Legislature(2005 - 2006)CAPITOL 106

04/14/2005 08:00 AM STATE AFFAIRS

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08:08:52 AM Start
08:09:49 AM Alaska Air National Guard - Brigadier General
08:16:19 AM HB167
08:37:21 AM HB160
09:44:37 AM HB238
10:01:44 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation hearing: AK Air National TELECONFERENCED
Guard-Brigadier General
Colonel Tony A. Hart--Kulis ANG Base
<Pending Referral>
Heard & Held
Bills Previously Heard/Scheduled
Moved CSHB 167(STA) Out of Committee
Heard & Held
HB 238-PUBLIC EMPLOYEE/TEACHER RETIREMENT                                                                                     
9:44:37 AM                                                                                                                    
CHAIR SEATON announced  that the last order of  business was HOUSE                                                              
BILL  NO.  238,  "An  Act  relating   to  contribution  rates  for                                                              
employers  and  members  in  the  defined  benefit  plans  of  the                                                              
teachers' retirement  system and the public  employees' retirement                                                              
system and  to the  ad-hoc post-retirement  pension adjustment  in                                                              
the  teachers'   retirement  system;  requiring   insurance  plans                                                              
provided  to  members  of the  teachers'  retirement  system,  the                                                              
judicial  retirement  system,  the  public  employees'  retirement                                                              
system,  and  the  former  elected   public  officials  retirement                                                              
system to provide  a list of preferred drugs;  relating to defined                                                              
contribution  plans  for  members   of  the  teachers'  retirement                                                              
system   and  the   public  employees'   retirement  system;   and                                                              
providing for an effective date."                                                                                               
CHAIR  SEATON  noted  that the  committee  had  discussed  several                                                              
changes to  Version L  and those  changes are  shown in  a handout                                                              
with  color-coded type  [included in  the committee  packet].   He                                                              
announced  he would  give the  committee three  minutes to  review                                                              
the handout before proceeding with the bill hearing.                                                                            
The committee took an at-ease from 9:45:19 AM to 9:48:06 AM.                                                                
9:48:14 AM                                                                                                                    
REPRESENTATIVE  ELKINS  noted  that   the  committee  members  had                                                              
received  a  facsimile  that  mornings   from  AARP  advising  the                                                              
committee to take  HB 238 slowly.  He said he thinks  that is good                                                              
9:48:31 AM                                                                                                                    
CHAIR  SEATON  agreed that  the  matter  before the  committee  is                                                              
"extremely serious."   He  returned to the  subject of  the color-                                                              
coded handout  and explained that  it contained all the  ideas for                                                              
amendments  that   the  committee  had  discussed   at  its  prior                                                              
meeting.   He stated  his intent  for the  committee to  adopt all                                                              
the  changes  in  the  handout as  a  unit  rather  than  adopting                                                              
individual amendments.                                                                                                          
9:50:01 AM                                                                                                                    
KATHERINE  SHOWS,  Staff  to Representative  Paul  Seaton,  Alaska                                                              
State Legislature,  on behalf of  Representative Seaton,  chair of                                                              
the  House State  Affairs  Standing Committee,  sponsor,  reviewed                                                              
the color-coded  handout.   She said the  changes would be  to the                                                              
following  categories:  changing  "health  reimburse  account"  to                                                              
"health  reimbursement  arrangement";   adding  definitions  where                                                              
needed; making  changes in semantics;  clarifying the part  of the                                                              
bill that addresses  cost sharing as it relates  to the increasing                                                              
health care costs;  addressing the committee's  concerns regarding                                                              
a   retiree's   acquiring   dependents   after   retirement;   and                                                              
eliminating  the  language that  spoke  to  the issue  of  generic                                                              
drugs  and changing  it to  intent  language for  the Division  of                                                              
Retirement & Benefits.   She said there would be  no change of the                                                              
intent of the bill.                                                                                                             
9:52:38 AM                                                                                                                    
MS.  SHOWS,  in   response  to  a  question   from  Representative                                                              
Gruenberg,  explained that  the red  type shows  the changes  that                                                              
she made, while  the blue type shows the language  changes by Brad                                                              
Lawson of Mercer Human Resource Consulting.                                                                                     
9:52:52 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG asked  if the intent  language  would be                                                              
