04/30/1998 03:10 PM House HES

HB 323 - PERS CREDIT FOR NONCERTIFICATED EMPLOYEES                             
                                                                               
Number 0186                                                                    
                                                                               
REPRESENTATIVE BUNDE noted the next bill before the committee was              
HB 323, "An Act relating to the calculation of credited service in             
the public employees' retirement system for noncertificated                    
employees of school districts, regional educational attendance                 
areas, and state boarding schools; and providing for an effective              
date."                                                                         
                                                                               
Number 0195                                                                    
                                                                               
REPRESENTATIVE TOM BRICE made a motion to adopt proposed committee             
substitute 0-LS1350\F, Cramer, 4/29/98, as the working draft.                  
                                                                               
Number 0218                                                                    
                                                                               
CHAIRMAN BUNDE objected for discussion purposes.                               
                                                                               
REPRESENTATIVE BRICE explained, "What we we're doing with the                  
committee substitute is allowing individuals who are                           
noncertificated employees the ability to opt into the program which            
would frankly, give them an increase in their benefits.  For that              
increase, they get a full year of benefits for the length of work              
they might participate in.  Some employees work nine months and                
only get nine months credit towards retirement.  The problem with              
that is they end up working 40 years for a 30 year retirement.                 
This would just give them the ability to increase their                        
contribution rate to cover the months that they're not working so              
for a 30-year retirement, they get 30-year ...."                               
                                                                               
CHAIRMAN BUNDE asked if it would be comparable to the retirement               
program for certificated employees.                                            
                                                                               
REPRESENTATIVE BRICE said it would be very close to what a                     
certificated employee would have, with possibly the difference                 
being that certificated employees have the option to have their                
retirement benefits spread over a 12-month period versus a 9-month             
period.  This legislation does not deal with that issue.                       
                                                                               
Number 0344                                                                    
                                                                               
CHAIRMAN BUNDE asked what the minimum would be that an individual              
would have to work for a year of retirement benefit.                           
                                                                               
REPRESENTATIVE BRICE deferred that question to the representative              
from the Division of Retirement and Benefits.                                  
                                                                               
Number 0398                                                                    
                                                                               
GUY BELL, Director, Division of Retirement and Benefits, Department            
of Administration, introduced Bill Church from the division.                   
                                                                               
Number 0414                                                                    
                                                                               
BILL CHURCH, Retirement Supervisor, Division of Retirement and                 
Benefits, Department of Administration, responded the minimum would            
be 172 days for a full year of service.                                        
                                                                               
CHAIRMAN BUNDE understood there would no negative actuarial impact             
on the retirement system if HB 323 is passed.                                  
                                                                               
MR. CHURCH said that was correct.                                              
                                                                               
CHAIRMAN BUNDE asked if the new contribution rate be mandatory or              
optional if HB 323 were to pass?                                               
                                                                               
Number 0450                                                                    
                                                                               
MR. CHURCH replied it is an option under 0-LS1350\F.  He added that            
individuals currently employed would have 180 days to opt up to the            
alternate calculation of service and obviously the higher rate of              
contributions and new employees would have 90 days from the date of            
employment to opt up to the higher coverage.                                   
                                                                               
CHAIRMAN BUNDE said, "And the purpose of the option, I'm just                  
guessing, would be people who view that profession as temporary                
versus those that might view that work as a career."                           
                                                                               
MR. CHURCH replied certainly those individuals who elect the option            
will view it as being more favorable to them.  He explained,                   
"Someone just starting off, they can look at it and say 'I can work            
30 years and retire' whatever age that may be.  If someone's right             
out of high school, 30 years might put them at 48 years old with               
the ability to retire at that point in time as opposed to                      
currently, the tiers for normal retirement age, not service based,             
is age 60, so to them certainly that would be a clear advantage."              
                                                                               
Number 0512                                                                    
                                                                               
REPRESENTATIVE JOE GREEN noted the department had a fiscal note of             
$116,000 for updating computers.  He asked if the division would be            
getting a system that would allow this to happen and would the                 
division derive other benefits from updating their system.                     
                                                                               
MR. CHURCH said the division is currently running two different                
systems; the existing system and a new system that's coming on                 
line.  He explained the new system would not be on line in time, so            
the division would only have to update one system.  He said the                
division would have to create the ability of the system to be able             
to recognize a different group of employees, to be able to credit              
their service properly and be able to apply the right contribution             
value that comes in.  Based on all these changes, it has to be for             
both systems and the fiscal note reflects the costs estimated by               
the data processing staff.                                                     
                                                                               
Number 0600                                                                    
                                                                               
CHAIRMAN BUNDE verified that funds to upgrade the computer system              
wouldn't come out of the general fund, but instead out of the                  
earnings of the retirement system.                                             
                                                                               
MR. BELL confirmed the funding source is the public employees'                 
retirement account.                                                            
                                                                               
CHAIRMAN BUNDE asked if there were further questions for the                   
division?  Hearing none, he asked Mr. Cyr to come before the                   
committee to present his remarks.                                              
                                                                               
Number 0635                                                                    
                                                                               
JOHN CYR, President, NEA-Alaska, testified in support of CSHB 323.             
He said the classified employees in the 53 or 54 school districts              
across the state represented by NEA-Alaska have worked long and                
hard and view this as an equity issue.  He said NEA-Alaska has                 
looked at a number of different ways to help provide a type of                 
retirement system that would secure benefits for them at the end of            
their career.  He explained that many of the employees have been               
put in the position of having had at one point year-round jobs and             
their jobs have been cut back and scaled back as the district's                
ability to provide that resource lessened.  He stated this is of               
critical importance to the employees represented by NEA-Alaska and             
in his opinion, the language in the proposed committee substitute              
is fair by placing the burden on those employees who opt into it to            
pay for that added benefit.  He urged the committee to pass the                
proposed committee substitute from committee.                                  
                                                                               
Number 0740                                                                    
                                                                               
CHAIRMAN BUNDE closed public testimony and asked the wishes of the             
committee.                                                                     
                                                                               
Number 0750                                                                    
                                                                               
REPRESENTATIVE DYSON made a motion to move HB 323, version 0-                  
LS1350\F, Cramer, 4/2998, with individual recommendations from                 
committee.  There being no objection, CSHB 323(HES) passed out of              
the House Health, Education and Social Services Standing Committee.            
                                                                               
CHAIRMAN BUNDE noted that even though CSHB 323(HES) had passed from            
committee, Mary Biss wished to present her remarks from Anchorage              
on HB 323.                                                                     
                                                                               
Number 0769                                                                    
                                                                               
MARY BISE, President, Totem Association of Educational Support                 
Personnel, testified via teleconference from Anchorage, and urged              
the committee to vote for equality in the state law and the PERS               
retirement system for noncertificated school district personnel.               
She said this bill will reinstate the equity enjoyed by these                  
employees prior to July 1, 1976 when they did receive a full year              
credit.  She said these employees should receive the same one year             
of retirement benefits for one year of work as do the teachers.                
                                                                               
Number 0840                                                                    
                                                                               
BARBARA TUCK HUFFNESS, Director, Governmental and Legislative                  
Affairs, Teamsters Local 959, testified via teleconference from                
Anchorage.  She said the Teamsters Local 959 represents the                    
Anchorage School District's approximately 400 noncertificated                  
employees, who strongly support this legislation.