Legislature(2005 - 2006)CAPITOL 106
03/14/2006 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB475 | |
| HB448 | |
| HB438 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 475 | TELECONFERENCED | |
| += | HB 448 | TELECONFERENCED | |
| += | HB 438 | TELECONFERENCED | |
| += | HB 45 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 475-PUB EMPLOYEE & TEACHER RETIREMENT & SBS [Contains discussion of SB 141 and SB 293.] 8:06:53 AM CHAIR SEATON announced that the first order of business was HOUSE BILL NO. 475, "An Act describing contributions to the health reimbursement arrangement plan for certain teachers and public employees; clarifying eligibility for membership in that health reimbursement arrangement plan; relating to the 'administrator' of the Public Employees' Retirement System of Alaska; and providing for an effective date." [Before the committee was the committee substitute (CS) for HB 475, Version 24-LS1685\Y, Wayne, 3/1/06.] [CHAIR SEATON handed the gavel over to Vice Chair Gatto.] 8:07:17 AM REPRESENTATIVE SEATON brought attention to a consolidated sectional analysis for HB 475, which was included in the committee packet. He reminded the committee that during the first hearing of the bill, there had been a review of the original sectional analysis, in which many issues were repeated for the various retirement systems. The consolidated analysis combines those systems and provides clarity. 8:07:57 AM CHAIR SEATON moved to adopt Conceptual Amendment 6, which read as follows [original punctuation provided, but with some formatting changed]: Page 17, following line 15: Insert new bill sections to read: "* Sec. 45. AS 39.35 is amended by adding new sections to read: Sec. 39.35.957. Designation of eligible employees, agreement to contribute, and amendment of participation. (a) A political subdivision or public organization shall designate the departments, groups, or other classifications of employees eligible to participate in the plan, and shall agree to make contributions each year in the amounts required for members of the plan under AS 39.35.750. (b) If the employer does not participate in the defined benefit retirement plan under AS 39.35.095- 39.35.680, an employee who is eligible under (a) of this section and who is a member of the defined benefit retirement plan under AS 39.35.095 - 39.35.680 shall not accrue credited service or make contributions under that plan, but shall be a member of the defined contribution retirement plan under AS 39.35.700-39.35.990 and make contributions under that plan. (c) An employer may request to amend its participation in the plan to add or exclude departments, groups, or other classifications of employees by filing a resolution as provided by AS 39.35.950 or AS 39.35.955 with the administrator. Sec. 39.35.958. Termination of participation in the plan. (a) A political subdivision or public organization may request that its participation in the plan be terminated. The request may be made only after adoption of a resolution by the legislative body of the political subdivision and approval of the resolution by the person required by law to approve the resolution, or, in the case of a public organization, after adoption of a resolution by the governing body of that public organization. A certified copy of the resolution shall be filed with the administrator. (b) If contributions are not transmitted to the plan within the prescribed time limit, the commissioner of administration may grant an extension and shall assess interest on the outstanding contributions at the rate established under AS 39.35.610. If the political subdivision or public organization is in default at the end of the extension, participation in the plan is terminated, and it shall be sent notice of termination. (c) When an employer's participation in the plan is terminated, or when an employer terminates coverage of a department, group, or other classification of employees under AS 39.35.957(c), the administrator shall assess the employer an amount that the administrator determines is actuarially required to fully fund the costs to the plan for employees whose coverage is terminated, including the cost of providing the employer's share of retiree health benefits under AS 39.35.880, occupational disability and occupational death benefits under AS 39.35.890 and 39.35.892, and retirement benefits elected under AS 39.35.890(h)(2). (d) An employee whose coverage under the plan is terminated as a result of termination of an employer's participation under this section or amendment of the employer's agreement under AS 39.35.957(c) shall be considered fully vested in employer contributions under AS 39.35.790(b) and in the individual account established for the employee under AS 39.30.370. If the employee is later employed with a participating employer, the employee's membership service earned under the plan during employment with a terminated employer shall be credited for purposes of determining vesting in employer contributions under AS 39.35.790(b) and eligibility for retirement and medical benefits under this chapter and AS 39.30.300- 39.35.495." 