Legislature(2005 - 2006)
05/09/2005 08:28 AM Joint 141
| Audio | Topic |
|---|---|
| Start | |
| SB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 141-PUBLIC EMPLOYEE/TEACHER RETIREMENT/BOARDS
CHAIR LYDA GREEN called the Conference Committee on SB 141 with
limited free powers to order at 8:28:53 AM. Present were
Representatives Weyhrauch, Seaton, and Crawford and Senators
Olson, Seekins and Chair Green.
CHAIR GREEN directed members' attention to the matrix entitled
"SB 141 - Differences between Senate and House" and explained
that the points of agreement from the previous meeting are
highlighted in green, as well as the points recommended for
discussion today. She said without objection Items 5 and 7 were
adopted and the first open issue is item 8. She hoped to get an
acceptable proposal to both bodies.
CHAIR GREEN said, regarding item 8, the number 4 is acceptable
to the Senate but the Senate wants to include a definition of
"normal cost rate." That definition would read:
For the purposes of this section, 'normal cost rate'
means a percent of payroll required to fully fund the
actuarially calculated benefits expected to be earned
by active members during a fiscal year.
She offered that definition as a conceptual amendment.
REPRESENTATIVE WEYHRAUCH asked for the definition of "past
service rate."
CHAIR GREEN suggested it might be a term of art.
REPRESENTATIVE WEYHRAUCH asked if it would be the rate next to
line 9.
REPRESENTATIVE SEATON stated that "past service rate" is defined
in the House bill and explained the goal of the House was to
place a floor on the employer contribution rate so that future
PERS/TRS boards won't be faced with the current debacle
associated with under contributing. He said the Senate version
would require that the normal cost rate be funded every year and
the contribution rate would not be less in the event of a bull
market.
He suggested the House and Senate agree in concept. The
difference is whether or not to set a contribution floor or say
the normal cost rate must always be funded. Either way is
acceptable, he said.
CHAIR GREEN said the goal is to have healthy contributions to
keep the plan whole for the future.
REPRESENTATIVE CRAWFORD summarized by saying that the pension
programs weren't adequately funded during the "go-go" years of
the '90s, which dug the hole Representative Seaton mentioned and
no one looked forward to a repeat situation.
8:33:45 AM
REPRESENTATIVE SEATON asked if the suggestion is to say that the
employer rate may not be less than the normal service cost
without addressing past service cost.
CHAIR GREEN advised that "past service rate" is addressed in AS
39.35.250.
REPRESENTATIVE SEATON questioned whether another section would
address the fact that the employer may be required to pay
additional contributions for past service costs.
MS. TRACI CARPENTER, staff to the Senate Finance Committee,
explained that past service rate is defined in the statutes
related to PERS. Separate parts relate to the calculation of the
employee's contribution rate and the amount of the employer's
contributions. She suggested reworking the language to make sure
that past service costs are addressed.
REPRESENTATIVE SEATON said that is acceptable and it would be
helpful to adopt all the amendments conceptually.
8:38:33 AM
CHAIR GREEN announced Amendment 1 for open item 8 is adopted
conceptually to provide an opportunity for additional work on
past service rate.
A M E N D M E N T 1
For Open Item 8
Sec. 7. AS 14.25.070 is amended to read:
Sec. 14.25.070. Contributions by employer. (a) An employer
shall contribute to the plan an amount equal to the normal cost
rate, expressed as a percentage certified by the board, less the
member contribution under AS 14.25.050. The amount shall be
calculated by applying the certified percentage against the sum
total of the base salaries paid to members, including any
adjustments to contributions required by AS 14.25.173(a).
(b) For the purposes of this section, "normal cost rate"
means the percent of payroll required to fully fund the
actuarially calculated benefits expected to be earned by active
members during a fiscal year.
Sec. 93. AS 39.35.270 is amended to read:
Sec. 39.35.270. Contributions by employer. (a) An employer shall
contribute to the plan an amount equal to the normal cost rate,
expressed as a percentage certified by the board, less the
member contribution under AS 39.35.160. The amount shall be
calculated by applying the certified percentage against the sum
total of the compensation paid to members, including any
adjustments to contributions required by AS 39.35.520(a).
(b) For the purposes of this section, "normal cost rate"
means the percent of payroll required to fully fund the
actuarially calculated benefits expected to be earned by active
members during a fiscal year.
8:38:44 AM
CHAIR GREEN announced the next item under discussion is item 9b.
REPRESENTATIVE SEATON said the House prepared and submitted a
packet of amendments to combine and address several issues at
the same time. Using the matrix for explanation, he offered
amendment 24-LS0637\RA.4 to address Items 9b, 11, and 12.
He proposed adopting the following:
ITEM: 9b
Employer Contribution to Medical
CSSB 141 (FIN): 1.75 percent to Medical
ITEM: 11
Medical Benefits
HCS CSSB 141 (FIN) am H: "Must retire directly from system for
access to medical coverage."
ITEM: 12
CSSB 141 (FIN): No pre-Medicare cost sharing.
ITEM: 9c
Employer contribution to HRA
Amend HRA amount: 3.00 percent to HRA
Proposed employer contribution percentages for Items 9a-c:
9a: 5.00 percent to DC account
9b: 1.75 percent to Medical
9c: 3.00 percent to HRA
CHAIR GREEN said that makes a generous contribution to the HRA
and enriches a plan that gives the employee full access to a
wide variety of services.
8:41:09 AM
REPRESENTATIVE WEYHRAUCH pointed out that the total for 9a-c is
9.75 percent, which differs from both the House and Senate
versions.
CHAIR GREEN acknowledged the total would have to be
recalculated.
REPRESENTATIVE SEATON said the total would be increased somewhat
when the public employee death and disability benefit is
addressed. The House suggests that an amended version of the
House proposal be accepted for Items 15 and 16.
CHAIR GREEN said the Police/Fire and the PERS systems vary and
therefore the committee would have to agree conceptually on the
basis points for each.
8:44:16 AM
CHAIR GREEN asked Representative Seaton to walk the committee
through conceptual Amendment 2 relating it to the matrix.
CHAIR GREEN asked if there'd actually been a motion to adopt
conceptual Amendment 1. [It was adopted.]
SENATOR SEEKINS moved conceptual Amendment 2 and objected for
discussion purposes.
8:45:06 AM
REPRESENTATIVE SEATON explained conceptual Amendment 2.
24-LS0637\RA.4
Craver
A M E N D M E N T 2
OFFERED IN THE CONFERENCE COMMITTEE BY REPRESENTATIVE SEATON
TO: HCS CSSB 141(FIN) am H
Page 17, line 17:
Delete "2.5 percent"
Insert "1.75 percent"
Page 27, line 17:
Delete "60 months less than"
Page 28, lines 25 - 28:
Delete all material.
Reletter the following subsections accordingly.
Page 28, line 31 through page 29, line 15:
Delete all material.
Reletter the following subsections accordingly.
Page 29, line 22:
Delete "30 years of"
Insert "25 years of"
Page 29, following line 23:
Insert a new paragraph to read:
"(4) 15 percent if the member has 25 or more, but
less than 30 years of service;"
Renumber the following paragraph accordingly.
Page 38, line 4:
Delete "60 months less than"
Page 61, line 8:
Delete "2.5 percent"
Insert "three percent"
Page 86, line 21:
Delete "2.5 percent"
Insert "1.75 percent"
Page 96, line 27:
Delete "60 months less than"
Page 98, lines 9 - 12:
Delete all material.
Reletter the following subsections accordingly.
Page 98, lines 15 - 30:
Delete all material.
Reletter the following subsections accordingly.
Page 99, line 6:
Delete "30 years"
Insert "25 years"
Page 99, following line 7:
Insert a new paragraph to read:
"(4) 15 percent if the member has 25 or more, but
less than 30 years of service;"
Renumber the following paragraph accordingly.
Page 111, line 21:
Delete "60 months less than"
SENATOR SEEKINS removed his objection to conceptual Amendment 2.
8:47:31 AM
CHAIR GREEN announced conceptual Amendment 2 was adopted.
SENATOR SEEKINS asked whether the agreement on 9a is
accomplished in the amendment.
REPRESENTATIVE WEYHRAUCH said 9a was agreed upon previously and
the current discussion relates to 9b.
REPRESENTATIVE SEATON confirmed conceptual Amendment 2 does not
affect 9a.
SENATOR SEEKINS asked the record to reflect that the House
version is being amended.
REPRESENTATIVE WEYHRAUCH clarified that the Senate version of 9b
was adopted in conceptual Amendment 2.
SENATOR SEEKINS added that the House version of Item 9a was
agreed to previously.
REPRESENTATIVE SEATON said the "Must retire directly from the
system..." is already in the House version.
8:49:19 AM
CHAIR GREEN announced that Item 9a was officially closed out
yesterday and therefore no longer subject to change.
REPRESENTATIVE WEYHRAUCH moved conceptual Amendment 3 dealing
with item 9c and item 17.
Item 9c
Employer contribution to HRA
CSSB 141(FIN): 2.00 percent to HRA
HCS CSSB 141(FIN) am H: 2.50 percent to HRA
Amended Amount: 3.00 percent to HRA
Item 17
Health Reimbursement Arrangement (HRA)
CSSB 141(FIN): Employer contributes 2 percent of annual average
employer's group compensation.
Page 58, Line 10
HCS CSSB 141(FIN) am H: Employer contributes 2.5 percent of
annual average employer's group compensation.
Page 61, Line 8
Amended Amount: Employer contributes 3.00 percent of annual
average employer's group compensation.
A M E N D M E N T 3
Page 61, line 8, delete "2.5," insert "3"
8:51:01 AM
REPRESENTATIVE WEYHRAUCH asked if the Senate version of item 12,
in conjunction with the new amount for 9c, is agreed upon.
