02/15/1996 03:05 PM House HES

 HB 354 - RIP FOR SCHOOL DISTRICT EMPLOYEES                                  
                                                                               
 Number 740                                                                    
                                                                               
 REPRESENTATIVE JERRY MACKIE, Sponsor, said he didn't have much to             
 add to his previous testimony in the last hearing, but in response            
 to the committee's request regarding what kind of savings would be            
 involved with the school districts, Representative Mackie provided            
 committee members with a copy of the estimated cost or savings                
 audit that was done by the Division of Legislative Audit in late              
 1991 and released in early 1992 which was the last time there was             
 a Retirement Incentive Plan (RIP).  The audit indicates the number            
 of school districts, the number of retirees they expected would               
 take advantage of it, and the estimated savings.  Representative              
 Mackie noted this is 1992 information and things are different now,           
 but he believes this gives a ballpark idea of the savings that                
 could be generated through a RIP of this nature.  He said                     
 collectively, with all the school districts listed in the report,             
 this generated nearly $23 million in savings to school districts              
 around the state.  He recognized that probably not all the                    
 districts listed would take advantage of a RIP, but he knew there             
 where some districts not listed that would take advantage of it.              
 He stated at that time, Anchorage suggested they could possibly               
 save $2.6 million, and he understood it would still be in that                
 ballpark.  The Kenai Peninsula School District testified in the               
 last hearing  they could possibly realize somewhere in the                    
 neighborhood of a $2 million savings.  A letter dated January 22,             
 1996, from the Juneau School District indicates a savings of as               
 much as $3 million through a RIP program.  The Hoonah School                  
 District, which is a small district, estimated they could probably            
 save somewhere around $340,000 in the first three years.  That is             
 a huge savings for a district that size.  He cautioned these were             
 estimated savings and added this is clearly an optional program               
 that each school district would need to look at and decide if they            
 wanted to do it.  He advised that school districts are currently              
 working on getting accurate projections for this year.                        
                                                                               
 Number 890                                                                    
                                                                               
 DEBRA GERRISH testified as a parent who has been sitting through              
 the budget crisis for the last two years and looking at different             
 approaches to filling in the gaps in support of HB 354.  She                  
 expressed concern over the increase in pupil/teacher ratio; it's              
 about 30 in the elementary schools.  She said passage of this                 
 legislation would allow more teachers to be hired.  The advantage             
 of this bill, as opposed to a local RIP, is that it allows the                
 school district several years to pay that retirement; whereas, with           
 a local RIP, the district has to come up with the money at the very           
 beginning.  Most of the districts don't have that money up front.             
 She urged committee members to pass HB 354 and to give the                    
 districts a tool that can be used to lower the classroom sizes.               
                                                                               
 CO-CHAIR TOOHEY asked if there was any guarantee that the cost of             
 the teacher coming in would be quite a bit lower.                             
                                                                               
 REPRESENTATIVE MACKIE said he didn't know how a guarantee could               
 actually be written in to the bill, but noted the districts are               
 going to have to certify that a cost savings will be realized.  He            
 commented that most of the higher end teachers are in the $57,000             
 to $58,000 a year range, and most school districts' starting range            
 for a teacher is in the $30,000 to $32,000 a year range.  That                
 figures to be a $20,000 to $25,000 savings if a high end teacher is           
 retired and a new teacher is hired; that's where the savings would            
 be achieved.                                                                  
                                                                               
 REPRESENTATIVE DAVIS said that Co-Chair Toohey's question was                 
 addressed on page 2, line 4 which states, "(b) The organizational             
 units of a plan must be selected so that implementation of the plan           
 results in maximum savings to the school district..."                         
                                                                               
 SALLY RUE, Vice President, Juneau Board of Education, testified the           
 Juneau School District is probably different from some districts,             
 but not terribly unique in that many of the teachers are at the               
 high end of the salary schedule.  More than half of the teachers              
 are at the top.  She said the Juneau School District is under                 
 tremendous pressure with the operating budget.  The budget                    
 currently being worked on for next year indicates a $675,000 budget           
 gap; the following year is projected to be over $1 million.  She              
 remarked that a couple of years ago, all the nontenured teachers              
 were laid off because it was the only way the district could afford           
 to keep the schools going.  As Ms. Gerrish mentioned, that did                
 increase the pupil/teacher ratio.                                             
                                                                               
 MS. RUE concluded there are over 60 teachers that could take                  
 advantage of this RIP and that does not include the three years               
 extra.  They have calculated it would save the district $100,000              
 per teacher over five years.  That would mean a huge difference for           
 the Juneau School District in being able to run the programs.                 
 Instead of increasing the class size each year, that money could be           
 used for more teachers so they can continue operating the programs.           
                                                                               
 CO-CHAIR BUNDE asked if there was further public testimony on HB
.  Hearing none, he closed public testimony.                               
                                                                               
 Number 1135                                                                   
                                                                               
 REPRESENTATIVE DAVIS moved to pass HB 354 out of committee with               
 individual recommendations and attached fiscal notes.  Hearing no             
 objection, it was so ordered.