8:09:33 AM VICE CHAIR GATTO objected for discussion purposes. 8:09:42 AM CHAIR SEATON spoke to Conceptual Amendment 6. He explained that currently there are provisions in the defined benefit (DB) retirement plan that allow employers to opt out of the plan. Conceptual Amendment 6 would bring the defined contribution (DC) retirement plan in conformity, so that if an employer decided to opt out in the future, it could be done basically under the same conditions that employers currently follow for the DB plan. 8:10:47 AM KATIE SHOWS, Staff to Representative Paul Seaton, Alaska State Legislature, on behalf of Representative Seaton, sponsor, and in response to remarks made by Representative Gardner and Representative Seaton, clarified that, under Conceptual Amendment 6, a new employer can decide to opt into both a DC and a DB plan, or just the DC plan. By opting into the DB plan, the employer would be able to hire employees already established in the DB plan and allow them to continue to accrue defined benefit service. Alternatively, a new employer could opt to participate solely in the DC plan, in which case, an employee with previous DB service would effectively start over as a DC employee and be a member of both plans, which would be treated as two separate plans. 8:12:14 AM REPRESENTATIVE GARDNER suggested it may be difficult for people who have been in the DB plan but are not yet vested in it to leave that plan in order to work for a new employee who has opted to only be in the DC plan. 8:12:44 AM MS. SHOWS responded that's correct. She stated that it is the decision of the employer to decide whether or not to have that flexibility in hiring [by offering both plans]. 8:12:56 AM MS. SHOWS, in response to Vice Chair Gatto, stated her assumption that, under the Internal Revenue Service (IRS) code, the employer could not offer one plan to one employee and not to another. 8:13:09 AM REPRESENTATIVE SEATON clarified that if a new employer chose to be solely in the DC plan, "it would be exactly as if someone was going to work for a private employer or somebody else that was not a member of PERS." 8:13:42 AM VICE CHAIR GATTO removed his objection to Conceptual Amendment 6. 8:14:29 AM VICE CHAIR GATTO asked if there was any further objection to Conceptual Amendment 6. There being none, Conceptual Amendment 6 was adopted. 8:14:48 AM REPRESENTATIVE GRUENBERG directed attention to Conceptual Amendment 7, which he explained is SB 293, with minor technical changes. He said the amendment would delay [the effective date of SB 141] from July 1, 2006, to July 1, 2008. He said [SB 141] has had a lot of unintended consequences. It is more expensive than the existing system for new employees, the greater part of the expense is shifted to future employees, and the benefit risk is shifted to employees. He said that risk is significant, because Alaska's government employees, unlike government employees elsewhere, are not generally eligible for a "social security safety net." He stated, "The change from Tier III to Tier IV will do nothing to pare down the unfunded liability, and the changes do not deal with the fundamental driver of (indisc. -- coughing) costs and skyrocketing health care costs." 8:16:34 AM REPRESENTATIVE GRUENBERG moved to adopt Amendment 7, which read as follows [with some handwritten changes and formatting changes]: "An Act relating to the teachers' and public employees' retirement systems and creating defined contribution and health reimbursement plans for members of the teachers' retirement system and the public employees' retirement system who are first hired after July 1, 2008; providing for an effective date by amending the effective date section of sec. 148, ch. 9, FSSLA 2005; and providing for an effective date." Add the following sections to the bill - insert in appropriate places * Section 1. AS 14.25.009 is amended to read: Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of AS 14.25.009 - 14.25.220 apply only to members first hired before July 1, 2008 [2006]. * Sec. 2. AS 14.25.012(c) is amended to read: (c) Employees first hired after June 30, 2008 [2006], are not eligible to participate in the plan established in AS 14.25.009 - 14.25.220. * Sec. 3. AS 14.25.310 is amended to