  
03                      (D)  the income and expenditures for the previous fiscal year;                                     
04                      (E)  the return projections for the next calendar year;                                            
05                      (F)  one-year, three-year, five-year, and 10-year investment                                       
06            performance for each of the funds entrusted to the board; and                                                
07                      (G)  other statistical data necessary for a proper understanding                                   
08            of the financial status of the systems;                                                                      
09                 (14)  submit quarterly updates of the investment performance reports to                                 
10       the Legislative Budget and Audit Committee; and                                                                   
11                 (15)  develop an annual operating budget.                                                               
12            (b)  The board may                                                                                           
13                 (1)  employ outside investment advisors to review investment policies;                                  
14                 (2)  enter into an agreement with the fiduciary of another state fund in                                
15       order to assume the management and investment of those assets;                                                    
16                 (3)  contract for other services necessary to execute the board's powers                                
17       and duties.                                                                                                       
18            (c)  Expenses for the board and the operations of the board shall be paid from                               
19       the retirement fund.                                                                                              
20    * Sec. 43.  AS 37.10.250 is amended to read:                                                                       
21            Sec. 37.10.250.  Compensation of trustees.  Trustees, other than trustees who                              
22       are employees of the state, [OR] a political subdivision of the state, or a school                        
23       district or regional educational attendance area in the state, receive an honorarium                          
24       of $150 for each day spent at a meeting of the board or at a meeting of a subcommittee                            
25       of the board or at a public meeting as a representative of the board, including a day in                      
26       which a trustee travels to or from a meeting.  Trustees who are state employees are                           
27       entitled to administrative leave for service as a trustee.  Trustees who are employees of                         
28       a political subdivision of the state or a school district or regional educational                             
29       attendance area in the state are entitled to leave benefits provided by their employers                       
30       comparable to those provided to state employees for service as a trustee.  Trustees are                           
31       entitled to per diem and travel expenses authorized for boards and commissions under                              
01       AS 39.20.180.                                                                                                     
02    * Sec. 44.  AS 37.10.270(a) is amended to read:                                                                    
03            (a)  The board may [SHALL] appoint an investment advisory council                                        
04       composed of at least three and not more than five members.  Members of the council                                
05       shall possess experience and expertise in financial investments and management of                                 
06       investment portfolios for public, corporate, or union pension benefit funds,                                      
07       foundations, or endowments.                                                                                       
08    * Sec. 45.  AS 37.10.390 is amended to read:                                                                       
09            Sec. 37.10.390.  Definitions.  In AS 37.10.210 - 37.10.390, unless the context                             
10       otherwise requires,                                                                                               
11                 (1)  "board" means the board of trustees of the Alaska Retirement                                   
12       Management [STATE PENSION INVESTMENT] Board;                                                                  
13                 (2)  "retirement systems" or "systems" means the teachers' retirement                               
14       system, the judicial retirement system, the Alaska National Guard and Alaska Naval                                
15       Militia retirement system, [AND] the public employees' retirement system, the State                           
16       of Alaska supplemental annuity plan, the public employees' deferred                                           
17       compensation program, the State of Alaska teachers' and public employees'                                     
18       retiree health reimbursement arrangement plan, and the elected public officers'                               
19       retirement system under former AS 39.37.                                                                      
20    * Sec. 46.  AS 37.10.390 is amended by adding a new paragraph to read:                                             
21                 (3)  "fund" means the fund or funds composed of the assets of each of                                   
22       the retirement systems administered and managed by the board.                                                     
23    * Sec. 47.  AS 37.14.160 is amended to read:                                                                       
24            Sec. 37.14.160.  Duties of the commissioner of revenue.  The commissioner                                  
25       of revenue is the treasurer of the trust fund created in AS 37.14.110 and shall                                   
26                 (1)  in carrying out investment duties under this section, exercise the                                 
27       same powers and duties established for the Alaska Retirement Management [STATE                                
28       PENSION INVESTMENT] Board in AS 37.10.210 [AS 14.25.180(c)];                                                  
29                 (2)  deposit the principal and income from investments in separate                                      
30       principal and income accounts for the fund;                                                                       
31                 (3)  invest and maintain accounting records that distinguish between the                                
01       principal and income of the fund;                                                                                 
02                 (4)  provide reports to the board established under AS 37.14.120 on the                                 
03       condition and investment performance of the fund.                                                                 
04    * Sec. 48.  AS 37.14.210(4) is amended to read:                                                                    
05                 (4)  invest and reinvest the assets of the trust as provided in this section                            
06       and as provided for the investment of funds under [AS 14.25.180(c) AND]                                           
07       AS 37.14.170;                                                                                                     
08    * Sec. 49.  AS 37.14.520(4) is amended to read:                                                                    
09                 (4)  invest and reinvest the assets of the fund as provided in this section                             
10       and as provided for the investment of funds under [AS 14.25.180(c) AND]                                           
11       AS 37.14.170;                                                                                                     
12    * Sec. 50.  AS 37.14.610 is amended to read:                                                                       
13            Sec. 37.14.610.  Duties of the commissioner.  The commissioner of revenue                                  
14       has the power and duty to                                                                                         
15                 (1)  act as official custodian of the cash and investments belonging to                                 
16       the Arctic Winter Games Team Alaska trust by securing adequate and safe custodial                                 
17       facilities;                                                                                                       
18                 (2)  exercise the same powers and duties as those established for the                                   
19       Alaska Retirement Management [STATE PENSION INVESTMENT] Board in                                              
20       AS 37.10.210 [AS 14.25.180(b) AND (c)];                                                                       
21                 (3)  invest the assets of the trust in a manner likely to yield at least five                           
22       percent real rate of return over time;                                                                            
23                 (4)  maintain accounting records of the trust in accordance with                                        
24       investment accounting principles;                                                                                 
25                 (5)  enter into and enforce contracts or agreements considered                                          
26       necessary for the investment purposes of the trust;                                                               
27                 (6)  report annually to the board of directors of the Arctic Winter                                     
28       Games Team Alaska the condition and performance of the trust;                                                     
29                 (7)  monitor use of trust money by the Arctic Winter Games Team                                         
30       Alaska; and                                                                                                       
31                 (8)  do all acts that the commissioner of revenue considers necessary or                                
01       proper in administering the assets of the trust.                                                                  
02    * Sec. 51.  AS 39.30.090(a) is amended to read:                                                                    
03            (a)  The Department of Administration may obtain a policy or policies of group                               
04       insurance covering state employees, persons entitled to coverage under AS 14.25.168,                              
05       14.25.480, AS 22.25.090, AS 39.35.535, 39.35.880, or former AS 39.37.145,                                 
06       employees of other participating governmental units, or persons entitled to coverage                              
07       under AS 23.15.136, subject to the following conditions:                                                          
08                 (1)  A group insurance policy shall provide one or more of the                                          
09       following benefits: life insurance, accidental death and dismemberment insurance,                                 
10       weekly indemnity insurance, hospital expense insurance, surgical expense insurance,                               
11       dental expense insurance, audiovisual insurance, or other medical care insurance.                                 
12                 (2)  Each eligible employee of the state, the spouse and the unmarried                                  
13       children chiefly dependent on the eligible employee for support, and each eligible                                
14       employee of another participating governmental unit shall be covered by the group                                 
15       policy, unless exempt under regulations adopted by the commissioner of                                            
16       administration.                                                                                                   
17                 (3)  A governmental unit may participate under a group policy if                                        
18                      (A)  its governing body adopts a resolution authorizing                                            
19            participation, and payment of required premiums;                                                             
20                      (B)  a certified copy of the resolution is filed with the                                          
21            Department of Administration; and                                                                            
22                      (C)  the commissioner of administration approves the                                               
23            participation in writing.                                                                                    
24                 (4)  In procuring a policy of group health or group life insurance as                                   
25       provided under this section or excess loss insurance as provided in AS 39.30.091, the                             
26       Department of Administration shall comply with the dual choice requirements of                                    
27       AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to                                 
28       transact business in the state under AS 21.09, a hospital or medical service corporation                          
29       authorized to transact business in this state under AS 21.87, or a health maintenance                             
30       organization authorized to operate in this state under AS 21.86.  An excess loss                                  
31       insurance policy may be obtained from a life or health insurer authorized to transact                             
01       business in this state under AS 21.09 or from a hospital or medical service corporation                           
02       authorized to transact business in this state under AS 21.87.                                                     
03                 (5)  The Department of Administration shall make available bid                                          
04       specifications for desired insurance benefits or for administration of benefit claims and                         
05       payments to (A) all insurance carriers authorized to transact business in this state                              
06       under AS 21.09 and all hospital or medical service corporations authorized to transact                            
07       business under AS 21.87 who are qualified to provide the desired benefits; and (B) to                             
08       insurance carriers authorized to transact business in this state under AS 21.09, hospital                         
09       or medical service corporations authorized to transact business under AS 21.87, and                               
10       third-party administrators licensed to transact business in this state and qualified to                           
11       provide administrative services.  The specifications shall be made available at least                             
12       once every five years.  The lowest responsible bid submitted by an insurance carrier,                             
13       hospital or medical service corporation, or third-party administrator with adequate                               
14       servicing facilities shall govern selection of a carrier, hospital or medical service                             
15       corporation, or third-party administrator under this section or the selection of an                               
16       insurance carrier or a hospital or medical service corporation to provide excess loss                             
17       insurance as provided in AS 39.30.091.                                                                            
18                 (6)  If the aggregate of dividends payable under the group insurance                                    
19       policy exceeds the governmental unit's share of the premium, the excess shall be                                  
20       applied by the governmental unit for the sole benefit of the employees.                                           
21                 (7)  A person receiving benefits under AS 14.25.110, AS 22.25,                                          
22       AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in                                 
23       effect under this section at the time of termination of employment with the state or                              
24       participating governmental unit.                                                                                  
25                 (8)  A person electing to have insurance under (7) of this subsection                                   
26       shall pay the cost of this insurance.                                                                             
27                 (9)  For each permanent part-time employee electing coverage under                                      
28       this section, the state shall contribute one-half the state contribution rate for permanent                       
29       full-time state employees, and the permanent part-time employee shall contribute the                              
30       other one-half.                                                                                                   
31                 (10)  A person receiving benefits under AS 14.25, AS 22.25, AS 39.35,                                   
01       or former AS 39.37 may obtain auditory, visual, and dental insurance for that person                              
02       and eligible dependents under this section.  The level of coverage for persons over 65                            
03       shall be the same as that available before reaching age 65 except that the benefits                               
04       payable shall be supplemental to any benefits provided under the federal old age,                                 
05       survivors, and disability insurance program.  A person electing to have insurance                                 
06       under this paragraph shall pay the cost of the insurance.  The commissioner of                                    
07       administration shall adopt regulations implementing this paragraph.                                               
08                 (11)  A person receiving benefits under AS 14.25, AS 22.25, AS 39.35,                                   
09       or former AS  39.37 may obtain long-term care insurance for that person and eligible                              
10       dependents under this section.  A person who elects insurance under this paragraph                                
11       shall pay the cost of the insurance premium.  The commissioner of administration                                  
12       shall adopt regulations to implement this paragraph.                                                              
13                 (12)  Each licensee holding a current operating agreement for a vending                                 
14       facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that                                 
15       applies to governmental units other than the state.                                                               
16    * Sec. 52.  AS 39.30.095(d) is amended to read:                                                                    
17            (d)  If the commissioner of administration determines that there is more money                               
18       in the fund than the amount needed to pay premiums, benefits, and administrative                                  
19       costs for the current fiscal year, the surplus, or so much of it as the commissioner of                           
20       administration considers advisable, may be invested by the commissioner of revenue                                
21       in the same manner as retirement funds are invested under AS 37.10.210                                        
22       [AS 14.25.180].                                                                                                   
23    * Sec. 53.  AS 39.30.150(b) is amended to read:                                                                    
24            (b)  Employees of the division of marine transportation included in                                          
25       AS 39.35.095 - 39.35.680 [THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM]                                            
26       through the process of collective bargaining under AS 39.35.680(21)(D) may, under                                 
27       the terms of a collective bargaining agreement, utilize contributions made under (a) of                           
28       this section on their behalf to offset the costs of inclusion in the public employees'                            
29       retirement system; however,                                                                                       
30                 (1)  the state is placed under no obligation to continue making                                         
31       contributions under this section if the state resumes participation in the federal social                         
01       security system;                                                                                                  
02                 (2)  the bargaining agreement must provide a mechanism for satisfying                                   
03       any residual liabilities that might exist if the state resumes participation in the federal                       
04       social security system; and                                                                                       
05                 (3)  funds contributed under (a) of this section on behalf of employees                                 
06       who are not covered by maritime union contracts may not be obligated or expended to                               
07       pay any costs associated with the inclusion of marine transportation employees in                                 
08       AS 39.35.095 - 39.35.680 [THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM].                                           
09    * Sec. 54.  AS 39.30 is amended by adding a new section to read:                                                   
10            Sec. 39.30.151.  Administrator.  The commissioner of administration or the                                 
11       commissioner's designee is the administrator of the system.                                                       
12    * Sec. 55.  AS 39.30 is amended by adding a new section to read:                                                   
13            Sec. 39.30.154.  Powers and duties of the administrator.  The administrator                                
14       has the same powers and duties with regard to the plan as those set out in                                        
15       AS 14.25.004.                                                                                                   
16    * Sec. 56.  AS 39.30.155 is repealed and reenacted to read:                                                        
17            Sec. 39.30.155.  Management and investment of fund.  The Alaska                                            
18       Retirement Management Board is the fiduciary of the fund and has the same powers                                  
19       and duties under this section in regard to the fund as are provided under AS 37.10.210.                           
