Legislature(2005 - 2006)CAPITOL 106

04/20/2005 08:00 AM STATE AFFAIRS


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08:11:28 AM Start
08:11:56 AM SB141
09:10:20 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Continued from 04/19 --
= HJR 12 CONST. AM: BUDGET RESERVE FUND REPEAL
Scheduled But Not Heard
= SB 141 PUBLIC EMPLOYEE/TEACHER RETIREMENT/BOARDS
Moved HCS CSSB 141(STA) Out of Committee
= HB 238 PUBLIC EMPLOYEE/TEACHER RETIREMENT
Scheduled But Not Heard
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         April 20, 2005                                                                                         
                           8:11 a.m.                                                                                            
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Paul Seaton, Chair                                                                                               
Representative Carl Gatto, Vice Chair                                                                                           
Representative Jim Elkins                                                                                                       
Representative Bob Lynn                                                                                                         
Representative Jay Ramras                                                                                                       
Representative Berta Gardner                                                                                                    
Representative Max Gruenberg                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 141                                                                                                             
"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, 2005;  establishing  the Alaska  Retirement                                                               
Management Board  to replace the Alaska  State Pension Investment                                                               
Board,  the Alaska  Teachers' Retirement  Board,  and the  Public                                                               
Employees' Retirement  Board; adding appeals of  the decisions of                                                               
the  administrator   of  the  teachers'  and   public  employees'                                                               
retirement  systems   to  the  jurisdiction  of   the  office  of                                                               
administrative hearings; and providing for an effective date."                                                                  
                                                                                                                                
     - MOVED HCS CSSB 141(STA) OUT OF COMMITTEE                                                                                 
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 12                                                                                                   
Proposing amendments to  the Constitution of the  State of Alaska                                                               
relating to the repeal of the budget reserve fund.                                                                              
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
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."                                                                                                                          
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 141                                                                                                                  
SHORT TITLE: PUBLIC EMPLOYEE/TEACHER RETIREMENT/BOARDS                                                                          
SPONSOR(s): FINANCE                                                                                                             
                                                                                                                                
03/14/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/05       (S)       FIN                                                                                                    
03/16/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/16/05       (S)       Heard & Held                                                                                           
03/16/05       (S)       MINUTE(FIN)                                                                                            
03/17/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/17/05       (S)       Heard & Held                                                                                           
03/17/05       (S)       MINUTE(FIN)                                                                                            
03/21/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/21/05       (S)       Heard & Held                                                                                           
03/21/05       (S)       MINUTE(FIN)                                                                                            
03/22/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/22/05       (S)       Heard & Held                                                                                           
03/22/05       (S)       MINUTE(FIN)                                                                                            
03/23/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/23/05       (S)       Heard & Held                                                                                           
03/23/05       (S)       MINUTE(FIN)                                                                                            
03/29/05       (S)       FIN AT 4:30 PM SENATE FINANCE 532                                                                      
03/29/05       (S)       Heard & Held                                                                                           
03/29/05       (S)       MINUTE(FIN)                                                                                            
03/30/05       (H)       FIN AT 9:00 AM HOUSE FINANCE 519                                                                       
03/30/05       (S)       Heard & Held                                                                                           
03/30/05       (S)       MINUTE(FIN)                                                                                            
03/31/05       (H)       FIN AT 9:00 AM HOUSE FINANCE 519                                                                       
03/31/05       (S)       Heard & Held                                                                                           
03/31/05       (S)       MINUTE(FIN)                                                                                            
04/01/05       (H)       FIN AT 9:00 AM HOUSE FINANCE 519                                                                       
04/01/05       (S)       Heard & Held                                                                                           
04/01/05       (S)       MINUTE(FIN)                                                                                            
04/02/05       (S)       FIN AT 10:00 AM SENATE FINANCE 532                                                                     
04/02/05       (S)       Heard & Held                                                                                           
04/02/05       (S)       MINUTE(FIN)                                                                                            
04/03/05       (S)       FIN AT 10:00 AM SENATE FINANCE 532                                                                     
04/03/05       (S)       Heard & Held                                                                                           
04/03/05       (S)       MINUTE(FIN)                                                                                            
04/04/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/04/05       (S)       Scheduled But Not Heard                                                                                
04/05/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/05/05       (S)       Heard & Held                                                                                           
04/05/05       (S)       MINUTE(FIN)                                                                                            
04/06/05       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/06/05       (S)       Moved CSSB 141(FIN) Out of Committee                                                                   
04/06/05       (S)       MINUTE(FIN)                                                                                            
04/08/05       (S)       FIN    RPT   CS        5DP   1DNP    1AM                                                               
                         NEW TITLE                                                                                              
04/08/05       (S)       DP:   GREEN,   WILKEN,   BUNDE,   DYSON,                                                               
                         STEDMAN                                                                                                
04/08/05       (S)       DNP: HOFFMAN                                                                                           
04/08/05       (S)       AM: OLSON                                                                                              
04/12/05       (S)       ENGROSSED                                                                                              
04/14/05       (S)       TRANSMITTED TO (H)                                                                                     
04/14/05       (S)       VERSION: CSSB 141(FIN)                                                                                 
04/14/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/14/05       (H)       STA, FIN                                                                                               
04/14/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
04/14/05       (H)       <Pending Referral>                                                                                     
04/16/05       (H)       STA AT 9:30 AM CAPITOL 106                                                                             
04/16/05       (H)       <Bill Hearing Canceled>                                                                                
04/19/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
04/19/05       (H)       Heard & Held                                                                                           
04/19/05       (H)       MINUTE(STA)                                                                                            
04/20/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KATHERINE SHOWS, Staff                                                                                                          
to Representative Paul Seaton                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Offered clarification on amendments to SB
141.                                                                                                                            
                                                                                                                                
TRACI CARPENTER, Staff                                                                                                          
to Senator Lyda Green                                                                                                           
Alaska State Legislature                                                                                                        
POSITION STATEMENT:  During hearing of SB 141, answered                                                                         
questions.                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR PAUL  SEATON called  the meeting back  to order  at 8:11:28                                                           
AM.   Present  at the  call  back to  order were  Representatives                                                             
Gatto, Elkins, Lynn, Ramras, Gardner, Gruenberg, and Seaton.                                                                    
                                                                                                                                
SB 141-PUBLIC EMPLOYEE/TEACHER RETIREMENT/BOARDS                                                                              
                                                                                                                                
CHAIR SEATON announced that the only order of business would be                                                                 
CS  FOR  SENATE  BILL  NO.  141(FIN), "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,  2005;                                                               
relating  to  university  retirement programs;  establishing  the                                                               
Alaska Retirement  Management Board  to replace the  Alaska State                                                               
Pension Investment Board, the  Alaska Teachers' Retirement Board,                                                               
and  the Public  Employees' Retirement  Board; adding  appeals of                                                               
the decisions  of the administrator  of the teachers'  and public                                                               
employees' retirement  systems to the jurisdiction  of the office                                                               
of administrative  hearings; providing  for nonvested  members of                                                               
the  teachers'   retirement  system  defined  benefit   plans  to                                                               
transfer   into   the   teachers'   retirement   system   defined                                                               
contribution  plan  and  for  nonvested  members  of  the  public                                                               
employees' retirement  system defined  benefit plans  to transfer                                                               
into   the   public    employees'   retirement   system   defined                                                               
contribution  plan;  providing  for  political  subdivisions  and                                                               
public  organizations to  request  to participate  in the  public                                                               
employees'  defined contribution  retirement plan;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
8:11:56 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  [moved to adopt] Amendment  17, labeled                                                               
24-LS0637\L.12, Craver,  4/19/05.  [A motion  had previously been                                                               
made  to adopt  Amendment 17,  during  the 4/19  portion of  this                                                               
meeting, but  the motion  was withdrawn].   Amendment 17  read as                                                               
follows:                                                                                                                        
                                                                                                                                
