Legislature(2021 - 2022)ADAMS 519

04/27/2021 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 92(FIN) Out of Committee
Heard & Held
-- Public Testimony --
HOUSE BILL NO. 55                                                                                                             
     "An  Act relating  to  participation  of certain  peace                                                                    
     officers and  firefighters in  the defined  benefit and                                                                    
     defined  contribution plans  of  the Public  Employees'                                                                    
     Retirement  System of  Alaska; relating  to eligibility                                                                    
     of  peace   officers  and  firefighters   for  medical,                                                                    
     disability, and  death benefits; relating  to liability                                                                    
     of the  Public Employees' Retirement System  of Alaska;                                                                    
     and providing for an effective date."                                                                                      
11:24:53 AM                                                                                                                   
Co-Chair Merrick OPENED public testimony.                                                                                       
11:25:19 AM                                                                                                                   
JEFF JONES, SELF,  KETCHIKAN (via teleconference), testified                                                                    
in support of the legislation. He  shared that he was a fire                                                                    
medic and had been with  the Ketchikan Fire Department since                                                                    
2007.  He stated  a return  to a  DB [defined  benefit] plan                                                                    
could help  the state  and municipalities mitigate  the cost                                                                    
the associated  with training and turnover  with existing DB                                                                    
plans. He  provided information about the  various positions                                                                    
he had  held with  the [fire] department.  He stated  he was                                                                    
not irreplaceable; however,  it would be a  long time before                                                                    
someone  new could  receive the  numerous certifications  he                                                                    
had  obtained. He  did not  want to  relocate his  family to                                                                    
another state  with a  DB program. He  remarked it  was well                                                                    
known  that firefighters  working after  the age  of 55  put                                                                    
them in greater risk of dying.  He wanted to be able to hold                                                                    
his grandchildren  and enjoy his retirement.  He started his                                                                    
career when he was 28 years old  and at 58, he would have 30                                                                    
years  with the  department, but  not enough  to retire.  He                                                                    
emphasized that  responding to  a fire at  that age  put the                                                                    
employee,  coworkers, and  the  public at  greater risk.  He                                                                    
believed the  relatively small increase  for the  DB program                                                                    
would  be money  well spent  when considering  the value  of                                                                    
retaining employees  throughout their career.  He encouraged                                                                    
the committee to pass the bill.                                                                                                 
11:27:24 AM                                                                                                                   
GERARD  ASSELIN,   CAPTAIN,  ANCHORAGE   POLICE  DEPARTMENT,                                                                    
ANCHORAGE  (via   teleconference),  shared  that  he   is  a                                                                    
lifelong Alaska  resident. He supported the  legislation. He                                                                    
had been honored to serve  his friends and neighbors for the                                                                    
past 23  years with the department.  He provided information                                                                    
about  his job  duties.  He worked  with  over 200  officers                                                                    
providing critical  service around the  clock. Additionally,                                                                    
he oversaw  the field  training program.  He saw  the direct                                                                    
impacts  of the  recruitment and  retention challenges  that                                                                    
existed  within the  profession  in  Alaska. He  highlighted                                                                    
that the  department was  fundamentally and  increasingly in                                                                    
search of  qualified, educated professionals to  work in the                                                                    
career. He stressed that demands  on the policing profession                                                                    
had increased,  making it more  difficult to  recruit people                                                                    
into  the  profession  and causing  officers  to  reevaluate                                                                    
their  desire  to  stay. He  detailed  that  after  officers                                                                    
received training, they became a valuable commodity.                                                                            
Mr.  Asselin   shared  that  recruitment  had   become  more                                                                    
competitive   and   challenging   than  ever   before.   The                                                                    
department  saw  officers  leave  on  a  monthly  basis  for                                                                    
departments  in  other  states.  He spoke  to  the  loss  of                                                                    
productivity that  occurred with academy and  field training                                                                    
and the proficiency that came  with experience. He witnessed                                                                    
the  loss  of  productivity   daily  with  the  department's                                                                    
training programs. He  reported that over the  past month he                                                                    
had  interviewed  20 patrol  sergeants  and  almost all  had                                                                    