20    * Sec. 57.  AS 39.30.160(a) is amended to read:                                                                    
21            (a)  The Department of Administration shall, in accordance with policies                                     
22       prescribed by regulations of the Alaska Retirement Management [PUBLIC                                         
23       EMPLOYEES RETIREMENT] Board, provide to employees for whom special                                                
24       individual employee benefit accounts are established under AS 39.30.150 the                                       
25       following benefit options:                                                                                        
26                 (1)  supplemental health benefits; [,]                                                              
27                 (2)  supplemental death benefits; [,]                                                               
28                 (3)  supplemental disability benefits; [,] and                                                      
29                 (4)  supplemental dependent care benefits.                                                              
30    * Sec. 58.  AS 39.30.160(e) is amended to read:                                                                    
31            (e)  Regulations adopted by the board [PUBLIC EMPLOYEES                                                  
01       RETIREMENT BOARD] implementing AS 39.30.150 and this section are not subject                                      
02       to AS 44.62 (Administrative Procedure Act).                                                                       
03    * Sec. 59.  AS 39.30.175(a) is amended to read:                                                                    
04            (a)  The board [ALASKA STATE PENSION INVESTMENT BOARD] is the                                            
05       fiduciary of the mandatory receipts, under AS 39.30.150(a), of the employee benefits                              
06       program established under AS 39.30.150 - 39.30.180 and has the same powers and                                    
07       duties concerning the management and investment in regard to those receipts as are                                
08       provided under AS 37.10.210 [AS 14.25.180].                                                                   
09    * Sec. 60.  AS 39.30.180 is amended by adding a new paragraph to read:                                             
10                 (3)  "board" means the board of trustees of the Alaska Retirement                                       
11       Management Board established under AS 37.10.210.                                                                  
12    * Sec. 61.  AS 39.30 is amended by adding new sections to read:                                                    
13       Article 5.  State of Alaska Teachers' and Public Employees' Retiree Health                                      
14                     Reimbursement Arrangement Plan.                                                                   
15            Sec. 39.30.300.  State of Alaska Teachers' and Public Employees' Retiree                                   
16       Health Reimbursement Arrangement Plan established.  The State of Alaska                                         
17       Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is                                
18       established for teachers who first become members of the defined contribution plan of                             
19       the teachers' retirement system under AS 14.25.310 - 14.25.590 on or after July 1,                                
20       2005, and employees of the state, political subdivisions of the state, and public                                 
21       organizations of the state who first become members of the defined contribution plan                              
22       of the public employees' retirement system under AS 39.35.700 - 39.35.990 on or after                             
23       July 1, 2005.                                                                                                     
24            Sec. 39.30.310.  Purpose and effective date.  (a)  The purpose of the plan is to                           
25       allow medical care expenses to be reimbursed from individual savings accounts                                   
26       established for qualified members.                                                                                
27            (b)  The plan becomes effective July 1, 2005, at which time contributions by                                 
28       employers begin.                                                                                                  
29            Sec. 39.30.320.  Attorney general.  The attorney general of the state is the                               
30       legal counsel for the plan and shall advise the administrator and represent the plan in a                         
31       legal proceeding.                                                                                                 
01            Sec. 39.30.330.  Administrator.  The commissioner of administration or the                                 
02       commissioner's designee is the administrator of the plan.                                                         
03            Sec. 39.30.340.  Powers and duties of the administrator.  The administrator                                
04       shall establish a teachers' and public employees' retiree health reimbursement                                    
05       arrangement plan trust fund in which the assets of the plan shall be deposited and held.                          
06       The administrator has the same powers and duties with regard to the plan and the trust                            
07       fund as provided in AS 14.25.004.                                                                               
08            Sec. 39.30.350.  Employer contribution fund.  The fund established under                                   
09       AS 39.30.340 is an employer contribution fund.  The value of the fund reflects                                    
10       employer contributions, expenses, and investment gains and losses.  Employee                                      
11       contributions to the fund are not permitted.                                                                    
12            Sec. 39.30.360.  Management and investment of the fund.  The Alaska                                        
13       Retirement Management Board is the fiduciary of the fund and has the same powers                                  
14       and duties under this section in regard to the fund as are provided under AS 37.10.220.                           
15            Sec. 39.30.370.  Contributions by employers.  For each member of the plan,                                 
16       an employer shall contribute to the teachers' and public employees' retiree health                                
17       reimbursement arrangement plan trust fund an amount equal to one percent of the                                   
18       employer's average annual employee compensation, not to exceed $500 a member a                                    
19       year.  The administrator shall maintain a record for each member to account for                                   
20       employer contributions on behalf of that member.  The board shall establish by                                    
21       regulation the rate of interest to be applied annually to the amount in a member's                                
22       record.                                                                                                           
23            Sec. 39.30.380.  Termination of employment.  A person who terminates                                       
24       employment before application and eligibility for normal retirement loses any right to                            
25       the contributions made on behalf of the person to the teachers' and public employees'                             
26       retiree health reimbursement arrangement trust fund.  If a person returns to                                      
27       employment with the same employer within five years after the date of termination                                 
28       and if the employer is still a participating employer, the person's account balance shall                         
29       be restored in the amount recorded on the date of termination from the trust, without                             
30       interest or other adjustment.                                                                                     
31            Sec. 39.30.390.  Eligibility and enrollment.  A member is eligible for                                     
01       reimbursement from the individual account established for that member under the plan                              
02       when that member becomes eligible for medical benefits under AS 14.25.480  or                                     
03       AS 39.35.880.  The administrator shall enroll an eligible member in the plan upon                                 
04       receipt of the eligible member's request for enrollment in retirement and medical                                 
05       benefits.                                                                                                         
06            Sec. 39.30.400.  Benefits payable from the individual account.  (a)  The                                   
07       administrator may pay the cost of monthly premiums for retiree major medical                                      
08       insurance on behalf of a participant if the participant elected retiree major medical                             
09       insurance under AS 14.25.480 or AS 39.35.880.                                                                     
10            (b)  Upon application of a participant, the administrator shall reimburse to a                               
11       participant the costs for medical care expenses as defined in 26 U.S.C. 213(d) .                                  
12            (c)  When the member's individual account balance is exhausted, the insurance                                
13       premium payments under (a) of this section and the reimbursement of medical care                                  
14       expenses under (b) of this section end.                                                                           
15            (d)  If a participant dies before exhausting the participant's individual account,                           
16       the surviving spouse and the surviving spouse's dependent children are eligible to be                             
17       reimbursed for medical care expenses as defined in 26 U.S.C. 213(d) until the                                     
18       individual account is exhausted.  If any amount remains in an individual account after                            
19       the death of a participant, the account balance shall revert to the trust.                                        
20            Sec. 39.30.410.  Exemption from taxation and process.  (a)  Contributions                                  
21       and other amounts held in the plan on behalf of a member or other person who is or                                
22       may become eligible for benefits under the plan may be used only to reimburse                                     
23       eligible medical expenses, are exempt from Alaska state and municipal taxes and                                   
24       federal taxes to the extent allowed under the Internal Revenue Code, and are not                                  
25       subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or                          
26       charge of any kind, either voluntary or involuntary, before they are received by the                              
27       person entitled to the amount under the terms of the plan.  Any attempt to anticipate,                            
28       alienate, sell, transfer, assign, pledge, encumber, charge, or otherwise dispose of any                           
29       right to amounts accrued in the plan is void.  However, a member's right to receive                               
30       benefits may be assigned                                                                                          
31                 (1)  under a qualified domestic relations order; or                                                     
01                 (2)  to a trust or similar legal device that meets the requirements for a                               
02       Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4).                                        
03            (b)  Notwithstanding AS 09.38.065, contributions and other amounts held in                                   
04       the plan and benefits payable under this plan are exempt from garnishment, execution,                             
05       or levy.                                                                                                          
06            Sec. 39.30.420.  Amendment and termination of plan.  (a)  The state has the                              
07       right to amend the plan at any time and from time to time, in whole or in part,                                   
08       including the right to make retroactive amendments referred to in 26 U.S.C. 401(b).                               
09            (b)  The plan administrator may not modify or amend the plan retroactively in                                
10       such a manner as to reduce the benefits of any member accrued to date under the plan                              
11       by reason of contributions made before the modification or amendment except to the                                
12       extent that the reduction is permitted by the Internal Revenue Code.                                              
13            (c)  The state may, in its discretion, terminate the plan in whole or part at any                            
14       time without liability for the termination.  If the plan is terminated, all investments                           
15       remain in force until all individual accounts have been completely distributed under                              
16       the plan, and, after all plan liabilities are satisfied, excess assets revert to the employer.                    
17            (d)  Any contribution made by an employer to the plan because of a mistake of                                
18       fact must be returned to the employer by the administrator within one year after the                              
19       contribution or discovery, whichever is later.                                                                    
20            Sec. 39.30.430.  Exclusive benefit.  (a)  The corpus or income of the assets                               
21       held in trust as required by the plan may not be diverted or used for other than the                              
22       exclusive benefit of the participants.                                                                            
23            (b)  The assets of the plan may not be used to pay premiums or contributions of                              
24       the employer under another plan maintained by the employer.                                                       
25            Sec. 39.30.495.  Definitions.  Unless the context requires otherwise, in                                   
26       AS 39.30.300 - 39.30.495                                                                                          
27                 (1)  "administrator" means the commissioner of administration or the                                  
28       commissioner's designee;                                                                                          
29                 (2)  "board" means the Alaska Retirement Management Board                                               
30       established under AS 37.10.210;                                                                                   
31                 (3)  "compensation" has the meaning given in AS 14.25.590;                                            
01                 (4)  "employer" has the meaning given in AS 14.25.590 for employers                                     
02       of teachers in the defined contribution plan established in AS 14.25.310 - 14.25.590                              
03       and has the meaning given in AS 39.35.990 for employers of public employees in the                                
04       defined contribution plan established in AS 39.35.700 - 39.35.990;                                                
05                 (5)  "fund" means the assets of the teachers' and public employees'                                     
06       retiree health reimbursement arrangement plan trust fund;                                                         
07                 (6)  "individual account" means the record established by the                                           
08       administrator for individual employees under the teachers' and public employees'                                  
09       retiree health reimbursement arrangement plan;                                                                    
10                 (7)  "member" means a member of the defined contribution plan of the                                  
11       teachers' retirement system in AS 14.25.310 - 14.25.590 or a member of the public                                 
12       employees' retirement system in AS 39.35.700 - 39.35.990;                                                         
13                 (8)  "qualified domestic relations order" has the meaning given in                                      
14       AS 14.25.220;                                                                                                     
15                 (9)  "qualified member" means a member entitled to medical benefits.                                    
16    * Sec. 62.  AS 39.35 is amended by adding new sections to read:                                                    
17     Article 1.  Administration of the Public Employees' Retirement System of Alaska.                                
18            Sec. 39.35.001.  Purpose.  The purpose of this chapter is to encourage                                     
19       qualified personnel to enter and remain in service with participating employers by                                
20       establishing plans for the payment of retirement, disability, and death benefits to or on                         
21       behalf of the members.                                                                                            
22            Sec. 39.35.002.  Attorney general.  The attorney general of the state is the                               
23       legal counsel for the system and shall advise the administrator and represent the                                 
24       system in a legal proceeding.                                                                                     
25            Sec. 39.35.003.  Administrator.  (a)  The commissioner of administration or                                
26       the commissioner's designee is the administrator of the system.                                                   
27            (b)  The commissioner of administration shall adopt regulations to govern the                                
28       operation of the system.                                                                                          
29            Sec. 39.35.004.  Powers and duties of the administrator.  (a)  The                                         
30       administrator shall                                                                                               
31                 (1)  establish and maintain an adequate system of accounts;                                             
01                 (2)  transmit the funds deposited in the system to the retirement fund                                  
02       established and maintained by the Alaska Retirement Management Board;                                             
03                 (3)  approve or disapprove claims for retirement benefits;                                              
04                 (4)  make payments for the various purposes specified;                                                  
05                 (5)  submit periodic reports or statements of account that are needed;                                  
06                 (6)  issue a statement of account to an employee not less than once each                                
07       year showing the amount of the employee's contributions to the applicable plan in the                             
08       system;                                                                                                           
09                 (7)  formulate and recommend to the commissioner of administration                                      
10       regulations to govern the operation of the system;                                                                
11                 (8)  as soon as possible after the close of each fiscal year, and not later                             
12       than six months after the close of each fiscal year, send to the governor and the                                 
13       legislature an annual statement on the operations of each of the plans in the system                              
14       containing                                                                                                        
15                      (A)  a balance sheet;                                                                              
16                      (B)  a statement of income and expenditures for the year;                                          
17                      (C)  a report on valuation of trust fund assets;                                                   
18                      (D)  a summary of assets held in the trust fund listed by the                                      
19            categories of investment, as provided by the Alaska Retirement Management                                    
20            Board;                                                                                                       
21                      (E)  other statistical financial data that are necessary for proper                                
22            understanding of the financial condition of the system as a whole and each plan                              
23            in the system and the result of its operations;                                                              
24                 (9)  engage an independent certified public accountant to conduct an                                    
25       annual audit of each plan's accounts and the annual report of the system's financial                              
26       condition and activity;                                                                                           
27                 (10)  report to the Legislative Budget and Audit Committee concerning                                   
28       the condition and administration of each plan and distribute the report to the members                            
29       of each plan in the system;                                                                                       
30                 (11)  publish an information handbook for each plan in the system at                                    
31       intervals that the administrator considers appropriate; and                                                       
01                 (12)  meet at least annually with the board to review the condition and                                 
02       management of the retirement systems and to review significant changes to policies,                               
03       regulations or benefits;                                                                                          
04                 (13)  do whatever else may be necessary to carry out the purposes of                                    
05       each plan in the system.                                                                                          
06            (b)  The administrator is authorized to charge uniform fees to members'                                      
07       accounts to cover the ongoing cost of operating each plan in the system.                                          
08            (c)  The administrator is authorized to contract with public and private entities                            
09       to provide record keeping, benefits payments, and other functions necessary for the                               
10       administration of each plan in the system.                                                                        
11            Sec. 39.35.005.  Regulations.  (a)  Regulations adopted by the commissioner                                
12       of administration under this chapter relate to the internal management of state                                   
13       agencies, and the adoption of these regulations is not subject to AS 44.62                                        
14       (Administrative Procedure Act).                                                                                   
15            (b)  Notwithstanding (a) of this section, a regulation adopted under this chapter                            
16       shall be published in the Alaska Administrative Register and Code for informational                               
17       purposes.                                                                                                         
18            (c)  Each regulation adopted under this chapter must conform to the style and                                
19       format requirements of the drafting manual for administrative regulations that is                                 
20       published under AS 44.62.050.                                                                                     
21            (d)  At least 30 days before the adoption, amendment, or repeal of a regulation                              
22       under this chapter, the board shall provide notice of the action that is being considered.                        
23       The notice shall be                                                                                               
24                 (1)  posted in public buildings throughout the state;                                                   
25                 (2)  published in one or more newspapers of general circulation in each                                 
26       judicial district of the state;                                                                                   
27                 (3)  mailed to each person or group that has filed a request for notice of                              
28       proposed action with the board; and                                                                               
29                 (4)  furnished to each member of the legislature and to the Legislative                                 
30       Affairs Agency.                                                                                                   
31            (e)  Failure to mail notice to a person as required under (d)(3) of this section                             
01       does not invalidate an action taken by the board.                                                                 
02            (f)  The board may hold a public hearing on a proposed regulation.                                           
03            (g)  A regulation adopted under this chapter takes effect 30 days after adoption                             
04       by the board.                                                                                                     
05            (h)  Notwithstanding the other provisions of this section, a regulation may be                               
06       adopted, amended, or repealed, effective immediately, as an emergency regulation by                               
07       the unanimous vote of a quorum of the board.  For an emergency regulation to be                                   
08       effective the board must find that the adoption, amendment, or repeal of the regulation                           
09       is necessary for the immediate preservation of the orderly operation of the system or                             
10       the business of the board.  The board shall, within 10 days after adoption of an                                  
11       emergency regulation, give notice of the adoption under (d) of this section.  An                                  
12       emergency regulation adopted under this subsection may not remain in effect past the                              
13       date of the next regular board meeting unless the board complies with the procedures                              
14       set out in this section and adopts the regulation as a permanent regulation.                                      