     Page 7, lines 9 - 30:                                                                                                      
          Delete all material.                                                                                                  
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 8, lines 9 - 10:                                                                                                      
          Delete "calculated under AS 14.25.052,"                                                                               
                                                                                                                                
     Page 68, line 15, through page 69, line 13:                                                                                
          Delete all material.                                                                                                  
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 72, lines 5 - 6:                                                                                                      
          Delete "calculated under AS 39.35.162,"                                                                               
                                                                                                                                
     Page 105, line 23:                                                                                                         
          Delete "sec. 59"                                                                                                      
          Insert "sec. 57"                                                                                                      
                                                                                                                                
     Page 108, line 21, following "14.25.047,":                                                                                 
          Insert "14.25.050(a),"                                                                                                
                                                                                                                                
     Page 109, line 19:                                                                                                         
          Delete "SECTIONS 139 AND 140"                                                                                         
          Insert "SECTIONS 135 AND 136"                                                                                         
                                                                                                                                
     Page 109, line 20:                                                                                                         
          Delete "secs. 139 and 140"                                                                                            
          Insert "secs. 135 and 136"                                                                                            
                                                                                                                                
     Page 109, lines 21 - 22:                                                                                                   
          Delete "secs. 139 and 140"                                                                                            
          Insert "secs. 135 and 136"                                                                                            
                                                                                                                                
     Page 109, line 23:                                                                                                         
          Delete "Sections 11, 12, 14, 15, 20, 89 - 94,                                                                         
     107, 114, and 131"                                                                                                         
          Insert "Sections 6, 10, 12, 13, 18, 85 - 90, 103,                                                                     
     110, and 127"                                                                                                              
                                                                                                                                
     Page 109, line 25:                                                                                                         
          Delete "Section 141"                                                                                                  
          Insert "Section 137"                                                                                                  
                                                                                                                                
     Page 109, line 26:                                                                                                         
          Delete "secs. 142 and 143"                                                                                            
          Insert "secs. 138 and 139"                                                                                            
                                                                                                                                
REPRESENTATIVE  GRUENBERG  explained  that  the  amendment  would                                                               
remove provisions that provide for  increases in the contribution                                                               
rate for members of both  the Public Employees' Retirement System                                                               
(PERS) and the Teachers' Retirement System (TRS).                                                                               
                                                                                                                                
CHAIR  SEATON  reviewed  Amendment   17,  noting  that  it  would                                                               
increase the  contribution rate by  0.5 percent.  He  pointed out                                                               
that  the committee  had adopted  an amendment  by Representative                                                               
Ramras that limited  the total contribution by an  employee to 10                                                               
percent for current PERS employees.   He explained that Amendment                                                               
17  would repeal  any employee  increase for  current members  of                                                               
PERS or TRS.                                                                                                                    
                                                                                                                                
8:13:26 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON objected [to the adoption of Amendment 17].                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG offered  further details  for Amendment                                                               
17; he said:                                                                                                                    
                                                                                                                                
     It  rolls back  the rate  increase.   Sections 7  and 8                                                                    
     currently  provide for  increases  in the  contribution                                                                    
     rate  for TRS,  [and] sections  87 and  88 provide  for                                                                    
     increases in the  contribution rate for PERS.   And all                                                                    
     existing TRS and  PERS ... members ...  were hired with                                                                    
     the  reasonable  expectation  that  their  contribution                                                                    
     rates   to  retirement   systems   were   fixed  at   a                                                                    
     contractual  rate.    And,  by  the  way,  Article  12,                                                                    
     Section 7, of the  constitution says that membership in                                                                    
     employee  retirement  systems  ... shall  constitute  a                                                                    
     contractual  relationship.    And  it's  my  contention                                                                    
     [that]   to   be  certain   that   ...   the  bill   is                                                                    
     constitutional,  we  need  to keep  that  contribution,                                                                    
     rate, the  same for  existing employees,  and therefore                                                                    
     this [amendment] deletes those provisions.                                                                                 
                                                                                                                                
8:15:10 AM                                                                                                                    
                                                                                                                                
A  roll  call vote  was  taken.   Representatives  Elkins,  Lynn,                                                               
Gardner,  and   Gruenberg  voted   in  favor  of   Amendment  17.                                                               
Representatives  Ramras,  Gatto,  and Seaton  voted  against  it.                                                               
Therefore, Amendment 17 passed by a vote of 4-3.                                                                                
                                                                                                                                
8:16:14 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  returned the committee's attention  to Amendment 9,                                                               
as follows [original punctuation provided]:                                                                                     
                                                                                                                                
     p.8 line 10. Delete "less  than" and insert "the lesser                                                                    
     of"                                                                                                                        
     line 11  after "active members" insert  "11 percent for                                                                    
     TRS employer and 10 percent for PERS employers"                                                                            
                                                                                                                                
The committee took an at-ease from 8:17:54 AM to 8:19:29 AM.                                                                  
                                                                                                                                
8:19:31 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON [moved to adopt Amendment 9].                                                                                      
                                                                                                                                
REPRESENTATIVE GATTO objected for discussion purposes.                                                                          
                                                                                                                                
CHAIR SEATON explained:                                                                                                         
                                                                                                                                
     Amendment  9  establishes  a  floor  for  the  employer                                                                    
     contributions at 11 percent for  TRS and 10 percent for                                                                    
     PERS.  And  this is the employer  contribution only; it                                                                    
     does  not  affect  the  employee  contribution.    What                                                                    
     brought us into  part of our unfunded  liability at our                                                                    
     past  service cost  is that  the systems  lowered their                                                                    
     contribution rates ... as far  as 6.75 [percent] in one                                                                    
     system.    ... This  does  not  affect the  match;  the                                                                    
     employee will still be required  to match at 50 percent                                                                    
     of the  normal cost rate.   All  this does is  say that                                                                    
     the  employer  contribution  can't go  down  less  than                                                                    
     this.  ... If we do  go down to a low contribution rate                                                                    
     by  the  employer,  we  have a  statutory  limit  of  5                                                                    
     percent, so then  all of a sudden if we  need to go up,                                                                    
     like  we  do  now,  we  cannot  return  up.    So  this                                                                    
     [amendment]  is a  smoothing mechanism  that keeps  the                                                                    
     employer  at a  fairly constant  contribution rate  and                                                                    
     also doesn't  dig us into  holes when the  stock market                                                                    
     goes up or down.                                                                                                           
                                                                                                                                
8:21:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO removed his objection.                                                                                     
                                                                                                                                
CHAIR SEATON asked if there was any further objection to                                                                        
Amendment 9.  There being none, Amendment 9 was adopted.                                                                        
                                                                                                                                