CHAIR GREEN said yes, in conceptual Amendment 2.
SENATOR SEEKINS asked for verification.
REPRESENTATIVE SEATON verified that the Senate language for item
12 - "No pre-Medicare cost sharing" - was adopted as part of
conceptual Amendment 2.
REPRESENTATIVE WEYHRAUCH questioned whether clean up language is
needed for item 17 - "Health Reimbursement Arrangement" - as
part of conceptual Amendment 3.
CHAIR GREEN said that's correct.
SENATOR SEEKINS voiced agreement.
REPRESENTATIVE WEYHRAUCH referenced the matrix and said that
item 17 is amended to 3.0 percent and is part of conceptual
Amendment 3.
REPRESENTATIVE SEATON said conceptual Amendment 3 amends page
61, line 8, which is line 17 on the House side.
8:54:48 AM
REPRESENTATIVE SEATON offered Amendment 4.
A M E N D M E N T 4
TRS
Page 17, following line 22 insert new section "(c) An
employer shall make annual contributions to the plan
in an amount adopted by the board to be actuarially
required to fully fund the cost of providing medical
benefits in 14.25.480."
Renumber accordingly
PERS
Page 86, following line 26 insert a new section "(c)
An employer shall make annual contributions to the
plan in an amount adopted by the board to be
actuarially required to fully fund the cost of
providing medical benefits in 39.35.880."
Renumber accordingly
REPRESENTATIVE SEATON said this refers to an item addressed
previously on the medical. The Senate version was 1.75 percent
and the House version was 2.5 percent. Both bodies expressed the
amounts as numbers and both bodies agreed to have health care
actuarially calculated.
CHAIR GREEN asked which item the amendment refers to.
REPRESENTATIVE SEATON replied it applies to 9b. He recapped the
concern that both bodies were setting a particular number in
statute. Page 86, line 30 of HCS CSSB 141 (FIN)am H deals with
death and disability benefits and the amendment brings it back
to the actuarially computed number.
SENATOR SEEKINS said that's a reasonable provision.
8:57:03 AM
CHAIR GREEN said the one issue is that the board is not
officially in business until October 1, 2005 so the committee
needs to adopt a rate for 7/1/2005 to 10/1/2005. She asked if he
would accept an amendment to say "For the time being it would be
1.75 percent for the period until the board calculates."
8:57:48 AM
REPRESENTATIVE SEATON said the proposed amendment doesn't delete
the 1.75 percent. It adds the annual requirement for the
calculation.
SENATOR SEEKINS commented there would be a carry forward rate
now-and-then but, after the first calculation, the process would
begin.
REPRESENTATIVE SEATON said that's correct.
CHAIR GREEN asked if the House version has a calculated rate in
statute.
REPRESENTATIVE SEATON said in the House version the board will
be responsible for the actuarial calculation and it is charged
with adopting rates that will pay the benefits.
CHAIR GREEN asked for a motion to adopt Amendment 4.
8:59:33 AM
SENATOR SEEKINS moved Amendment 4.
CHAIR GREEN announced Amendment 4 was adopted without objection.
CHAIR GREEN directed members' attention to line 14.
REPRESENTATIVE SEATON asked that staff explain that item.
9:00:31 AM
MS. CARPENTER explained that item 14 is very similar in both
versions. The Senate's medical program contains no subsidy for
medical insurance until the member reaches the age of 65 or the
Medicare-eligible age. Now that the "retire from the system"
concept has been accepted, if a person retires from the system
prior to reaching Medicare-eligible age, the individual would be
required to pay the full premium until reaching Medicare-
eligible age, which is from the Senate version.
9:01:37 AM
REPRESENTATIVE SEATON responded, "The effect of this is that a
person if they had a spouse that was actually covering them with
medical coverage or something, they would have to select by the
age of 70½ or upon termination from employment, whichever is
later, whether they wanted to participate in the medical
benefit."
REPRESENTATIVE WEYHRAUCH suggested members were agreeing to the
Senate version of both 14 and 14a.
CHAIR GREEN said that is what she is hearing as well.
SENATOR SEEKINS said the 70½-age mirrors federal law.
REPRESENTATIVE WEYHRAUCH said as a practical matter, at the age
of 70½, the person is probably already retired and merely has to
make the election by that date.
MS. CARPENTER told members Senator Seekins was referring to the
federal IRS regulations, which require a person to begin taking
distributions from a 401k plan at age 70½.
CHAIR GREEN asked members if the Senate language for 14 and 14a
is acceptable.
9:03:08 AM
SENATOR SEEKINS moved to adopt the Senate versions of items 14
and 14a without amendment.
CHAIR GREEN announced that without objection, the motion
carried.
9:03:51 AM
MS. CARPENTER suggested members skip to item 18 because it is
related to item 14.
REPRESENTATIVE WEYHRAUCH thought item 17 had been addressed [in
Amendment 3].
CHAIR GREEN said that is correct.
MS. CARPENTER said item 18 is part of the medical language from
the Senate version. It makes explicit that an employee does not
have to participate in the medical program in order to use that
employee's HRA.
SENATOR SEEKINS said if kept as is, the employee could use
his/her HRA to pay for allowable medical expenses if covered
under another plan and accomplish portability.
MS. CARPENTER said that is correct.
9:04:52 AM
CHAIR GREEN said it might apply to a married couple with one
spouse providing full coverage for both. The couple could use
the HRA to buy supplemental or long-term care insurance.
SENATOR SEEKINS moved to accept line 18 without amendment.
CHAIR GREEN announced that without objection, the motion
carried.
9:05:39 AM
REPRESENTATIVE SEATON moved to amend the House version of item
19 that would replace "time limitation" with "35 years" to
provide a time certain.
CHAIR GREEN objected and said that would provide an extremely
long window.
REPRESENTATIVE WEYHRAUCH asked Representative Seaton to read the
sentence.
REPRESENTATIVE SEATON read, "An employee can return to a
participating employer within 35 years and have the account
balance restored with interest."
REPRESENTATIVE WEYHRAUCH said he thought the House language
played into the portability concept more. In the Senate version,
the employee can have the account balance restored without
interest if the employee returns to work within 5 years. He
asked if the employer's contribution would be considered as part
of the pay the employee is getting. That is where he believes it
plays into the concept of portability.
CHAIR GREEN said that portion of the plan is not portable. It is
designed to give the employer a choice, in a way, to use the
account the employer has contributed to. The idea behind it is
the employer contributes to it while the employee is employed.
It is not an investment account to be held for 35 years while
the employee is living and working elsewhere. This plan is
designed to augment health coverage [while employed].
REPRESENTATIVE SEATON said the best example he can provide is
that of a young female teacher who comes into the workforce in
Alaska and leaves after 6 years to raise a family. The teacher
stays home for 8 or 10 years and decides to go back to work in
the school system. The House version says if the employee
contributes while working and then takes a break, the benefits
of the contributions made to her identified account will be
there upon reemployment. The chief purpose of having a benefit
account and a retirement and benefit system is to attract and
retain employees because of the high amount of employee movement
within the system. He continued, "One of the chief things we
tried to do in this entire benefit package is change from a
defined benefit to a defined contribution philosophy. The
defined contribution philosophy is that there was something put
into an account that has your name on it and that's there. Now
you have to vest and everything else but this is the defined
contribution element of a medical plan..."
CHAIR GREEN disagreed and said the defined contribution is on
the retirement side. The [defined benefit] was set up as an
employer add-on to that, not to re-create the current situation,
which has caused an incalculable liability. She said it should
be assumed that someone who leaves PERS employment for 35 years
has accumulated all sorts of benefits elsewhere. This unlimited
liability will recreate one of the problems the retirement
system is experiencing now. She prefers a 5 year limit but if
House members could agree to 10 years, she would find that to be
reasonable.
SENATOR SEEKINS asked if the HRA is an account that can be used
to subsidize medical insurance premiums forever.
REPRESENTATIVE SEATON said that is incorrect; it's a defined
account deposited in the employee's name to be used for medical
purposes only.
SENATOR SEEKINS said it is a memo account and not a property
value. He said a well-designed retirement system rewards the
long-term employee. He said with the memo account, there should
be a cut-off point when the person reaches an actuarial age and
has not re-entered the system. The state will not know where
former employees are living after a certain point. He said a
person who does not return after a certain amount of time is not
likely to return; he would rather see the money from those
accounts be used to increase benefits for employees who stay.
9:15:58 AM
SENATOR OLSON said he sees this as disadvantageous to a woman
who was employed, left the workforce for 20 years to raise a
family in Alaska and decided to return to work. He said this
would encourage mothers to get back into the retirement system
rather than to raise families.
REPRESENTATIVE WEYHRAUCH said he worked for the state and took a
6-year hiatus clerking [in the court system] and then a 15-year
hiatus and became a legislator. He said in today's society,
people move from job to job; people have testified that they are
bringing a number of retirement programs to their lives. He
asked Senator Seekins if a memo account follows a former
employee around.
SENATOR SEEKINS said the state would have to account for every
single former employee every year. He doesn't object to someone
coming back in and having their memo account balance restored
but he questions whether it should be with interest. He also
believes the bill should contain a time certain that is at least
age sensitive when it is unlikely the person will re-enter the
system so that the state doesn't have to keep track forever -
perhaps until December 31 of the year the person turns 65.
REPRESENTATIVE WEYHRAUCH questioned how this could be
detrimental if the system is keeping track.
SENATOR SEEKINS said he does not have a problem with that if the
employee comes back for more than one day.
SENATOR OLSON agreed and said otherwise, the employee would just
be working the system.
SENATOR SEEKINS said he wants to take care of good employees and
not let someone get a free ride.