15            (i)  In this section, "regulation" has the meaning given in AS 44.62.640(a).                                 
16            Sec. 39.35.006.  Appeals.  An employer, member, annuitant, or beneficiary                                  
17       may appeal a decision made by the administrator to the office of administrative                                   
18       hearings established under AS 44.64.  An aggrieved party may appeal a final decision                              
19       to the superior court.                                                                                            
20            Sec. 39.35.007.  Investment management of retirement system funds.  The                                    
21       Alaska Retirement Management  Board established under 37.10.210 is the fiduciary of                               
22       the system funds.                                                                                                 
23            Sec. 39.35.008.  Definitions.  In  AS 39.35.001 - 39.35.008,                                               
24                 (1)  "plan" means the retirement plan established in AS 39.35.095 -                                     
25       39.35.680 or the retirement plan established in AS 39.35.700 - 39.35.990;                                         
26                 (2)  "system" means all retirement plans established under the public                                   
27       employees' retirement system.                                                                                     
28    * Sec. 63.  AS 39.35 is amended by adding a new section to read:                                                   
29            Article 2.  Public Employees First Hired before July 1, 2005.                                              
30            Sec. 39.35.095.  Applicability of AS 39.35.095 - 39.35.680 to employees first                              
31       hired before July 1, 2005.  The following provisions of this chapter apply only to                              
01       members first hired before July 1, 2005:  AS 39.35.095 - 39.35.680.                                             
02    * Sec. 64.  AS 39.35.100 is amended to read:                                                                       
03            Sec. 39.35.100.  Accounting.  (a)  The commissioner of administration shall                                
04       establish and maintain an adequate system of accounts and records for the plan                                
05       [SYSTEM].  The accounts and records shall be integrated with the accounts, records,                               
06       and procedures of the employers to the end that they operate most effectively and at                              
07       minimum expense, and that duplication of records and accounts is avoided.                                         
08            (b)  All income of the pension fund and all disbursements made by the fund                                   
09       shall be credited or charged, whichever is appropriate, to the following accounts:                                
10                 (1)  An individual account shall be maintained for each employee to                                     
11       record the amount of the employee's mandatory contributions collected under                                       
12       AS 39.35.160(a).  As of the last day of each calendar year and each fiscal year                                   
13       beginning with June 30, 1969, this account shall be credited with interest, by applying                           
14       [ONE HALF OF] the prescribed rate of interest as determined by the board to the                               
15       balance in the account as of that date.  Within one year following retirement, the                                
16       amount actuarially determined as necessary to fully fund the benefits to be received                              
17       shall be transferred first from the employee contribution account and, after the                                  
18       employee contribution account has been exhausted, then from the employer                                          
19       contribution account into the retirement reserve account.                                                         
20                 (2)  An individual account shall be maintained for each employee to                                     
21       record the amount of the employee's voluntary contributions.  As of the last day of                               
22       each calendar year and each fiscal year beginning with June 30, 1969, this account                                
23       shall be credited with interest, by applying [ONE HALF OF] the prescribed rate of                                 
24       interest as determined by the board to the balance in the account as of that date.                            
25       Amounts that, before termination of employment, are withdrawn by an employee from                                 
26       the employee's savings account shall be charged to that account.  Upon retirement, the                            
27       amount actuarially determined as necessary to fully fund the benefits to be received                              
28       shall be transferred first from the employee savings account and, after the employee                              
29       savings account has been exhausted, then from the employer contribution account into                              
30       the retirement reserve account.                                                                                   
31                 (3)  A separate account for each employer shall be maintained.  The                                     
01       account shall be credited with contributions of the employer.  This account shall be                              
02       charged with the employer's actuarial charge for pension, death benefits, and other                               
03       benefits paid under this plan [SYSTEM] to or on behalf of the employee of the                                 
04       employer.  After an allowance for interest credited to employee contribution accounts                             
05       and employee savings accounts, the investment income of the pension fund shall be                                 
06       allocated to the retirement reserve account and to each employer asset share account                              
07       according to the ratio that the average of the assets in the account as of the beginning                          
08       and as of the end of the fiscal year bears to the total of the average balance of the                             
09       retirement reserve account and all employer accounts.                                                             
10                 (4)  An expense account shall be maintained for the plan [SYSTEM].                                  
11       This account shall be charged with all disbursements representing administrative                                  
12       expenses incurred by the plan [SYSTEM].  At the end of the year the expense account                           
13       shall be allocated to each employer in accordance with (3) of this subsection.                                    
14       Expenditures from this account shall be included in the governor's budget for each                                
15       fiscal year and are subject to approval by the legislature.                                                       
16    * Sec. 65.  AS 39.35 is amended by adding a new section to article 1 to read:                                      
17            Sec. 39.35.115.  Defined benefits retirement plan.  (a)  A defined benefits                                
18       retirement plan for employees of the state, political subdivisions, and public                                    
19       organizations is created.  The plan becomes effective January 1, 1961, at which time                              
20       contributions by the employers and employees begin.                                                               
21            (b)  The retirement plan established by AS 39.35.115 - 39.35.680 is intended to                              
22       qualify under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified                                  
23       retirement plan established and maintained by the state for its employees and for the                             
24       employees of political subdivisions, public corporations, and public organizations of                             
25       the state, and for the employees of other employers whose participation is authorized                             
26       by AS 39.35.115 - 39.35.680 and who participate in this plan.                                                     
27            (c)  An amendment to AS 39.35.115 - 39.35.680 does not provide a person                                      
28       with a vested right to a benefit if the Internal Revenue Service determines that the                              
29       amendment will result in disqualification of the plan under the Internal Revenue Code.                            
30    * Sec. 66.  AS 39.35.131 is amended to read:                                                                       
31            Sec. 39.35.131.  Membership in teachers' and public employees'                                             
01       retirement systems.  (a)  A person who is employed at least half-time in the plan                           
02       [SYSTEM] during the same period that the person is employed at least half-time in a                               
03       position in the teachers' retirement system under AS 14.25 shall receive credited                                 
04       service under each retirement program [SYSTEM] for half-time employment.                                      
05       However, the amount of credited service a person receives under the plan [SYSTEM]                             
06       during a school year may not exceed the amount necessary, when added to the amount                                
07       of credited service earned during the school year under the teachers' retirement                                  
08       system, to equal one year of credited service.                                                                    
09            (b)  A person who was employed at least half-time in a position in the teachers'                             
10       retirement system under AS 14.25 in the same period that the person was employed at                               
11       least half-time in a position in this plan [SYSTEM] may claim credited service in both                        
12       retirement programs [SYSTEMS] for employment before May 31, 1989.  To obtain                                  
13       this credited service, the person shall claim the service and verify the period of half-                          
14       time employment.  When eligibility for half-time service credit has been established,                             
15       an indebtedness shall be determined to the retirement program [SYSTEM] in which                               
16       the person did not participate.  The amount of the indebtedness is the full actuarial cost                        
17       of providing benefits for the credited service claimed.  Interest as prescribed by                                
18       regulation accrues on that indebtedness beginning on the later of July 1, 1989, or the                            
19       date on which the member is first eligible to claim the service.  Any outstanding                                 
20       indebtedness existing at the time the person retires will require an actuarial adjustment                         
21       to the benefits payable based on that service.                                                                    
22    * Sec. 67.  AS 39.35.158 is amended to read:                                                                       
23            Sec. 39.35.158.  Administrative director of courts.  An administrative                                     
24       director of the Alaska court system who withdraws from the judicial retirement system                             
25       under AS 22.25.012 is eligible for membership in the plan [SYSTEM] and shall                                  
26       receive credited service in the plan [SYSTEM] for service rendered as administrative                          
27       director.  To be eligible for membership in the plan [SYSTEM] under this subsection,                          
28       the administrative director must contribute to the plan [SYSTEM]                                              
29                 (1)  the amount the director would have contributed if the director had                                 
30       been a member during the director's period of membership in the judicial retirement                               
31       system; and                                                                                                       
01                 (2)  any contributions for services as administrative director refunded                                 
02       by the plan [SYSTEM] at the time the director became a member of the judicial                                 
03       retirement system.                                                                                                
04    * Sec. 68.  AS 39.35.160(a) is amended to read:                                                                    
05            (a)  Beginning July 1, 2005 [JANUARY 1, 1987], each peace officer or fire                                
06       fighter shall contribute to the plan a percentage [SYSTEM AN AMOUNT EQUAL                                     
07       TO SEVEN AND ONE-HALF PERCENT] of the peace officer's or fire fighter's                                           
08       compensation as determined under AS 39.35.162.  Except as provided in (d) of this                             
09       section, beginning July 1, 2005 [JANUARY 1, 1987], each other employee shall                                  
10       contribute to the system a percentage [AN AMOUNT EQUAL TO SIX AND                                             
11       THREE-QUARTERS PERCENT] of the employee's compensation as determined                                          
12       under AS 39.35.162.  The contributions shall be deducted by the employer at the end                           
13       of each payroll period. The contributions shall be deducted from employee                                         
14       compensation before computation of applicable federal taxes, and the contributions                                
15       shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A member may                                
16       not have the option of making the payroll deduction directly instead of having the                                
17       contribution picked up by the employer.                                                                           
18    * Sec. 69.  AS 39.35 is amended by adding new sections to read:                                                    
19            Sec. 39.35.162.  Calculation of member contribution rate.  (a)  Each peace                                 
20       officer or fire fighter shall contribute a percentage of the peace officer's or fire fighter's                    
21       compensation to be determined annually in advance by the administrator.  Each other                               
22       employee shall contribute a percentage of the employee's compensation to be                                       
23       determined annually in advance by the administrator.  The employee contribution rate                              
24       is the greater of                                                                                                 
25                 (1)  7.5 percent for a peace officer or fire fighter;                                                   
26                 (2)  6.75 percent for each other employee; or                                                           
27                 (3)  one-half of the normal cost rate actuarially calculated to fund the                                
28       benefits expected to be earned by active members during the fiscal year.                                          
29            (b)  The normal cost rate for peace officers or fire fighters and the employee                               
30       contribution rate for other employees shall be separately calculated based on the                                 
31       actuarially calculated costs for each group of employees.  The maximum increase in                                
01       the contribution rate for a peace officer or fire fighter or other employee from one year                         
02       to the next may not be more than five percentage points, as actuarially calculated.                               
03    * Sec. 70.  AS 39.35.165(a) is amended to read:                                                                    
04            (a)  An employee who is eligible to purchase credited service under                                          
05       AS 39.35.310, 39.35.330, 39.35.340, 39.35.342, 39.35.345, [39.35.350,] 39.35.360, or                              
06       39.35.370, a member who is eligible to purchase credited service under AS 39.35.375,                              
07       or an elected public official who is eligible to purchase credited service under                                  
08       AS 39.35.381 is an employee for purposes of this section.  An employee may, in lieu                               
09       of making payments directly to the plan, elect to have the employee's employer make                               
10       payments as provided in this section.                                                                             
11    * Sec. 71.  AS 39.35.165(b) is amended to read:                                                                    
12            (b)  An employee may elect to have the employer make payments for all or any                                 
13       portion of the amounts payable for the employee's purchase of credited service                                    
14       through a salary reduction program as follows:                                                                    
15                 (1)  the amounts paid under a salary reduction program are in lieu of                                   
16       contributions by the employee making the election; the electing employee's salary or                              
17       other compensation shall be reduced by the amount paid by the employer under this                                 
18       subsection;                                                                                                       
19                 (2)  the employee shall make an irrevocable election under this section                                 
20       to purchase credited service as permitted in AS 39.35.310, 39.35.330, 39.35.340,                                  
21       39.35.342, 39.35.345, [39.35.350,] 39.35.360, 39.35.370, 39.35.375, or 39.35.381 and                              
22       before the employee's termination of employment; the irrevocable election must                                    
23       specify the number of payroll periods that deductions will be made from the                                       
24       employee's compensation and the dollar amount of deductions for each payroll period                               
25       during the specified number of payroll periods; the deductions made under this                                    
26       paragraph cease upon the earlier of the member's termination of employment with the                               
27       employer or the member's death; amounts paid by an employer under (f) of this                                     
28       section may not be applied toward the payment of the dollar amount of the deductions                              
29       representing the portion of the credited service that is being purchased by the member                            
30       through payroll deduction in accordance with the member's irrevocable election under                              
31       this subsection;                                                                                                  
01                 (3)  amounts paid by an employer under this subsection shall be treated                                 
02       as employer contributions for the purpose of determining tax treatment under the                                  
03       Internal Revenue Code; the amounts paid by the employer under this section may not                                
04       be included in the member's gross income for income tax purposes until those amounts                              
05       are distributed by refund or retirement benefit payments.                                                         
06    * Sec. 72.  AS 39.35.165(f) is amended to read:                                                                    
07            (f)  The commissioner may accept rollover contributions from a member [AND                                   
08       DIRECT TRANSFERS, AS DESCRIBED IN THIS SUBSECTION, FOR THE                                                        
09       PURCHASE, IN WHOLE OR IN PART, OF CREDITED SERVICE FOR THE                                                        
10       REINSTATEMENT, IN WHOLE OR IN PART, OF FORFEITED CREDITED                                                         
11       SERVICE UNDER AS 39.35.350].  A rollover contribution [OR TRANSFER] as                                            
12       described in this subsection shall also be treated as employer contributions for the                              
13       purpose of determining tax treatment under the Internal Revenue Code and may be                                   
14       made by any one or a combination of the following methods:                                                        
15                 (1)  subject to the limitations prescribed in 26 U.S.C. 401(a)(3) and 26                                
16       U.S.C. 402(c), accepting eligible rollover distributions directly from one or more                                
17       retirement programs of another employer that are qualified under 26 U.S.C. 401(a) or                              
18       accepting rollovers directly from a member;                                                                       
19                 (2)  subject to the limitations prescribed in 26 U.S.C. 408(d)(3)(A)(ii),                               
20       accepting from a member conduit rollover contributions that are received by the                                   
21       employee from one or more conduit rollover individual retirement accounts previously                              
22       established by the member;                                                                                        
23                 (3)  subject to the limitations prescribed in 26 U.S.C. 403(b)(13),                                     
24       accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the                          
25       member, on or after January 1, 2002, from a tax sheltered annuity described in 26                                 
26       U.S.C. 403(b);                                                                                                    
27                 (4)  subject to the limitations prescribed in 26 U.S.C. 457(e)(17),                                     
28       accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the                          
29       member, on or after January 1, 2002, from an eligible deferred compensation plan of a                             
30       tax-exempt organization or a state or local government described in 26 U.S.C. 457(b);                             
31                 (5)  accepting direct trustee-to-trustee transfer from an account                                       
01       established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska                                     
02       Supplemental Annuity Plan).                                                                                       
03    * Sec. 73.  AS 39.35.165(g) is amended to read:                                                                    
04            (g)  Payments made under this section shall be applied to reduce the                                         
05       employee's outstanding indebtedness described in AS 39.35.310, 39.35.330,                                         
06       39.35.340, 39.35.342, 39.35.345, [39.35.350,] 39.35.360, 39.35.370, 39.35.375, or                                 
07       39.35.381 at the time that the contributions are received by the plan.                                            
08    * Sec. 74.  AS 39.35.165(i) is amended to read:                                                                    
09            (i)  On satisfaction of the eligibility requirements of AS 39.35.310, 39.35.330,                             
10       39.35.340, 39.35.341, 39.35.345, [39.35.350,] 39.35.360, 39.35.370, 39.35.375, or                                 
11       39.35.381, the requirements of this section, and the administrative filing requirements                           
12       specified by the commissioner, the plan shall adjust the employee's credited service                              
13       history and add any additional service credits acquired.                                                          
14    * Sec. 75.  AS 39.35.200 is amended by adding a new subsection to read:                                            
15            (d)  An employee who receives a refund of contributions in accordance with                                   
16       this section forfeits corresponding credited service under AS 39.35.115 - 39.35.680.                              