8:21:27 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON directed attention back to Amendment 11.  [The                                                                     
motion to adopt Amendment 11 was left pending from the 4/19                                                                     
portion of this meeting.  Amendment 11 read as follows:]                                                                        
                                                                                                                                
     p. 32  line 10,  insert "'member  contribution account'                                                                    
     means  the  member's  contributions  to  their  defined                                                                    
     contribution account plus any accumulated interest."                                                                       
                                                                                                                                
CHAIR SEATON withdrew his motion  from 4/19/05 to adopt Amendment                                                               
11.                                                                                                                             
                                                                                                                                
CHAIR SEATON [moved  to adopt Amendment 18 as  a modified version                                                               
of  withdrawn Amendment  11],  as  follows [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     p.32  line 10,  insert  "'member contribution  account'                                                                    
     means  the  member's  contributions  to  their  defined                                                                    
     contribution account plus any change in market value."                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG noted  that Amendment  11 had  included                                                               
the  phrase  "accumulated  interest".    He  moved  to  adopt  an                                                               
amendment to  Amendment 18,  which would  change Amendment  18 to                                                               
read:                                                                                                                           
                                                                                                                                
     p.32  line 10,  insert  "'member contribution  account'                                                                    
     means  the  member's  contributions  to  their  defined                                                                    
     contribution account  plus any  change in  market value                                                                    
     and any accumulated interest."                                                                                             
                                                                                                                                
8:22:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  objected to the amendment  to Amendment 18.                                                               
He asked for clarification regarding the phrase "market value."                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG pointed out  that this question does not                                                               
address the friendly amendment to Amendment 18.                                                                                 
                                                                                                                                
REPRESENTATIVE GATTO withdrew his objection.                                                                                    
                                                                                                                                
[The amendment to Amendment 18 was treated as adopted.]                                                                         
                                                                                                                                
8:24:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  noted  that  this  amendment  includes                                                               
unrealized gains as well as realized gains.                                                                                     
                                                                                                                                
8:25:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  commented that she was  not exactly clear                                                               
where [Amendment 18, as amended] would insert into the bill.                                                                    
                                                                                                                                
CHAIR SEATON clarified  his intent for the  language in Amendment                                                               
18 [as amended]  to be inserted as paragraph (3)  in the location                                                               
specified in Amendment 18.                                                                                                      
                                                                                                                                
CHAIR SEATON  asked if there  was any objection to  Amendment 18,                                                               
as amended.  There being none, it was so ordered.                                                                               
                                                                                                                                
8:26:50 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON  returned to  Amendment  5,  which was  adopted  on                                                               
4/19/05 and read as follows [original punctuation provided]:                                                                    
                                                                                                                                
     p.46  line  30.  After "system;"  insert,  "The  member                                                                    
     shall be selected  from no less than three  and no more                                                                    
     than  five  nominees  put forward  by  the  appropriate                                                                    
     bargaining units."                                                                                                         
     p.46 line 31. After  "system." Insert "The member shall                                                                    
     be selected  from no less  than three and no  more than                                                                    
     five   nominees   put   forward  by   the   appropriate                                                                    
     bargaining units."                                                                                                         
     p.47  line  2.  After  "terms of"  delete  "three"  and                                                                    
     insert  "six".  After  "total of"  delete  "three"  and                                                                    
     insert   "two".   Line   4.   insert   "full"   between                                                                    
     "consecutive" and "terms".                                                                                                 
                                                                                                                                
     p.105 line  26. After "AS 39.05.055(7)."  Insert, "Upon                                                                    
     establishment of the board one  finance officer will be                                                                    
     appointed to a three year  term and one finance officer                                                                    
     will  be  appointed  to  a  six  year  tem  [sic],  one                                                                    
     PERS/TRS member  representative will be appointed  to a                                                                    
     three  year   term  and   the  other   PERS/TRS  member                                                                    
     representative will be appointed to a six year term."                                                                      
                                                                                                                                
CHAIR SEATON  reviewed that Amendment  5 changed the term  of the                                                               
boards  to six  years  on  a rotating  schedule.   Regarding  the                                                               
system that  uses nominees  put forward  by bargaining  units, he                                                               
said  the  committee "adopted  two  amendments  that change  this                                                               
amendment."  The  first one was [Amendment 6],  which changed the                                                               
number of non-public  members from three to  one and [designated]                                                               
two trustees from  PERS and two from TRS.   The second change was                                                               
made by  adopting Amendment 16,  which provided for  "election of                                                               
those  positions by  those  two systems."    He concluded,  "That                                                               
still leaves in place the staggered terms and the term limits."                                                                 
                                                                                                                                
8:29:02 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON returned to [Conceptual]  Amendment 7, regarding the                                                               
health reimbursement arrangement (HRA).                                                                                         
                                                                                                                                
The committee took an at-ease from 8:29:40 AM to 8:30:33 AM.                                                                
                                                                                                                                
CHAIR  SEATON noted  that on  April 19,  2005, the  committee had                                                               
adopted Conceptual  Amendment 4 and  Conceptual Amendment 7.   He                                                               
reminded  the committee  that Conceptual  Amendment 7  dealt with                                                               
the HRA, while  Conceptual Amendment 4 dealt with  a medical plan                                                               
that the  committee had adopted.   He explained  that Legislative                                                               
Legal  and  Research  Services   combined  those  two  conceptual                                                               
amendments  into one  amendment,  labeled 24-LS0637\L.7,  Craver,                                                               
4/18/05 [what ultimately became  Amendment 19]. [Original text of                                                               
Amendment 19 can be found at the end of this set of minutes].                                                                   
                                                                                                                                
REPRESENTATIVE  GRUENBERG stated  that  he was  unaware that  the                                                               
committee had  adopted [Conceptual Amendment  7].  He  asked that                                                               
the committee adopt  [the Amendment 19] and  repeal [the adoption                                                               
of] Conceptual Amendment 4 and Conceptual Amendment 7.                                                                          
                                                                                                                                
8:33:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  moved  to  adopt  the  [Amendment  19,                                                               
labeled  24-LS0637\L.7,   Craver,  4/18/05].    There   being  no                                                               
objection, Amendment 19 was adopted.                                                                                            
                                                                                                                                
REPRESENTATIVE  GRUENBERG  [moved   to  rescind  the  committee's                                                               
action  in adopting  Conceptual] Amendment  4.   [There being  no                                                               
objection, Conceptual Amendment 4 was before the committee.]                                                                    
                                                                                                                                
CHAIR SEATON withdrew [Conceptual] Amendment 4.                                                                                 
                                                                                                                                
8:35:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG moved to  rescind the committee's action                                                               
in adopting [Conceptual] Amendment 7.   There being no objection,                                                               
[Conceptual] Amendment 7 [was before the committee].                                                                            
                                                                                                                                
CHAIR SEATON withdrew [Conceptual] Amendment 7.                                                                                 
                                                                                                                                
8:35:45 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON clarified the Amendment 19.  He said:                                                                              
                                                                                                                                
     When  we're talking  about retiring  directly from  the                                                                    
     system,  such as  on page  5,  line 22  through 24  [as                                                                    
     numbered on  the amendment],  retiring from  the system                                                                    
     means  12  months  before application  for  retirement.                                                                    
     However, recall that  if you work for 30  years you are                                                                    
     eligible to  retire and you are  retiring directly from                                                                    
     the system  at that time -  30 plus years.   Or, if you                                                                    
     reach  normal  retirement  age and  have  at  least  10                                                                    
     years, then you are retiring directly from the system.                                                                     
                                                                                                                                
