05/04/1998 08:40 AM House FIN

HOUSE BILL NO. 323                                                             
                                                                               
"An Act relating to the calculation of credited service                        
in the public employees' retirement system for                                 
noncertificated employees of school districts, regional                        
educational attendance areas, and state boarding                               
schools; and providing for an effective date."                                 
                                                                               
REPRESENTATIVE TOM BRICE, SPONSOR, testified in support of                     
SB 235.  He explained that the legislation addresses an                        
inequity that exists within state schools.  Currently,                         
certificated school district employees receive a full year                     
retirement credit for each school year worked.  The school                     
year is generally 170 - 180 days.  Noncertificated school                      
employees receive day-per-day credit toward retirement.  The                   
legislation would allow noncertificated employees to receive                   
a full year credit for each school year they work.  Employee                   
participation would be optional.  Employees who opt-in would                   
pay for the additional credit.  There would be no additional                   
cost to the employer.                                                          
                                                                               
Representative Brice reviewed the legislation.  Section 1                      
delineates the calculation for employee payments.  Sections                    
2 and 3 allow employees to opt-in to the program.  New                         
employees have a three-month window of opportunity to opt                      
in.  Current employees have six months to opt-in.  Employees                   
that are currently inactive have three months to opt-in to                     
the program.                                                                   
                                                                               
Co-Chair Therriault clarified that employees cannot buy back                   
past year's service.  Individual employees are given the                       
option of participating.  The option to participate is                         
irrevocable.                                                                   
                                                                               
GUY BELL, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,                       
DEPARTMENT OF ADMINISTRATION provided information on HB 323.                   
He clarified that employees will pay the full cost of the                      
program.  He explained that the surcharge is paid entirely                     
by the employee who elects to go with the higher rate and                      
the 12-month retirement credit.                                                
                                                                               
Co-Chair Therriault questioned if payments would be prorated                   
or taken out at the end of the school year.   Representative                   
Brice stated that payments would be taken out monthly during                   
their period of employment.                                                    
                                                                               
Representative Kelly MOVED to ADOPT Amendment 1 on behalf of                   
Representative Brice (copy on file).  Amendment 1 would                        
delete  "on or after the date that the administrator accepts                   
it" on page 2, line 17 and page 3, line 4 and insert "for                      
the school year in which the election is accepted by the                       
administrator."   There being NO OBJECTION, it was so                          
ordered.                                                                       
                                                                               
Representative Kelly MOVED to ADOPT Amendment 2 on behalf of                   
Representative Brice (copy on file).  Amendment 2 would add                    
the Alaska Vocational Technical Center.  Representative                        
Brice explained that the amendment was recommended by the                      
Administration.  He observed that the Kotzebue Vocational                      
Center is operated by the school district.  There being NO                     
OBJECTION, it was so ordered.                                                  
                                                                               
Co-Chair Therriault referred to the fiscal note.  The fiscal                   
note would fund $116.5 thousand dollars for contractors to                     
update the Division's computer system.                                         
                                                                               
BILL CHURCH, RETIREMENT SYSTEMS MANAGER, DEPARTMENT OF                         
ADMINISTRATION provided information on the Department's                        
fiscal note.  The fiscal note is needed to update the                          
present system.  A separate code identifier must be                            
developed for their old and new systems.                                       
                                                                               
Representative Kelly MOVED to report CSHB 323 (FIN) out of                     
Committee with the accompanying fiscal note.  There being NO                   
OBJECTION, it was so ordered.                                                  
                                                                               
CSHB 323 (FIN) was REPORTED out of Committee with a "do                        
pass" recommendation and with a fiscal impact note by the                      
Department of Administration, 5/01/98.