17    * Sec. 76.  AS 39.35.270 is amended to read:                                                                       
18            Sec. 39.35.270.  Amount of employer's contributions.  The amount of each                                   
19       employer's contributions shall be determined by applying the employer's contribution                              
20       rate, as certified by the board, to the total compensation paid to the active employees                       
21       of the employer for each payroll period and by including any adjustments to                                       
22       contributions required by AS 39.35.520(a).  This amount shall be remitted by the                                  
23       employer to the administrator in accordance with AS 39.35.610.                                                    
24    * Sec. 77.  AS 39.35.270 is amended by adding a new subsection to read:                                            
25            (b)  When added to the member contribution rate calculated under                                             
26       AS 39.35.162, the employer contribution may not be less than the rate required, as                                
27       determined by the board, to fully fund the future liabilities of active members.                                  
28    * Sec. 78.  AS 39.35.340(f) is amended to read:                                                                    
29            (f)  An employee cannot be credited with a period of active military service in                              
30       the armed forces of the United States under this section if credit for that military                              
31       service was granted under AS 14.25.009 - 14.25.220 [AS 14.25].                                                
01    * Sec. 79.  AS 39.35.340(h) is amended to read:                                                                    
02            (h)  The combined period of military service claimed under this section and                                  
03       under AS 14.25.009 - 14.25.220 [AS 14.25] may not exceed five years.                                          
04    * Sec. 80.  AS 39.35.360(i) is amended to read:                                                                    
05            (i)  An employee who completes three years of credited service with an                                       
06       employer, for which the employee makes contributions required by AS 39.35.095 -                               
07       39.35.680 [THIS CHAPTER], is entitled to credited service on a year-for-year basis                            
08       for service credited in the Civil Service Retirement System, rendered as an employee                              
09       of an Alaska Bureau of Indian Affairs (BIA) school, other than service as a teacher.                              
10       When eligibility for retroactive credited service under this subsection has been                                  
11       established, an indebtedness of the employee to the plan [SYSTEM] shall be                                    
12       determined as follows: (1) the employee's actual annual compensation, or the                                      
13       calculated annual compensation for an employee who works fewer than 12 months, for                                
14       the most recent calendar year in which service is rendered to an employer before the                              
15       calendar year in which the employee first becomes eligible to claim service under this                            
16       subsection, multiplied by (2) the number of years of service in Alaska BIA schools                                
17       that is credited under this subsection, and this product multiplied by (3) six percent for                        
18       employees first eligible to claim this service before January 1, 1987, or eight and one-                          
19       half percent for employees first eligible to claim this service on or after January 1,                            
20       1987.  Interest as prescribed by regulation accrues on the indebtedness beginning on                              
21       the date the employee may first claim the retroactive credited service.  Any                                      
22       outstanding indebtedness that exists at the time the employee retires requires an                                 
23       actuarial adjustment to the benefits that are based on retroactive credited service under                         
24       this subsection.  A retirement benefit payable under this subsection for Alaska BIA                               
25       service shall be reduced by an amount equal to the retirement benefits paid to the                                
26       member by the United States government for the same service.                                                      
27    * Sec. 81.  AS 39.35.360(l) is amended to read:                                                                    
28            (l)  An administrative director of the Alaska Court System who withdraws                                     
29       from the judicial retirement system under AS 22.25.012(b) is eligible for membership                              
30       in the plan [PUBLIC EMPLOYEES' RETIREMENT SYSTEM] and shall receive                                           
31       credited service in this plan [SYSTEM] for service rendered as administrative                                 
01       director.  To be eligible for membership in this plan [SYSTEM] under this subsection,                         
02       the administrative director must contribute to the plan [SYSTEM]                                              
03                 (1)  the amount that would have been contributed if the administrative                                  
04       director had been a member during the period of the membership in the judicial                                    
05       retirement system; and                                                                                            
06                 (2)  any contributions for service as administrative director refunded                                  
07       from the plan [PUBLIC EMPLOYEES' RETIREMENT SYSTEM] at the time the                                           
08       administrative director became a member of the judicial retirement system.                                        
09    * Sec. 82.  AS 39.35.370(g) is amended to read:                                                                    
10            (g)  When an employee who was employed as a dispatcher in a state trooper                                    
11       office or in a police or fire department in the plan [PUBLIC EMPLOYEES'                                       
12       RETIREMENT SYSTEM] applies for appointment to retirement, the employee may                                        
13       convert the credited service for that position to credited service as a peace officer by                          
14       claiming the service as peace officer service.  An employee who has converted                                     
15       credited service to peace officer service under this subsection shall be treated as a                             
16       peace officer for purposes of AS 39.35.095 - 39.35.680 [THIS CHAPTER].  When the                              
17       member claims this credited service as peace officer service, an indebtedness of the                              
18       member to the plan [SYSTEM] shall be established.  The indebtedness is equal to the                           
19       full actuarial cost of the conversion of the credited service to treatment as peace                               
20       officer service.  Any outstanding indebtedness that exists at the time the member is                              
21       appointed to retirement will require an actuarial adjustment to the benefits payable                              
22       based upon the conversion of the credited service.                                                                
23    * Sec. 83.  AS 39.35.375(a) is amended to read:                                                                    
24            (a)  An active or inactive member who has never been vested in this plan                                 
25       [SYSTEM] or in the teachers' retirement system under AS 14.25, who has at least two                               
26       years of credited service in this plan [SYSTEM], and who has membership service in                            
27       the teachers' retirement system may claim credited service in this plan [SYSTEM] in                           
28       an amount equal to the membership service the member has in the teachers' retirement                              
29       system.  The claimed credited service may be added to service earned under                                        
30       AS 39.35.095 - 39.35.680 [THIS CHAPTER] to enable the member to qualify for a                                 
31       public service benefit under this section.  The member may not claim credited service                             
01       for membership service for which the member has received a refund under                                           
02       AS 14.25.150 unless the member fully pays the indebtedness as established under                                   
03       AS 14.25.063.  The member may not claim credited service in this plan [SYSTEM]                                
04       based on unused sick leave under AS 14.25.115.                                                                    
05    * Sec. 84.  AS 39.35.375(b) is amended to read:                                                                    
06            (b)  To claim credited service under this section, the member shall file a                                   
07       written request with the administrator when the member applies to retire.  The                                    
08       administrator shall determine the full actuarial cost of benefits based on the member's                           
09       total credited service and shall transfer from the teachers' retirement system to this                            
10       plan [SYSTEM] an amount equal to the sum of the member contributions and any                                  
11       indebtedness payments to the teachers' retirement system and the employer                                         
12       contributions to the teachers' retirement system made on behalf of the employee                                   
13       together with interest earned on those contributions and indebtedness payments.  If the                           
14       amount to be transferred, when combined with the amount of employee contributions                                 
15       and indebtedness payments to this plan [SYSTEM] and the amount of employer                                    
16       contributions on behalf of the employee in this plan [SYSTEM], and interest earned                            
17       on contributions and indebtedness payments for the employee, is less than the full                                
18       actuarial cost computed under this subsection, an indebtedness to the plan [SYSTEM]                           
19       equal to the amount of the difference is established.  Interest as prescribed by                                  
20       regulation accrues on the indebtedness.  The member must pay any outstanding                                      
21       indebtedness existing at the time the member applies for retirement in full before the                            
22       member is appointed to retirement under this section.                                                             
23    * Sec. 85.  AS 39.35.375(c) is amended to read:                                                                    
24            (c)  A member is entitled to receive a public service benefit under this section                             
25       if the member has at least a total of five years credited service under AS 39.35.095 -                        
26       39.35.680 [THIS CHAPTER] and credited service from the teachers' retirement                                   
27       system claimed under this section.  A public service benefit shall be calculated using                            
28       the higher of the average monthly compensation for service in this plan [SYSTEM] or                           
29       the average base salary for service in the teachers' retirement system.  The amount of                            
30       the benefit shall be calculated in accordance with AS 39.35.370(c).                                               
31    * Sec. 86.  AS 39.35.375(d) is amended to read:                                                                    
01            (d)  Credited service earned under either this plan [SYSTEM] or the teachers'                            
02       retirement system that has been claimed for a public service benefit under this section                           
03       may not be used for any other purpose.  A member who claims credited service under                                
04       this section loses all rights to benefits under AS 14.25 based on the claimed credited                            
05       service.  A member may not claim credited service under this section unless the                                   
06       member claims all of the membership service the member has in the teachers'                                       
07       retirement system.  A public service benefit does not constitute a normal or early                                
08       retirement benefit for purposes of qualifying for a conditional service retirement                                
09       benefit under AS 14.25.125 or AS 39.35.385.                                                                       
10    * Sec. 87.  AS 39.35.375(f) is amended to read:                                                                    
11            (f)  Notwithstanding AS 14.25.063 and AS 39.35.350, a former member of the                                   
12       teachers' retirement system who is an active member or inactive member of this plan                           
13       [SYSTEM] may reinstate, under this section, membership service earned under                                       
14       AS 14.25 for which the member received a refund of contributions.                                                 
15    * Sec. 88.  AS 39.35.375(f) is amended to read:                                                                    
16            (f)  Notwithstanding AS 14.25.063 [AND AS 39.35.350], a former member of                                     
17       the teachers' retirement system who is an active member or inactive member of this                                
18       plan may reinstate, under this section, membership service earned under AS 14.25 for                              
19       which the member received a refund of contributions.                                                              
20    * Sec. 89.  AS 39.35.375(g) is amended to read:                                                                    
21            (g)  If a member retires under this section and subsequently returns to work for                             
22       an employer under this plan [SYSTEM] or the teachers' retirement system, benefits                             
23       under this section shall cease during the period of reemployment and shall                                        
24       recommence when the reemployment is ended.  The credited service earned during the                                
25       period of reemployment may not be added to the credited service claimed for a public                              
26       service benefit under this section.  If a member vests and meets the other eligibility                            
27       requirements under this system or the teachers' retirement system during the                                      
28       reemployment, the member is entitled to a benefit under AS 14.25.009 - 14.25.220                              
29       [AS 14.25] or 39.35.095 - 39.35.680 [AS 39.35], as appropriate.                                               
30    * Sec. 90.  AS 39.35.375 is amended by adding a new subsection to read:                                            
31            (h)  In this section,                                                                                        
01                 (1)  "teachers' retirement system" and "teachers' retirement system                                     
02       under AS 14.25" means the teachers' retirement plan established in AS 14.25.009 -                                 
03       14.25.220;                                                                                                        
04                 (2)  "membership service earned under AS 14.25" means membership                                        
05       service earned under AS 14.25.009 - 14.25.220.                                                                    
06    * Sec. 91.  AS 39.35.381(a) is amended to read:                                                                    
07            (a)  An elected public officer is eligible for a public officer benefit if the officer                       
08       is retired under AS 14.25.009 - 14.25.220 [AS 14.25 (TEACHERS' RETIREMENT                                     
09       SYSTEM)].  Only fully paid credited service as an elected public officer of a                                     
10       municipality or other political subdivision, earned while the municipality or political                           
11       subdivision was an employer under this plan [SYSTEM] and while the person was                                 
12       employed full-time under AS 14.25.009 - 14.25.220 [AS 14.25], may be counted                                  
13       under this section.                                                                                               
14    * Sec. 92.  AS 39.35.410(f) is amended to read:                                                                    
15            (f)  An employee is not entitled to an occupational disability benefit unless the                            
16       employee files an application for it with the administrator within 90 days of the date of                         
17       terminating employment.  If the employee is unable to meet a filing requirement of                                
18       this subsection, it may be waived by the administrator [PUBLIC EMPLOYEES'                                     
19       RETIREMENT BOARD] if there are extraordinary circumstances that resulted in the                                   
20       employee's inability to meet the filing requirement.  [THE BOARD MAY                                              
21       DELEGATE THE AUTHORITY TO WAIVE A FILING DEADLINE UNDER THIS                                                      
22       SUBSECTION TO THE ADMINISTRATOR.]                                                                                 
23    * Sec. 93.  AS 39.35.475(b) is amended to read:                                                                    
24            (b)  The increase in benefit payments applies to total benefit payments                                      
25       [EXCEPT FOR THE COST-OF-LIVING ALLOWANCE UNDER AS 39.35.480].                                                     
26       The amount of the increase is a percentage of the current benefit equal to                                        
27                 (1)  the lesser of 75 percent of the increase in the cost of living in the                              
28       preceding calendar year or nine percent, for recipients who on July 1 are at least 65                             
29       years old and for members receiving disability benefits; and                                                      
30                 (2)  the lesser of 50 percent of the increase in the cost of living in the                              
31       preceding calendar year or six percent, for recipients who on July 1 are at least 60 but                          
01       less than 65 years old or for recipients who are less than 60 years old on July 1 but                             
02       who have received benefits from the plan [SYSTEM] for at least five years.                                    