vocalized  the number  one problem  was  young officers  and                                                                    
recruitment   and   retention.    The   situation   led   to                                                                    
inexperience and a loss of  productivity. He appreciated any                                                                    
tools  that  could  be  given  to  improve  recruitment  and                                                                    
retention  for  the  department.  He stated  that  the  bill                                                                    
provided  an  opportunity to  put  Alaska  in a  competitive                                                                    
position to  maintain the best public  safety professionals.                                                                    
He urged support of the bill.                                                                                                   
11:31:14 AM                                                                                                                   
JODIE  HETTRICK,  FIRE  CHIEF,  ANCHORAGE  FIRE  DEPARTMENT,                                                                    
ANCHORAGE  (via teleconference),  spoke  in  support of  the                                                                    
bill. She  detailed that the  Anchorage Fire  Department was                                                                    
the  largest in  the  state with  about  400 employees.  She                                                                    
shared  that  one  of  the  department's  biggest  stumbling                                                                    
blocks  for recruitment  and retention  of  members was  the                                                                    
retirement system. The situation  was compounded by members'                                                                    
ineligibility for  social security.  She explained  that the                                                                    
department was trying to get people  to spend 20 to 25 years                                                                    
serving the  community and when  they left, they only  had a                                                                    
401k. She  explained it had  significantly contributed  to a                                                                    
reduction  in recruitment  opportunities. She  reported that                                                                    
the department's  application numbers were  approximately 25                                                                    
percent  of what  they had  been pre-Tier  IV. Additionally,                                                                    
employees were leaving typically  within their first five to                                                                    
seven years.  She shared  that an  employee had  reached his                                                                    
benchmark  for his  401k under  the  Tier IV  system, so  he                                                                    
retired at the  age of 34 after working  with the department                                                                    
just under 10  years. She explained it was  an investment of                                                                    
close  to  $2 million  the  municipality  had put  into  the                                                                    
individual for training and other  and it had gone right out                                                                    
the  door. She  detailed that  the department  was not  only                                                                    
losing employees to other states,  but to retirement because                                                                    
they were  comfortable living at  a fairly low  wage without                                                                    
having  to deal  with the  negative effects  of a  career in                                                                    
emergency services.                                                                                                             
Ms.  Hettrick stated  that  without  an adequate  retirement                                                                    
system in place, it would  be even more difficult to recruit                                                                    
and retain  valuable employees to  serve the  community. She                                                                    
believed  the  bill went  in  the  right direction  and  she                                                                    
strongly urged support for its passage.                                                                                         
Representative LeBon referenced the  retirement of the young                                                                    
individual  in  Ms.  Hettrick's example.  He  asked  if  the                                                                    
individual   had  left   the   profession   to  seek   other                                                                    
employment. He remarked that retiring  and drawing on a 401k                                                                    
at the age  of 34 would be very unusual.  He wondered if the                                                                    
individual  had   moved  to  another  employer   within  the                                                                    
profession or left the profession completely.                                                                                   
Ms. Hettrick answered that the  specific individual had left                                                                    
the  profession   entirely.  The  person  had   moved  to  a                                                                    
community in the Lower 48 where  he could live for much less                                                                    
stable income.  The individual had  another career  field in                                                                    
woodworking and photography and  would supplement his income                                                                    
with   retirement   income.   The   department   had   never                                                                    
experienced  someone  leaving  that early  for  an  official                                                                    
11:36:10 AM                                                                                                                   
ANGIE  FRAIZE,  OFFICER, COMMUNICATIONS  OFFICER,  ANCHORAGE                                                                    
POLICE  DEPARTMENT  EMPLOYEES' ASSOCIATION,  ANCHORAGE  (via                                                                    
teleconference),  spoke in  favor  of  the legislation.  She                                                                    
shared  that the  organization represented  over 570  police                                                                    
employees. She  stated that the  committee's support  of the                                                                    
legislation  would   directly  and  indirectly   impact  the                                                                    
department's employees  and the greater Anchorage  area. She                                                                    
shared it was  her 20th year and she was  eligible to retire                                                                    