read: Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of AS 14.25.310 - 14.25.590 apply only to teachers who first become members on or after July 1, 2008 [2006], or to members who transfer into the defined contribution plan under AS 14.25.540. * Sec. 4. AS 14.25.320(b) is amended to read: (b) The defined contribution retirement plan includes a plan in which savings are accumulated in an individual account for the exclusive benefit of the member or beneficiaries. The plan is established effective July 1, 2008 [2006], at which time contributions by employers and members begin. * Sec. 5. AS 14.25.330(a) is amended to read: Sec. 14.25.330. Membership. (a) A teacher who first becomes a member on or after July 1, 2008 [2006], shall participate in the plan as a member of the defined contribution retirement plan. * Sec. 6. AS 39.30.300 is amended to read: Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan established. The State of Alaska Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is established for teachers who first become members of the defined contribution plan of the teachers' retirement system under AS 14.25.310 - 14.25.590 on or after July 1, 2008 [2006], and employees of the state, political subdivisions of the state, and public organizations of the state who first become members of the defined contribution plan of the public employees' retirement system under AS 39.35.700 - 39.35.990 on or after July 1, 2008 [2006]. * Sec. 7. AS 39.30.310(b) is amended to read: (b) The plan becomes effective July 1, 2008 [2006], at which time contributions by employers begin. * Sec. 8. AS 39.35.095 is amended to read: Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The following provisions of this chapter apply only to members first hired before July 1, 2008 [2006]: AS 39.35.095 - 39.35.680. * Sec. 9. AS 39.35.700 is amended to read: Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of AS 39.35.700 - 39.35.990 apply only to members first hired on or after July 1, 2008 [2006], or to members who transfer into the defined contribution plan under AS 39.35.940. * Sec. 10. AS 39.35.710(b) is amended to read: (b) The defined contribution retirement plan is a plan in which savings are accumulated in an individual retirement account for the exclusive benefit of the member or beneficiaries. The plan is established effective July 1, 2008 [2006], at which time contributions by employers and members begin. * Sec. 11. AS 39.35.720 is amended to read: Sec. 39.35.720. Membership. An employee who becomes a member on or after July 1, 2008 [2006], shall participate in the plan set out in AS 39.35.700 - 39.35.990. * Sec. 12. AS 39.35.750(c) is amended to read: (c) Notwithstanding (b) of this section, the employer contribution for retiree major medical insurance for fiscal year 2009 [2007] shall be 1.75 percent of each member's compensation from July 1 to the following June 30. *Sec. 11. Section 148, ch. 9, FSSLA 2005, is amended to read: Sec. 148. Sections 2, 8, 35, 40, 46, 61, 69, 80, 82, 122, and 134 of this Act take effect July 1, 2008 [2006]. * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to read: CONDITIONAL RETROACTIVITY. If secs. 1 - 13 of this Act take effect after July 1, 2006, secs. 1 - 13 of this Act are retroactive to July 1, 2006. (These sections shall take effect immediately under AS 01.10.070(c).) Change title as necessary 8:16:51 AM REPRESENTATIVE RAMRAS objected to Conceptual Amendment 7. VICE CHAIR GATTO said he wants to see a copy of SB 293/Conceptual Amendment 7. [The committee moved to other business while waiting for copies of SB 293 to be made and distributed.] 8:17:04 AM REPRESENTATIVE GARDNER directed attention to the part of the consolidated sectional analysis addressing a change from 120 days - the required time in which a decision on an appeal must be issued - to 180 days. She asked if the original PERS and TRS Boards had 120 days and if [the Office of Administrative Hearings (OAH)] wants the 180 days. 8:17:37 AM MS. SHOWS deferred to the Division of Retirement & Benefits to answer. 8:18:40 AM VICE CHAIR GATTO noted that the committee had just received a copy of Conceptual Amendment 7. 8:19:09 AM REPRESENTATIVE GRUENBERG said Conceptual Amendment 7 is simple; it just conforms the language in the appropriate places in HB 475, to change the date from July 1, 2006, to July 1, [2008]. 8:20:15 AM REPRESENTATIVE RAMRAS maintained his objection. 8:20:17 AM REPRESENTATIVE SEATON suggested hearing from representatives from the Division of Retirement & Benefits regarding what they think the impact of the delay proposed by Conceptual Amendment 7 would be. 8:21:15 AM REPRESENTATIVE GRUENBERG remarked that the new Tier IV retirement system is more expensive for employees than the old system. 