9:19:52 AM
REPRESENTATIVE SEATON said the employee would have no reason to
come back for 1 day unless he was vested. His second point is
that an HRA would not present a liability to the system because
it is an account with a defined amount of money with the
employee's name on it; no benefits come out of it other than the
money and interest earned. He said that differs from the
unfunded liability problem of major medical costs.
SENATOR SEEKINS agreed but said it is a memo account that the
state must keep track of forever. He said the legislation should
include an actuarial date at which time the account no longer
exists if the employee hasn't re-entered the system.
REPRESENTATIVE SEATON clarified that his amendment to item 19
does just that by adding a 35-year limit because 35 years is
within the working life of an employee. He said he was open to
changing that number.
SENATOR SEEKINS asked about an employee who returned to work at
age 50.
9:21:47 AM
REPRESENTATIVE SEATON said this would not require anything new
be kept open because employee records track date of hire,
contributions, etc. Employee information is not purged.
SENATOR SEEKINS disagreed because an account only for use by a
specific individual must be tracked and calculated annually.
REPRESENTATIVE SEATON suggested a cut-off date of 25 years.
SENATOR SEEKINS suggested 25 years or 65 years of age.
CHAIR GREEN preferred 55 years of age.
REPRESENTATIVE SEATON thought 65 years of age is logical since
that is the retirement eligible age in the bill.
SENATOR SEEKINS said he wants this benefit to go to the people
who have truly contributed to the State of Alaska through their
employment.
REPRESENTATIVE CRAWFORD asked if the individual account will be
deposited in the general fund after the cut-off date.
9:24:04 AM
MS. CARPENTER explained the HRA money would be pooled in a group
trust fund. For accounting purposes, each individual member
would have an account record. If a person forfeits his HRA, the
money would stay in the pool and be used for the benefit of
other employees in the pool or to pay future contributions in
advance.
SENATOR SEEKINS said his proposal is to credit the folks in the
pool by somehow using lapsed account balances. He repeated he
wants to create a benefit to those who stay in the system.
REPRESENTATIVE SEATON suggested requiring the employee to return
for at least one year.
REPRESENTATIVE WEYHRAUCH said one year seems fair except for
legislative employees, who should be required to work one
session.
SENATOR SEEKINS repeated that he wants to make sure it applies
to an employee who is returning to work and is not just using
the system.
CHAIR GREEN replicates a huge problem with the current system,
that being the ability for someone to find a loophole to come
back and work for a very short period of time.
9:26:57 AM
REPRESENTATIVE WEYHRAUCH thought the Senate language provides
that loophole because a person could return within 5 years and
work just 1 day.
REPRESENTATIVE SEATON didn't think that people should consider
this as a defined benefit pool for which lapsed funds can be
used for other employees. He said an HRA account would contain a
fixed 3 percent employer contribution plus interest with a
specific employee's name on it. That amount cannot be given to
other employees.
SENATOR SEEKINS suggested including an age certain that says if
the employee hasn't reentered the system, the state no longer
has to keep track of that employee. He asked what members
consider a reasonable age to be.
9:28:42 AM
REPRESENTATIVE SEATON said some commissioners return at later
ages so he didn't want to cut it off too early. He felt 60-65
years of age is reasonable.
SENATOR SEEKINS suggested on December 31 of the year a person
reaches 60 years of age.
9:29:36 AM
REPRESENTATIVE WEYHRAUCH said that creates different ages within
the conceptual framework of the bill.
9:29:51 AM
CHAIR GREEN suggested returning within 10 years or at 60 years
of age, whichever is later. She noted there would always be
untapped HRA funds, for example in the case of death, which the
state would be within its right to redistribute. She said the
bill needs to make clear the account will not be held in
perpetuity for the employee.
SENATOR SEEKINS said 10 years or 65, whichever is later, would
take care of the person who has an interruption, which he
prefers.
REPRESENTATIVE SEATON said he has no problem with that language.
He clarified that he meant the lapsed HRA money would not be
redistributed to other HRA accounts but it could be used for
other purposes.
9:31:49 AM
CHAIR GREEN replied:
It would be part of the calculation of the interest
though. Of course they could use it in another
account. If that person's not going to draw the money
- isn't it all just money that sits there? It doesn't
matter if the state puts in new money or that they use
money. It's never going to be used. If the person has
passed on or for whatever reason we can guarantee
they're not going to come back and use the HRA, the
state has the ability to use that money in its
calculation of [indisc.] of funding the next year's
interest or however it's calculated.
REPRESENTATIVE SEATON clarified he was speaking to the account
balances of other individuals, not the physical dollars. It
would not be added to the account balances of other individuals
because the premise of the HRA is it is 2 percent of the average
wage base put in a separate account.
9:32:54 AM
SENATOR SEEKINS restated an employee who has worked for 10 years
and vested has 10 years in which to re-enter the system or at
the Medicare-eligible age it cuts off, whichever is later, and
the employee must remain for two years before the account
accrues interest.
CHAIR GREEN felt the term "Medicare-eligible" to be troublesome
because that age can float up.
SENATOR SEEKINS clarified it would be as of December 31 in the
year a person turns 65.
REPRESENTATIVE WEYHRAUCH asked how that would apply to a 65-year
old person who came back to work on December 1.
SENATOR SEEKINS said that employee would have to remain for two
years.
CHAIR GREEN asked Ms. Carpenter to clarify that issue.
9:34:21 AM
MS. CARPENTER explained that a person with 10 years of service
would be entitled to the money. The employee would then only
have to meet the rest of the eligibility requirements under the
medical program. The effect is the same in both the House and
Senate bills. The House version contains an explicit statement
saying except the person does not have to retire directly from
the system and there is no retirement from the system in the
Senate version. She continued, "I heard Senator Seekins say once
that person has 10 years in, then they have 10 years to come
back and that is not the concept. It is anyone who has less than
10 years would forfeit their rights unless they came back within
a certain time period."
REPRESENTATIVE WEHYRAUCH added, "And got the vesting period in."
SENATOR SEEKINS said that was his intent.
CHAIR GREEN said an employee would have to work 10 years to vest
in the HRA before leaving employment in both versions.
REPRESENTATIVE SEATON said the purpose of this is to say if a
person worked 6 to 8 years and had a block in employment, that
employee can come back and work 8 more years. That employee
would be vested and the account stays with that employee. He
furthered, "The other way is saying if you worked 8 years and
went out and had a kid, and then you came back in and worked
another 8 years, you've worked 16 years but you don't have any
vesting in your HRA because there was no 10-year period where
you worked. You worked two 8-year periods but...."
CHAIR GREEN clarified that the current 10 year vesting
requirement is in both versions of the bill. She said the
question is what requirements should be placed on the employee
when returning to the system to access that account.
REPRESENTATIVE WEYHRAUCH said the difference is the Senate
version has 5 years and [Representative Seaton's amendment] says
35 years.
REPRESENTATIVE SEATON said the purpose of this section has
nothing to do with pre-vesting. Its purpose is to allow an
employee to accumulate deposits made on that person's account.
If that employee only worked for 8 years, she could return and
continue to come back and build on her HRA account and vest. He
stated, otherwise a person who did not work continually for 10
years would be out and none of that state service would apply.
He thought saying 10 years would be confusing and preferred to
say if the employee does not return by age 65, the account is
gone.
9:38:43 AM
SENATOR SEEKINS said his intent is to make sure this provision
takes care of the folks who stay in, work in and contribute to
Alaska, not to benefit those who want to manipulate the system
for their own benefit. He repeated that a person who has not
reentered the system by December 31 of the year that person
reaches age 65 he can no longer reenter and claim any ownership
of the previous HRA.
9:40:24 AM
MS. CARPENTER referred members to page 61, lines 17-19, of the
House version. She suggested adding "by the year in which they
turn 65" to line 17 so that it would read:
If a person returns to employment with a participating
employer by the year in which they turn 65..."
SENATOR SEEKINS suggested adding, "before December 31 of the
year in which they turn 65 and remains for a minimum of 2
years."
REPRESENTATIVE WEYHRAUCH pointed out that a person who returned
at age 65 on December 31 would have to work two years until
December 31.
SENATOR SEEKINS said that is correct.
CHAIR GREEN said she does not see why a person should accumulate
interest on an HRA when not working.
SENATOR SEEKINS noted that 35 years worth of compounded interest
can equal a lot of money.
9:42:31 AM
CHAIR GREEN said the employer pays it all. She pointed out the
state is not in the business of creating investment accounts for
individuals and is prohibited from doing so for permanent fund
dividends. She asked why this would be okay if a person isn't in
the system.
REPRESENTATIVE WEYHRAUCH said one purpose of an HRA is to
attract employees to state service that wouldn't be attracted
otherwise.
CHAIR GREEN maintained that offering an HRA would give an
employee an incentive to stay with the employer. She said she
still believes a full 10-year vesting period should be required
of all employees.
REPRESENTATIVE SEATON indicated that 10 years would be required
but those years do not have to be consecutive. He thought this
feature would be used most by teachers that leave to raise
families.
SENATOR SEEKINS said he would prefer to attract an employee who
would work 25-30 years with uninterrupted service.
9:45:47 AM
REPRESENTATIVE SEATON pointed out that an HRA is not contingent
upon retiring directly from the system.
9:46:16 AM
CHAIR GREEN said the board make-up in the Senate bill consists
of the commissioners of administration, revenue, three Alaskan
residents who are non-beneficiaries, and one finance officer of
a municipality, one from a school district, and one PERS and one
TRS member. She said the Senate was looking for a professional
investment board with no connection to PERS or TRS, which is why
it included three Alaskan non-beneficiaries.
SENATOR SEEKINS said the Senate wants three independent folks
with no vested interest in the state retirement system.