with a  pension. Additionally, she loved  the department and                                                                    
was  born and  raised  in Alaska.  She  emphasized that  the                                                                    
department was  seeing its employees  leave in  droves after                                                                    
their  first five  years. She  relayed  that the  department                                                                    
recruited a  high number of  military employees  leaving the                                                                    
military.  She  noted that  the  individuals  were not  from                                                                    
Alaska and  did not have  extended family in the  state, but                                                                    
they were  starting their families with  the department. She                                                                    
detailed that  after about five  years the  officers started                                                                    
having young children and were  pulled away by family in the                                                                    
Lower 48  and by  lucrative offers from  lateral departments                                                                    
out-of-state   offering  more   money   and  pensions.   She                                                                    
emphasized that  the department  was spending  a substantial                                                                    
amount  on  the  employees.  She  added  that  the  loss  of                                                                    
employees  had  resulted in  a  very  young department.  She                                                                    
explained  that  it   would  have  a  huge   impact  on  the                                                                    
community. Additionally, due to  the national narrative that                                                                    
police were facing,  professional, experienced, and educated                                                                    
officers were needed.                                                                                                           
She shared  that there  were only two  officers left  in the                                                                    
department from  her 2007 academy.  She emphasized  that the                                                                    
department  was  hurting  for experienced  and  professional                                                                    
police   officers.  She   hoped  the   committee  considered                                                                    
supporting the legislation.                                                                                                     
Representative Rasmussen  asked Ms.  Fraize to speak  to the                                                                    
benefit   a  more   experienced  officer   could  bring   in                                                                    
situational awareness.                                                                                                          
Ms. Fraize replied that there  were many studies showing the                                                                    
more education  experience, the less force  an officer used.                                                                    
She  noted it  was a  topic nationwide  and fortunately  the                                                                    
department  had not  experienced the  situation. She  shared                                                                    
that the  department had a  very junior patrol  division and                                                                    
over 80 percent had been there  for three to five years. She                                                                    
shared that when  she had worked as an  officer downtown, it                                                                    
had taken her about five  years to feel completely confident                                                                    
in her  handling of all  situations. She explained  that the                                                                    
junior  officers did  not have  the  experience, through  no                                                                    
fault  of their  own. She  stressed the  need to  continue a                                                                    
highly  educated  and  experienced department  in  order  to                                                                    
avoid  seeing   the  community  suffer  like   Ferguson  and                                                                    
Representative  Rasmussen  stated  she found  it  astounding                                                                    
there was  only 20 percent  of the department that  had over                                                                    
five  years  of  experience.   She  observed  that  incoming                                                                    
officers likely  were not receiving the  training they could                                                                    
if there were more experienced officers serving as mentors.                                                                     
11:41:18 AM                                                                                                                   
JUSTIN MACK, ALASKA  PROFESSIONAL FIREFIGHTERS' ASSOCIATION,                                                                    
ANCHORAGE (via  teleconference), supported  the legislation.                                                                    
He  shared  that  he  had  worked  for  the  Anchorage  Fire                                                                    
Department for  10 years and  currently served as  a captain                                                                    
for Fire Station 3. He  relayed there was widespread support                                                                    
for   the  bill   within  the   organization  of   over  500                                                                    
professional fire fighters and  EMS personnel throughout the                                                                    
state.  The association  had been  advocating  for a  shared                                                                    
risk solution  where employees, employers, and  the State of                                                                    
Alaska shared a responsibility  in addressing recruiting and                                                                    
retention. He  detailed that  since the  change to  Tier IV,                                                                    
there had been many  unintended consequences. He stated that                                                                    
perhaps  the   clearest  consequence  was   the  competitive                                                                    
disadvantage Alaska  faced in recruitment and  retention. He                                                                    
reported  that the  problem  was  widespread throughout  the                                                                    
state's  fire departments.  He pointed  out that  Alaska was                                                                    
one  of  the  only  states  to  offer  a  mandatory  defined                                                                    