03    * Sec. 94.  AS 39.35.485(a) is amended to read:                                                                    
04            (a)  An employee who is eligible for a benefit calculated in accordance with                                 
05       AS 39.35.370(c) is entitled to a benefit of at least $25 a month for each year of                                 
06       credited service, not including adjustments made under AS 39.35.340 for military                                  
07       service, AS 39.35.350 for reinstatement of credited service, AS 39.35.360 for credit                              
08       for earlier service, AS 39.35.370(c) for early retirement, AS 39.35.420 for                                       
09       nonoccupational death benefits, AS 39.35.450 for the survivor's option, former                                    
10       AS 39.35.460 for the level income option, and AS 39.35.475 for the post-retirement                            
11       pension adjustment [, AND AS 39.35.480 FOR THE COST OF LIVING].                                                   
12    * Sec. 95.  AS 39.35.485(a) is amended to read:                                                                    
13            (a)  An employee who is eligible for a benefit calculated in accordance with                                 
14       AS 39.35.370(c) is entitled to a benefit of at least $25 a month for each year of                                 
15       credited service, not including adjustments made under AS 39.35.340 for military                                  
16       service, [AS 39.35.350 FOR REINSTATEMENT OF CREDITED SERVICE,]                                                    
17       AS 39.35.360 for credit for earlier service, AS 39.35.370(c) for early retirement,                                
18       AS 39.35.420 for nonoccupational death benefits, AS 39.35.450 for the survivor's                                  
19       option, former AS 39.35.460 for the level income option, and AS 39.35.475 for the                                 
20       post-retirement pension adjustment.                                                                               
21    * Sec. 96.  AS 39.35.680(2) is amended to read:                                                                    
22                 (2)  "actuarial adjustment" means the adjustment necessary to obtain                                    
23       equality in value of the aggregate expected payments under two different forms of                                 
24       pension payments, considering expected mortality and interest earnings on the basis of                            
25       assumptions, factors, and methods specified in regulations issued under this plan                             
26       [SYSTEM] that are formally adopted [UNDER AS 39.35.042] by the board that                                         
27       clearly preclude employer discretion in the determination of the amount of any                                    
28       member's benefit;                                                                                                 
29    * Sec. 97.  AS 39.35.680(6) is amended to read:                                                                    
30                 (6)  "board" means the Alaska Retirement Management [PUBLIC                                         
31       EMPLOYEES RETIREMENT] Board;                                                                                      
01    * Sec. 98.  AS 39.35.680(34) is amended to read:                                                                   
02                 (34)  "qualified domestic relations order" means a divorce or                                           
03       dissolution judgment under AS 25.24, including an order approving a property                                      
04       settlement, that                                                                                                  
05                      (A)  creates or recognizes the existence of an alternate payee's                                   
06            right to, or assigns to an alternate payee the right to, receive all or a portion of                         
07            employee contribution account or the benefits payable with respect to an                                     
08            employee;                                                                                                    
09                      (B)  sets out the name and last known mailing address, if any, of                                  
10            the employee and of each alternate payee covered by the order;                                               
11                      (C)  sets out the amount or percentage of the employee's benefit,                                  
12            or of any survivor's benefit, to be paid to the alternate payee, or sets out the                             
13            manner in which that amount or percentage is to be determined;                                               
14                      (D)  sets out the number of payments or period to which the                                        
15            order applies;                                                                                               
16                      (E)  sets out the retirement plan [SYSTEM] to which the order                                  
17            applies;                                                                                                     
18                      (F)  does not require any type or form of benefit or any option                                    
19            not otherwise provided by AS 39.35.010 - 39.35.680 [THIS CHAPTER];                                       
20                      (G)  does not require an increase of benefits in excess of the                                     
21            amount provided by AS 39.35.010 - 39.35.680 [THIS CHAPTER], determined                                   
22            on the basis of actuarial value; and                                                                         
23                      (H)  does not require the payment to an alternate payee of                                         
24            benefits that are required to be paid to another alternate payee under another                               
25            order previously determined to be a qualified domestic relations order;                                      
26    * Sec. 99.  AS 39.35.680 is amended by adding a new paragraph to read:                                             
27                 (41)  "plan" means the retirement plan established in AS 39.35.115 -                                    
28       39.35.680.                                                                                                        
29    * Sec. 100.  AS 39.35 is amended by adding new sections to read:                                                   
30             Article 9.  Employees First Hired on or after July 1, 2005.                                               
31            Sec. 39.35.700.  Applicability of AS 39.35.700 - 39.35.990.  The provisions of                             
01       AS 39.35.700 - 39.35.990 apply only to members first hired on or after July 1, 2005.                              
02            Sec. 39.35.710.  Defined contribution retirement plan established; federal                                 
03       qualification requirements.  (a)  A defined contribution retirement plan is established                         
04       for employees of the state or a political subdivision or public organization of the state.                        
05            (b)  The defined contribution retirement plan is a plan in which savings are                                 
06       accumulated in an individual retirement account for the exclusive benefit of the                                  
07       member or beneficiaries.  The plan is established effective July 1, 2005, at which time                           
08       contributions by employers and employees begin.                                                                   
09            (c)  The retirement plan established by AS 39.35.700 - 39.35.990 is intended to                              
10       qualify under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified                                  
11       retirement plan established and maintained by the state for its employees, for the                                
12       employees of political subdivisions, public corporations, and public organizations of                             
13       the state, and for the employees of other employers whose participation is authorized                             
14       by AS 39.35.700 - 39.35.990 and who participate in the plan set out in AS 39.35.700 -                             
15       39.35.990.                                                                                                        
16            (d)  An amendment to AS 39.35.700 - 39.35.990 does not provide a person                                      
17       with a vested right to a benefit if the Internal Revenue Service determines that the                              
18       amendment will result in disqualification of the plan under the Internal Revenue Code.                            
19            Sec. 39.35.720.  Membership.  An employee first hired on or after July 1,                                  
20       2005, shall participate in the plan set out in AS 39.35.700 - 39.35.990.                                        
21            Sec. 39.35.730.  Contributions by members.  (a)  Member contributions to                                   
22       the trust fund are mandatory and shall be in an amount equal to eight percent of the                              
23       member's compensation from July 1 to the following June 30.  This contribution shall                              
24       be paid into a member's individual account in the Department of Administration under                              
25       the terms set out in AS 39.35.700 - 39.35.990.                                                                    
26            (b)  Subject to the limitations on contributions under AS 39.35.780, a member                                
27       may elect to make additional contributions to the member's individual account.                                    
28            (c)  The employer shall deduct the contribution from the member's                                            
29       compensation at the end of each payroll period, and the contribution shall be credited                            
30       by the plan to the member's individual account.  The contributions shall be deducted                              
31       from member's compensation before the computation of applicable federal taxes and                                 
01       shall be treated as employer contributions under 26 U.S.C. 414(h)(2).  A member may                               
02       not have the option of making the payroll deduction directly in cash instead of having                            
03       the contribution picked up by the employer.                                                                       
04            Sec. 39.35.740.  Employment contributions mandatory.  Contributions of                                     
05       employees shall be made by payroll deductions.  Every included employee shall be                                  
06       considered to consent to payroll deductions.  It is of no consequence that a payroll                              
07       deduction may cause the compensation paid in cash to an employee to be reduced                                    
08       below the minimum required by law.  Payment of an employee's compensation, less                                   
09       payroll deductions, is a full and complete discharge and satisfaction of all claims and                           
10       demands by the employee relating to remuneration of services during the period                                    
11       covered by the payment, except with respect to the benefits provided under the plan.                              
12            Sec. 39.35.750.  Contributions by employers.  (a)  An employer shall                                       
13       contribute to each member's individual account an amount equal to 3.5 percent of the                              
14       member's compensation from July 1 to the following June 30.                                                       
15            (b)  An employer shall also contribute an amount equal to 3.75 percent of each                               
16       member's compensation to pay for retiree major medical insurance.  This contribution                              
17       shall be paid into the group health and life benefits fund established by the                                     
18       commissioner of administration under AS 39.30.095 and shall be accounted for in                                   
19       accordance with regulations established by the commissioner.                                                      
20            (c)  An employer shall also make contributions to the health reimbursement                                   
21       arrangement plan under AS 39.30.300.                                                                              
22            Sec. 39.35.760.  Rollover contributions and distributions.  (a)  An employee                               
23       may elect, at the time and in the manner prescribed by the administrator, to have all or                          
24       part of a direct rollover distribution from an eligible retirement plan owned by the                              
25       member paid directly into the member's individual account established under                                       
26       AS 39.35.730 - 39.35.750.                                                                                         
27            (b)  Rollover contributions do not count as a purchase of membership service                                 
28       for the purpose of determining years of service.                                                                  
29            (c)  A distributee may elect, at the time and in the manner prescribed by the                                
30       administrator, to have all or part of an eligible rollover distribution paid directly to an                       
31       eligible retirement plan specified by the distributee in the direct rollover.                                     
01            (d)  In this section,                                                                                        
02                 (1)  "direct rollover" means the payment of an eligible rollover                                        
03       distribution by the plan to an eligible retirement plan specified by a distributee who is                         
04       eligible to elect a direct rollover;                                                                              
05                 (2)  "distributee" means a member, or a beneficiary who is the                                          
06       surviving spouse of the member, or an alternate payee;                                                            
07                 (3)  "eligible retirement plan" means                                                                   
08                      (A)  a conduit individual retirement account described in 26                                       
09            U.S.C. 408(d)(3)(A);                                                                                         
10                      (B)  an annuity plan described in 26 U.S.C. 403(a);                                                
11                      (C)  a qualified trust described in 26 U.S.C. 401(a);                                              
12                      (D)  an annuity plan described in 26 U.S.C. 403(b); or                                             
13                      (E)  a governmental plan described in 26 U.S.C. 457(b);                                            
14                 (4)  "eligible rollover distribution" means a distribution of all or part of                            
15       a total account to a distributee, except for                                                                      
16                      (A)  a distribution that is one of a series of substantially equal                                 
17            installments payable not less frequently than annually over the life expectancy                              
18            of the distributee or the joint and last survivor life expectancy of the distributee                         
19            and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9);                             
20                      (B)  a distribution that is one of a series of substantially equal                                 
21            installments payable not less frequently than annually over a specified period                               
22            of 10 years or more;                                                                                         
23                      (C)  a distribution that is required under 26 U.S.C. 401(a)(9);                                    
24                      (D)  the portion of any distribution that is not includable in                                     
25            gross income;                                                                                                
26                      (E)  a distribution that is on account of hardship; and                                            
27                      (F)  other distributions that are reasonably expected to total less                                
28            than $200 during a year.                                                                                     
29            Sec. 39.35.770.  Transmittal of contributions.  All contributions deducted in                              
30       accordance with AS 39.35.700 - 39.35.990 shall be transmitted to the plan for deposit                             
31       in the trust fund as soon as administratively feasible, but in no event later than 15 days                        
01       following the close of the payroll period.                                                                        
02            Sec. 39.35.780.  Limitations on contributions.  Notwithstanding any other                                  
03       provisions of this plan, the annual additions to each member's individual account                                 
04       under this plan and under all defined contribution plans of the employer required to be                           
05       aggregated with the contributions from this plan under the provisions of 26 U.S.C. 415                            
06       may not exceed, for any limitation year, the amount permitted under 26 U.S.C. 415 at                              
07       any time.  If the amount of a member's defined contribution plan contributions exceeds                            
08       the limitation of 26 U.S.C. 415(c) for any limitation year, the administrator shall take                          
09       any necessary remedial action to correct an excess contribution.  The provisions of 26                            
10       U.S.C. 415, and the regulations adopted under that statute, as applied to qualified                               
11       defined contribution plans of governmental employees are incorporated as part of the                              
12       terms and conditions of the plan.                                                                                 
13            Sec. 39.35.790.  Vesting.  (a)  A participating member is immediately and                                
14       fully vested in that member's contributions and related earnings.                                                 
15            (b)  A member shall be fully vested in the employer contributions made on that                               
16       member's behalf, and related earnings, after five years of service.  A member is                                  
17       partially vested in the employer contributions made on that member's behalf, and the                              
18       related earnings, in the ratio of                                                                                 
19                 (1)  25 percent with two years of service;                                                              
20                 (2)  50 percent with three years of service; and                                                        
21                 (3)  75 percent with four years of service.                                                             
22            Sec. 39.35.800.  Investment of individual accounts.  (a)  The board shall                                  
23       provide a range of investment options and permit a participant to exercise investment                             
24       control over the participant's assets in the member's individual account as provided in                           
25       this section.  If a participant exercises control over the assets in the individual account,                      
26       the participant is not considered a fiduciary for any reason on the basis of exercising                           
27       that control.                                                                                                     
28            (b)  A participant may direct investment of plan funds held in an account                                    
29       among available investment funds in accordance with rules established by the board.                               
30            (c)  A participant may elect to change or transfer all or a portion of the                                   
31       participant's existing account balance among available investment funds not more                                  
01       often than once each day in accordance with the rules established by the administrator.                           
02       Only the last election received by the administrator before the transmittal of                                    
03       contributions to the trust fund for allocation to the individual account will be used to                          
04       direct the investment of the contributions received.                                                              
05            (d)  Except to the extent clearly set out in the terms of the investment plans                               
06       offered by the employer to the employee, the employer is not liable to the participant                            
07       for investment losses if the prudent investment standard has been met.                                            
08            (e)  The employer, administrator, state, board, or a person or entity who is                                 
09       otherwise a fiduciary is not liable by reason for any participant's investment loss that                          
10       results from the participant's directing the investment of plan assets allocated to the                           
11       participant's account.                                                                                            
12            (f)  To the extent that a member's individual account has been divided as                                    
13       provided in a qualified domestic relations order between participants, each participant                           
14       shall be treated as the holder of a separate individual account for purposes of                                   
15       investment yields, decisions, transfers, and time limitations imposed by this section.                            