8:21:49 AM MELANIE MILLHORN, Director, Division of Retirement & Benefits, Department of Administration, said she doesn't agree with Representative Gruenberg's statement. She said the normal cost for Tier III [in TRS] and Tier IV [in PERS] is less expensive than the existing Tiers II and III for TRS and PERS, respectively. She said the DC retirement plan provides a more predictable, stable employer contribution rate. The portion that is not a defined contribution plan is the medical component. Ms. Millhorn discussed rising health care costs and noted that many states do not offer medical benefits to their employees. She offered further statistics, and she concluded that [the DC plan] reduces the cost to the employer and reduces the volatility associated with defined benefit components. 8:26:35 AM REPRESENTATIVE GRUENBERG clarified that he wants to know if [the new defined contribution plan] would be more expensive to new employees, and he said he thinks Ms. Millhorn's remarks indicate that she agrees it really would be. He continued: When we look at the health care costs too, we can't artificially separate out the health care costs, because ... from the employee's point of view it's the total cost. And you have said that these total costs are going to be a certain amount. You've also said the employer section's going down. It just logically follows then that the employee portion is going to go up, doesn't it? 8:27:29 AM MS. MILLHORN offered information relating to contribution rates. 8:27:55 AM REPRESENTATIVE GRUENBERG stated that he is not talking about just the contribution rate, but rather the total cost, of which, under the new DC plan, the state will pay less. He said Ms. Millhorn is talking about the contribution rate, not the amount that the employee will have to pay the doctor. 8:28:26 AM REPRESENTATIVE SEATON said he thinks Representative Gruenberg and Ms. Millhorn are talking about two different issues. He related that every time the state has changed from an existing tier to a new tier, it could be said that those in the new tier pay more, because they receive less. However, he pointed out that the new DC plan includes occupational death and disability benefits that were not provided under the DB plan. He stated that the plans are different and it is difficult to measure what employees get from one plan versus the other, because, for example, it depends on how many employees will qualify for the benefits. He offered examples. Chair Seaton said the contribution cost to the employer is easily assessable. 8:30:57 AM REPRESENTATIVE GRUENBERG stated that he has been under the misimpression that the purpose of creating Tier IV was to cut down the cost to the state. He added, "And if the total costs remain the same, and the part the state pays goes less, logically the part the employee pays must go up." 8:31:15 AM VICE CHAIR GATTO said the unfunded liability was not just climbing in interest, but also in principle each year. Stopping that trend, he said, is certainly a savings to the state. REPRESENTATIVE GRUENBERG responded that the employee would then make up the difference. VICE CHAIR GATTO said he would not agree that it would be the entire difference. 8:31:42 AM MS. MILLHORN said she does not believe that the cost to the employee is increased. She said the employee's contribution is set in statute at 8 percent, and the employer's contribution is set in statute, as well. She explained that [the new DC plan] will stop the growth of unfunded liability in the future "for a system that has defined benefit elements that are subject to change over time, that can differ with experience." 8:32:55 AM VICE CHAIR GATTO said one question is whether the new employee who will not be contributing into a DB plan will cost the state more in the long run when he/she retires. He stated, "This says the state will have to cough up some more money in the short run, because we don't have the new employees contributing into the plan; but we maintain the liability." 8:33:34 AM REPRESENTATIVE GRUENBERG indicated that he is not particularly disagreeing with Vice Chair Gatto, but rather is espousing a different view point. He mentioned the cost of living, which he noted comes from "the cash portion of the pension," and the insurance cost, which he said "would come when the doctor is paid. He stated that whatever those costs are, they are projected to increase - especially the health care costs. He reasoned that, given one amount, if the state's portion of that amount is reduced, then it stands to reason that the employees' portions will increase. 