8:36:40 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON continued:                                                                                                         
                                                                                                                                
     There was  one other clarification that  we needed, and                                                                    
     that was on  the HRA language on page 8,  ... lines 11-                                                                    
     16   [as  numbered   on  Amendment   19,  labeled   24-                                                                    
     LS0637\L.7].  And that's [that]  a member's eligible to                                                                    
     apply  for reimbursement  from the  [HRA] plan  after a                                                                    
     minimum of  10 years  of service and  does not  have to                                                                    
     retire  directly  from the  system.    Just to  clarify                                                                    
     this:     if  you  worked   for  10  years,   you  have                                                                    
     established an  invested personal  account in  the HRA.                                                                    
     When you reach 60  months pre-Medicare, that account is                                                                    
     available to you, so you don't  lose it, which is ... a                                                                    
     change ....                                                                                                                
                                                                                                                                
8:37:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER stated:                                                                                                  
                                                                                                                                
     In  the original  sheet  that  numbered the  amendments                                                                    
     4,5, and  7, it talks  about if an  employee terminates                                                                    
     employment before reaching  the 10-year requirement for                                                                    
     medical  eligibility  and  doesn't come  back  to  work                                                                    
     within  five   years,  they  forfeit   the  accumulated                                                                    
     balance of  the HRA.   And that's not  specifically ...                                                                    
     lined out  in our  new [Amendment  19], but  that still                                                                    
     holds ...?                                                                                                                 
                                                                                                                                
8:38:19 AM                                                                                                                    
                                                                                                                                
KATHERINE  SHOWS, Staff  to  Representative  Paul Seaton,  Alaska                                                               
State Legislature, explained  that the intent of  Amendment 7 was                                                               
to repeal  the provision  in SB  141 that  stipulated that  if an                                                               
employee left employment  for five years, he/she  would no longer                                                               
have any access  to the HRA.  Also, she  noted that the amendment                                                               
would change  the provision in SB  141 that said if  the employee                                                               
does return  to employment, the  HRA would be  reinstated without                                                               
the accumulation of any interest.                                                                                               
                                                                                                                                
8:39:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked whether  the language in  the old                                                               
Amendment 7 matches the language in the Amendment 19.                                                                           
                                                                                                                                
MS. SHOWS  replied, "I believe  it does."   She pointed  out that                                                               
she was reading page 8, lines 11-16 of the Amendment 19.                                                                        
                                                                                                                                
8:40:16 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER interpreted the language  to say that if a                                                               
person leaves  employment, he/she  won't ever  have the  right to                                                               
apply for reimbursement from the HRA.                                                                                           
                                                                                                                                
CHAIR  SEATON stated  that was  his interpretation  as well.   He                                                               
suggested  removing  the  line   [in  the  withdrawn  Conceptual]                                                               
Amendment 7  that would  delete "AS 14.25.470"  on page  58, line                                                               
16, and  insert "(b)  of this section"  and insert  language that                                                               
would  restore  the   balance  of  an  [HRA]   account  plus  any                                                               
accumulated interest  to a person  if he/she  resumes employment.                                                               
[This language was already incorporated into Amendment 19.]                                                                     
                                                                                                                                
8:41:25 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  expressed her concern that  employees who                                                               
are paying  into an HRA  and don't stay  the 10 years  would lose                                                               
their entire  amount.  She said,  "I'm not sure that  that's fair                                                               
or appropriate policy."                                                                                                         
                                                                                                                                
8:41:42 AM                                                                                                                    
                                                                                                                                
MS. SHOWS pointed out that on page  5 of the Amendment 19, line 9                                                               
would delete  "within five years  after the date  of termination"                                                               
and line 12 would delete "without interest or adjustment".                                                                      
                                                                                                                                
8:42:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  turned that committee's  attention back                                                               
to the  [Conceptual] Amendment 7 and  said that he would  like to                                                               
be  certain that  the intent  in that  amendment is  also in  the                                                               
final document.                                                                                                                 
                                                                                                                                
8:43:32 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON again  clarified the language in  Amendment 19 [text                                                               
provided at the end of this set of minutes].                                                                                    
                                                                                                                                
8:44:51 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON turned  to a table in the  committee packet labeled,                                                               
"State  of Alaska,  Division of  Retirement and  Benefits, Normal                                                               
Cost Rate  and Actuarial  Computed Rate from  FY 1983  through FY                                                               
2006."   He pointed  out that  the average  normal cost  rate for                                                               
employers under PERS between 1983  and 2006 is 10.86 percent, and                                                               
the  average normal  cost rate  for employers  under TRS  between                                                               
1983 and 2006 is 11.16 percent.                                                                                                 
                                                                                                                                
CHAIR SEATON turned to another  handout from the committee packet                                                               
that  is not  titled, but  contains a  conceptual amendment  that                                                               
would increase the 1.75 percent  contribution to major medical in                                                               
SB 141  to 3.75  percent for  TRS employees  and 3.5  percent for                                                               
PERS employees.                                                                                                                 
                                                                                                                                
CHAIR  SEATON [moved  to adopt  Conceptual  Amendment 20],  which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
     p.82, line 8 delete "1.75" and insert "3.5"                                                                                
     p. 16, line 10 delete "1.75" and insert "3.5" [sic]                                                                        
                                                                                                                                
REPRESENTATIVE GRUENBERG  objected for  discussion purposes.   He                                                               
asked if this amendment would have any effect on Amendment 17.                                                                  
                                                                                                                                
CHAIR SEATON replied that it would not.                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG withdrew his objection.                                                                                
                                                                                                                                
8:48:17 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON  realized  that  the  written  copy  of  Conceptual                                                               
Amendment 20 contained a typographical  error in the second line.                                                               
He clarified that the amendment should read:                                                                                    
                                                                                                                                
     p.82, line 8 delete "1.75" and insert "3.5"                                                                                
     p. 16, line 10 delete "1.75" and insert "3.75"                                                                             
                                                                                                                                
REPRESENTATIVE RAMRAS asked what the cost of that would be.                                                                     
                                                                                                                                
CHAIR SEATON  replied that the  difference between 1.75  and 3.75                                                               
is 2 percent.                                                                                                                   
                                                                                                                                
REPRESENTATIVE RAMRAS  asked, "How many millions  of dollars does                                                               
that 2 percent represent?"                                                                                                      
                                                                                                                                
CHAIR SEATON deferred to the sponsor's staff.                                                                                   
                                                                                                                                
8:50:05 AM                                                                                                                    
                                                                                                                                
TRACI  CARPENTER,  Staff  to Senator  Lyda  Green,  Alaska  State                                                               
Legislature, replied  that the cost  of that  particular increase                                                               
is approximately $47 million.                                                                                                   
                                                                                                                                
8:50:24 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS asked, "Does  this mean that the employers'                                                               
contribution is increasing by $47 million annually?"                                                                            
                                                                                                                                
MS. CARPENTER answered, "That is correct."                                                                                      
                                                                                                                                
REPRESENTATIVE RAMRAS asked Chair  Seaton why the committee would                                                               
do this.                                                                                                                        
                                                                                                                                
8:50:47 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON explained  that there's  a 2  percent HRA,  and the                                                               
committee adopted a major medical  policy that kicks in 60 months                                                               
before Medicare eligibility.   He noted that the  original SB 141                                                               
has  no medical  coverage or  subsidy pre-Medicare  eligible age.                                                               
He commented that  the committee's version of the  bill, with the                                                               
added medical  components, has additional  costs.  He  noted that                                                               
the  medical portion  [of the  benefits] has  been identified  by                                                               
both employers and  employees as the most  important component of                                                               
the retirement and benefit package.                                                                                             
                                                                                                                                