contribution (DC) for public safety employees.                                                                                  
Mr. Mack  relayed other states  had switched back from  a DC                                                                    
plan  to a  DB  plan specifically  to  address the  problems                                                                    
currently  happening  in  Alaska.  The bill  aimed  to  make                                                                    
Alaska  competitive in  the hiring  and retaining  of public                                                                    
safety  employees.  He stated  it  was  a conservative  plan                                                                    
built by  incorporating best practices  of some of  the most                                                                    
successful plans  in the  country, including  establishing a                                                                    
minimum  retirement age,  removing DB  medical, and  using a                                                                    
five-year  average  rather  than a  three-year  average.  He                                                                    
remarked that  the changes  drastically reduced  the state's                                                                    
liability.   He  detailed   that  the   plan  also   offered                                                                    
mechanisms to  address any adverse  experience the  plan may                                                                    
have,   including    increasing   employee    and   employer                                                                    
contributions and withholding inflation proofing.                                                                               
Mr.  Mack stressed  there was  a significant  cost of  doing                                                                    
nothing.  He   highlighted  that  too  many   public  safety                                                                    
employees had  left the state  who cited lack  of retirement                                                                    
as a  primary cause. He  stated that departments  across the                                                                    
state  were hiring  police, fire,  and corrections  officers                                                                    
who would  receive excellent training, yet  had no long-term                                                                    
plans to remain in Alaska.  He informed the committee it was                                                                    
becoming well known that Alaska  employees were ripe for the                                                                    
picking;  the department  received  emails  and flyers  from                                                                    
other states attempting to  recruit its employees. Employers                                                                    
were having  to reinvest  recruitment and  retention dollars                                                                    
several  times  over, which  was  wreaking  havoc on  public                                                                    
safety  budgets.  He  pointed  out that  the  most  talented                                                                    
public  safety   officers  were   leaving  the   state.  The                                                                    
organization strongly supported the bill.                                                                                       
11:44:35 AM                                                                                                                   
NICK  DAVIS,  SENIOR  CAPTAIN,  ANCHORAGE  FIRE  DEPARTMENT,                                                                    
ANCHORAGE (via teleconference), shared  that he had about 17                                                                    
years with the Anchorage Fire  Department and was one of the                                                                    
lead  recruiters and  testers for  the department.  He added                                                                    
that he was  in the Tier III retirement  system. He detailed                                                                    
that he  had left  for commercial  fishing but  had returned                                                                    
for the Tier III defined benefits.  He relayed it was one of                                                                    
the  only reasons  he  was  in Alaska.  He  stated that  his                                                                    
retirement  benefits  kept  him   with  the  department.  He                                                                    
stressed it was  very challenging to work in  a fire station                                                                    
where half  the employees had  retirement and half  did not.                                                                    
He underscored that the job  was dangerous. He supported the                                                                    
bill and plead with the committee to pass the legislation.                                                                      
11:46:47 AM                                                                                                                   
JACOB  WILSON, BUSINESS  AGENT,  ALASKA CORRECTION  OFFICERS                                                                    
ASSOCIATION,  ANCHORAGE   (via  teleconference),   spoke  in                                                                    
support   of  the   legislation.   He   detailed  that   the                                                                    
organization  represented  over  900  correctional  officers                                                                    
across the state. He shared  that throughout his 10 years in                                                                    
the  job  he  had  spoken  with  thousands  of  correctional                                                                    
officers  concerning their  retirement and  the reason  they                                                                    
came   and  left   the   profession.   He  emphasized   that                                                                    
correctional  officers put  their  lives on  the line  every                                                                    
day. He stressed that there  was currently a recruitment and                                                                    
retention crisis. He shared that  one of the root causes was                                                                    
the state's DC retirement  system, which was not competitive                                                                    
with  other law  enforcement retirement  systems around  the                                                                    
country. He  detailed that between January  2015 and January                                                                    
2021, 650 correctional officers or  just under 70 percent of                                                                    
the total workforce had left the bargaining unit.                                                                               
Mr.  Wilson emphasized  the high  turnover  had serious  and                                                                    
negative  safety, security,  and  financial  impacts on  the                                                                    