8:34:25 AM REPRESENTATIVE SEATON explained that Representative Gruenberg's estimation is not quite correct. He continued: Seventy-five percent of the expense coming from runaway health care is by people that have ... retirement before the age of 65 - before Medicare eligible age. So, there is a difference in benefit. Those people - and they're not a vast majority - that retire early, get that massive amount of benefit that everyone pays for under the current plan. So, if you are a Tier I employee and you could retire at 55, you would have all your health care paid for from that point on, and solely by the system. ... The current plan, ... if you've got 30 years, will pay 90 percent of the ... medical benefit, ... because Medicare picks up a lot from that point forward. So, when you talk about "to an employee," there is no average employee. Some employees - those that retire early - get an extreme benefit under the current plan because they get all their medical paid for by the system. Those people that work [until] they're 65 don't get that benefit at all. In this plan, what happens is it comes much more to everyone [who] qualifies for benefits and shares equally. The medical benefits that are provided under the defined benefit plan are far [inequitably] distributed among the people, depending upon when they retire. So, there is a definite realignment that makes these -- like the HRA. Everybody gets the HRA, based on the entire system wide average of ... wage base. So, everybody gets an equal amount of health care dollars there, depending upon their years of service. So, what you have is a system right now under DB which is very ... weighted, and some people get a whole lot of benefits, and some people get much less benefit. And that's the entire cost of the plan. Whereas the new defined contribution plan is very definitely individually based and much more aligned with equality for participants enjoying the benefits of their plan. 8:37:05 AM REPRESENTATIVE OLSON asked Ms. Millhorn for a projection of how many new employees would "pick up under SB 293, under the current system." 8:37:19 AM MS. MILLHORN said there is a projection, based upon the last 12- month fiscal year, which shows that there will be approximately 4,400 new PERS and TRS members. She added, "So, what this effective delay would do is it would allow entry of another approximate 8,800 members, who would then therefore be entitled to this very rich medical benefit." 8:37:44 AM REPRESENTATIVE OLSON asked Ms. Millhorn if she knows what the cost would be. 8:37:50 AM MS. MILLHORN replied that the division has not yet analyzed the cost. 8:38:05 AM REPRESENTATIVE GARDNER asked Ms. Millhorn to describe the difference in cost under the new and old systems for the medical insurance portion between retirement and Medicaid eligibility. 8:38:35 AM MS. MILLHORN stated that currently, under PERS, the normal cost that the employer pays for the employee medical benefit is approximately 8.68 percent, and under TRS it is approximately 9 percent. She continued: When the tier redesign began a task force and ... asked the employers ... and ... employees what's really important ..., employers and employees said it's very important to have that medical benefit. When you actually start analyzing the cost for that medical benefit, you have to redesign it in a way that you preserved the benefit to the employees and to the employers who have to recruit and retain a workforce. So, this redesign was studied extensively, it was reviewed, [and] the components within it are ... on the leading edge of looking at that redesign. I appreciate the comments from Representative Seaton also, because before, under Tier I, for example, you had a deferred, vested member - most of those parties right now that are retiring are Tier I - you could have five years of vested service, you could go work for another employer, and then once you're eligible, you can start drawing that pension and medical benefit. So, by redesigning this plan that costs shares with the employee, you ... inject consumer- driven health care into your health plan where employees value decisions that they have to make. They have these dollars set aside to make these medical decisions and it provides a redesign of that benefit that is very, very beneficial to both the employer and the employee. 8:41:04 AM REPRESENTATIVE GARDNER responded: During that period when the employer's percentage drops ... from 8.68 to 1.75 percent, doesn't the former employee - who is now retired but doesn't yet qualify for [Medicare] - ... pick up a significant portion? And it comes out of the HRA account or a set aside until that's gone, and then there's another big hit. As I recall, last year there was some debate about if payments were missed and they didn't bring it current in a given timeframe, they would then lose access in the future to medical coverage. REPRESENTATIVE GARDNER, in response to a request from Ms. Millhorn, clarified that she wants a comparison between the DB and DC members "for that period between retirement from the system as a fully vested member and access to [Medicare]." 