REPRESENTATIVE SEATON didn't understand why a PERS member
wouldn't be trying to earn the most for the retirement system.
9:49:22 AM
REPRESENTATIVE WEYHRAUCH pointed out the commissioners will
represent the employer, not PERS members.
CHAIR GREEN disagreed because if the system is not healthy, no
one involved will benefit.
REPRESENTATIVE WEYHRAUCH clarified that he meant the
commissioners would represent the employer and act as
fiduciaries of PERS/TRS. He said the same would apply to the TRS
board member who would be a beneficiary and who would want to
keep the system healthy.
CHAIR GREEN said she hoped so but the commissioners are charged
with a higher standard.
9:50:48 AM
SENATOR SEEKINS suggested that non-beneficiaries would have to
shoulder the liability if the investments are unsuccessful. He
said he wants to make sure the board has some professionals on
it who are not beneficiaries of the system to provide an
"outside looking in" perspective.
9:52:33 AM
REPRESENTATIVE CRAWFORD said in the real world of big pension
plans, [board] members represent management and labor. The House
version proposes a board made up of four management and four
labor representatives, and one uninterested party to be the
tiebreaker. That person would be looking out for the people of
Alaska. He thought the House version is the most fair and
represents all areas.
9:53:42 AM
CHAIR GREEN said she would agree that the municipal and school
district members would represent management; however every
letter she has received from those entities says the legislature
needs to backfill the PERS/TRS shortage.
REPRESENTATIVE WEYHRAUCH asked if the Senate would accept its
composition with the exception of increasing PER/TRS members
from one to two, thereby creating an 11-member board.
CHAIR GREEN said Senate members do not want more than nine
members on the board.
SENATOR SEEKINS moved to adopt the following board make-up: the
commissioners of administration and revenue, two Alaska resident
non-beneficiaries, two PERS members, one TRS member, one school
district member and one municipal member. He said the last two
don't necessarily need to be financial officers but they need to
have competence according to the screening provided.
9:56:27 AM
SENATOR OLSON likened having 33 percent of the retirement board
be non-beneficiaries to having 33 percent of the game board be
non-hunters and said he has a problem with that.
SENATOR SEEKINS agreed except for the fact that non-hunters
don't pay for the management of fish and game. In the case of
state retirement, non-employees would pay in the case of a
shortfall.
9:57:28 AM
REPRESENTATIVE SEATON said he sees a discrepancy in the fact
that the board has 2 PERS and 1 TRS members and objects to a
single TRS member.
SENATOR SEEKINS said he wouldn't object to having two highly
qualified PERS and TRS employees each and combining the
municipal/school district position if they all meet the high
stringency rules to capably manage this amount of money. He
repeated that he was someone who is not a member of the
governing system to be part of the board.
9:58:54 AM
REPRESENTATIVE SEATON pointed out that every member will have to
meet the same criteria.
SENATOR SEEKINS moved to amend his earlier amendment to have the
board made up of the commissioners of revenue, administration,
two Alaska residents who are non-beneficiaries, two TRS members
and two PERS members, and one member who represents
municipalities or school districts.
REPRESENTATIVE CRAWFORD asked who would decide whether the
applicants are qualified.
SENATOR SEEKINS said under the Senate plan, the governor will
nominate folks.
REPRESENTATIVE SEATON said under the House version, the
bargaining units will nominate a list of three candidates from
which the governor will appoint.
SENATOR SEEKINS asked if all of the bargaining units must agree
on whom they nominate.
REPRESENTATIVE SEATON said because of staggered terms, one
member would be nominated at a time so that three names would be
given to the governor for the one TRS vacancy, for example.
SENATOR SEEKINS asked if the legislature would confirm the
governor's appointee.
REPRESENTATIVE SEATON said it would not confirm any of the
appointments to this board.
10:02:32 AM
CHAIR GREEN read the board member qualifications from the House
CS:
"recognized competence" means a minimum of 10 years'
professional experience working or teaching in the
field of investment management, finance, banking,
economics, accounting, pension administration, or
actuarial analysis;
and said she believes the Senate language is the same. She said
that past and present board members with no financial background
have had a steep learning curve. She wants the new board to be
able to understand, from the beginning, the legislative
discussions and investment principles. She envisions the new
retirement board to be more like the Alaska Permanent Fund
board.
REPRESENTATIVE CRAWFORD referred to the ironworker who served on
a pension board for 20 years - a board with no shortfall - and
said he understood the jargon.
CHAIR GREEN said that person would qualify under the definition
in this bill because it requires recognized competency. A degree
is not required.
REPRESENTATIVE CRAWFORD said he just wanted to raise that issue.
CHAIR GREEN said the greatest financial analysis might not make
the cut because s/he is not chosen but that doesn't mean that
person is not qualified.
10:05:30 AM
SENATOR SEEKINS said a college education isn't a requirement in
his mind if the person has the demonstrated capability.
10:05:44 AM
CHAIR GREEN announced the committee would come back to board
membership later and move on to item 22 - Board Terms. She said
the difference in the House and Senate versions is that the
House provides for six-year terms and allows a member to serve
two consecutive terms with a one-year break afterward, while the
Senate version provides for three-year terms and allows a member
to serve a maximum of three consecutive terms with a one-year
break required.
REPRESENTATIVE WEYHRAUCH asked whether either bill addresses
removal for cause.
CHAIR GREEN said both do.
REPRESENTATIVE WEHYRAUCH suggested amending the bill to provide
for five-year terms with a maximum of two terms.
SENATOR SEEKINS said having served on a lot of boards and
commissions, he prefers the shorter term without a limit because
some people are great contributors while others are absent a lot
of the time. He said if a person is doing a good job, he should
be able to serve forever. He said his intent is to provide a
way to filter the process every so often to replace a member who
has lost interest.
REPRESENTATIVE WEYHRAUCH said he was speaking to removal for
cause.
SENATOR SEEKINS argued that is hard to prove as it involves
moral turpitude.
SENATOR SEEKINS said as a PERS employee, he would like to have a
filter to replace board members. He then proposed four-year
staggered terms and allowing members to serve forever if they
are doing a good job.
REPRESENTATIVE SEATON said the House's concern was not to allow
all members to be replaced by a single governor. He explained,
"If you have a four-year term that means the entire board is
going to be replaced, there will be no overlap at all.... You
have the two commissioners who are going to be replaced. It's
like on the nine-member board you have three terms to be
replaced over three years and in three years you've replaced the
entire board."
10:11:04 AM
SENATOR SEEKINS asked if removal of political employees has been
a big problem. He noted the Permanent Fund board member term is
three years. The legislature recently inserted the clause that
allows them to be removed for cause. He said he has seen some
carry-over on that board from this and the previous governor. He
said he is not worried about the governor; he is worried about
work performance so if a member is good, that member should be
able to stay.
REPRESENTATIVE SEATON indicated the need to build a system with
some continuity beyond a single governor. He suggested
compromising at five-year terms.
SENATOR SEEKINS questioned the reason for removing a person who
is doing a good job. He argued that he is trying to find a
balance to the problem of political appointees versus the need
to retain contributing members. He said either way, he does not
want to include the one-year break. He suggested four-year
staggered terms and not requiring any one-year break.
CHAIR GREEN said with staggered terms, it would take a long time
to replace the entire board.
SENATOR SEEKINS said he is opposed to term limits on this board
because a person doing a good job should be able to stay.
REPRESENTATIVE WEYHRAUCH asked to take Senator Seekins' proposed
amendment under advisement.
CHAIR GREEN agreed and moved to item 22a.
REPRESENTATIVE WEYHRAUCH said that subsumes 22a.
REPRESENTATIVE SEATON explained that 22a staggers the terms of
the two PERS and TRS members so that they are not replaced
simultaneously. He said that stagger should be built in
conceptually.
SENATOR SEEKINS agreed.
10:13:58 AM
CHAIR GREEN noted that Ms. Carpenter suggested changing the
staggered terms to the manner provided for the 7-member board
that currently exists. The commissioners would automatically
change if replaced by a new administration.
CHAIR GREEN said members would return to items 21, 22, and 22a
and moved to item 23 - Board Duties.
10:15:07 AM
REPRESENTATIVE SEATON explained item 23 requires the board to
annually evaluate the medical rate. Item 9b is slightly
different in that it requires the adoption of the plan to make
sure it is funded.
10:15:42 AM
REPRESENTATIVE WEYHRAUCH said they should connect. He indicated
one concern that led to this issue is that the employer rate has
not been sufficient to cover projected costs. This item requires
the board to conduct annual updates to insure that costs are
covered.
CHAIR GREEN said that is somewhat taken care of by the new plan.
10:16:41 AM
CHAIR GREEN directed members back to conceptual Amendment 4 and
asked if that covers item 23.
SENATOR SEEKINS said perhaps, if the evaluation is there.
However, if an audit-type evaluation were undertaken, a biennial
evaluation would be enough since a full-blown audit would occur
every four years.
REPRESENTATIVE WEYHRAUCH said members could state that amendment
4 was adopted, which subsumes the language in item 23 because
[the board] cannot do that without a reasoned basis to do so.
CHAIR GREEN added, "That's right because that is what they'll be
doing - is determining that calculation and that requires the
review as I understand it."
REPRESENTATIVE SEATON agreed but said in the past, the board
rolled over the adoption from year to year without looking at
the calculation. This primarily involves the defined benefit
plan.
SENATOR SEEKINS suggested the biennial review because one update
would provide a reasonable degree of certainty every other year
and then a full-blown audit would be done on the fourth year.
10:19:16 AM
REPRESENTATIVE SEATON said the purpose of the update was to look
at the basis of the actuarial calculation but he could agree to
Senator Seekins' suggestion is fine.