16            Sec. 39.35.810.  Distribution election at termination.  (a)  A member is                                   
17       eligible to elect distribution of the member's account in accordance with this section                            
18       60 days after termination of employment.                                                                          
19            (b)  Notwithstanding (a) of this section, distribution of all or a portion of the                            
20       individual account of a member may take place before the 60th day after the                                       
21       termination of employment with the approval of the administrator if the member                                    
22       makes a written request for a distribution under this subsection.  The member's spouse                            
23       must consent to the request in writing if the member is married.  Distribution of an                              
24       individual account may only be made on account of an immediate and heavy financial                                
25       need of the member for the following reasons and in the amount the need is                                        
26       demonstrated for                                                                                                  
27                 (1)  medical care described in 26 U.S.C. 213(d) incurred by the                                         
28       member, the member's spouse, or the member's dependent, or necessary to obtain that                               
29       medical care;                                                                                                     
30                 (2)  the purchase of a principal residence for the member;                                              
31                 (3)  postsecondary education tuition and related educational fees for the                               
01       next 12-month period for the member, the member's spouse, or a dependent of the                                   
02       member; in this paragraph, "dependent" has the meaning given in 26 U.S.C. 152;                                    
03                 (4)  prevention of the eviction of the member from the member's                                         
04       principal residence or foreclosure on the mortgage of the member's principal                                      
05       residence; or                                                                                                     
06                 (5)  any need prescribed by the United States Department of the                                         
07       Treasury, Internal Revenue Service, in a revenue ruling, notice, or other document of                             
08       general applicability that satisfies the safe harbor definition of hardship under                                 
09       regulations adopted under 26 U.S.C. 401(k).                                                                       
10            (c)  If a member dies before benefits commence, the member's beneficiary is                                  
11       immediately eligible to elect distribution of the member's share of the member's                                  
12       individual account.                                                                                               
13            (d)  Distributions are payable to an alternate payee in accordance with the                                  
14       terms and conditions of a qualified domestic relations order that is received and                                 
15       approved by the administrator as specified in AS 39.35.860.                                                       
16            (e)  Distributions that are being paid to a member may not be affected by the                                
17       member's subsequent reemployment with the employer.  Upon reemployment, a new                                     
18       individual account shall be established for the member to which any future                                        
19       contributions shall be allocated.  Upon subsequent termination of employment, the                                 
20       member's new individual account shall be distributed in accordance with this section.                             
21            Sec. 39.35.820.  Forms of distribution.  (a)  A participant may elect to receive                           
22       the participant's share of the individual account in a                                                            
23                 (1)  lump sum payment, which is a single payment of the entire balance                                  
24       in the account;                                                                                                   
25                 (2)  periodic lump sum payment, which is a payment of a portion of the                                  
26       balance in the account, not more than twice each year;                                                            
27                 (3)  period certain annuity payment, which is an annuity payable in a                                   
28       fixed number of monthly installments for a duration of 60, 120, or 180 months;                                    
29                 (4)  life annuity with a period certain payment, which is an annuity                                    
30       payable until the later of the first day of the month in which the annuitant's death                              
31       occurs, or the date on which the payment of a fixed number of monthly installments is                             
01       completed; the period certain for installments is 120 or 180 months;                                              
02                 (5)  single life annuity payment, which is an annuity payable monthly                                   
03       until the first of the month in which the annuitant's death occurs; or                                            
04                 (6)  joint and survivor annuity payment, which is an annuity payable                                    
05       monthly to the member until the first of the month in which the member's death                                    
06       occurs; after the member's death, a survivor annuity equal to 50 percent or 100 percent                           
07       of the member's benefit, as previously elected by the member, shall be paid monthly to                            
08       the joint annuitant for the remainder of the survivor's lifetime.                                                 
09            (b)  Upon the death of an annuitant whose payments have commenced, an                                        
10       annuitant's beneficiary shall receive further payments only to the extent provided in                             
11       accordance with the form of payment that was being made to the annuitant.  The                                    
12       remaining portion of the interest will continue to be distributed at least as rapidly as                          
13       under the method of distribution being used before the annuitant's death.                                         
14            (c)  If  a participant dies before the distribution commencement date,                                       
15       distribution of the participant's entire interest to a beneficiary shall be payable in any                        
16       form other than a joint and survivor annuity.                                                                     
17            (d)  If an unmarried member or other participant fails to elect a form of                                    
18       payment before the distribution commencement date, the account shall be paid to a                                 
19       beneficiary in the form of a lump sum to the extent required by the minimum                                       
20       distribution requirements set out in the Internal Revenue Code.  If a married member                              
21       fails to elect a form of payment before the distribution commencement date, the                                   
22       account shall be paid in the form of a 50 percent joint and survivor annuity, with the                            
23       member's spouse as the joint annuitant.                                                                           
24            Sec. 39.35.830.  Manner of electing distributions.  (a)  Any election or any                               
25       alteration or revocation of a prior election by a participant for any purpose under this                          
26       plan shall be on forms or made in a manner prescribed for that purpose by the plan                                
27       administrator.  To be effective, the forms required or the required action for any                                
28       purpose under this plan must be completed and received in accordance with rules,                                  
29       regulations, and policies adopted by the administrator.                                                           
30            (b)  At any time, but not less than seven days before the benefit                                            
31       commencement date, a member, alternate payee, or beneficiary may change                                           
01                 (1)  the form of payment election;                                                                      
02                 (2)  an election to commence benefits; or                                                               
03                 (3)  the joint annuitant designation.                                                                   
04            (c)  Changes in elections are not allowed on or after seven days before the                                  
05       benefit commencement date.                                                                                        
06            Sec. 39.35.840.  Distribution requirements.  (a)  Payments to a participant                                
07       shall commence as soon as administratively feasible following the distribution                                    
08       commencement date.  The distribution commencement date is the first date on which                                 
09       one of the following occurs:                                                                                      
10                 (1)  a member meets the requirements of AS 39.35.810 and has made a                                     
11       complete application for payment under AS 39.35.820;                                                              
12                 (2)  a participant has elected to defer receipt of the account to a date                                
13       specified, the date has been attained, and the participant has made a complete                                    
14       application for payment;                                                                                          
15                 (3)  a member attains normal retirement age and has not made an                                         
16       application for payment or elected to defer receipt of the account to a date later than                           
17       normal retirement age;                                                                                            
18                 (4)  a member's beneficiary does not make an application for benefits                                   
19       and five years have elapsed since the member's death;                                                             
20                 (5)  notwithstanding AS 39.35.820, a participant whose account has a                                    
21       balance of $1,000 or less meets the requirements of AS 39.35.810, at which time the                               
22       participant must take payment of the participant's account.                                                       
23            (b)  The entire interest of a member must be distributed or must begin to be                                 
24       distributed not later than the member's required beginning date.                                                  
25            (c)  If a member dies after the distribution of the member's interest has begun                              
26       but before the distribution has been completed, the remaining portion of the interest                             
27       shall continue to be distributed at least as rapidly as under the method of distribution                          
28       being used before the member's death.                                                                             
29            (d)  If a member has made a distribution election and dies before the                                        
30       distribution of the member's interest begins, distribution of the member's entire interest                        
31       shall be completed by December 31 of the calendar year containing the fifth                                       
01       anniversary of the member's death.  However, if any portion of the member's interest                              
02       is payable to a designated beneficiary, distributions may be made over the life of the                            
03       designated beneficiary or over a period certain not greater than the life expectancy of                           
04       the designated beneficiary, commencing on or before December 31 of the calendar                                   
05       year immediately following the calendar year in which the member died, and, if the                                
06       designated beneficiary is the member's surviving spouse, the date distributions are                               
07       required to begin may not be earlier than the later of December 31 of the calendar year                           
08       (1) immediately following the calendar year in which the member died, or (2) in which                             
09       the member would have attained 70 1/2 years of age, whichever is earlier.  If the                                 
10       surviving spouse dies after the member but before payments to the spouse have begun,                              
11       the provisions of this subsection apply as if the surviving spouse were the member.                               
12       An amount paid to a child of the member will be treated as if it were paid to the                                 
13       surviving spouse if the amount becomes payable to the surviving spouse when the                                   
14       child reaches the age of majority.                                                                                
15            (e)  If a member has not made a distribution election before the member's                                    
16       death, the member's designated beneficiary must elect the method of distribution not                              
17       later than December 31 of the calendar year (1) in which distributions would be                                   
18       required to begin under this section, or (2) that contains the fifth anniversary of the                           
19       date of death of the member, whichever is earlier.  If the member does not have a                                 
20       designated beneficiary or if the designated beneficiary does not elect a method of                                
21       distribution, distribution of the member's entire interest must be completed by                                   
22       December 31 of the calendar year containing the fifth anniversary of the member's                                 
23       death.                                                                                                            
24            (f)  For purposes of (b) of this section, distribution of a member's interest is                             
25       considered to begin (1) on the member's required beginning date, or (2) if the                                    
26       designated beneficiary is the member's surviving spouse and the surviving spouse dies                             
27       after the member but before payments to the spouse have begun, on the date                                        
28       distribution is required to begin to the surviving spouse.  If distribution in the form of                        
29       an annuity irrevocably commences to the member before the required beginning date,                                
30       the date distribution is considered to begin is the date that the distribution actually                           
31       commences.                                                                                                        
01            (g)  Notwithstanding any contrary provisions of AS 39.35.700 - 39.35.990, the                                
02       requirements of this section apply to all distributions of a member's interest and take                           
03       precedence over any inconsistent provisions of AS 39.35.700 - 39.35.990.                                          
04            (h)  All distributions required under this section are determined and made in                                
05       accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute,                                   
06       including any minimum distribution incidental benefit requirement.                                                
07            (i)  In this section,                                                                                        
08                 (1)  "designated beneficiary" means the individual who is designated as                                 
09       the beneficiary under the plan in accordance with 26 U.S.C. 401(a)(9) and regulations                             
10       adopted under that statute;                                                                                       
11                 (2)  "required beginning date" means the first day of April of the                                      
12       calendar year following the calendar year in which the member either attains 70 1/2                               
13       years of age or actually retires, whichever is later.                                                             
14            Sec. 39.35.850.  Designation of beneficiary.  (a)  Each participant shall have                             
15       the right to designate a beneficiary and shall have the right, at any time, to revoke the                         
16       designation or to substitute another beneficiary, subject to the following limitation:  in                        
17       the event a married member elects a nonspouse beneficiary, the actuarial equivalent                               
18       value of the benefit payable to the beneficiary may not exceed 50 percent of the                                  
19       member's portion of the account balance, and the member's spouse shall automatically                              
20       be considered the beneficiary for the remaining 50 percent of the account balance,                                
21       unless the spouse consents to the beneficiary designation in a writing that is notarized                          
22       or witnessed by the administrator.  If the spouse consents in this manner, a married                              
23       member may designate a nonspouse beneficiary for the entire benefit or any portion                                
24       the benefit as part of an available form of payment contained in this plan,                                       
25                 (1)  except to the extent a qualified domestic relations order filed with                               
26       the administrator provides for payment to a former spouse or other dependent of the                               
27       member; or                                                                                                        
28                 (2)  unless the member filed a revocation of beneficiary accompanied                                    
29       by a written consent to the revocation from the present spouse and each person entitled                           
30       under the order; however, consent of the present spouse is not required if the member                             
31       and the present spouse had been married for less than one year on the date of the                                 
01       member's death and if the member established when filing the revocation that the                                  
02       member and the present spouse were not cohabiting.                                                                
03            (b)  Except as provided in (a) of this section, the member may change or                                     
04       revoke the designation without notice to the beneficiary or beneficiaries at any time.                            
05       If a member designates more than one beneficiary, each shares equally unless the                                  
06       member specifies a different allocation or preference.  The designation of a                                      
07       beneficiary, a change or revocation of a beneficiary, and a consent to revocation of a                            
08       beneficiary shall be made on a form provided by the administrator and is not effective                            
09       until filed with the administrator.                                                                               
10            (c)  If a member fails to designate a beneficiary, or if no designated beneficiary                           
11       survives the member, the death benefit shall be paid                                                              
12                 (1)  to the surviving spouse or, if there is none surviving;                                            
13                 (2)  to the surviving children in equal parts or, if there are none                                     
14       surviving;                                                                                                        
15                 (3)  to the surviving parents in equal parts or, if there are none                                      
16       surviving;                                                                                                        
17                 (4)  to the estate.                                                                                     
18            (d)  A person claiming entitlement to benefits payable under AS 39.35.700 -                                  
19       39.35.990 as a consequence of a member's death shall provide the administrator with a                             
20       marriage certificate, divorce or dissolution judgment, or other evidence of entitlement.                          
21       Documents establishing entitlement may be filed with the administrator immediately                                
22       after a change in the member's marital status.  If the administrator does not receive                             
23       notification of a claim before the date 10 days after the member's death, the person                              
24       claiming entitlement is not entitled to receive from the division of retirement and                               
25       benefits any benefit already paid by the administrator.                                                           
26            Sec. 39.35.860.  Rights under qualified domestic relations order.  (a)                                   
27       Notwithstanding the nonalienation provisions in AS 39.35.900(a), the plan                                         
28       administrator may direct that benefits be paid to someone other than a member or                                  
29       beneficiary under a valid qualified domestic relations order that is executed by the                              
30       judge of a competent court in accordance with applicable state law and that has been                              
31       accepted by the administrator.                                                                                    
01            (b)  The administrator shall determine whether an order meets the requirements                               
02       of this section within a reasonable period after receiving an order.  The administrator                           
03       shall notify the member and any alternate payee that an order has been received and                               
04       indicate to the member and any alternate payee when the order is accepted.  A separate                            
05       account for the alternate payee portion shall be established as soon as administratively                          
06       feasible after the order has been accepted by the administrator.                                                  
07            Sec. 39.35.870.  Retirement.  (a)  In order to obtain medical benefits under                               
08       AS 39.35.880 and access to the health reimbursement arrangement plan under                                        
09       AS 39.30.300, an active member must retire directly from the plan.  A member is                                   
10       eligible to retire from the plan if                                                                               
11                 (1)  the member has at least 25 years of service as a peace officer or fire                             
12       fighter or 30 years of service for all other employees;                                                           
13                 (2)  the member reaches the normal retirement age of 65 years of age                                    
14       and has at least 10 years of membership service; and                                                              
15                 (3)  the member has been an active member for at least 12 months                                        
16       before application for retirement.                                                                                
17            (b)  A member must apply to the administrator for retirement and medical                                     
18       benefit enrollment.  Application shall be made on forms and in the manner prescribed                              
19       by the administrator.                                                                                             
20            (c)  A member who continues in the employ of the employer after reaching                                     
21       normal retirement age shall continue to participate in the plan and to have                                       
22       contributions allocated to the member's account.                                                                  
23            Sec. 39.35.880.  Medical benefits.  (a)  The medical benefits available to                                 
24       eligible persons are access to the retiree major medical insurance plan and to the                                
25       health reimbursement arrangement.  Access to the retiree major medical insurance                                  
26       plan means that an eligible person may not be denied insurance coverage except for                                
27       failure to pay the required premium.                                                                              
28            (b)  The following persons are eligible for the retiree major medical insurance                              
29       plan provided under this section and the health reimbursement arrangement:                                        
30                 (1)  a member                                                                                           
31                      (A)  with at least                                                                                 
01                           (i)  25 years of service as a peace officer or fire fighter;                                  
02                 or                                                                                                      
03                           (ii)  30 years of service for all other employees; and                                        
04                      (B)  who retires directly from the plan;                                                           
05                 (2)  the surviving spouse of a member who elected coverage under (1)                                    
06       of this subsection;                                                                                               
07                 (3)  a member who reaches the normal retirement age of 65 years of                                      
08       age, has at least 10 years of service, and retires directly from the plan;                                        
09                 (4)  the surviving spouse of a member who elected coverage under (3)                                    
10       of this subsection.                                                                                               
11            (c)  Retiree major medical insurance plan coverage elected by an eligible                                    
12       member under this section covers the eligible member, the spouse of the eligible                                  
13       member, and the dependent children of the eligible member.                                                        
14            (d)  Retiree major medical insurance plan coverage elected by a surviving                                    
15       spouse of an eligible member under this section covers the surviving spouse and the                               
16       dependent children of the surviving spouse.                                                                       
17            (e)  Major medical insurance coverage takes effect on the first day of the                                   
18       month following the date of the election and stops when the person who elects                                     
19       coverage under (b) of this section dies or fails to make a required premium payment.                              
