Legislature(2021 - 2022)BELTZ 105 (TSBldg)
04/07/2021 01:30 PM Senate LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s) | |
| SB41 | |
| SB6 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 41 | TELECONFERENCED | |
| + | SB 6 | TELECONFERENCED | |
| + | SB 26 | TELECONFERENCED | |
| + | SB 93 | TELECONFERENCED | |
| + | SB 38 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 6-RIP FOR PUBLIC EMPLOYEES/TEACHERS
2:20:32 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SENATE BILL NO. 6 "An Act relating to
retirement incentives for members of the defined benefit
retirement plan of the teachers' retirement system and the
defined benefit retirement plan of the Public Employees'
Retirement System of Alaska; and providing for an effective
date."
[CSSB 6(EDC) was before the committee.]
2:20:46 PM
SENATOR SCOTT KAWASAKI, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 6, introduced the legislation paraphrasing
the following sponsor statement:
Senate Bill 6 would implement a temporary, voluntary
Retirement Incentive Program to increase state savings
by allowing public employees to retire up to three
years early. Long serving public employees are among
the highest paid in the state. In many cases, pensions
paid to retiring employees would cost the state less
money than their current salaries. Providing high-
salaried employees the option to retire early would
save Alaska money through lower personnel costs.
SB 6 could also help prevent layoffs. The bill
presents a method of cost-cutting and payroll
reduction without forcing anyone out of the workforce
before they are ready to retire. This gives the State
of Alaska the opportunity to reduce operating costs by
opening vacancies that enable the placement of more
junior employees. Retirement incentive programs are
regularly used in the private sector to efficiently
control personnel costs through market incentives
rather than heavy-handed layoffs.
Retirement Incentive Programs have been used on a
temporary basis three times in Alaska's history and
was last proposed in 2004. In 1986, Senator Jim Duncan
estimated savings at approximately $25 million. A
Legislative Audit of the 1989 Retirement Incentive
Program demonstrated a savings of $22.9 million with
nearly 1,764 individual participants. In 1996, Rep.
McGuire calculated the state gained $41 million in
savings through identical legislation.
Senate Bill 6 is an innovative policy option for state
agencies, municipalities and school districts to
consider as a means to reduce payroll costs without
layoffs.
CHAIR COSTELLO moved to invited testimony.
2:24:46 PM
DOUG WOOLIVER, Deputy Administrative Director, Alaska Court
system, Anchorage, Alaska, stated that the Court System does not
have a position on SB 6, but the sponsor asked him to testify
about the retirement incentive program (RIP) the court
implemented in 2016. The idea was to reduce the workforce
without having to lay off any employees. The court offered an
incentive of three month's salary to anybody who had been
eligible to retire for at least three years and employees of the
Court System for at least 10 years. Of the 28 employees who were
eligible, 18 took advantage of the RIP, which has resulted in an
annual savings of $680,000. The upfront cost of three month's
salary was about $400,000. He acknowledged that this was a small
number compared to PERS and TRS, but it accounted for much of
the savings the court was looking for in FY16 and FY17
MR. WOOLIVER said the Court System RIP was a little different
than SB 6. The court did not have the ability to change who was
eligible to retire but they did have the authority to provide an
incentive to those already eligible to retire. It was a good
program for the court at the time; it made a lot of sense, he
said.
CHAIR COSTELLO asked if the court found it difficult to replace
the older, seasoned employees and provide training to the
replacements.
MR. WOOLIVER replied, the court did lose expertise and
experience but within a few years, everybody had the experience
so that was not problem with the court's RIP.
2:29:39 PM
CHAIR COSTELLO noted that the state was recovering from COVID-19
and asked the sponsor it he had contemplated offering the RIP to
people with preexisting health conditions. She asked if the
legislation intended to address the budget situation or the
COVIC-19 situation.
SENATOR KAWASAKI replied he introduced the legislation in a
previous legislature with the intention of avoiding layoffs, but
he would acknowledge that COVID-19 has fast-tracked a new group
of people into the retirement community. He recounted the
requirements to qualify for this RIP and pointed out the
employers have the ability to limit the program to prevent a
brain drain. He said the applicable conditions would be in
regulation.
CHAIR COSTELLO asked if this applies to both Public Employee
Retirement System (PERS) and Teacher Retirement System (TRS)
employees.
SENATOR KAWASAKI answered yes.
CHAIR COSTELLO asked for the number of PERS and TRS employees.
SENATOR KAWASAKI offered to run a report to find the information
but about 2,000 employees qualified in each of the 1986, 1989,
and 1996 RIPs.
2:32:40 PM
SENATOR GRAY-JACKSON stated support for the bill and asked for
the age limitations.
SENATOR KAWASAKI answered that participants must have at least
17 years of state service and be at least 50 years of age.
CHAIR COSTELLO asked him to clarify whether that was for the
bill or normal retirement. She noted that Mr. Puckett was
available to answer questions.
SENATOR GRAY-JACKSON advised that a firefighter reached out when
the bill was introduced in the last legislature to ask if he
might qualify. She suggested that she follow up with the sponsor
offline to discuss the situation.
2:34:09 PM
SENATOR HOLLAND asked if the big savings come from the
difference between the old and new salary and that the retiree
is paid through PERS or TRS and not the department.
SENATOR KAWASAKI replied that is correct.
2:35:37 PM
CHAIR COSTELLO opened public testimony on SB 6.
2:35:52 PM
RICHARD SEWELL, representing self, Anchorage, Alaska, stated
that as a Tier I PERS employee of a certain age, he has a
personal interest in SB 6, particularly the last sentence in
Section 1 that seems to require the elimination of certain
position control numbers (PCN) if the employee opts for the RIP.
