04/04/2012 09:00 AM Senate FINANCE

SENATE BILL NO. 100                                                                                                             
                                                                                                                                
     "An  Act  relating  to employer  contributions  to  the                                                                    
     Public   Employees'   Retirement  System   of   Alaska;                                                                    
     relating to  requirements that employers  who terminate                                                                    
     some  or all  participation  in  the Public  Employees'                                                                    
     Retirement System of Alaska  pay termination costs; and                                                                    
     making the changes retroactive."                                                                                           
                                                                                                                                
9:07:29 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman  MOVED  to ADOPT  the  proposed  committee                                                                    
substitute  for  SB  100,  Work  Draft  27-LS0272\E  (Wayne,                                                                    
4/3/12.)                                                                                                                        
                                                                                                                                
9:07:48 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
9:07:55 AM                                                                                                                    
                                                                                                                                
SENATOR JOE  PASKVAN, explained that  the CS  was introduced                                                                    
in  response to  concerns  raised by  committee members.  He                                                                    
related that the most important  change was found in Section                                                                    
1,  of  the   CS  that  related  to   AS  39.35.255a,  which                                                                    
established  a "floor"  for base  salaries, as  of June  30,                                                                    
2008. He  noted that  the provision  was left  unchanged. He                                                                    
reported that  Section 2 and  Section 5 allowed  a municipal                                                                    
employer  to  exclude up  to  20  percent of  its  employees                                                                    
[participation  in the  retirement plan]  without triggering                                                                    
termination  costs.  He  shared that  the  Alaska  Municipal                                                                    
League  felt  the changes  in  the  CS were  a  "reasonable"                                                                    
compromise. He  concluded that the  intent of the CS  was to                                                                    
include  the   "20  percent   rule",  [20   percent  partial                                                                    
termination rule] and maintain the salary base.                                                                                 
                                                                                                                                
9:10:44 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  REMOVED  his OBJECTION.  There  being  NO                                                                    
FURTHER OBJECTION, Work Draft 27-LS0272\E was ADOPTED.                                                                          
                                                                                                                                
Senator  Paskvan summarized  SB 100.  He explained  that the                                                                    
legislature  passed a  law [SB  125 enacted  in 2008]  which                                                                    
attempted  to   pay  off  the  unfunded   liability  in  the                                                                    
retirement  system  [Public   Employees'  Retirement  System                                                                    
(PERS)]  over   time.  The   law  required   that  municipal                                                                    
employers  paid  a  22  percent  contribution  rate  on  the                                                                    
greater  amount of  either a  combined defined  contribution                                                                    
and defined  benefit salary base or  total payroll beginning                                                                    
on June 30, 2008. The  established floor addressed a concern                                                                    
that  employers might  convert PERS  positions to  contacted                                                                    
positions in order  to reduce their PERS  costs and transfer                                                                    
an unfair burden of the  unfunded liability to the employees                                                                    
who  remained   in  the  system.  The   legislation  allowed                                                                    
municipalities  to   transfer  up  to  20   percent  of  its                                                                    
employees  to  a  different  plan  without  the  statutorily                                                                    
induced consequences  of paying  the costs of  a termination                                                                    
study and the potential assessment  of double the 22 percent                                                                    
for the terminated employees.                                                                                                   
                                                                                                                                
Senator  Egan wondered  if the  provisions in  the CS  would                                                                    
still  alleviate  the  concerns of  small  communities  like                                                                    
Anderson.  Senator Paskvan  could not  remember the  details                                                                    
but thought the CS would provide relief.                                                                                        
                                                                                                                                
Co-Chair Stedman noted that the  fiscal note (FN 2 ADM) from                                                                    
the  Department of  Administration  in the  amount of  $86.6                                                                    
thousand  in FY  3013,  reimbursed the  department for  cost                                                                    
related  to  the  retroactivity  clause  in  Section  9  and                                                                    
Section 10 of the legislation.                                                                                                  
                                                                                                                                
Co-Chair  Hoffman  MOVED  to report  CSSB  100(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
9:15:38 AM                                                                                                                    
                                                                                                                                
CSSB  100(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation and with a  new fiscal impact note from                                                                    
the Department of Administration.