20            (f)  The coverage for persons 65 years of age or older is the same as that                                   
21       available for persons under 65 years of age.  The benefits payable to those persons 65                            
22       years of age or older supplement any benefits provided under the federal old age,                                 
23       survivors and disability insurance program.                                                                       
24            (g)  The medical and optional insurance premiums owed by the person who                                      
25       elects coverage under (b) of this section may be deducted from the health                                         
26       reimbursement arrangement.  If the amount of the health reimbursement arrangement                                 
27       becomes insufficient to pay the premiums, the person who elects coverage under (a) of                             
28       this section shall pay the premiums directly.                                                                     
29            (h)  The cost of premiums for retiree major medical insurance coverage for an                                
30       eligible member or surviving spouse who is                                                                        
31                 (1)  not eligible for Medicare is an amount equal to the full monthly                                   
01       group premium for retiree major medical insurance coverage;                                                       
02                 (2)  eligible for Medicare is the following percentage of the premium                                   
03       amounts established for retirees who are Medicare:                                                                
04                      (A)  30 percent if the member had 10 or more, but less than 15,                                    
05            years of service;                                                                                            
06                      (B)  25 percent if the member had 15 or more, but less than 20,                                    
07            years of service;                                                                                            
08                      (C)  20 percent if the member had 20 or more, but less than 25,                                    
09            years of service;                                                                                            
10                      (D)  15 percent if the member had 25 or more, but less than 30,                                    
11            years of service;                                                                                            
12                      (E)  10 percent if the member had 30 or more years of service.                                     
13            (i)  The eligibility for and cost of premiums for retiree major medical insurance                            
14       coverage for an alternate payee under a qualified domestic relations order shall be                               
15       determined based on the years of service of the member to which the alternate payee is                            
16       entitled under the order.                                                                                         
17            (j)  A person who is entitled to retiree major medical insurance coverage shall                              
18                 (1)  be informed by the administrator in writing                                                        
19                      (A)  that the health insurance coverage available to retired                                       
20            members may be different from the health insurance coverage provided to                                      
21            employees;                                                                                                   
22                      (B)  of time limits for selecting optional health insurance                                        
23            coverage and whether the election is irrevocable; and                                                        
24                 (2)  indicate in writing on a form provided by the administrator that the                               
25       person has received the information required by this subsection and whether the                                   
26       person has chosen to receive optional health insurance coverage.                                                  
27            (k)  The monthly group premiums for retiree major medical insurance coverage                                 
28       are established by the administrator in accordance with AS 39.30.095.  Nothing in                                 
29       AS 39.35.700 - 39.35.990 guarantees a person who elects coverage under (a) of this                                
30       section a monthly group premium rate for retiree major medical insurance coverage                                 
31       other than the premium in effect for the month in which the premium is due for                                    
01       coverage for that month.                                                                                          
02            (l)  In this section,                                                                                        
03                 (1)  "health reimbursement arrangement" means the plan established in                                   
04       AS 39.30.300;                                                                                                     
05                 (2)  "retires directly from the plan" means that the member is an active                                
06       member at the time that the member applies to the administrator for retirement and                                
07       medical benefits enrollment and that the member continues as an active member up                                  
08       through the day before the day the member is enrolled in retirement and medical                                   
09       benefits.                                                                                                         
10            Sec. 39.35.890.  Amendment and termination of plan.  (a)  The state has the                                
11       right to amend the plan at any time and from time to time, in whole or in part,                                   
12       including the right to make retroactive amendments referred to in 26 U.S.C. 401(b).                               
13            (b)  The plan administrator may not modify or amend the plan retroactively in                                
14       such a manner as to reduce the benefits of any member accrued to date under the plan                              
15       by reason of contributions made before the modification or amendment except to the                                
16       extent that the reduction is permitted by the Internal Revenue Code.                                              
17            (c)  The state may, in its discretion, terminate the plan in whole or part at any                            
18       time without liability for the termination.  If the plan is terminated, all investments                           
19       remain in force until all individual accounts have been completely distributed under                              
20       the plan, and, after all plan liabilities are satisfied, excess assets revert to the employer.                    
21            (d)  Any contribution made by an employer to the plan because of a mistake of                                
22       fact must be returned to the employer by the administrator within one year after the                              
23       contribution or discovery, whichever is later.                                                                    
24            Sec. 39.35.900.  Exclusive benefit.  (a)  The corpus or income of the assets                               
25       held in trust as required by the plan may not be diverted or used for other than the                              
26       exclusive benefit of the participants.                                                                            
27            (b)  If plan benefits are provided through the distribution of annuity or                                    
28       insurance contracts, any refunds or credits in excess of plan benefits due to dividends,                          
29       earnings, or other experience rating credits, or surrender or cancellation credits, will be                       
30       paid to the trust fund.                                                                                           
31            (c)  The assets of the plan may not be used to pay premiums or contributions of                              
01       the employer under another plan maintained by the employer.                                                       
02            Sec. 39.35.910.  Nonguarantee of returns, rates, or benefit amounts.  The                                  
03       plan created by AS 39.35.700 - 39.35.990 is a defined contribution plan, not a defined                            
04       benefit plan.  The amount of money in the account of a member depends on the                                      
05       amount of contributions and the rate of return from investments of the account that                               
06       varies over time.  If benefits are paid in the form of an annuity, the benefit amount                             
07       payable is dependent on the amount of money in the account and the interest rates                                 
08       applied and service fees charged by the annuity payor at the time benefits are first                              
09       paid.  Nothing in this plan guarantees a member, beneficiary, or alternate payee                                  
10                 (1)  a rate of return or interest rate other than that actually earned by the                           
11       account of the member, beneficiary, or alternate payee, less applicable administrative                            
12       expenses;                                                                                                         
13                 (2)  an annuity based on interest rates or service charges other than                                   
14       interest rates available from and service charges by the annuity payor in effect at the                           
15       time the annuity is paid.                                                                                         
16            Sec. 39.35.920.  Nonguarantee of employment.  The provisions of                                            
17       AS 39.35.700 - 39.35.990 are not a contract of employment between an employer and                                 
18       an employee, nor do they confer a right of an employee to be continued in the                                     
19       employment of an employer, nor are they a limitation of the right of an employer to                               
20       discharge an employee with or without cause.                                                                      
21            Sec. 39.35.930.  Fraud.  A person who knowingly makes a false statement or                                 
22       falsifies or permits to be falsified a record of this plan in an attempt to defraud the plan                      
23       is guilty of a class A misdemeanor.                                                                               
24            Sec. 39.35.990.  Definitions.  In AS 39.35.700 - 39.35.990, unless the context                             
25       requires otherwise,                                                                                               
26                 (1)  "active member" means an employee who is employed by an                                            
27       employer, is receiving compensation for seasonal, permanent full-time, or permanent                               
28       part-time services, and is making contributions to the plan;                                                      
29                 (2)  "administrator" means the commissioner of administration or the                                  
30       commissioner's designee;                                                                                          
31                 (3)  "alternate payee" means the person for whom an amount has been                                   
01       separated into an account under a qualified domestic relations order described in                                 
02       AS 39.35.860;                                                                                                     
03                 (4)  "beneficiary" means the person or persons entitled under the                                     
04       provisions of this plan to receive benefits after the death of a member or alternate                              
05       payee;                                                                                                            
06                 (5)  "board" means the Alaska Retirement Management Board                                               
07       established under AS 37.10.210;                                                                                   
08                 (6)  "calendar year" has the meaning given in AS 39.35.680;                                             
09                 (7)  "compensation"                                                                                     
10                      (A)  means                                                                                         
11                           (i)  the total remuneration earned by an employee for                                         
12                 personal services rendered, including cost-of-living differentials, as                                  
13                 reported on the employee's Federal Income Tax Withholding Statement                                     
14                 (Form W-2) from the employer for the calendar year;                                                     
15                           (ii)  the teacher contribution to the teachers' retirement                                    
16                 system under AS 14.25.340, employee deferrals under AS 39.45.010,                                       
17                 the wage reduction amount contributed to the Alaska Supplemental                                        
18                 Annuity Plan under AS 39.30.150(a), and the wage reduction amount                                       
19                 contributed to the Alaska Supplemental Benefit Plan under                                               
20                 AS 39.30.150(c), as those statutes may be amended from time to time;                                    
21                      (B)  does not include retirement benefits, severance pay or other                                  
22            separation bonuses, welfare benefits, per diem, expense allowances, workers'                                 
23            compensation payments, payments for leave not used whether those leave                                       
24            payments are scheduled payments, lump-sum payments, donations, or cash-ins,                                  
25            any remuneration contributed by the employer for or on account of the                                        
26            employee under this plan or under any other qualified or nonqualified                                        
27            employee benefit plan, any remuneration not specifically included above                                      
28            which would have been excluded under 26 U.S.C. 3121(a) (Internal Revenue                                     
29            Code) if the employer had remained in the Federal Social Security System, or                                 
30            any remuneration paid by the employer in excess of the Social Security                                       
31            Taxable Wage Base for the calendar year; notwithstanding the foregoing,                                      
01                      (C)  includes any amount that is contributed by the employer                                       
02            under a salary reduction agreement and that is not includible in the gross                                   
03            income of the employee under 26 U.S.C. 125, 132(f)(4), 402(e)(3),                                            
04            402(h)(I)(B) or 403(b) (Internal Revenue Code); the annual compensation                                      
05            limitation for the member, which is so taken into account for those purposes,                                
06            may not exceed $200,000, as adjusted for the cost of living in accordance with                               
07            26 U.S.C. 401(a)(17)(B) (Internal Revenue Code), with the limitation for a                                   
08            fiscal year being the limitation in effect for the calendar year within which the                            
09            fiscal year begins;                                                                                          
10                 (8)  "dependent child" has the meaning in AS 39.35.680;                                                 
11                 (9)  "distribution commencement date" has the meaning given in                                          
12       AS 39.35.840(a);                                                                                                  
13                 (10)  "employer" means                                                                                  
14                      (A)  the State of Alaska; or                                                                       
15                      (B)  a political subdivision or public organization of the state                                   
16            that participates in the plan;                                                                               
17                 (11)  "fund" means the assets of the plan;                                                              
18                 (12)  "individual account" means the total maintained by the plan in an                               
19       investment account within the trust fund, established for each participant for the                                
20       purposes of allocation of the member's contributions, the employer's contributions, and                           
21       earnings credited to each of those contributing investment gains and losses, and                                  
22       expenses; as well as reporting of the member's benefit under the plan;                                            
23                 (13)  "Internal Revenue Code" means the Internal Revenue Code of                                        
24       1986, as amended;                                                                                                 
25                 (14)  "investment funds" means those separate funds that are provided                                 
26       within and that make up the trust fund and that are established for the purpose of                                
27       directing investment through the exercise of the sole control of a member, beneficiary,                           
28       or alternate payee under the terms of the plan and trust agreement;                                               
29                 (15)  "member" means an employee of an employer or former                                             
30       employee of an employer who retains a right to benefits under the plan;                                           
31                 (16)  "membership service" means full-time or part-time employment                                      
01       by an employer in the plan and participation as an active member;                                                 
02                 (17)  "normal retirement age" means 65 years of age;                                                  
03                 (18)  "participant" means the person who has a vested right to an                                       
04       individual account, such as a member, an alternate payee if the account is subject to a                           
05       qualified domestic relations order, the member's beneficiary if the member is                                     
06       deceased, or an alternate payee's beneficiary if the alternate payee is deceased;                                 
07                 (19)  "peace officer" or "fire fighter" has the meaning given in                                        
08       AS 39.35.680;                                                                                                     
09                 (20)  "plan" means the retirement plan established in AS 39.35.700 -                                    
10       39.35.990;                                                                                                        
11                 (21)  "qualified domestic relations order" means a divorce or                                           
12       dissolution judgment under AS 25.24, including an order approving a property                                      
13       settlement, that                                                                                                  
14                      (A)  creates or recognizes the existence of an alternate payee's                                   
15            right to, or assigns to an alternate payee the right to, receive all or a portion of                         
16            an individual account or the benefits payable with respect to an employee;                                   
17                      (B)  sets out the name and last known mailing address, if any, of                                  
18            the employee and of each alternate payee covered by the order;                                               
19                      (C)  sets out the amount or percentage of the employee's benefit,                                  
20            or of any survivor's benefit, to be paid to the alternate payee, or sets out the                             
21            manner in which that amount or percentage is to be determined;                                               
22                      (D)  sets out the number of payments or period to which the                                        
23            order applies;                                                                                               
24                      (E)  sets out the retirement plan to which the order applies;                                      
25                      (F)  does not require any type or form of benefit or any option                                    
26            not otherwise provided by AS 39.35.700 - 39.35.990;                                                          
27                      (G)  does not require an increase of benefits in excess of the                                     
28            amount provided by AS 39.35.700 - 39.35.990, determined on the basis of                                      
29            actuarial value; and                                                                                         
30                      (H)  does not require the payment to an alternate payee of                                         
31            benefits that are required to be paid to another alternate payee under another                               
01            order previously determined to be a qualified domestic relations order;                                      
02                 (22)  "surviving spouse" means the spouse of an employee who has                                        
03       been married to the employee for at least one year at the time of the employee's death;                           
04                 (23)  "system" has the meaning given in AS 39.35.680;                                                   
05                 (24)  "years of service" means the total number of complete years of                                    
06       membership service completed by an employee; part-time service is given credit on a                               
07       pro rata basis if the part-time service was for regular employment at least 50 percent of                         
08       full time.                                                                                                        
09    * Sec. 101.  AS 39.45.030(a) is amended to read:                                                                   
10            (a)  The Alaska Retirement Management [STATE PENSION                                                     
11       INVESTMENT] Board is authorized, subject to contracts with individual employees,                                  
12       to invest the funds held under a deferred compensation program.  The board has the                                
13       same powers and duties concerning the management and investment in regard to those                                
14       funds as are provided under AS 37.10.220 [AS 14.25.180].                                                      
15    * Sec. 102.  AS 39.45.030(g) is amended to read:                                                                   
16            (g)  In this section, "board" means the Alaska Retirement Management                                     
17       [STATE PENSION INVESTMENT] Board.                                                                                 
18    * Sec. 103.  AS 39.45.060 is amended by adding a new paragraph to read:                                            
19                 (2)  "board" means the trustees of the Alaska Retirement Management                                     
20       Board established under AS 37.10.210.                                                                             
21    * Sec. 104.  AS 39.50.200(a)(9) is amended to read:                                                                
22                 (9)  "public official" means                                                                            
23                      (A)  a judicial officer;                                                                           
24                      (B)  the governor or the lieutenant governor;                                                      
25                      (C)  a person hired or appointed in a department in the                                            
26            executive branch as                                                                                          
27                           (i)  the head or deputy head of the department;                                               
28                           (ii)  the director or deputy director of a division;                                          
29                           (iii)  a special assistant to the head of the department;                                     
30                           (iv)  a person serving as the legislative liaison for the                                     
31                 department;                                                                                             
01                      (D)  an assistant to the governor or the lieutenant governor;                                      
02                      (E)  the chair or a member of a state commission or board                                          
03            [OTHER THAN PHYSICIAN MEMBERS OR ALTERNATES OF THE                                                           
04            ALASKA TEACHERS' RETIREMENT BOARD APPOINTED UNDER                                                            
05            AS 14.25.035(a)(2) OR OF THE PUBLIC EMPLOYEES' RETIREMENT                                                    
06            BOARD APPOINTED UNDER AS 39.35.030(d);]                                                                      
07                      (F)  state investment officers and the state comptroller in the                                    
08            Department of Revenue;                                                                                       
09                      (G)  [REPEALED                                                                                     
10                      (H)]  the chief procurement officer appointed under                                                
11            AS 36.30.010;                                                                                                
12                      (H) [(I)]  the executive director of the Alaska Workforce                                      
13            Investment Board; and                                                                                        
14                      (I) [(J)]  each appointed or elected municipal officer;                                        
15    * Sec. 105.  AS 39.50.200(b)(54) is amended to read:                                                               
16                 (54)  Alaska Retirement Management [STATE PENSION                                                   
17       INVESTMENT] Board (AS 37.10.210);                                                                                 
18    * Sec. 106.  AS 44.25.020(2) is amended to read:                                                                   
19                 (2)  collect, account for, have custody of, invest, and manage all state                                
20       funds and all revenues of the state except revenues incidental to a program of licensing                          
21       and regulation carried on by another state department, funds managed and invested by                              
22       the Alaska Retirement Management [STATE PENSION INVESTMENT] Board,                                            
23       and as otherwise provided by law;                                                                                 
24    * Sec. 107.  AS 44.25.028(a) is amended to read:                                                                   
25            (a)  The commissioner of revenue may designate employees of the Department                                   
26       of Revenue who are subject to the provisions of AS 39.50 because of their                                         
27       responsibility for participating in the management or investment of the funds for                                 
28       which the Alaska Retirement Management [STATE PENSION INVESTMENT]                                             
29       Board is responsible.                                                                                             
30    * Sec. 108.  AS 44.25.028(b) is amended to read:                                                                   
31            (b)  If an officer or employee of the Department of Revenue with responsibility                              
01       for funds for which the Alaska Retirement Management [STATE PENSION                                           
02       INVESTMENT] Board is responsible acquires, owns, or controls an interest, direct or                               
03       indirect, in an entity or project in which assets under the control of the board are                              
04       invested, the officer or employee shall immediately disclose the interest to the board.                           
