Legislature(2005 - 2006)
05/12/2005 08:35 AM Joint 141
| Audio | Topic |
|---|---|
| Start | |
| SB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 141-PUBLIC EMPLOYEE/TEACHER RETIREMENT/BOARDS
CHAIR BERT STEDMAN called the Free Conference Committee on SB
141 to order at 8:35:50 AM. Present were Representatives
Kerttula, Kelly, Hawker, and Senators Elton, Wilken, and
Stedman.
CHAIR STEDMAN reviewed the progress made by the conference
committee with limited powers of free conference. He said he
would like to honor the points of agreement from that committee
and leave intact the negotiated decisions made by former
committee members. [See minutes from meetings on May 7, 8, and
9, 2005.] He directed members to the chart entitled, "Adopted by
SB 141 Conference Committee with Limited Free Powers" dated May
10, 2005, which details the areas of difference between the
House and Senate versions of SB 141. He recapped the areas of
agreement by the previous committee:
Item 4: Benefit formula equals 13 percent per year to the
defined contribution account plus investment earnings
Item 7: Employee Contribution Rates - Deleted as per House plan
Item 8: House and Senate concepts were the same. Added verbiage
saying neither the House nor Senate felt it prudent that
contribution rate on current tiers fall below the normal service
cost. He pointed out the normal cost differs substantially from
the past service cost. This will assure that regardless of the
condition of the plan, the contribution shall never fall below
the normal service cost. He said over time, plans have a
tendency to be over-funded and under-funded and the extremes
create problems.
Items 9(a), (b), (c) - the following amounts were accepted:
5.00 % contribution to DC account (House)
1.75 % to Medical (Senate)
3.00 % to HRA (New-employer pays, tax-free to employee)
.35 % to Death and Disability Benefits (New)
10.10 % total
8:46:32 AM
SENATOR KIM ELTON said his understanding was the death and
disability benefits would be .4 percent for peace officers and
firefighters and .3 percent for other employees. He asked if the
chart shows the average of the two at .35 percent.
CHAIR STEDMAN replied it's an actuarially calculated rate that
depends on the benefits selected.
SENATOR ELTON said he was still trying to figure out whether a
peace officer's employer would pay .4 percent and a highway
engineer's employer would pay .3 percent or whether both
employers will pay .35 percent.
CHAIR STEDMAN replied, "It's a composite rate. It is 4 and 3 and
there will be individual calculations on it."
SENATOR ELTON clarified the employer of a highway engineer would
pay .3 percent while the employer of a police officer would pay
.4 percent.
CHAIR STEDMAN said that is his understanding.
8:57:13 AM
SENATOR ELTON referenced Item 19 and asked if a municipal
employee would have to return to the previous municipal employer
or whether the employee could return to any participating
employer prior to age 65.
CHAIR STEDMAN replied the employee could do it either way and
the prior years would count.
CHAIR STEDMAN continued the recap:
Item 20, retirement boards, and said the proposed structure is
totally different from the current board structure. The current
board spends 80 percent of its time on appeals. The proposal is
to send appeals to administrative law judges, rather than the
board. The current board also agrees on actuarial assumptions
and setting the contribution rates. The new board will take on
those functions along with the responsibilities of the assets
and liabilities. The Senate wanted a nine-member board including
the commissioners of administration and revenue, three Alaska
residents who are non-beneficiaries of the system, a municipal
finance officer, a school district finance officer, one member
from PERS and one member from TRS. The House wanted the same
make-up except for two PERS and two TRS members and one Alaska
resident who is a non-beneficiary of the system. The previous
committee discussed the need for the board composition to
reflect the employees' needs versus the need for more
representation on the board of non-beneficiaries to address the
need to prevent shortfalls. Members decided the number of non-
beneficiaries would be two and the municipal and school district
finance officer positions would be combined. He noted the new
board structure mirrors that of the Alaska Permanent Fund
Corporation board.
9:03:11 AM
SENATOR ELTON referenced Item 22a relating to retirement board
terms and said three years works with six year terms, but the
staggering should be two years apart for four year terms. For
example, a PERS member might rotate out the first and third
years and a TRS member the second and fourth years.