REPRESENTATIVE RAMRAS asked, "This  references a mechanism to pay                                                               
for [Amendment 19]?"                                                                                                            
                                                                                                                                
CHAIR SEATON agreed and noted  that the current normal cost rates                                                               
are  13.24  percent for  PERS  and  14.28  percent for  TRS,  and                                                               
therefore this  bill would  make a  significant reduction  of the                                                               
employer's contribution.                                                                                                        
                                                                                                                                
8:52:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  moved to adopt a  friendly amendment to                                                               
Conceptual  Amendment 20  to ensure  that the  amendment read  as                                                               
follows:                                                                                                                        
                                                                                                                                
     p.82, line 8 delete "1.75" and insert "3.5"                                                                                
     p. 16, line 10 delete "1.75" and insert "3.75"                                                                             
                                                                                                                                
There being no objection, the friendly amendment to Conceptual                                                                  
Amendment 20 was adopted.                                                                                                       
                                                                                                                                
REPRESENTATIVE   GRUENBERG  reiterated   that  he   withdrew  his                                                               
objection  to the  adoption of  Conceptual Amendment  20.   There                                                               
being  no objection,  Conceptual  Amendment 20,  as amended,  was                                                               
adopted.                                                                                                                        
                                                                                                                                
8:54:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO moved to report CSSB 141(FIN), as amended,                                                                 
out of committee with individual recommendations and the                                                                        
accompanying fiscal notes.                                                                                                      
                                                                                                                                
8:54:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER objected.  She commented:                                                                                
                                                                                                                                
     The  crux  of  the  course is  moving  from  a  defined                                                                    
     benefit plan  to a  defined contribution  plan.   And I                                                                    
     think  that  there clearly  are  some  benefits, and  a                                                                    
     defined contribution plan I  think could be constructed                                                                    
     in a  way that really  meets the  needs of the  state -                                                                    
     both employers  and employees.  I'm  not convinced that                                                                    
     this plan  does that,  and part of  my concern  is that                                                                    
     this is all done in such  a rush that I don't believe I                                                                    
     fully  understand  it.    I   don't  believe  that  the                                                                    
     stakeholders  fully understand  it and  have had  every                                                                    
     opportunity to  really participate.  If  we're going to                                                                    
     put  in place  a radical  change and  it has  long-term                                                                    
     consequences once we put it  in - there's no going back                                                                    
     for any  employees hired under  it - [then] I  think it                                                                    
     merits  more  careful discussion.    ...  I think  [the                                                                    
     committee  chair has]  done a  really excellent  job in                                                                    
     laying out the  problem and trying to  keep the process                                                                    
     moving forward.  I think  the amendments this committee                                                                    
     has offered  are improvements  over the  original bill,                                                                    
     but I don't think we're ready to vote.                                                                                     
                                                                                                                                
8:57:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN stated:                                                                                                     
                                                                                                                                
     I too  would like  to join in  applauding the  chair of                                                                    
     this committee  for wading  through some  thirty pounds                                                                    
     of paperwork.   ... I've  had, and I continue  to have,                                                                    
     some  very  serious  concerns about  this  bill.    The                                                                    
     intent is good,  but the devil is in the  details.  I'm                                                                    
     concerned  about poor  souls  who  could outlive  their                                                                    
     retirement  ....   I've  had  some  concerns about  the                                                                    
     makeup of the board and  the process of putting someone                                                                    
     on  the   board,  and   concerns  about   changing  the                                                                    
     contribution  rates   for  people  who   are  currently                                                                    
     covered.   But  those concerns  have been  addressed by                                                                    
     amendment ....   It's helped  me in  my decision-making                                                                    
     process.   That said, I  was elected to make  some very                                                                    
     hard decisions, and let the  chips fall where they may.                                                                    
     This bill,  like all  bills, is  an attempt  to balance                                                                    
     the  equities ...  between the  employees  ... and  the                                                                    
     taxpayers of  the state  ....   It's a  tough decision.                                                                    
     It's a tough medicine that we  may have to take to help                                                                    
     address  the financial  health of  the state.   I  join                                                                    
     some of my colleagues  in being concerned about pushing                                                                    
     too  fast on  this  bill,  but every  day  we do  delay                                                                    
     exacerbates the potential problems.                                                                                        
                                                                                                                                
8:59:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO noted that in  2003 the governor appointed a                                                               
subcommittee of  the PERS  and TRS Boards  that was  charged with                                                               
researching and evaluating the concept  of a new retirement tier.                                                               
This subcommittee worked  throughout 2004 as well.   He said that                                                               
the Senate has done so much  work to [prepare this bill], and the                                                               
House  has  been  working  on  the  issue  since  February.    He                                                               
commented, "It  may seem  rushed, but everything  we do,  to some                                                               
degree is within  timeframes, otherwise we would have  HB 1 still                                                               
in front of  us if we took  all the time that  was necessary, and                                                               
we would  never get to  HB 2 ...."   He  opined that [SB  141, as                                                               
amended] is an  imperfect document.  He noted that  he is in Tier                                                               
1, and enjoys a good retirement,  and he said,  "I want everybody                                                               
to enjoy a good  retirement, I do.  But on the  other hand, ... I                                                               
feel like  I'm hired by  the public to  take care of  the state's                                                               
business.  And the state's  business is, when everybody's walking                                                               
toward a cliff, somebody's got to  put a barrier up there because                                                               
we will fall off the cliff."                                                                                                    
                                                                                                                                
9:05:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG commented  on  behalf  of the  minority                                                               
members of the committee as follows:                                                                                            
                                                                                                                                
     There is a statute that  we discussed ... that provides                                                                    
     occupational  death  benefits:  AS 39.35.430.    I  see                                                                    
     there is  nothing in  the bill  that amends  or repeals                                                                    
     that  statute,  and  I  would just  like  that  on  the                                                                    
     record.   ... I just want  it to be crystal  clear that                                                                    
     that statute remains on the books.                                                                                         
                                                                                                                                
9:06:36 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG stated,  "I think  what we've  done has                                                               
improved [SB 141]...  and I think that the work  of the chair and                                                               
his staff  has been  really good,  and we  all appreciate  them a                                                               
lot."  He voiced two concerns:                                                                                                  
                                                                                                                                
     I want to  be certain that we are not  too far ahead of                                                                    
     the  population,  because  if people  don't  understand                                                                    
     what  we've done  and don't  have the  popular support,                                                                    
     that can  be a real  problem, and  I don't want  to see                                                                    
     that occur.   ... I'm  not going  to vote to  pass this                                                                    
     out because I  think this is the  committee that should                                                                    
     be  making certain  that whatever  product we  have has                                                                    
     the external  support it needs  to be the best  bill it                                                                    
     can be, and that the  people support what we've done on                                                                    
     a bipartisan basis.  And  secondly, I am concerned that                                                                    
     all of the work that's  been done in this committee can                                                                    
     be undone farther down the  line than the next 20 days.                                                                    
     And I think we should  have some agreements before this                                                                    
     bill moves to make certain it's not instantly undone.                                                                      
                                                                                                                                