05       The disclosure is a matter of public record and shall be included in the minutes of the                           
06       board meeting next following the disclosure.  The commissioner shall adopt                                        
07       regulations to restrict officers and employees of the department from having a                                    
08       substantial interest in an entity or project in which assets under the control of the board                       
09       are invested.                                                                                                     
10    * Sec. 109.  AS 44.64.030(a) is amended by adding a new paragraph to read:                                         
11                 (36)  AS 37.10.210 - 37.10.390 (Alaska Retirement Management                                            
12       Board).                                                                                                           
13    * Sec. 110.  AS 14.25.012(a), 14.25.015, 14.25.020, 14.25.022, 14.25.030, 14.25.035,                               
14 14.25.037, 14.25.170, 14.25.175(e), 14.25.180, 14.25.190, 14.25.220(41); AS 39.30.175(f);                               
15 AS 39.35.010, 39.35.011, 39.35.020, 39.35.030, 39.35.040, 39.35.042, 39.35.047, 39.35.060,                              
16 39.35.080, 39.35.090, 39.35.480, 39.35.520(c), 39.35.522(c), 39.35.522(e); AS 39.45.025;                                
17 AS 39.50.200(b)(23), and 39.50.200(b)(29) are repealed.                                                               
18    * Sec. 111.  AS 14.25.061(c), 14.25.062; and AS 39.35.350 are repealed.                                          
19    * Sec. 112.  The uncodified law of the State of Alaska is amended by adding a new section                          
20 to read:                                                                                                                
21       TRANSITION:  INITIAL STAGGERED TERMS OF TRUSTEES OF THE                                                           
22 ALASKA RETIREMENT SECURITY AND PORTABILITY BOARD.  Notwithstanding                                                      
23 AS 37.10.210(c), as repealed and reenacted by sec. 40 of this Act, the terms of the initially                           
24 appointed trustees of the Alaska Retirement Management Board who are not commissioners                                  
25 shall be set by the governor to achieve staggered terms in the manner provided for nine-                                
26 member boards by AS 39.05.055(7).                                                                                       
27    * Sec. 113.  The uncodified law of the State of Alaska is amended by adding a new section                          
28 to read:                                                                                                                
29       TERMS OF MEMBERS OF THE ALASKA TEACHERS' RETIREMENT BOARD,                                                        
30 THE ALASKA STATE PENSION INVESTMENT BOARD, AND THE PUBLIC                                                               
31 EMPLOYEES' RETIREMENT BOARD.  The terms of all board members appointed to the                                           
01 Alaska Teachers' Retirement Board, the Alaska State Pension Investment Board, and the                                   
02 Public Employees' Retirement Board expire on the effective date of this section.                                        
03    * Sec. 114.  The uncodified law of the State of Alaska is amended by adding a new section                          
04 to read:                                                                                                                
05       TRANSITION.  Hearings and other proceedings pending under a law amended or                                        
06 repealed by this Act or in connection with functions transferred by this Act continue in effect                         
07 and may be continued and completed notwithstanding a transfer or amendment or repeal                                    
08 provided for in this Act.  Orders and regulations issued or adopted under authority of a law                            
09 amended or repealed by this Act remain in effect for the term issued, or until revoked,                                 
10 vacated, or otherwise modified under the provisions of this Act.  Contracts, rights, liabilities,                       
11 and obligations created by or under a law amended or repealed by this Act, and in effect on                             
12 the effective date of this section, remain in effect notwithstanding this Act's taking effect.                          
13 Records, equipment, appropriations, funds, and other property of boards or agencies of the                              
14 state whose functions are transferred under this Act shall be transferred to implement the                              
15 provisions of this Act.                                                                                               
16    * Sec. 115.  The uncodified law of the State of Alaska is amended by adding a new section                          
17 to read:                                                                                                                
18       TRANSITION:  REGULATIONS.  (a)  The Department of Administration may                                              
19 proceed to develop and adopt regulations required to implement this Act.                                                
20       (b)  Regulations adopted by the Department of Administration under this Act relate to                             
21 the internal management of a state agency, and the adoption of the regulations is not subject to                        
22 AS 44.62 (Administrative Procedure Act).                                                                                
23    * Sec. 116.  The uncodified law of the State of Alaska is amended by adding a new section                          
24 to read:                                                                                                                
25       INSTRUCTION REGARDING ALASKA TEACHERS' RETIREMENT SYSTEM                                                          
26 BOARD, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM BOARD, AND                                                            
27 ALASKA STATE PENSION INVESTMENT BOARD.  Wherever in the Alaska Statutes and                                             
28 the Alaska Administrative Code the terms "Alaska Teachers' Retirement System Board,"                                    
29 "Alaska Public Employees' Retirement System Board," or "Alaska State Pension Investment                                 
30 Board" are used, they shall be read as "Alaska Retirement Management Board" when to do so                               
31 would be consistent with the changes made by this Act.                                                                  
01    * Sec. 117.  The uncodified law of the State of Alaska is amended by adding a new section                          
02 to read:                                                                                                                
03       SPECIFIC INSTRUCTIONS TO REVISOR OF STATUTES CONCERNING                                                           
04 SPECIFIC REFERENCES.  (a)  The revisor of statutes shall change references to "this                                     
05 chapter" to "AS 14.25.009 - 14.25.220" in the following statutes:  AS 14.25.040(b),                                     
06 14.25.040(c), 14.25.045(a), 14.25.047, 14.25.061(a), 14.25.062, 14.25.063(a), 14.25.075(c),                             
07 14.25.105, 14.25.107, 14.25.110(k), 14.25.142(a), 14.25.150(b), 14.25.153, 14.25.160(h),                                
08 14.25.165(f), 14.25.166, 14.25.177, 14.25.195, 14.25.200(b), 14.25.205, and 14.25.210, and                              
09 in 14.25.220 in each place that the phrase appears.                                                                     
10       (b)  The revisor of statutes shall change the reference to "board"  to "administrator" in                         
11 the following statutes:  AS 14.25.075 and 14.25.130(f).                                                                 
12       (c)  The revisor of statutes shall change the reference to "system" to "plan" in the                              
13 following statutes:  AS 14.25.040(b), 14.25.040(c), 14.25.045, 14.25.047, 14.25.055,                                    
14 14.25.060, 14.25.061(a), 14.25.062, 14.25.063(a), 14.25.065, 14.25.070, 14.25.075(c),                                   
15 14.25.075(d), 14.25.075(g), 14.25.075(h), 14.25.075(i), 14.25.100(a), 14.25.105(c),                                     
16 14.25.107, 14.25.110, 14.25.125(c), 14.25.143, 14.25.163, 14.25.165(i), 14.25.167(g),                                   
17 14.25.168, 14.25.169, 14.25.173(a), 14.25.173(d), 14.25.181, 14.25.200, 14.25.210,                                      
18 14.25.220(1), 14.25.220(4), 14.25.220(7), 14.25.220(14), 14.25.220(20), 14.25.220(22),                                  
19 14.25.220(23), 14.25.220(31), 14.25.220(34), 14.25.220(36), 14.25.220(37), 14.25.220(42);                               
20 AS 39.35.120, 39.35.125, 39.35.160, 39.35.165(a), 39.35.165(c), 39.35.165(d), 39.35.165(e),                             
21 39.35.165(g), 39.35.165(h), 39.35.165(i), 39.35.170, 39.35.180, 39.35.195(b), 39.35.195(c),                             
22 39.35.250, 39.35.280, 39.35.300(c), 39.35.310(a), 39.35.310(c), 39.35.340(a), 39.35.342(a),                             
23 39.35.342(d), 39.35.345(a), 39.35.345(d), 39.35.360(a), 39.35.360(g), 39.35.360(h),                                     
24 39.35.360(k), 39.35.370(f), 39.35.370(h), 39.35.370(i), 39.35.370(j), 39.35.370(k),                                     
25 39.35.371(i), 39.35.381(b), 39.35.381(g), 39.35.385(c), 39.35.400(e), 39.35.450(g),                                     
26 39.35.475(a), 39.35.475(d), 39.35.500(a), 39.35.505, 39.35.520(a), 39.35.520(d),                                        
27 39.35.522(d), 39.35.527(a), 39.35.527(b), 39.35.530, 39.35.535(a), 39.35.535(d), 39.35.550,                             
28 39.35.560, 39.35.570, 39.35.580, 39.35.590, 39.35.600, 39.35.610, 39.35.620(a),                                         
29 39.35.620(h), 39.35.650, 39.35.670, 39.35.675(a), 39.35.680(1), 39.35.680(5), 39.35.680(9),                             
30 39.35.680(12), 39.35.680(15), 39.35.680(16), 39.35.680(17), 39.35.680(20),                                              
31 39.35.680(21)(A), 39.35.680(29), 39.35.680(32), 39.35.680(33), and 39.35.680(35).                                       
01       (d)  The revisor of statutes shall change the reference to "board"  to "commissioner" in                          
02 the following statutes:  AS 39.35.290, 39.35.522(a), 39.35.522(b), and 39.35.522(d).                                    
03       (e)  The revisor of statutes shall change references to "this chapter" to "AS 39.35.095 -                         
04 39.35.680" in the following statutes: AS 39.35.165, 39.35.200, 39.35.250, 39.35.300,                                    
05 39.35.340, 39.35.350, 39.35.360, 39.35.370, 39.35.371, 39.35.375, 39.35.381, 39.35.490,                                 
06 39.35.495, 39.35.505, 39.35.530, 39.35.546, 39.35.547, 39.35.615(c), 39.35.620(e),                                      
07 39.35.660, 39.35.675(b), 39.35.677, and 39.35.680.                                                                      
08       (f)  The revisor of statutes shall renumber AS 39.35.690 to follow AS 39.35.990.                                  
09    * Sec. 118.  The uncodified law of the State of Alaska is amended by adding a new section                          
10 to read:                                                                                                                
11       IMPLEMENTATION OF SECTIONS 116 and 117 OF THIS ACT.  Under                                                        
12 AS 01.05.031, the revisor of statutes shall implement secs. 116 and 117 of this Act in the                              
13 Alaska Statutes, and, under AS 44.62.125(b)(6), the regulations attorney shall implement secs.                          
14 116 and 117 of this Act in the administrative code.                                                                   
15    * Sec. 119.  Sections 11, 12, 14, 15, 17, 70 - 75, 88, 95, and 111 of this Act take effect                         
16 June 30, 2010.                                                                                                          
17    * Sec. 120.  Section 118 of this Act takes effect immediately under AS 01.10.070(c).                               
18    * Sec. 121.  Except as provided in secs. 119 and 120 of this Act, this Act takes effect July 1,                    
19 2005.                                                                                                                   
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