8:43:06 AM MS. MILLHORN stated that the normal retirement age for employees under the existing DB benefit plan is 55, at which point those employees who have met the membership service and vesting requirements would be able to receive a pension and medical benefit for themselves and for their eligible dependents. At age 65, that benefit "coordinates with Medicare." Under the DC benefit plan, employees who have a service eligibility of 30 years and are 55 years of age would be eligible for their health reimbursement arrangement in order to pay the premiums [for health care] until age 65. In response to a question from Representative Gardner, she said the health reimbursement arrangement is not a contribution account that the employee makes any contributions to at all; it is an employer contribution that is made on behalf of the employee into the account to pay for medical expenses. 8:45:07 AM REPRESENTATIVE GARDNER recalled from testimony last year that there is a potential that that money can run out and the employee would not have the funds from that account or elsewhere to keep current with his/her medical coverage. She described that time as occurring between when an employee has access to "funds for maintaining coverage" and when he/she has access to Medicare, and indicated that "that's where there's an additional for the ... employee." 8:45:45 AM CHAIR SEATON confirmed that that's what he was talking about: "this unequal benefit by employees." He said the original Tier I was too expensive for the state to maintain, so a new tier was created. He continued: But those people still have this very - if they take advantage of that - this very unequal benefit. You know, it could be a couple hundred thousand dollars a year if you started ... late and missed service, came back under Tier I, and then went forward and retired early at 55. Now, if you work to 65 it doesn't make any difference. If you continue to work so that you're not accepting that benefit, then you have your regular active medical plan ..., and then you get Medicare and you get the ... retirement benefit. But Tier III is different than Tier I: you don't have the same retirement age, because we found that those were very unequal benefits that were provided for different employees and it couldn't be afforded. And we're looking at the same thing in Tier IV: we're looking at benefits that ... vastly cost the system per individuals if they want to choose to retire as early as possible and take those payments from the system, versus the majority of the members in the system. And so, you again have to come back into the basic philosophy ... [that] a DC plan equalized benefits among people, instead of saying, "Okay, we're going to throw out a very rich benefit for a certain select group of people in our retiree population." ... If you only want to consider the cost of somebody who makes the selection that costs the system the most, you'll find that that's the case. If you take the person that retires at 65, then those differences don't really exist. So, that's what you have to look at, as well. 8:48:13 AM REPRESENTATIVE GRUENBERG directed attention to a letter dated Jan 7, 2006, to Senator Elton from Gail Schubert, Chair, Alaska Retirement Management (ARM) Board, [included in the committee packet]. He highlighted information from charts on the first and second pages of the letter, which shows that the normal costs to employers will drop when changing to a DC plan, whereas the normal cost for employees will rise. 8:50:01 AM MS. MILLHORN said she does not dispute the facts and figures in the letter. She relayed that the new DC plan does have members paying 8 percent and sets out what the employer contribution rate is going to be. She said it was observed that the existing DB plans did not appear to equally share costs. The entire normal cost rate is over 20 percent and the employer pays the bigger portion of it. The employer is also left with a lack of predictability regarding ever-increasing costs that may be different from assumptions. Based on those facts, Ms. Millhorn said, the employer bears all of the risk for the plan. She said the DC plan would be more equal in terms of the employer cost in relation to the employee cost. She said members in focus groups were surveyed in 2004, and some said they would be willing to pay more for their valuable benefits, but statute prohibits them from doing so. 8:52:00 AM REPRESENTATIVE GRUENBERG indicated that he doesn't want to keep beating "this horse." 