He said that language is troubling because members who are
eligible for a RIP typically are senior employees who would be
the last to be laid off because the union layoff rules are based
on seniority. Furthermore, these senior employees typically are
in key positions that commissioners need to run the department
so they would be unlikely approve those RIPS. He suggested the
solution could be to allow the department to have a net loss of
one position for every employee that took a RIP as opposed to
losing the particular position. He said he had other comments on
the bill, but the foregoing was the most important.
CHAIR COSTELLO said Section 1 is uncodified law but even if it
were law, her reading is that this is an option for employers,
not a requirement. She asked the sponsor if he agrees with her
reading and Mr. Sewell's comment about losing the PCNs.
2:39:55 PM
SENATOR KAWASAKI agreed that the Purposes and Intent in Section
is uncodified law so there is no requirement. The position could
be held, vacant, or eliminated.
CHAIR COSTELLO asked if he agrees that the entire bill is
uncodified law.
SENATOR KAWASAKI answered no; just Section 1 is uncodified. The
bill itself is in Sections 2-10.
CHAIR COSTELLO said she would follow up and talk about that
offline.
2:41:05 PM
CHAIR COSTELLO closed public testimony on SB 6. She thanked Mr.
Sewell for his testimony. She welcomed him to submit his
comments in writing.
2:41:36 PM
MR. SEWELL said he had one more comment relating to Section 2,
page 3, lines 28-31 to page 4, lines 1-2. Paragraph (f)(3)(B)
talks about 20 years [of credited service] as an employee and he
wondered if that was total time accrued in various
jurisdictions. He said he started as a PERS employee with the
Municipality of Anchorage and now works for Department of
Transportation and Public Facilities (DOTPF) but he does not 20
years of service. He asked how his employment is counted.
2:42:20 PM
CHAIR COSTELLO said she reads the bill to mean 20 years total
with the state and it could be in one or more jurisdictions. She
asked Senator Kawasaki if he agreed.
SENATOR KAWASAKI answered yes; the employment could be with the
state and a municipality.
CHAIR COSTELLO asked if PERS and TRS employment could be
combined to reach 20 years.
SENATOR KAWASAKI suggested that Mr. Puckett might be able to
answer the question.
CHAIR COSTELLO asked Mr. Puckett to respond to the questions.
2:43:25 PM
JIM PUCKETT, Deputy Director, Division of Retirement and
Benefits, Department of Administration, Juneau, Alaska, answered
that a combination of PERS and TRS can be used in some cases. He
offered to provide more information in writing.
CHAIR COSTELLO asked him to send the information to her office
and she would distribute it to the members.
SENATOR GRAY-JACKSON pointed out that the savings when there is
a RIP is not only the salaries but also the benefits, leave
accruals, and PERS contributions.
CHAIR COSTELLO asked Ms. Ricci if she wanted to respond to
Senator Gray-Jackson's comment about savings in addition to
salaries.
2:45:55 PM
EMILY RICCI, Chief Health Administrator, Division of Retirement
and Benefits, Department of Administration, Juneau, Alaska, said
the division will have a better idea of the savings once the
bill reaches the Finance Committee and the division analyzes it
with help from their actuaries.
CHAIR COSTELLO noted that the Finance Committee was the next
committee of referral.
CHAIR COSTELLO asked the sponsor's staff to visit the members in
their offices to answer any questions and address concerns
before the next meeting. The sectional analysis could wait until
then.
CHAIR COSTELLO held SB 6 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SLAC GOV Appointee Tanya Kirk Board Application Redacted.pdf |
SL&C 4/7/2021 1:30:00 PM |
SLAC GOV APPOINTEE CDEM TANYA KIRK |
| SLAC GOV Appointee Tanya Kirk Resume Redacted.pdf |
SL&C 4/7/2021 1:30:00 PM |
SLAC GOV APPOINTEE CDEM TANYA KIRK |
| SLAC GOV Appointee Hannah St George Board Application Redacted.pdf |
SL&C 4/7/2021 1:30:00 PM |
SLAC GOV APPOINTEE CDEM HANNAH ST GEORGE |
| SLAC GOV Appointee Rachel Berngartt Resume Redacted.pdf |
SL&C 4/7/2021 1:30:00 PM |
SLAC GOV APPOINTEE VE RACHEL BERNGARTT |
| SLAC GOV Appointee Tammy Lindemuth Board Application Redacted.pdf |
SL&C 4/7/2021 1:30:00 PM |
SLAC GOV APPOINTEE BP TAMMY LINDEMUTH |
| SLAC GOV Appointee Vincent Perez Resume Redacted.pdf |
SL&C 4/7/2021 1:30:00 PM |
SLAC GOV APPOINTEE OSHR VINCENT PEREZ |
| SB 41 Sponsor Statement.pdf |
SL&C 4/7/2021 1:30:00 PM |
SB 41 |
| SB 41 Sectional Analysis Version A.pdf |
SL&C 4/7/2021 1:30:00 PM |
SB 41 |
| SB 41 Presentation 4.7.21.pdf |
SL&C 4/7/2021 1:30:00 PM |
SB 41 |
| SB 41 Letter of Comment Premera.pdf |
SL&C 4/7/2021 1:30:00 PM |
SB 41 |
| CSSB 6 (EDC) Sponsor Statement Version B.pdf |
SL&C 4/7/2021 1:30:00 PM |
SB 6 |
| CSSB 6 (EDC) Sectional Analysis Version B.pdf |
SL&C 4/7/2021 1:30:00 PM |
SB 6 |
| SB 6 Letter of Support Michael Ripke.pdf |
SL&C 4/7/2021 1:30:00 PM |
SB 6 |