in the  form of a  letter of  intent or an  intent section  in the                                                              
9:53:15 AM                                                                                                                    
CHAIR SEATON said  he believes that would be an  intent section in                                                              
the bill.                                                                                                                       
MS. SHOWS  said she expects  that the bill  drafter will  put that                                                              
into more formal language.                                                                                                      
9:53:45 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG stated  his assumption  that there  will                                                              
be a new  committee substitute (CS)  that contains the  changes in                                                              
the handout.                                                                                                                    
CHAIR  SEATON answered  yes.   He  added that  he  didn't want  to                                                              
create a CS without  first displaying the changes  in writing that                                                              
the committee spoke of previously.                                                                                              
REPRESENTATIVE  GRUENBERG said he  is not  familiar with  the word                                                              
"arrangement" as  a legal term of  art.  He also  recommended that                                                              
the phrase  "must retire  directly" is the  most accurate  term to                                                              
9:54:41 AM                                                                                                                    
MS.  SHOWS  said  the actual  language  in  the  Internal  Revenue                                                              
Service (IRS)  code is  "arrangement," although  "account"  is the                                                              
more well-known term.                                                                                                           
9:55:18 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG   observed  that  there   appear  to  be                                                              
typographical  errors in  the color-coded  handout  and urged  Ms.                                                              
Shows to clear those before giving it to the bill drafter.                                                                      
9:56:04 AM                                                                                                                    
CHAIR  SEATON  asked  the  committee  members  if  there  was  any                                                              
objection  to adopting  the language  in  the handout  into a  new                                                              
committee  substitute.    There  being  no objection,  it  was  so                                                              
9:57:05 AM                                                                                                                    
CHAIR  SEATON referred  to  a handout  included  in the  committee                                                              
packet  showing the  "Projected  Values for  Health  Reimbursement                                                              
Accounts,"  [with  various  scenarios,  including  early  or  late                                                              
hire, with spouse,  PERS "other," PERS police/fire,  and TRS].  He                                                              
reviewed that the  early hire provision is when  someone works for                                                              
30 years  and, in the  example provided, retires  at 55.   In that                                                              
example,  the employee  would probably  not  be able  to make  the                                                              
medical payments  necessary.  He  said the question is  whether to                                                              
choose  a   30-years-and-out  retirement   provision  or   to  set                                                              
retirement at  age 60.  At age  60 and with an HRA  provision of 2                                                              
percent, the  tables show  that there  would probably  be adequate                                                              
funding to  allow people  to transition  between early  retirement                                                              
at  age 60  and  Medicare eligibility.    Another  option for  the                                                              
committee  to consider  is whether  to  just have  a big  warning:                                                              
"If you  retire before  age 60  and are  required to have  medical                                                              
insurance  bridging that  coverage,  our projections  are that  if                                                              
you  don't  have  ...  another  job  with  medical  coverage  [or]                                                              
medical  coverage with  spouse  that you  can  identify, the  plan                                                              
will not  provide you  sufficient  money to bridge  [the gap]  and                                                              
you  will lose  your  post-Medicare  eligible contribution."    He                                                              
summarized   that  the   question  is   whether  to   go  with   a                                                              
conservative  approach  or  to just  issue  a  warning.   He  said                                                              
another  option would  be to  decide to  increase to  a 3  percent                                                              
HRA,  or some  other  mechanism to  fund the  early  retiree.   He                                                              
stated,  "That  is  the philosophical  problem  that  we  have  to                                                              
9:59:58 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG  said  he  would like  to  hear  various                                                              
groups testify regarding this issue to find out what they want.                                                                 
10:00:32 AM                                                                                                                   
CHAIR  SEATON said  he  wants to  put these  questions  out to  be                                                              
addressed at the succeeding hearings on HB 238.                                                                                 
[HB 238 was heard and held.]                                                                                                    

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