CHAIR STEDMAN said that section references the existing
structure in statute.
SENATOR ELTON said he still believes it would be a two-year
stagger so that two PERS members would not come off one after
the other.
CHAIR STEDMAN agreed to look into that, but thought it was taken
care of in statute. He moved to Item 25, board compensation, and
said the Senate used the current $150 per day honorarium fee;
the House used $400 per day, based on the Alaska Permanent Fund
Corporation board's policy. The previous committee agreed on the
House number.
CHAIR STEDMAN told members the previous committee accepted the
House ratio of 105 percent for the Ad hoc PRPAs. The previous
committee deleted item 28, which pertained to legislative
employees. Regarding Item 29, the previous committee adopted the
House provision, which closes a loophole in existing law that
deals with medical benefits for second families of retirees who
died.
9:08:43 AM
CHAIR STEDMAN said of the items that remain open, Item 30,
dealing with the University of Alaska Optional Retirement
Program, is probably the one that the committee could resolve
most easily when the time is appropriate. The University has
proposed language to the committee.
9:12:53 AM
CHAIR STEDMAN noted Item 32 is clean-up language; Item 33 makes
no changes to current statute. In Item 34, the Senate thought
the cost saving measures should be taken care of via regulation
while the House wanted them put in statute. The previous
committee adopted the Senate approach. Regarding Item 35, the
House requirement that the Division of Retirement and Benefits
submit an annual report to the legislature was accepted.
CHAIR STEDMAN said that detailed discussion on open Item 37, the
sunset provision, and open Item 38, continuing the option for
the defined benefit plan into the future, would occur at the
next meeting. He didn't intend to try to resolve those items
today. He did want to try and honor the previous agreements and
deal with the three open items. Regarding Item 39, the previous
committee agreed upon the House's fiscal note.
He said clean up work is required in a few areas of the House
bill. He pointed to page 15, line 15 through page 16, line 2
dealing with retirement plan choices; page 84, line 20 to page
85, line 7, dealing with retirement plan choices; and page 115,
lines 13 through 29. There's a problem with the reference pages
for the university section on page 41, line 5 through page 45,
line 11.
9:17:53 AM
CHAIR STEDMAN said he'd like members to look at the points and
he'd like feedback from each member on trying to hold the
discussion to the open items. In particular he would make sure
everyone received the language on the university issue. He said
the Senate is flexible, but some issues are more difficult to
move on.
9:19:18 AM
CHAIR STEDMAN said he would like to deal with Item 30 [UA] last
since it is easier and it would be nice to close on an easier
issue.
REPRESENTATIVE MIKE HAWKER suggested the committee would be
better off resolving issues where ready agreement could be made
to define the points of contention.
CHAIR STEDMAN said clearly, Items 37 and 38 would be the most
difficult evidenced by the fact that the previous committee was
unable to resolve them.
REPRESENTATIVE HAWKER said those items are issues within the
presumption that the defined benefit contribution plan must be
included in the legislation. Some sitting at the table are not
in agreement the entire component is appropriate to include in
this bill.
CHAIR STEDMAN replied there are certainly things each member
would like to change, but in its current form the bill is a
collective compromise. That being said, they could certainly
expand the approach so the agreed solution deals as a package as
long as that package is reasonable in scope. Clearly the idea is
to move to the middle toward a solution.
SENATOR ELTON said Representative Hawker was also saying that as
the committee works on those two issues, moving toward the
middle doesn't necessarily mean picking one element from one
side and another element from the other side. As six bright
people they have the obligation to think broadly and outside the
box and look at a number of potential solutions.
CHAIR STEDMAN said he recognizes they are in free conference and
have the authority to virtually rewrite the entire bill. He
agreed with broadening the scope a little bit to deal with the
issues and move toward compromise but believes there is a limit
on how far the committee should stray.
There were no further comments.
CHAIR STEDMAN recessed the meeting to the call of the Chair at
9:24:08 AM.
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