Legislature(1999 - 2000)
02/15/2000 01:45 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 236
An Act relating to credited service in the teachers'
retirement system for part- time employment.
PATTI SWENSON, STAFF, REPRESENTATIVE CON BUNDE, explained
that the purpose of HB 236 was to correct an inequity in the
Teachers Retirement System (TERS). Under the current
system, teachers working more than 50% of the time, but less
than full time, receive only one-half service credit for
time worked. In other words, teachers in this group
contribute more retirement dollars, but do not get a
retirement benefit consistent with their contribution.
Ms. Swenson stated that HB 236 would correct the inequity in
the teacher retirement system by giving teachers, who work
more than 50% of the time, but less than full time,
retirement service based on time worked.
Representative G. Davis inquired if the entire fund would
increase the calculated contribution rate by approximately
.06% and if all members of the group would pay that. Ms.
Swenson replied that teachers are currently paying that
rate. She requested that Guy Bell answer the question in
more depth.
GUY BELL, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION, explained that there is a
calculated cost of .06% of covered payroll. He noted that
since the employee calculation rate is fixed, 8.65% would go
to the employers. The employees are effectively paying in
based on the time that they put in. The legislation would
create a small additional liability to employers, because it
is an adjustment to the benefit. However, this will not
have an affect on the 12% contribution rate. The .06% rate
will be absorbed by the system's current rate of 12% for
employers.
Representative Phillips commented that several years ago,
the Legislature passed a similar bill for the non-certified
employees. She asked if the nurses would be classified the
same as the teachers. Mr. Bell advised that school nurses
are generally classified as teachers.
Representative Phillips asked if it was the intent of
Representative Bunde that nurses be covered under this
legislation. Ms. Swenson replied that it was. Mr. Bell
pointed out that decision would be each district's
discretion.
Co-Chair Mulder pointed out that Section #2, the retroactive
portion, was "troubling". That section would allow
employees that have worked in excess of ½ time in the past,
to come back and make application to the portion of the time
that they worked. Mr. Bell explained that had been included
in the calculation as well as the future costs to the State.
Co-Chair Mulder suggested that would be an administrative
nightmare. Mr. Bell requested the retirement specialist from
his Division testify regarding that concern.
DAVID STOUT, RETIREMENT AND BENEFITS SPECIALIST, DIVISION OF
RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION, noted
that his job required administering the functions as
prescribed in HB 230. He commented that with the
computerization of the system, it would not be difficult to
accomplish a change in the service from 50% to a prorated
base.
Representative J. Davies noted that this would not be
totally retroactive, but rather, would address those coming
up for retirement. Representative J. Davies added that this
calculation would have to be determined regardless.
Co-Chair Mulder asked the number of people eligible in this
category. Mr. Stout replied that there is a small amount of
teachers that teacher part time. He guessed that only 15% -
20% of all active teachers has some part-time service in
their careers. Co-Chair Mulder interjected that was a
significant number.
Co-Chair Therriault inquired if the total cost would be
absorbed. Mr. Bell replied that he had been advised that
the costs could be absorbed.
Co-Chair Mulder voiced concern with adding something to the
benefit. He commented that there has been a determination
made without the proper calculation used. He foresaw a
large fiscal note "down the road".
Representative G. Davis noted that the bill only related to
the TERS budget. He pointed out that the State budget would
not be directly affected, however, costs would be "passed
through" to the school districts. The problem down the line
exists with the employee and the employer. Representative
G. Davis noted that his concern was having an unfunded
mandate.
Co-Chair Therriault interjected that staff just informed him
that 20% far surpassed the "real" number.
JOHN CYR, ALASKA PRESIDENT, NATIONAL EDUCATION ASSOCIATION
(NEA), JUNEAU, responded that last year, it was determined
that there are about 250 people statewide that would be
affected through the proposed legislation. The problem
exists because those people are already paying into the
system. He noted that if a person works ¾ time, they are
paying into the system for the ¾ time rate, however, when
they retire, they only receive ½ time rate payment. He
emphasized that the system is currently making money from
those employees. When those employees leave the system, the
money is not retroactive.
Representative Foster understood that a net zero would
benefit the system and would relate to those employees
working 25% and getting 25% rather than 50%. He thought this
would be a "wash". Co-Chair Therriault explained that the
employee would be required to work a minimum of a certain
percentage before they would be eligible. Mr. Bell replied
that you would have to work a minimum of half time (50%) to
be a member of the system. Mr. Cyr added that each local
district decides who is part of either the TERS or PERS
system.
Representative G. Davis asked what state employees would be
affected by the legislation. Mr. Bell stated that there are
only 230 employees within that system. He did not know how
many of those were part-time.
Representative Foster asked where most of the part-time
teachers were located in the State. Mr. Cyr replied that
the majority of these teachers are located in Anchorage. He
acknowledged that there are very few part-time teachers in
the Bush area.
Co-Chair Mulder noted that he had a conflict of interest as
one of his past employees was on the list. [Copy on File].
Co-Chair Therriault objected to Co-Chair Mulder abstaining
from voting.
Representative J. Davies declared a conflict because his
wife could have been a part-time schoolteacher. Co-Chair
Therriault objected to Representative J. Davies abstaining
from voting.
Representative Foster MOVED to report HB 236 out of
Committee with individual recommendation and with the
attached fiscal note. There being NO OBJECTION, it was so
ordered.
HB 236 was reported out of Committee with a "do pass"
recommendation and with a zero fiscal note by the Department
of Administration dated 2/9/00.
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