9:09:09 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  expressed appreciation  for the  entire committee's                                                               
work  on this  bill.   He  [moved to  report]  CSSB 141(FIN),  as                                                               
amended,  out of  committee with  individual recommendations  and                                                               
the accompanying fiscal notes.                                                                                                  
                                                                                                                                
A  roll  call vote  was  taken.   Representatives  Lynn,  Ramras,                                                               
Gatto, Elkins,  and Seaton  voted in favor  of CSSB  141(FIN), as                                                               
amended.   Representatives  Gardner and  Gruenberg voted  against                                                               
it.  Therefore,  HCS CSSB 141(STA) was reported out  of the House                                                               
State Affairs Standing Committee by a vote of 5-2.                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
State  Affairs  Standing  Committee   meeting  was  adjourned  at                                                               
9:10:20 AM.                                                                                                                   
                                                                                                                                
                                                                                                                              
                           AMENDMENTS                                                                                           
                                                                                                                                
The new Amendment 19, labeled, 24-LS0637\L.7, Craver, 4/18/05:                                                                  
                                                                                                                                
     Page 2, following line 4:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Section  1.  The  uncodified law of the  State of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          LEGISLATIVE INTENT REGARDING RETIREE HEALTH CARE                                                                      
     COST SAVINGS IN SECS. 33 AND  121.  It is the intent of                                                                    
     the  legislature for  the  division  of retirement  and                                                                    
     benefits   to  implement   by  regulation   cost-saving                                                                    
     measures appropriate to current  and future retirees in                                                                    
     the   health  care   system.     This  includes   using                                                                    
     manufacturer's  rebates,  co-pay   levels,  and  multi-                                                                    
     tiered  co-payment  structures;  mandating the  use  of                                                                    
     generic drugs; determining the type  of drug classes in                                                                    
     a  formulary; dispensing  fees; mandating  or providing                                                                    
     incentives  for  mail  order pharmaceuticals;  using  a                                                                    
     reduction  in the  average  wholesale price;  providing                                                                    
     case   management  services   for   certain  users   of                                                                    
     pharmaceuticals;  capping the  number of  prescriptions                                                                    
     filled  each  month;  and  restricting  the  number  of                                                                    
     refills that users can have at one time."                                                                                  
                                                                                                                                
     Page 2, line 5:                                                                                                            
          Delete "Section 1"                                                                                                  
          Insert "Sec. 2"                                                                                                     
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 26, line 3, through page 28, line 19:                                                                                 
          Delete all material and insert:                                                                                       
          "Sec. 14.25.470.  Retirement.  (a)  In order to                                                                     
     obtain  medical benefits  under  AS 14.25.480 a  member                                                                    
     must  retire  directly from  the  plan.   A  member  is                                                                    
     eligible  to retire  from the  plan if  the member  has                                                                    
     been an  active member  for at  least 12  months before                                                                    
     application for retirement and                                                                                             
               (1)  the member has at least 30 years of                                                                         
     service; or                                                                                                                
               (2)  the member reaches the normal                                                                               
     retirement age and has at least 10 years of service.                                                                       
          (b)  The normal retirement age is 60 months less                                                                      
     than the age  set for Medicare eligibility  at the time                                                                    
     the member retires.                                                                                                        
          (c)  A member must apply to the administrator for                                                                     
     appointment to  retirement.  Application shall  be made                                                                    
     on  forms   and  in  the   manner  prescribed   by  the                                                                    
     administrator.                                                                                                             
          (d)  A  member who continues in the  employ of the                                                                    
     employer  after reaching  normal  retirement age  shall                                                                    
     continue  to  participate  in  the  plan  and  to  have                                                                    
     contributions allocated to the member's account.                                                                           
          Sec.  14.25.480.   Medical  benefits.    (a)   The                                                                  
     medical  benefits  available  to eligible  persons  are                                                                    
     access to  the retiree major  medical plan.   Access to                                                                    
     the retiree  major medical plan means  that an eligible                                                                    
     person may  not be  denied medical coverage  except for                                                                    
     failure to pay the required premium.                                                                                       
          (b)   The following  persons are eligible  for the                                                                    
     retiree major medical plan  provided under this section                                                                    
     and may elect coverage under it:                                                                                           
               (1)  a member with at least 30 years of                                                                          
     service and who retires directly from the plan;                                                                            
               (2)  the surviving spouse of a member who                                                                        
     elected coverage under (1) of this subsection;                                                                             
               (3)  a member who reaches the normal                                                                             
     retirement  age as  provided  in  AS 14.25.470, has  at                                                                    
     least 10  years of  service, and retires  directly from                                                                    
     the plan;                                                                                                                  
               (4)  the surviving spouse of a member who                                                                        
     elected coverage under (3) of this subsection.                                                                             
          (c)   Retiree major medical plan  coverage elected                                                                    
     by  an eligible  member under  this section  covers the                                                                    
     eligible  member, the  spouse of  the eligible  member,                                                                    
     and the dependent children of the eligible member.                                                                         
          (d)   Retiree major medical plan  coverage elected                                                                    
     by  the surviving  spouse of  an eligible  member under                                                                    
     this  section  covers  the  surviving  spouse  and  the                                                                    
     dependent  children  of  the eligible  member  who  are                                                                    
     dependent on the surviving spouse.                                                                                         
          (e)   A person  other than  an eligible  member is                                                                    
     not  eligible  for coverage  if,  during  the time  the                                                                    
     eligible member was an active member, the person was                                                                       
               (1)  not married to the member; or                                                                               
               (2)  not a dependent child of the member.                                                                        
          (f)   Major medical  coverage takes effect  on the                                                                    
     first  day  of the  month  following  the date  of  the                                                                    
     election and stops when the  person who elects coverage                                                                    
     under  (b) of  this section  dies  or fails  to make  a                                                                    
     required premium payment.                                                                                                  
          (g)   The  coverage for  persons who  are eligible                                                                    
     for Medicare is the same  as that available for persons                                                                    
     who are  not yet eligible  for Medicare.   The benefits                                                                    
     payable to  those Medicare eligible  persons supplement                                                                    
     any benefits provided under the Medicare program.                                                                          
          (h)  The medical and optional insurance premiums                                                                      
     owed by  the person  who elects  coverage under  (b) of                                                                    
     this  section   shall  be  deducted  from   the  health                                                                    
     reimbursement  arrangement.    If  the  amount  of  the                                                                    
     health  reimbursement arrangement  becomes insufficient                                                                    
     to  pay the  premiums, the  person who  elects coverage                                                                    
     under  (b)  of  this  section shall  pay  the  premiums                                                                    
     directly.                                                                                                                  
          (i)  The administrator shall set on an annual                                                                         
     basis  separate retiree  health  coverage premiums  for                                                                    
     participants   who  are   Medicare  eligible   and  for                                                                    
     participants  who are  not yet  Medicare eligible.   An                                                                    
     increase  in the  premium amount  may  not exceed  five                                                                    
     percentage points  annually.  A participant's  share of                                                                    
     the  applicable premium  shall be  determined according                                                                    
     to (j) and (k) of this section.                                                                                            
          (j)  Participants who have not attained normal                                                                        
     retirement age are  required to pay the  full amount of                                                                    
     the applicable medical health coverage premium.                                                                            
          (k)  Participants who have attained normal                                                                            
     retirement age  are eligible  for a  subsidy applicable                                                                    
     to the  cost of  the applicable  premium.   The subsidy                                                                    
     percentage applicable  to the cost of  premiums payable                                                                    
     by the participant  is 30 percent if the  member had 10                                                                    
     years of  service; for each additional  year of service                                                                    
     after the  member's 10th year of  service, the discount                                                                    
     increases  by  three  percentage points;  however,  the                                                                    
     maximum discount is 90 percent  if the member has 30 or                                                                    
     more  years   of  service.    The   applicable  subsidy                                                                    
     percentage  shall be  applied  to the  subsidy base  to                                                                    
     determine  the dollar  amount of  the subsidy  which is                                                                    
     applied against the cost of the premium.                                                                                   
          (l)  Participants who are eligible for Medicare                                                                       
     will  use   the  subsidy  base   for  Medicare-eligible                                                                    
     premiums.   Participants who are  not yet  eligible for                                                                    
     Medicare  will use  the subsidy  base for  non-Medicare                                                                    
     eligible premiums.                                                                                                         
          (m)  The subsidy base for Medicare-eligible                                                                           
     participants  will be  the same  as the  premium amount                                                                    
     for  Medicare-eligible participants  in the  first year                                                                    
     of  this plan  and  the subsidy  base for  non-Medicare                                                                    
     eligible participants  will be the same  as the premium                                                                    
     amount  for non-Medicare  eligible participants  in the                                                                    
     first  year  of this  plan.    Each subsidy  base  will                                                                    
     increase five  percent each year  or the rate  at which                                                                    
     the   actual   premium   amount   increases   for   the                                                                    
     corresponding aged participants, whichever is less.                                                                        
          (n)  The eligibility for retiree major medical                                                                        
     coverage  for  an  alternate payee  under  a  qualified                                                                    
     domestic relations  order shall be determined  based on                                                                    
     the eligibility of  the member to elect  coverage.  The                                                                    
     alternate payee shall pay the  full monthly premium for                                                                    
     retiree major medical coverage.                                                                                            
          (o)  The administrator shall establish monthly                                                                        
     group  premiums  for  retiree major  medical  coverage.                                                                    
     Nothing  in  AS 14.25.310   -  14.25.590  guarantees  a                                                                    
     person who elects coverage under  (b) of this section a                                                                    
     monthly group  premium rate  for retiree  major medical                                                                    
     coverage  other  than the  premium  in  effect for  the                                                                    
     month  in which  the premium  is due  for coverage  for                                                                    
     that month.                                                                                                                
          (p)  A member is eligible to apply for                                                                                
     reimbursement    from    the    health    reimbursement                                                                    
     arrangement  plan  after  a  minimum  of  10  years  of                                                                    
     service and does  not have to retire  directly from the                                                                    
     system.                                                                                                                    
          (q)  In this section,                                                                                                 
               (1)  "health reimbursement arrangement"                                                                          
     means the plan established in AS 39.30.300;                                                                                
               (2)  "retires directly from the plan" means                                                                      
     that the member has been  an active member for at least                                                                    
     12 consecutive months immediately  before the time that                                                                    
     the   member   applies   to   the   administrator   for                                                                    
     appointment   to  retirement   and   that  the   member                                                                    
     continues  as  an  active member  up  through  the  day                                                                    
     before the day the member is appointed to retirement."                                                                     
                                                                                                                                