REPRESENTATIVE WEYHRAUCH added, "I'm happy if this language is
out because as long as we understand, for the record, what
[line] 4 does, it has to require that interaction."
SENATOR SEEKINS said he was thinking this would be like a formal
audit with recommendations done every other year, which is why
he suggested the biennial update.
REPRESENTATIVE WEYHRAUCH said he is comfortable with the Senate
language.
REPRESENTATIVE WEYHRAUCH moved to adopt the Senate language on
item 23.
10:20:54 AM
CHAIR GREEN announced without objection, the motion carried. She
then directed members' attention to item 28.
The committee took an at-ease and reconvened at 10:45:21 AM.
REPRESENTATIVE WEYHRAUCH asked to return to item 21, 22, and
22a.
10:46:06 AM
REPRESENTATIVE WEYHRAUCH said he thought members were in
agreement about the board consisting of the commissioners of
administration and revenue and two Alaska residents who are not
beneficiaries, two PERS and two TRS members and one finance
officer of a municipality or a school district, and moved to
adopt that board composition [Amendment 5].
10:47:11 AM
CHAIR GREEN announced that without objection, Amendment 5 was
adopted.
10:47:17 AM
REPRESENTATIVE WEYHRAUCH noted that one issue that was not
resolved regarding the PERS/TRS members is the selection
process. In the House version, the bargaining units submit the
names of three nominees to the governor.
SENATOR SEEKINS asked how many PERS bargaining units exist and
which one gets to submit the names.
REPRESENTATIVE WEYHRAUCH didn't know.
CHAIR GREEN said one of the least successful systems she has
observed has occurred when the governor is provided a list of
three or four names and cannot appoint from outside of that
list. She indicated the list can be manipulated to get a certain
result. She told members that member polls can be very expensive
and yield very low returns.
10:48:55 AM
REPRESENTATIVE WEYHRAUCH suggested skipping that issue for now
and going to item 22. He then asked members to agree to 4-year
staggered terms with no required break.
CHAIR GREEN restated the motion is to adopt 4-year staggered
terms with no break required and, without objection, announced
the motion was adopted.
REPRESENTATIVE SEATON said the house language should be retained
so that the PERS and TRS members are additionally staggered.
CHAIR GREEN was agreeable to including that language.
10:50:21 AM
REPRESENTATIVE WEYHRAUCH said he did not know how to deal with
item 22a in the context of 21 and 22.
10:50:48 AM
MS. CARPENTER told members if the committee accepts the House
language for staggering the terms of the PERS/TRS members, the
initial staggered terms should be set in a manner provided for a
7-member board because of the commissioner appointments. She
explained the language in both bills states, "Except for the
commissioners, the trustees shall serve staggered terms."
SENATOR SEEKINS said since there is the potential of two new
gubernatorial appointees in an election year, one of the
staggered terms should occur in that year and two of the
positions should be staggered on the other years to minimize
disruption.
CHAIR GREEN asked members for desired language.
REPRESENTATIVE SEATON said Ms. Carpenter's suggestion makes
sense; the initial terms will be set up in a manner appropriate
for a 7-member board, however the PERS members' terms will be
staggered from each other and likewise for the TRS members.
10:52:44 AM
CHAIR GREEN asked members to accept that language as a
conceptual amendment and agree to it. With no objection, the
motion carried.
10:53:05 AM
REPRESENTATIVE SEATON said the committee just adopted the House
language with changes to the board terms, but he pointed out the
House language did away with the election process and instead
directs the bargaining units to submit a list of appointees to
the governor. He asked if Senate members want an election
process.
CHAIR GREEN said she does not want an election and she would
prefer not to have the selection made from a list of names
presented.
REPRESENTATIVE WEYHRAUCH said that provision was left open.
CHAIR GREEN moved to item 28.
10:54:34 AM
REPRESENTATIVE WEYHRAUCH moved to adopt conceptual amendment 6.
REPRESENTATIVE SEATON informed members amendment 6 begins on
page 78, following line 22.
10:55:16 AM
SENATOR SEEKINS objected for the purpose of discussion. He then
said that legislative employees are hired for 126 days, which
includes 3 days before and 3 days after session. He asked if
amendment 6 says an employee who works at least 80% of the time
would get full credit.
REPRESENTATIVE WEYHRAUCH explained the House's concern was for
employees who get hired later in the session. This provision
wouldn't be applied retroactively; it would only be applied
prospectively.
REPRESENTATIVE SEATON told members the amendment in the Senate
provision was retrospective back to 1987 and changed the
requirement from 60 to 120 days and, for another date, 80 days
to 120 days. That changed accrued potential benefits. The House
changed the requirement to 100 days and does not preclude an
employee from accruing benefits if the session was shorter,
otherwise no staff would receive benefits for that year.
SENATOR SEEKINS suggested using a percentage of the time the
legislature is in session. He noted 100 days equals 79.36
percent and suggested requiring employees to work 90 to 95
percent of the legislative session.
REPRESENTATIVE CRAWFORD reminded members he was unable to begin
session on time this year because of a family emergency and that
could happen to a staffer as well. He does not feel employees
should be required to work every day of the session.
SENATOR SEEKINS said the person would have to be employed for
that period of time but wouldn't necessarily have to be here. A
legislator could allow an employee to take needed time off
because of the 24/7-work requirement.
REPRESENTATIVE SEATON asked if anyone objected to eliminating
the retroactive provision to 1987 and accruing benefits during
that time.
CHAIR GREEN said the Senate's interest is prospective.
REPRESENTATIVE SEATON agreed with that interest.
SENATOR SEEKINS asked Representative Seaton if he was agreeable
to adding a percentage of time worked during legislative
sessions, such as 90 or 95 percent.
11:00:09 AM
CHAIR GREEN felt it is strange that 4 months of a legislative
session equates to a full year of employment so she questioned
the need to shorten that time.
SENATOR SEEKINS said legislative employees need to be treated
fairly and a percentage of time would do that.
CHAIR GREEN asked what the objection is to requiring a
legislative employee to work 120 days.
SENATOR SEEKINS calculated out of 126 working days, 120 days
equal 95 percent.
11:01:37 AM
REPRESENTATIVE WEYHRAUCH suggested taking 90 percent as opposed
to a day limit under advisement.
REPRESENTATIVE CRAWFORD said he had a staffer who could not show
up for the first three weeks of session and did not want to be
paid for that time. He did not think 100 days provides enough
flexibility.
CHAIR GREEN said the original language in the bill refers only
to previous employees, which is a departure from what members
have been discussing. After July 2005, a new concept applies.
11:03:21 AM
REPRESENTATIVE SEATON said that is correct for the defined
contribution and HRA but the medical benefit is based on vesting
for 10 years. He said the original language says 5 years, which
was probably a Tier 2 calculation. He thought members would want
this amendment to be consistent with other medical benefits and
require 10 legislative sessions.
SENATOR SEEKINS said he believes requiring 10 years to vest with
the employee working 90 percent of the legislative session is
pretty generous.
CHAIR GREEN announced she would leave item 28 open and directed
members to item 30.
SENATOR SEEKINS said this provision is designed to allow for a
certain amount of portability. He said a PERS employee who wants
to transfer to a position at the University of Alaska should not
have to lose PERS credit in the transfer. However, strictly UA
employees should be members of the UA system. He asked if
members have difficulty with that concept.
REPRESENTATIVE SEATON said the problem is accrued benefits and
different vesting requirements for medical plans. He offered
conceptual amendment 7. He explained the UA came in with an
optional plan it developed primarily for professors and
administrative staff. UA wants to give employees who did not
opt-in originally that chance. It also wants to offer another
optional plan. However, that creates a problem under the
mandatory language, that being mandatory retirement programs
(PERS/TRS) are protected under the Alaska Constitution. If UA is
allowed to have a mandatory plan at its discretion, it could do
what other employers do - change benefits retroactively because
the UA plan would no longer be connected to the state plan or
constitutional requirements. The UA also wanted its new plan to
be "non-bargainable," which would allow it to get out from
underneath constitutionally protected employee rights and to
retroactively change benefits.
11:11:13 AM
SENATOR SEEKINS pointed out this will not force anyone to go
from PERS to UA's system.
REPRESENTATIVE SEATON explained the UA wants to have a mandatory
program, forcing all employees into its system.
SENATOR SEEKINS said he thinks the UA should have a unified
system and shouldn't have to worry about what bargaining unit an
employee is in. He asked if the UA retirement system isn't
constitutionally protected.
REPRESENTATIVE SEATON said that is correct if the Senate version
passes.
11:12:18 AM
CHAIR GREEN maintained the constitutional protection cannot be
taken away.
SENATOR SEEKINS questioned how the Constitution could be amended
by statute.
11:12:51 AM
MS. WENDY REDMOND, Vice President, UA, told members UA never
expected, nor believes, that this would compromise employees'
constitutional protection in any way. It is not UA's intention
to do that and she does not believe it can be done.
SENATOR SEEKINS agreed with Ms. Redmond.
REPRESENTATIVE WEYHRAUCH said it would be like the court
system's retirement program, which is under a different
provision.
SENATOR SEEKINS said even if UA's intention was to get out from
under the constitutional mandate that would not survive the
first challenge.
REPRESENTATIVE SEATON questioned why the statute has a provision
that says these programs cannot be "non-bargaining."
MS. REDMOND explained:
There is an opinion that - and a history, that PERS
and TRS retirement programs are not a subject of
collective bargaining. That opinion was issued prior
to the time the optional retirement program at the
University existed...Now our unions have not requested
- we haven't had a challenge, they're not subject to
collective bargaining. This simply was put in as
clarifying language to bring it into compliance with
PERS/TRS and ORP [ph] since there are now three
retirement programs and at the time of the opinion
there were only two.
