Legislature(2023 - 2024)SENATE FINANCE 532
01/24/2024 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB127 | |
| SB88 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 127 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 88 | TELECONFERENCED | |
SENATE BILL NO. 88
"An Act relating to the Public Employees' Retirement
System of Alaska and the teachers' retirement system;
providing certain employees an opportunity to choose
between the defined benefit and defined contribution
plans of the Public Employees' Retirement System of
Alaska and the teachers' retirement system; and
providing for an effective date."
2:04:46 PM
AJAI DESAI, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION, (DOA) introduced himself.
2:04:57 PM
KEVIN WORLEY, CHIEF FINANCIAL OFFICER, DIVISION OF
RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION,
introduced himself.
2:05:10 PM
KATHY LEA, CHIEF PENSION OFFICER, DIVISION OF RETIREMENT
AND BENEFITS, DEPARTMENT OF ADMINISTRATION, introduced
herself.
Co-Chair Olson remarked that the fiscal notes were quite
large, which have caused some questions and concerns.
Co-Chair Stedman asked about the fiscal note, and felt that
there needed to be detail about how the unfunded liability
percentage related to the municipalities.
Mr. Desai deferred to Mr. Kershner.
2:08:43 PM
DAVID KERSHNER, BUCK GLOBAL LLC, FLORIDA (via
teleconference), explained the details of the actuarial
analysis.
2:18:55 PM
Co-Chair Olson acknowledged SENATOR BILL WIELECHOWSKI, in
the gallery.
Co-Chair Stedman asked how the bill affected the unfunded
liability.
2:20:18 PM
Mr. Kershner replied that the current unfunded liability
would not be affected by SB 88.
Co-Chair Olson wanted to know that the state would not have
another unfunded liability.
Mr. Kershner replied that the state received a benefit by
shifting the risk from the state to the employees. He
stated that the bill would take on some of that risk.
Co-Chair Stedman looked at the fiscal note from May 11, and
remarked that there may be an opening for the municipality
to shift the responsibility to the state.
2:26:32 PM
Senator Merrick queried how much of the unfunded liability
was the result of the medical portion of the plan.
Mr. Kershner replied that both PERS and TRS were overfunded
in the health care portion. He shared that the issue was
that the overfunding of the health care trust could not be
used for pensions due to legal reasons.
Senator Wilson wondered whether the actuarial assessments
took into account the new tier outlined in SB 88.
Mr. Kershner replied "no", and explained that the
contributions were at the actuarial rate at no less than 12
percent, which included 3 percent for the HRA
contributions.
Senator Wilson wondered whether a 90 percent funded was a
"funded pension plan."
Mr. Kershner replied that a funded pension plan was 100
percent funding, and remarked that there were degrees of
funding.
Senator Wilson queried the 90 percent pension liability to
the state of Alaska under SB 88.
Mr. Kershner agreed to provide that information.
2:30:42 PM
Co-Chair Stedman surmised that there would be an updated
actuarial analysis.
Mr. Kershner replied that there had been a request for
alternative projections with different assumptions.
Co-Chair Olson queried the expected completion date of the
analyses.
Mr. Kershner replied that the goal was to complete the
materials by the end of February.
Co-Chair Stedman wanted to know which fiscal notes were
used in the bill.
2:33:53 PM
KEN ALPER, STAFF, SENATOR DONNY OLSON, replied that there
were three current fiscal notes. He stated that one fiscal
note was conventional, and about the implementation of the
bill and its impact to the department. He stated that the
fiscal note may be slightly different, and require a
replacement. He shared that the other two were based on the
Buck actuarial analysis.
Co-Chair Olson wondered how a current and updated fiscal
note would be different.
Mr. Alper replied that new fiscal notes based on the
actuarial analysis would need to be replaced, because they
were dated from the year prior.
2:37:39 PM
SENATOR CATHY GIESSEL, SPONSOR, stated that Mr. Desai could
speak in response to the fiscal notes.
Mr. Desai stated that the department was working to produce
new fiscal notes with the latest information.