     Page 35, line 31, following ""normal retirement age"":                                                                     
          Delete "means 65 years of age"                                                                                        
          Insert "means 60 months less than the age set for                                                                     
     Medicare eligibility at the time the member retires"                                                                       
                                                                                                                                
     Page 58, lines 19 - 20:                                                                                                    
          Delete "within five years after the date of                                                                           
     termination"                                                                                                               
                                                                                                                                
     Page 58, line 21, following "trust":                                                                                       
          Delete ", without interest or other adjustment."                                                                      
          Insert "with interest.  The prior period of                                                                           
     employment  with  a  participating  employer  shall  be                                                                    
     credited towards eligibility for medical benefits."                                                                        
                                                                                                                                
     Page 58, line 24, following "plan":                                                                                        
          Insert  ", except  members do  not have  to retire                                                                    
     directly from the system"                                                                                                  
                                                                                                                                
     Page 92, line 1, through page 94, line 18:                                                                                 
          Delete all material and insert:                                                                                       
          "Sec. 39.35.870.   Retirement.   (a)  In  order to                                                                  
     obtain  medical benefits  under AS 39.35.880  an active                                                                    
     member must  retire directly from  the plan.   A member                                                                    
     is eligible to  retire from the plan if  the member has                                                                    
     been an  active member  for at  least 12  months before                                                                    
     application for retirement and                                                                                             
               (1)  the member has at least 30 years of                                                                         
     membership service; or                                                                                                     
               (2)  the member reaches the normal                                                                               
     retirement age and has at  least 10 years of membership                                                                    
     service.                                                                                                                   
          (b)  The  normal retirement age is  60 months less                                                                    
     than the age  set for Medicare eligibility  at the time                                                                    
     the member retires.                                                                                                        
          (c)  A member must  apply to the administrator for                                                                    
     appointment to  retirement.  Application shall  be made                                                                    
     on  forms   and  in  the   manner  prescribed   by  the                                                                    
     administrator.                                                                                                             
          (d)  A  member who continues in the  employ of the                                                                    
     employer  after reaching  normal  retirement age  shall                                                                    
     continue  to  participate  in  the  plan  and  to  have                                                                    
     contributions allocated to the member's account.                                                                           
          Sec.  39.35.880.   Medical  benefits.    (a)   The                                                                  
     medical  benefits  available  to eligible  persons  are                                                                    
     access to  the retiree major  medical plan.   Access to                                                                    
     the retiree  major medical plan means  that an eligible                                                                    
     person may  not be  denied medical coverage  except for                                                                    
     failure to pay the required premium.                                                                                       
          (b)   The following  persons are eligible  for the                                                                    
     retiree  major medical  insurance  plan provided  under                                                                    
     this section and may elect coverage under it:                                                                              
               (1)  a member with at least 30 years of                                                                          
     service and who retires directly from the plan;                                                                            
               (2)  the surviving spouse of a member who                                                                        
     elected coverage under (1) of this subsection;                                                                             
               (3)  a member who reaches the normal                                                                             
     retirement  age as  provided  in  AS 39.35.860, has  at                                                                    
     least 10  years of  service, and retires  directly from                                                                    
     the plan;                                                                                                                  
               (4)  the surviving spouse of a member who                                                                        
     elected coverage under (3) of this subsection.                                                                             
          (c)   Retiree major medical plan  coverage elected                                                                    
     by  an eligible  member under  this section  covers the                                                                    
     eligible  member, the  spouse of  the eligible  member,                                                                    
     and the dependent children of the qualified member.                                                                        
          (d)   Retiree major medical plan  coverage elected                                                                    
     by  the surviving  spouse of  an eligible  member under                                                                    
     this  section  covers  the  surviving  spouse  and  the                                                                    
     dependent  children  of  the eligible  member  who  are                                                                    
     dependent on the surviving spouse.                                                                                         
          (e)   A person  other than  an eligible  member is                                                                    
     not  eligible  for coverage  if,  during  the time  the                                                                    
     eligible member was an active member, the person was                                                                       
               (1)  not married to the member; or                                                                               
               (2)  not a dependent child of the member.                                                                        
          (f)   Major medical  coverage takes effect  on the                                                                    
     first  day  of the  month  following  the date  of  the                                                                    
     election and stops when the  person who elects coverage                                                                    
     under  (b) of  this section  dies  or fails  to make  a                                                                    
     required premium payment.                                                                                                  
          (g)   The  coverage for  persons who  are eligible                                                                    
     for Medicare is the same  as that available for persons                                                                    
     who are  not yet eligible  for Medicare.   The benefits                                                                    
     payable to  those Medicare eligible  persons supplement                                                                    
     any benefits provided under the Medicare program.                                                                          
          (h)   The medical and optional  insurance premiums                                                                    
     owed by  the person  who elects  coverage under  (b) of                                                                    
     this  section   shall  be  deducted  from   the  health                                                                    
     reimbursement  arrangement.    If  the  amount  of  the                                                                    
     health  reimbursement arrangement  becomes insufficient                                                                    
     to  pay the  premiums, the  person who  elects coverage                                                                    
     under  (b)  of  this  section shall  pay  the  premiums                                                                    
     directly.                                                                                                                  
          (i)   The  administrator  shall set  on an  annual                                                                    
     basis  separate retiree  health  coverage premiums  for                                                                    
     participants   who  are   Medicare  eligible   and  for                                                                    
     participants  who are  not yet  Medicare eligible.   An                                                                    
     increase  in the  premium amount  may  not exceed  five                                                                    
     percentage points  annually.  A participant's  share of                                                                    
     the  applicable premium  shall be  determined according                                                                    
     to (j) and (k) of this section.                                                                                            
          (j)   Participants  who have  not attained  normal                                                                    
     retirement age are  required to pay the  full amount of                                                                    
     the applicable medical health coverage premium.                                                                            