REPRESENTATIVE WEYHRAUCH said he heard a lot of testimony given
by the collective bargaining units on this issue when Ms.
Redmond was not present.
MS. REDMOND said the UA has been involved in collective
bargaining for three contracts since it has had the ORP program
and that issue was never raised at the table.
REPRESENTATIVE WEYHRAUCH said it was brought up as a serious
concern in committee so he thinks it would be advisable to hear
from those folks.
SENATOR SEEKINS said he sees no constitutional prohibition to
the UA having a program that would allow for a transportable
provision based on the equal weight of the programs. He wants
the employee to be able to have that choice and to be treated
fairly when making that choice. He continued:
We can adjust these account balances to replicate the
program that they're moving into from the program that
they're moving out of but to have University employees
who are part TRS, part PERS, part - back and forth, I
think that we're not leaving the blue collar worker
behind here. We're giving them the choice. They can
move from here to there but here's the benefits
between here and there and you can weigh that and
balance it and come out with it and make a fair
decision on whether you want to move or not.
REPRESENTATIVE CRAWFORD asked if Senator Seekins is saying that
someone who has been employed by a municipality with PERS may
move to the University and continue with the PERS plan or
whether that employee would have to switch to the defined
contribution plan.
11:17:45 AM
SENATOR SEEKINS responded:
My concept would be that's part of the choice they
would make to move from here to there. This is the
plan but they get the full weight of their account
balance over here transferred to this account over
here. It's not a hard thing to try to figure out on an
adjusted account if you've got this in PERS, when you
come into the University system, here's - based on the
investment you have over here - this is where you are
in the system over here. You might be fully vested.
REPRESENTATIVE WEYHRAUCH said his understanding of why this
happened is that this breaks apart the portability that was in
PERS. For example, a UA mechanic's pension would continue who
goes to work for the Fairbanks borough. This provision would
terminate it because the person would be in two different
systems. If that person didn't vest in one system, he would lose
that time in the next system.
SENATOR SEEKINS said that is not what he wants. He wants full
portability with equal weight between the programs.
REPRESENTATIVE WEYHRAUCH suggested working on language to
accomplish Senator Seekins' intent.
CHAIR GREEN agreed and said she asked staff from the Department
of Law to come walk the committee through the constitutional
issues.
11:19:41 AM
REPRESENTATIVE SEATON said the UA told him it does not want a
defined benefit plan, therefore transferring from or to PERS/TRS
will be difficult.
11:20:17 AM
SENATOR OLSON thought the UA wanted a hybrid plan with both a
defined contribution and a defined benefit plan.
REPRESENTATIVE WEYHRAUCH said right now the Board of Regents has
that option. It offers its high paid professors a 401k option.
Under this provision, that option will be mandatory.
11:21:00 AM
The committee moved to Section 33 [page 40 of HCS CSSB
141(FIN)am H].
REPRESENTATIVE Seaton suggested removing that section altogether
and taking the Senate version, which makes no changes to
existing statute.
CHAIR GREEN agreed and moved to item 34.
REPRESENTATIVE WEYHRAUCH said the House State Affairs committee,
in line with Senator Therriault, included intent language that
urged the Division of Retirement and Benefits to implement
regulations that adopt cost saving measures in the retiree
health care system. He said the same holds true for number 35,
which requires a report to the legislature on those cost saving
measures.
11:23:14 AM
SENATOR SEEKINS remarked, "I guess I don't have a problem with
people implementing regulations to implement the statutes giving
them plenipotentiary power to implement cost saving measures is
something beyond the authority that I'd like to have them have."
The committee took a brief at-ease.
11:24:12 AM
CHAIR GREEN said one thing that happens when intent language is
placed in statute is that the effectiveness of the scope and
range of implementation is limited. She believes this language
goes backward so requested the committee adopt the Senate
language.
SENATOR SEEKINS said the legislature should demand full
accountability but he does not want to demand it without
creating some kind of additional obligation.
11:26:28 AM
REPRESENTATIVE SEATON pointed out the House version carefully
worded its intent language so as not to limit the division or
boards. The division and boards have already voluntarily taken
on cost saving measures, such as the offering of generic
prescription drugs. The House thought it critical that the
division and boards have very clear direction from the
legislature.
CHAIR GREEN asked, "Would it be possible that the purpose in
what you're looking for, certainly as a first rung, is served in
the House language on 35 and the Senate on 34? Adopt the House
language on the report on implementation?"
11:29:17 AM
REPRESENTATIVE WEYHRAUCH asked how adopting regulations would go
backwards.
CHAIR GREEN said she is concerned that lining out in statute
what the division must put in regulation could restrict the
division if it wants to go farther.
REPRESENTATIVE WEYHRAUCH agreed the language is somewhat
restrictive because it does not say, "including but not limited
to."
REPRESENTATIVE SEATON said he spoke with the Division of
Legislative Legal to make sure that language doesn't limit the
division.
SENATOR SEEKINS said that language implies "not limited to" in
statute. He also pointed out the report on page 118 is very
inclusive. It asks for additional ways to improve the financial
health of the retirement plans.
11:32:08 AM
REPRESENTATIVE WEYHRAUCH said he has no problem with deleting
item 34 but wants to give others time to think about it.
CHAIR GREEN agreed to return to lines 34 and 35. She then moved
to item 37.
REPRESENTATIVE WEYHRAUCH explained that item 37 was added by the
House to force the Legislature to make appropriations to address
the solution. It says the provisions of the bill sunset unless
the legislature adopts a statement saying a range of solutions
have been adopted that addresses the current shortfall. He
furthered there was concern that people not be led to believe
the bill sets up a defined contribution plan that will solve all
problems. The state needs to take other positive steps to
address the current $5.7 billion shortfall in PERS/TRS and
potential unfunded liability of $15 billion. This item was to
force the legislature to make those appropriations or authorize
pension bonds to address that shortfall.
SENATOR SEEKINS referred to page 118 of the House version and
asked if that language carries out the intent of the sunset
provision so that by next year, the legislature would be looking
at recommendations to address this very serious problem.
CHAIR GREEN said the reason for its importance is to prevent the
situation from getting worse.
SENATOR SEEKINS said that's when the legislature must look at
appropriations if necessary.
CHAIR GREEN pointed out that language requiring passage of
legislation can be very detrimental.
REPRESENTATIVE WEYHRAUCH said he does not see it as detrimental.
He said the House fiscal note is zero, while the Senate fiscal
note is $69 million because of appropriations to different
retirement funds. The Governor recently requested an
appropriation for a loggers' pension program. He said the
legislature makes appropriations based on the acknowledgement of
a problem in these pension funds. He said he does not see why,
if the legislature is addressing the problem in a piecemeal
fashion, it cannot address it in a global fashion.
SENATOR SEEKINS agreed all shortfalls should be considered and
that is what should occur in the process. If the governor makes
a recommendation, the legislature decides whether to accept it.
REPRESENTATIVE WEYHRAUCH said ultimately, a 51 percent vote is
necessary to solve the problem.
SENATOR SEEKINS said it is incumbent on the legislature to find
a solution to this problem. He said the legislature cannot
ignore its fiduciary responsibility under the Constitution so it
must look at alternatives. He cautioned that this would say if
the legislature cannot find a solution right now, the
legislation will sunset so it would not be able to ignore the
recommendations.
REPRESENTATIVE WEYHRAUCH said it is easier to ignore the
recommendations than to ignore a sunset unless the legislature
adopts legislation that says it will set itself on a course to
solve it.
CHAIR GREEN said the timeframe is a constraint. The Board will
not even be appointed until October or November. She said the
implementation of a new plan requires confidence.
REPRESENTATIVE WEYHRAUCH said that is a rational concern for
anyone adopting and managing the plan. He then asked that the
committee revisit item 37 later.
REPRESENTATIVE SEATON added the House feared the problem of
future liability would not be adequately addressed. This rewrite
of the entire retirement plan has been done in a short
timeframe. The legislature must find a long-term fiscal solution
to the plan, which is of concern. Some people have opposed this
legislation based on the fact that it is a short-term solution,
making a long-term plan unlikely. He said he does not think the
House would agree to not having any way to hold the
legislature's "feet to the fire."
SENATOR SEEKINS said the Senate sees this as a poison pill that
is unacceptable in its present construction.
11:42:21 AM
REPRESENTATIVE CRAWFORD said he believes the fix may exacerbate
the problem by not putting more money into the present plan. The
legislature is looking at a $5.7 billion shortfall. That
shortfall may grow if the legislature stops funding it. The
problem is in Tier I and II, and Tier III is under-funded, which
is why he supports the sunset date.
11:43:27 AM
REPRESENTATIVE WEYHRAUCH asked to return to item 37 at a later
date.
11:43:42 AM
CHAIR GREEN moved to item 38.
REPRESENTATIVE WEYHRAUCH explained that item 38 gives employees
30 days to choose between a defined benefit and a defined
contribution plan. If no choice is made, the default is the
defined contribution plan.
CHAIR GREEN asked if that amendment contains another provision
as well.
REPRESENTATIVE WEYHRAUCH was not sure.
CHAIR GREEN said one reason the Senate wants to move to a
defined contribution plan is because the longer the legislature
waits, the worse the problem will get. She pointed out every
time a new employee is hired under Tier III, the detriment may
not be obvious today but it will be when s/he retires. She said
this provision is most heart wrenching to her.
11:45:44 AM
REPRESENTATIVE CRAWFORD said Senator Seekins argued that it is
important to attract and retain long-term employees. The best
way to do that is to have them lock into a defined benefit - if
they leave they won't benefit from it. He said the legislature
needs to study ways to make the defined benefit stronger and
more solid.