state. Every time an experienced  officer left, the position                                                                    
was  backfilled  with  an   inexperienced  new  officer.  He                                                                    
stressed  there  was  significant  cost  to  the  state  for                                                                    
recruitment  and training.  He emphasized  that hiring  over                                                                    
100 new  recruits per year  compromised safety  and security                                                                    
in the institutions. The DOC  was not currently able to keep                                                                    
up with  demand for new  officers. He reported that  a study                                                                    
published  five years  earlier found  the institutions  were                                                                    
currently  operating with  insufficient  staffing levels  to                                                                    
meet   basic   security    operational   requirements.   The                                                                    
legislation  would  help   with  recruitment  and  retention                                                                    
problems.  He  stated the  bill  was  a  step in  the  right                                                                    
direction. He  reported that the  Tier IV  retirement system                                                                    
did not  offer enough  incentive for  officers to  stay past                                                                    
their five  year mark. The  association fully  supported the                                                                    
11:49:36 AM                                                                                                                   
Co-Chair  Merrick asked  how the  problems with  recruitment                                                                    
and retention lead to overtime.                                                                                                 
Mr. Wilson  replied there had  been a substantial  uptick in                                                                    
overtime over the  past five or so years.  He explained that                                                                    
the amount  of mandatory  overtime could  result in  16 hour                                                                    
days. He detailed  officers serving 12 hour  shifts could be                                                                    
instructed to stay for  four additional hours. Additionally,                                                                    
officers  being ordered  to come  in for  work on  their off                                                                    
week  had significantly  increased  over the  last year.  He                                                                    
highlighted  that  COVID-19   illustrated  the  department's                                                                    
Co-Chair  Merrick asked  Mr. Wilson  to share  the [written]                                                                    
data with the committee.                                                                                                        
11:50:48 AM                                                                                                                   
NICK  CLARK,  PARAMEDIC  AND FIRE  FIGHTER,  FAIRBANKS  FIRE                                                                    
DEPARTMENT, FAIRBANKS  (via teleconference), shared  that he                                                                    
is a  Tier IV member  and had  been with the  Fairbanks Fire                                                                    
Department for  almost 10 years. He  reported that currently                                                                    
34 out  of 45 of the  department's members were Tier  IV. He                                                                    
detailed  that within  nine years,  the last  seven Tier  IV                                                                    
members would be eligible to  retire with their 25 years. He                                                                    
elaborated that five  of the Tier IV  members were currently                                                                    
in or  moving into  officer positions.  He pointed  out that                                                                    
the top leadership  of the department was about  to be under                                                                    
Tier IV.  He shared  that the academy  had six  new recruits                                                                    
the past year, which was  the largest group since the 1990s.                                                                    
He shared  that the  department had  hired four  new members                                                                    
and was  on track to  hire a total  of eight in  the current                                                                    
year. He  reported the department  was running at  least two                                                                    
academies per  year. Prior  to Tier  IV, the  department ran                                                                    
one  academy  every  two  years.  He  stated  that  Tier  IV                                                                    
employees who had left the  department had lasted an average                                                                    
of 2.3  years. The  current Tier  IV employees  averaged 2.8                                                                    
years with the department. He  stressed the situation left a                                                                    
large  knowledge gap  in  the  department. Additionally,  it                                                                    
cost  the department  approximately  $120,000  in the  first                                                                    
year of bringing on a new recruit.                                                                                              
Mr. Clark explained  that seeing so many people  leave was a                                                                    
morale  killer.  He reported  that  the  candidate pool  was                                                                    
shrinking as people left the  state. He relayed there was no                                                                    
security  with  the  Tier  IV  retirement,  with  no  social                                                                    
security,  supplemental benefits  system, and  no chance  of                                                                    
successful retirement  income. He shared that  he had worked                                                                    
with the  department for  nearly 10  years because  he loved                                                                    
Fairbanks and  Alaska. Additionally, he was  confident there                                                                    
would be  a return  to a  modified DB  system. He  wanted to                                                                    
move  away  from  Tier  IV and  improve  things  for  future                                                                    
generations. He urged the committee to pass the bill.                                                                           