          (k)     Participants  who  have   attained  normal                                                                    
     retirement age  are eligible  for a  subsidy applicable                                                                    
     to the  cost of  the applicable  premium.   The subsidy                                                                    
     percentage applicable  to the cost of  premiums payable                                                                    
     by the participant  is 30 percent if the  member had 10                                                                    
     years of  service; for each additional  year of service                                                                    
     after the  member's 10th year of  service, the discount                                                                    
     increases  by  three  percentage points;  however,  the                                                                    
     maximum discount is 90 percent  if the member has 30 or                                                                    
     more  years   of  service.    The   applicable  subsidy                                                                    
     percentage  shall be  applied  to the  subsidy base  to                                                                    
     determine  the dollar  amount of  the  subsidy that  is                                                                    
     applied against the cost of the premium.                                                                                   
          (l)  Participants who are eligible for Medicare                                                                       
     will  use   the  subsidy  base   for  Medicare-eligible                                                                    
     premiums.   Participants who are  not yet  eligible for                                                                    
     Medicare  will use  the subsidy  base for  non-Medicare                                                                    
     eligible premiums.                                                                                                         
          (m)  The subsidy base for Medicare-eligible                                                                           
     participants  will be  the same  as the  premium amount                                                                    
     for  Medicare-eligible participants  in the  first year                                                                    
     of  this plan  and  the subsidy  base for  non-Medicare                                                                    
     eligible participants  will be the same  as the premium                                                                    
     amount  for non-Medicare-eligible  participants in  the                                                                    
     first  year  of this  plan.    Each subsidy  base  will                                                                    
     increase five  percent each year  or the rate  at which                                                                    
     the   actual   premium   amount   increases   for   the                                                                    
     corresponding aged participants, whichever is less.                                                                        
          (n)  The eligibility for retiree major medical                                                                        
     coverage  for  an  alternate payee  under  a  qualified                                                                    
     domestic relations  order shall be determined  based on                                                                    
     the eligibility of  the member to elect  coverage.  The                                                                    
     alternate payee shall pay the  full monthly premium for                                                                    
     retiree major medical coverage.                                                                                            
          (o)  The administrator shall establish the                                                                            
     monthly  group  premiums   for  retiree  major  medical                                                                    
     coverage.     Nothing   in  AS 39.35.700   -  39.35.895                                                                    
     guarantees a  person who elects  coverage under  (b) of                                                                    
     this section  a monthly group premium  rate for retiree                                                                    
     major  medical  coverage  other  than  the  premium  in                                                                    
     effect for  the month in  which the premium is  due for                                                                    
     coverage for that month.                                                                                                   
          (p)  A member is eligible to apply for                                                                                
     reimbursement    from    the    health    reimbursement                                                                    
     arrangement  plan  after  a  minimum  of  10  years  of                                                                    
     service and does  not have to retire  directly from the                                                                    
     system.                                                                                                                    
          (q)  In this section,                                                                                                 
               (1)  "health reimbursement arrangement"                                                                          
     means the plan established in AS 39.30.300;                                                                                
               (2)  "retires directly from the plan" means                                                                      
     that the member has been  an active member for at least                                                                    
     12 consecutive months immediately  before the time that                                                                    
     the   member   applies   to   the   administrator   for                                                                    
     appointment   to  retirement   and   that  the   member                                                                    
     continues  as  an  active member  up  through  the  day                                                                    
     before the day the member is appointed to retirement."                                                                     
                                                                                                                                
     Page  101,  line   28,  following  ""normal  retirement                                                                    
     age"":                                                                                                                     
          Delete "means 65 years of age"                                                                                        
          Insert " means 60 months less than the age set                                                                        
     for  Medicare  eligibility  at   the  time  the  member                                                                    
     retires"                                                                                                                   
                                                                                                                                
     Page 105, line 23:                                                                                                         
          Delete "sec. 60"                                                                                                      
          Insert "sec. 61"                                                                                                      
                                                                                                                                
     Page 107, following line 30:                                                                                               
     Insert a new bill section to read:                                                                                         
        "* Sec.  140.   The uncodified law  of the  State of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          REPORT TO THE LEGISLATURE BY THE DIVISION OF                                                                          
     RETIREMENT AND  BENEFITS.   The division  of retirement                                                                    
     and  benefits  will provide  an  annual  report to  the                                                                    
     legislature regarding the cost  savings measures it has                                                                    
     implemented  by regulation  as described  in sec.  1 of                                                                    
     this Act."                                                                                                                 
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 109, line 19:                                                                                                         
          Delete "SECTIONS 139 AND 140"                                                                                         
          Insert "SECTIONS 141 AND 142"                                                                                         
                                                                                                                                
     Page 109, line 20:                                                                                                         
          Delete "secs. 139 and 140"                                                                                            
          Insert "secs. 141 and 142"                                                                                            
                                                                                                                                
     Page 109, lines 21 - 22:                                                                                                   
          Delete "secs. 139 and 140"                                                                                            
          Insert "secs. 141 and 142"                                                                                            
                                                                                                                                
     Page 109, line 23:                                                                                                         
          Delete "Sections 11, 12, 14, 15, 20, 89 - 94,                                                                         
     107, 114, and 131"                                                                                                         
          Insert "Sections 12, 13, 15, 16, 21, 90 - 95,                                                                         
     108, 115, and 132"                                                                                                         
                                                                                                                                
     Page 109, line 25:                                                                                                         
          Delete "Section 141"                                                                                                  
          Insert "Section 143"                                                                                                  
                                                                                                                                
     Page 109, line 26:                                                                                                         
          Delete "secs. 142 and 143"                                                                                            
          Insert "secs. 144 and 145"                                                                                            
                                                                                                                                

Document Name Date/Time Subjects