11:46:39 AM
SENATOR SEEKINS said he heard a TRS employee say that if
employees are given a defined contribution program in TRS, they
may choose to go elsewhere, while employers want them to stay.
He said he has trouble buying into that concept. He thought it
was interesting to hear someone say that a defined contribution
plan may be so good for someone who wants portability, the
legislature may not want to offer it.
CHAIR GREEN said members would leave item 38 open and review all
items that have been left open.
11:48:15 AM
REPRESENTATIVE WEYHRAUCH said the committee needs to get more
information for lines 15 and 16 (occupational disability
benefits).
REPRESENTATIVE SEATON requested a brief at-ease at 11:48:46 AM.
CHAIR GREEN reconvened the meeting at 12:11:59 PM.
REPRESENTATIVE WEYHRAUCH referred to the matrix and said the
committee is done with page 1. He moved to line 19 on page 2 and
said instead of dealing with the interest issue, the House is
agreeable to inflation proof.
Line 19
SENATOR SEEKINS said his intent is to hold them harmless but not
reward them with compounded interest.
CHAIR GREEN asked if members are willing to accept a conceptual
amendment that the calculation is between the House and Senate
language.
REPRESENTATIVE SEATON noted that Senator Seekins offered
language that required the employee to return by December 31 of
the year in which s/he turns 65 and to work for 2 years.
CHAIR GREEN called a brief at-ease at 12:13:29 PM.
12:13:39 PM
CHAIR GREEN said the growth of that HRA will be based on an
inflation calculation, not on compounded interest. She verified
that language is acceptable to all members.
CHAIR GREEN called another at-ease.
12:14:39 PM
REPRESENTATIVE SEATON moved to amend the inflation proofing
provision to read "at the rate of the consumer price index of
Anchorage, Alaska."
CHAIR GREEN announced without objection, that amendment was
adopted.
REPRESENTATIVE SEATON moved a conceptual amendment (hand
written) to lines 15 and 16.
CHAIR GREEN objected for the purpose of discussion. The
conceptual amendment is as follows:
Page 86, line 29: Section (d) is replaced with the
following and new section (e) is added.
(d) An employer shall make annual contributions to the
group health and life benefits fund to fund occupational
disability and occupational death benefits under AS
39.35.890 and AS 39.35.892 as follows:
(1) Peace officers and firefighters 0.40 percent
(2) All others 0.30 percent
She explained the employer makes that contribution, which does
not necessarily mean the state. She asked if the calculations
are estimates.
REPRESENTATIVE SEATON said the calculations are 31 and 28.
CHAIR GREEN questioned whether that calculation should be set in
statute or whether it would be preferable to say it will be
calculated as in part b of the amendment.
SENATOR SEEKINS asked if the .40 and .30 numbers are intended to
accomplish a dollar amount or whether they are a contribution
that would then be in the private group life and health
benefits.
CHAIR GREEN said her understanding is the state is self-insured
for purposes of this type of coverage. The value for investment
is greater if the state can self-insure than if it purchases
insurance. This is the newest statistical calculation to prepare
to make the payment for the payout of the annuity on death or
disability.
REPRESENTATIVE SEATON said the actuarial calculation was based
on Mercer numbers. The total annual amount is $4.097 million;
for PERS, police and fire, the amount is $716,005.
SENATOR SEEKINS asked what the benefit to a person making a
claim would be.
REPRESENTATIVE SEATON said the average dollar amount is $29,000.
SENATOR SEEKINS said (e) says the contribution rate will be
calculated on an annual basis.
MR. MILES BAKER, staff to Senator Stedman, told members the
House version brought the existing death and disability benefits
from Tier III into the new program. This costing is based on a
projection of what it would cost the state to self-insure or buy
a policy. The details need to be worked out by the department.
That is the amount required to provide that benefit based on the
incident rate that currently exists in death and disability
benefits for the current population. It has to be set in statute
initially because the board will not be up and functioning until
later this year. He continued, "From here on out, they will
actuarially calculate to make sure that enough is going into
that fund to continue to pay those benefits."
REPRESENTATIVE WEYHRAUCH said that while the discussion has
revolved around firefighters and police that get killed on the
job, other employees are killed in the line of duty, such as
fish and game officers.
12:22:26 PM
SENATOR SEEKINS replied, "The contribution at this point,
because it's less dangerous in a larger universe, is .30."
REPRESENTATIVE WEYHRAUCH said he wanted to understand the intent
of the amendment.
CHAIR GREEN said the language included in the House version was
the calculation of the pension benefit based on the employee's
salary. Another concept considered was an annuity based on
$500,000. She wanted to make sure the annuity was not part of
the conversation.
SENATOR SEEKINS said his understanding is that an employee who
is disabled or killed on the job would receive full workers'
compensation benefits. This benefit would be in addition to
workers' compensation benefits.
REPRESENTATIVE SEATON said this would provide the same benefits
that are provided under the current plan for workers'
compensation for death and disability.
SENATOR SEEKINS repeated that this is over and above workers'
compensation benefits.
CHAIR GREEN noted with no further concerns, the conceptual
amendment takes care of both 15 and 16 and was adopted.
12:24:30 PM
REPRESENTATIVE WEYHRAUCH said there was a lingering issue on
line 21. The committee agreed on the board composition but came
to no agreement on how the PERS/TRS members would be appointed.
He provided the following conceptual amendment:
All the bargaining units for PERS are going to have to
come up with this list so they're going to have to
argue among themselves, ballot out, put their nominees
forward. That gets winnowed out on that process. They
come up with a list of at least four nominees to the
governor and they can do that through their existing
elections so that the state isn't involved in that but
then the governor has four names that he or she can
pick those members from the PERS system fund.
SENATOR SEEKINS said he has no problem with that but it would be
incumbent on the legislature to make sure the "big gorilla"
isn't stacking the deck.
CHAIR GREEN requested that the conceptual amendment also require
the names be submitted by a reasonable date certain. She said
the boards and commission appointment process is lengthy so she
doesn't want these names to be submitted at the last minute.
Members agreed to include "by a reasonable date certain" and
moved to the next item.
REPRESENTATIVE WEYHRAUCH thought members were finished with page
3 except for line 28.
REPRESENTATIVE SEATON referred to the existing language in the
Senate version on pages 76 and 77 (Section 111) and said the new
plan should require consistency for vesting qualification. On
page 77, employees are required to work five legislative
sessions. All medical benefits require 10 years for vesting
purposes.
CHAIR GREEN said Section 111 is a look back and has nothing to
do with future employees. She suggested deleting that section
and not addressing the 60 days.
12:29:39 PM
REPRESENTATIVE SEATON referred to line 4 of page 77 and said
that language talks about otherwise eligible and applies to
people employed after 1987 - meaning current and new employees.
CHAIR GREEN said deleting that section will leave the
requirement as is. She said it was not the Senate's intent to
mix in the plan for the HRA.
MS. CARPENTER said AS 39.35.385 is applicable to existing
employees in the current tiers. New employees will not be
covered under that statute so Section 111 will not apply to
them.
All members were agreeable to adopting the House language.
12:31:23 PM
REPRESENTATIVE WEYHRAUCH moved to adopt amendment 7, which is
acceptable to both the UA and to the employees subject to the
UA's plan.
CHAIR GREEN announced that with no further discussion, amendment
7 was adopted.
REPRESENTATIVE WEYHRAUCH said the committee would be adopting
the House language with amendment 7.
CHAIR GREEN asked members to hold off on that item and come back
to it. She announced the amendment was adopted.
12:32:27 PM
CHAIR GREEN stated item 33 was done, the Senate language was
accepted on item 34, the House language was accepted for item
35, and item 36 is done.
12:32:47 PM
REPRESENTATIVE WEYHRAUCH said the committee is left with the
last two items. He explained that the House fiscal note assumed
the cost of the existing program costs, which is why the amount
was zero. He asked Chair Green how she wanted to address the
fiscal notes.
CHAIR GREEN said they could be dealt with in conference
committee, or inserted in the capital or operating budgets. She
said the Senate's intention was to let everyone know the cost to
municipalities, boroughs and cities with PERS programs. That
amount is the under-funded aspect of this year's budget plus $38
million for school districts. The state has agreed to assist
with that debt this year but it cannot continue to do that.
REPRESENTATIVE SEATON told members the House Finance Committee
said [it wants to put the funds] in the supplemental and capital
budgets. He asked that members accept the zero fiscal note and
let the finance committees deal with the cost.
CHAIR GREEN announced that was acceptable.
CHAIR GREEN called an at-ease at 12:35:08 PM and reconvened at
12:58:23 PM.
CHAIR GREEN announced a break at 12:58:25 PM until 1:25 p.m.
CHAIR GREEN reconvened the meeting at 2:23:44 PM.
CHAIR GREEN announced the committee was on items 37 & 38.
SENATOR SEEKINS said he believes it is the intent of every
legislator to address the long-term difficulty of the current
$5.7 billion shortfall in the liability. He thought there should
be some compelling language to address this problem. It is a
constitutional issue and involves real dollars.
SENATOR SEEKINS said the new board will have a time certain in
which to bring the legislature recommendations for additional
legislative and administrative policy changes. That language is
compelling in that it says the legislature must address this
issue. He believes it is important that the legislature adopt
measures in the future that address this long-term unfunded
liability. He said he would not object to stronger language,
similar to what Representative Weyhrauch has proposed in (b).
That language takes a responsible approach that he believes the
Senate would not object to. The only objection would be if the
problem were not fully addressed at once, some will say since
the legislature didn't fulfill AS 14.25.315, AS 39.35.705 should
go into effect. He argued against the reversion language but for
strong action language and possibly an incremental approach. He
said he is arguing to eliminate the "poison pill" section and
adopt strong language that forces the legislature to address the
issue over time.