Co-Chair Stedman wondered whether the $1.6 billion was the
cost of the bill.
Mr. Desai replied that the $1.6 billion was the cost of the
administration of the program.
Co-Chair Stedman was trying to determine the cost of the
bill. He wondered when the committee could expect the new
actuarial analysis.
Mr. Desai replied that a new fiscal note would be verified,
and stated that there would only be minor changes.
2:40:06 PM
Co-Chair Stedman queried the total fiscal note cost.
Mr. Alper replied that the fiscal note was the conventional
fiscal note, which would be the administrative cost of the
bill that would have normal administrative costs. He stated
that the remaining two would be tied to the actuarial
analysis, which were potential costs of additional payroll
and pension contributions from the state.
Co-Chair Stedman asked for a ballpark number.
Mr. Alper replied that the two fiscal notes that were tied
to the Buck analysis totaled approximately $1.2 billion
over 17 years. He stated that the cost over six years is
$140 million, which would be the years covered in the
fiscal note. He explained that most of the money was not
additional costs to the bill, but rather was assumed that
the retention would improve therefore the state payroll
would increase.
Senator Bishop wondered whether the payroll numbers were
filling the vacant positions in the budget.
Mr. Alper replied that there was a very large vacancy rate
and it was his expectation that there would be a lower
vacancy rate after the passage of the bill.
Senator Giessel requested a quantification of the savings
in recruitment.
Mr. Desai agreed to provide that information.
Co-Chair Stedman wondered when the exact numbers related to
the calculation of over or under funding resulting from the
passage of the bill.
Mr. Desai replied that those numbers should be expected
near the end of February.
Co-Chair Olson stressed that he did not need a precise
number, but more of an approximation.
Senator Kiehl applauded the division, because the
implementation cost seemed the same as the implementation
of the current tier.
2:44:56 PM
Mr. Desai explained that the reason for the cost
differences, is due to the cost of the implementation.
Co-Chair Olson queried comments on the legislation.
Mr. Worley replied that the fiscal note for implementation
included the actuarial analyses and evaluations. He
explained the process to make a final determination of the
cost of the bill.
2:49:55 PM
Ms. Lea stated that she was able to deliver the benefits
outlined in the legislation.
Co-Chair Stedman wondered how TRS could be allowed into the
supplemental benefits system.
Ms. Lea replied that the statutes needed to be changed to
accommodate that allowance.
Co-Chair Stedman felt that there should be a discussion
about that issue.
2:52:37 PM
AT EASE
2:57:11 PM
RECONVENED
2:58:07 PM
Senator Giessel commented on some history of the bill, and
encouraged passage of the bill.
Senator Kiehl MOVED to REPORT SB 88 out of committee with
individual recommendations and attached fiscal notes.
3:04:25 PM
AT EASE
3:08:17 PM
RECONVENED
There being NO OBJECTION, it was so ordered.
3:09:05 PM
AT EASE
3:11:17 PM
RECONVENED
CSSB 88(FIN) REPORTED out of COMMITTEE with one "do not
pass" recommendation, three "no recommendations", and three
"do pass" recommendations; and with two new fiscal notes
from the Senate Finance Committee/Various Departments and
the Department of Administration.
Co-Chair Olson discussed the following day's agenda.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 127 Chamber of Progress AK SB 127_ Oppose Tax Mandate.pdf |
SFIN 1/24/2024 1:30:00 PM |
SB 127 |
| SB 127 Sectional Analysis v. U 1.22.2024.pdf |
SFIN 1/24/2024 1:30:00 PM |
SB 127 |
| SB 127 Testimony - Received as of 1.23.2024.pdf |
SFIN 1/24/2024 1:30:00 PM |
SB 127 |
| SB 127 DOR TAX 011924.pdf |
SFIN 1/24/2024 1:30:00 PM |
SB 127 |
| SB 127 DOR Presentation to SFIN 01.23.24.pdf |
SFIN 1/24/2024 1:30:00 PM |
SB 127 |
| SB 127 Opposition Technet.pdf |
SFIN 1/24/2024 1:30:00 PM |
SB 127 |