11:55:26 AM                                                                                                                   
Representative LeBon  thanked Mr.  Clark for calling  in. He                                                                    
referenced  Mr. Clark's  testimony  that 38  members of  the                                                                    
Fairbanks Fire Department  were in Tier IV. He  asked if the                                                                    
members were waiting  for the legislation to  pass to commit                                                                    
to working for  the department long-term. He  asked if there                                                                    
was  a sense  of  what the  response would  be  if the  bill                                                                    
Mr.  Clark   answered  that   the  department   had  several                                                                    
employees  currently  testing   for  jobs  out-of-state.  He                                                                    
reported  that many  members were  asking  whether the  bill                                                                    
would pass and wanted to  stay but were thinking about their                                                                    
future. He believed  the bill would help  retain members. He                                                                    
was confident  the passage of  the bill would give  him more                                                                    
security  and help  him feel  more  comfortable staying.  He                                                                    
stressed  the  turnover  was hard  on  morale.  He  believed                                                                    
members would stay.                                                                                                             
Representative Thompson  thanked Mr.  Clark for  calling in.                                                                    
He  asked  how  the  large turnover  within  the  department                                                                    
impacted having experienced people move  up the ranks in the                                                                    
department.   He  asked   if  the   department  had   enough                                                                    
experienced members to move up to leadership positions.                                                                         
Mr.  Clark replied  that there  would  be a  big impact.  He                                                                    
reported  there was  currently  one Tier  IV  employee in  a                                                                    
captain position and likely there  would be a couple more in                                                                    
the coming months. He explained  that about half the captain                                                                    
positions would  be held by  Tier IV members in  the current                                                                    
year. He  noted that  those four members  had been  with the                                                                    
department  the  longest.  He explained  that  beyond  those                                                                    
members, the  experience gap dropped off  substantially. The                                                                    
knowledge the  department was losing  due to  retirement and                                                                    
the departure  of employees was  substantial. He  stated the                                                                    
situation would continue if turnover persisted.                                                                                 
Co-Chair Merrick  CLOSED public  testimony. She  thanked the                                                                    
testifiers for their service and testimony.                                                                                     
12:00:08 PM                                                                                                                   
Co-Chair Merrick  asked to hear  the Division  of Retirement                                                                    
and Benefits' perspective on the bill.                                                                                          
JIM  PUCKETT, DEPUTY  DIRECTOR, DIVISION  OF RETIREMENT  AND                                                                    
BENEFITS,     DEPARTMENT      OF     ADMINISTRATION     (via                                                                    
teleconference), shared  that he  did not have  any prepared                                                                    
remarks. He was available for questions.                                                                                        
Representative LeBon  stated that the shared  upside risk in                                                                    
a DB program  was capped at 10 percent  for participants. He                                                                    
noted  the  initial  employee contribution  rate  was  at  8                                                                    
percent. He asked what the  financial impact would be if the                                                                    
ceiling was raised to 12 percent.                                                                                               
Mr.  Puckett replied  that  the question  should  go to  the                                                                    
division's chief financial officer.  He would follow up with                                                                    
the answer.                                                                                                                     
Representative  Josephson remarked  that  Buck, the  state's                                                                    
actuary,  had  stated  the  plan  was  around  99.3  percent                                                                    
solvent in  the past  year. He asked  if there  was anything                                                                    
that would change the number.                                                                                                   
Mr. Puckett was not aware  of anything that would change the                                                                    
number.  The division  would hear  an  updated analysis  the                                                                    
following day  and he would  provide the information  to the                                                                    
HB 55 was HEARD and HELD in committee for further                                                                               
Co-Chair Foster announced that the Legislative Finance                                                                          
Division could help members with amendments.                                                                                    
Co-Chair Merrick reviewed the schedule for the following                                                                        

Document Name Date/Time Subjects
HB 92 Amendments 1-2 LeBon 042221.pdf HFIN 4/27/2021 9:00:00 AM
HB 92
HB 69 FY21 Supp Transactions by Agency Cap 042721.pdf HFIN 4/27/2021 9:00:00 AM
HB 69
HB 69 21-04-26 House CS1 Summary.pdf HFIN 4/27/2021 9:00:00 AM
HB 69
HB 69 FY21 Supp Transactions by Agency Op 042721.pdf HFIN 4/27/2021 9:00:00 AM
HB 69
HB 55 Public Testimony 042721.pdf HFIN 4/27/2021 9:00:00 AM
HB 55