8:52:19 AM VICE CHAIR GATTO observed that the aforementioned letter indicates a .5 percent increase in cost. He asked, "And the short answer is balanced by ... the equity, or balanced by the long-term unfunded liability, or is that reasonable?" 8:52:29 AM MS. MILLHORN answered yes. 8:52:36 AM CHAIR SEATON proffered: These are the normal costs; these don't include the past service cost, of course, which is associated with Tier II [and] Tier III, under [the] defined benefit plan. I would bring everybody's attention to how close these are, and that the defined contribution plan has very high benefits compared to other defined contribution plans that have been done around the nation. And we did this very specifically, because we said that employers could pay [this] kind or [amount], and employees could make these [kinds] of distributions and continue hiring employees, not having to cut their workforce, not having to lay people off because of the high benefit cost. And so, what this does is give security for people going forward, but it's a very ... high cost, and that cost is actuarially determined so that those benefits are ... quite similar, although they're different. So, I would just speak against [Amendment 7], because what we're going to do is continue a system that's going to increase past service cost liability. 8:54:09 AM REPRESENTATIVE GRUENBERG said he would like to call a question on Amendment 7. 8:54:20 AM VICE CHAIR GATTO stated his intention to wait until committee members who recently vacated the room returned. [Amendment 7 was set aside.] 8:54:32 AM REPRESENTATIVE GRUENBERG moved to adopt Amendment 8 to Version Y, as follows: On page 8, line 21: Between "administrator" and "the appeal" Delete "receives" Insert "takes" After "the appeal" Insert "under advisement" REPRESENTATIVE GRUENBERG said a court does not receive an appeal; it "takes the appeal under advisement." 8:55:38 AM REPRESENTATIVE SEATON objected to Amendment 8. For clarification, he referred to the entire sentence to which Amendment 8 applies [beginning on page 8, line 19], which read as follows: The final decision under AS 44.64 is delegated to the administrative law judge and shall issue within 180 days after the date the administrator receives the appeal, unless the administrative law judge and all parties agree to another time. 8:55:52 AM REPRESENTATIVE GRUENBERG responded, "I stand corrected." CHAIR SEATON withdrew his objection. REPRESENTATIVE GRUENBERG opined that is unusual to require a judge to issue an opinion within a certain amount of time of the appeal being filed. He said there are statutes that don't allow the judge to get paid until he/she has issued a decision within six months, "but it's within six months after the case is submitted to the judge for the decision - after they take the case under advisement." He asked Ms. Carpenter why the division chose the date from which the administrator receives the appeal rather than the date the judge takes the appeal under advisement. 8:57:00 AM TRACI CARPENTER, Project Manager, Health Benefits Section, Division of Retirement & Benefits, Department of Administration, said Representative Gruenberg brings up an excellent point. She explained that the language in question was modeled on current Office of Administration Hearings' statute, with some slight variation. The current statute requires that the administrative law judge shall prepare a decision within the agency having received the appeal. 8:57:38 AM REPRESENTATIVE GRUENBERG withdrew Amendment 8. He commented that that is unusual, but he doesn't want to change existing law. 8:58:10 AM VICE CHAIR GATTO brought Amendment 7 back before the committee. REPRESENTATIVE GRUENBERG said he wants Representative Elkins present for the vote on Amendment 7. The committee took an at-ease from 8:59:17 AM to 8:59:30 AM. 8:59:42 AM REPRESENTATIVE RAMRAS maintained his objection to Amendment 7. A roll call vote was taken. Representatives Gardner, Gruenberg, and Lynn voted in favor of Amendment 7. Representatives Ramras, Gatto, Elkins, and Seaton voted against it. Therefore, Amendment 7 failed by a vote of 3-4. 9:00:46 AM VICE CHAIR GATTO closed public testimony. 9:01:25 AM REPRESENTATIVE SEATON moved to report CSHB 475, Version 24- LS1685\Y, Wayne, 3/1/06, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 475 (STA) was reported out of the House State Affairs Standing Committee. [VICE CHAIR GATTO handed the gavel back to Chair Seaton.]
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