REPRESENTATIVE WEYHRAUCH said he drafted language to start the
discussion; he did not expect it to be final. He believes it is
important to keep the legislature's "feet to the fire." If the
legislature does not act, it should pay a consequence - that
being that the work that went into a defined contribution plan
would become parallel to a defined benefit plan that exists in
statute. This language strikes a compromise between items 37 &
38. He said he is not sure he supports "before July 1, 2007" in
section (a) because that will delay what needs to be done.
2:32:51 PM
CHAIR GREEN asked if the House changed the due date of the
report from the board. She referred to page 118 of the House
version and said the board is to report to the legislature 120
days after appointment or 15 days after the first day of the
legislative session, whichever is first.
REPRESENTATIVE WEYHRAUCH said technically, it should read after
the report is received under Sec. 140.
CHAIR GREEN believed that date to be very ambitious. She noted
it includes a preliminary assessment of the actuarial services
purchased by the board, recommendations for additional
legislative or administrative policy to improve the financial
health of the retirement plans, short-term and long-term
recommendations for addressing the unfunded liability of the
retirement plans, and recommendations for legislative procedures
regarding fiscal notes for new legislation affecting the
retirement plans.
She said the report will provide a preliminary plan by mid-
January. If the legislature is required to work with the board
over a period of a year, then by the next year there would be
active working toward the structure that is sought. The goal is
to create short and long-term solutions without jeopardizing the
implementation of a defined contribution plan.
2:38:34 PM
REPRESENTATIVE CRAWFORD said he thought throughout this process,
the legislature has put the cart before the horse. The
legislature's goal should be to attract and retain the best
employees. To go down the defined contribution road instead of
dealing with the current defined benefit plan will make it more
difficult to attract and keep good employees. By starting a new
defined contribution plan, the $5.7 billion gap will grow
because no money will be in that pot to take advantage of future
stock market growth. The beauty of a defined benefit plan is
that it will continue to grow with level funding and time. He
furthered, "If we don't put up our part in the go-go years, then
it means we're going to have to put a lot more in in the down
years and that's just what happened to us." He said the
legislature needs to find a way to fund the $5.7 billion problem
without doing any harm. Tier I and Tier II are a problem, but
Tier III is not.
2:41:32 PM
REPRESENTATIVE SEATON told members the House version has a
September 2006 deadline, which he believes is unworkable. It
also contained choice language. The proposed language from
Representative Weyhrauch took that away so everyone will be in
the defined contribution program and extend it to July 2007. He
believes the legislature must get the report in January 2006 to
provide enough time to work on a solution. He pointed out the
language doesn't require the legislature to put all of the money
into a separate account. It means the legislature has devised a
fiscal plan to address the solution. He thought Representative
Weyhrauch's amendment proposes a drastic shift from implementing
immediate options to delaying implementation to 2007 if the
fiscal plan is not addressed. He suggested viewing
Representative Weyhrauch's amendment as a great amount of
movement because it was offered in the House.
REPRESENTATIVE SEATON said he sees one additional problem with
the solution offered, which is why he proposed section (c),
which would read: if section (a) takes effect, employees hired
between the effective date of this act and the effective date of
section (a) may exercise the same option as contained in (a).
He said he sees multiple ways to address the problem.
CHAIR GREEN asked Representative Seaton his interpretation of
addressing the problem.
REPRESENTATIVE SEATON said it would be to look at a mix of
increasing employer contributions to provide some fiscal
stimulus - whether that be from the CBR, the earnings reserve
account, pension bonds, etcetera. The House was investigating
some way to increase the investment return, such as the gas
pipeline. He thought the legislature has come a long way in one
year in changing the PERS and TRS, and he believes the problem
can be addressed in two years. The House State Affairs Committee
addressed both the fiscal solution issue and the broad policy
rewrite in SB 141.
2:46:51 PM
SENATOR SEEKINS said he is concerned that the solution may not
be within a single document; it make come over time. The
solution may begin next session by depositing additional money
into the retirement funds. However, if the bill says if the
legislature hasn't adopted measures to address the long-term
unfunded liability, then this is what happens. The argument will
be that the legislature has to address the problem in total, not
with a fluid solution. He thought trying to find a single
solution is not achievable, nor wise. He prefers recognizing the
problem and progressing toward a solution. His concern is
finding the right terminology that allows for future actions
rather than forcing one solution at one place.
2:50:34 PM
REPRESENTATIVE CRAWFORD said when he first came to the
legislature, the CBR was supposed to run out by a certain time
and it hasn't yet. If the defined contribution plan begins on
July 1, the state will not be putting any more money into the
defined benefit plan, which will exacerbate the problem. That is
why the House wanted to give people the option of either plan.
Most people would want to continue the defined benefit plan,
which would do more to attract and retain employees. He
expressed concern that adopting the Senate's language will make
the problem worse.
2:52:24 PM
SENATOR SEEKINS said that is not what the Senate language says.
It says that after a certain date, new employees enroll in the
new program. It does not say that once this bill is enacted, all
contributions to the defined benefit program will stop because
the people in there now would still be in that program. It is
inaccurate to say that everyone will go into the new program.
2:53:37 PM
SENATOR SEEKINS moved to adopt conceptually the (b) section
proposed by Representative Weyhrauch and to strengthen it to
require the legislature to begin the process of addressing the
short and long-term ramifications of under-funding the current
system. That language, along with the language on page 118,
would be in lieu of items 37 and 38. He repeated he wants that
language to be as compelling as possible, short of a sunset
date.
REPRESENTATIVE WEYHRAUCH objected to rhw motion.
REPRESENTATIVE CRAWFORD said he does not object to the language
in (b) but he does not agree with limiting it to those options.
SENATOR SEEKINS said he appreciates what Representative
Weyhrauch is trying to do and he is attempting to do the same
thing with a slightly different structure.
REPRESENTATIVE WEYHRAUCH said he believes members want section
(b) to read:
The legislature shall adopt measures related to the
short and long-term funding of the TRS and PERS
systems based upon a report required by section 140 of
this act.
He said he objects to using that language to substitute items 37
and 38 because the legislature will always have to adopt
measures. He wanted to link it to the defined contribution plan
to provide a hammer and wanted to start the debate of how to tie
the two together.
2:58:18 PM
REPRESENTATIVE WEYHRAUCH said section (b) could theoretically
start with replacing the sunset provision in line 37. That would
not address the choice issue in section (a) or line 38, which
Representative Seaton's amendment does.
3:01:10 PM
SENATOR SEEKINS said he agrees with the concept in line 37 but
believes providing the option in line 38 is a sticking point for
the Senate. He wants to provide a reasonable inducement to
attract good employees to state service. He said as a private
employer, he agrees employers need to help employees find a way
to plan for their futures.
REPRESENTATIVE WEYHRAUCH suggested the following language:
The legislature shall adopt measures related to the
short and long term funding of the PERS and TRS
systems based upon a report required by Section 140 of
this act on or before July 1, 2006.
He indicated that says the legislature will implement laws that
address the short and long-term funding.
SENATOR SEEKINS maintained that might only be an appropriation
bill.
REPRESENTATIVE WEYHRAUCH said that could also be a
constitutional amendment or a bonding bill.
SENATOR SEEKINS said he wouldn't object if the legislature was
making progress.
REPRESENTATIVE WEYHRAUCH said the issue is between the sunset
date and the choice. He continued:
If we really try and focus the debate and say we're
going to adopt things, then maybe we can agree to
replace substitute language for the sunset but we
haven't addressed the choice issue. That's a serious
link to hard acts by the legislature in this language
I brought in. But it also relates significantly to
what the House felt was important because of the
dichotomy and goals of whether there's a problem or
not. And so to bring the bill along through the House
and bring it into a conference committee - that's what
the House agreed to. So, I think I'm willing to go
with some compromise language on the sunset to say we
have to act and that - but we still have to focus in
this conference committee - the choice issue on 38,
the University on 30, and then we're done.
3:02:24 PM
SENATOR SEEKINS said he didn't have the power to speak to line
38 as is for the Senate, but he was willing to say that members
need to find a way to compel action.
REPRESENTATIVE WEYHRAUCH suggested members keep that discussion
open.
SENATOR SEEKINS agreed.
3:03:27 PM
REPRESENTATIVE SEATON said the two issues are linked.
Representative Weyhrauch's proposal reverses the linkage so that
if nothing happens by July 1, 2007, an option would be offered.
That provides 2 years to find a solution and adopt a fiscal
plan. He said he appreciates the distance Representative
Weyhrauch has gone on this and doesn't know how much farther the
committee can go.
SENATOR SEEKINS said the committee is at an impasse on that
issue.
3:05:09 PM
REPRESENTATIVE CRAWFORD remarked he couldn't go along with the
change as it is diametrically opposed to the House vote.
3:05:43 PM
REPRESENTATIVE SEATON suggested dealing with the full Weyhrauch
amendment and the amendment to the amendment, and that members
take it back to their bodies to see whether they concur.
CHAIR GREEN agreed members should take the language back to
their respective bodies and have the discussion. She said the
Senate's idea was to stop the current problem caused by the
existing benefit plan that is sinking the state. It has become a
huge financial burden. She stated, "If we continue to say oh but
there might be a DB out there again, I think shame on us." The
Senate is trying to move to a different approach that is funded
differently, is more predictable, with a good medical plan, a
health reimbursement account, and is portable. She said that
approach is a common plan for younger people. She wants to move
forward with the full realization of the scope of the problem.
3:08:43 PM
SENATOR SEEKINS said he wants this to be more than a token move.
He said both GM and Ford Motor Company's bonds were downgraded
to junk bonds because of their defined benefits programs. He
said people are living much longer after retirement than in the
past so retirement plan expenses are becoming a big liability.
3:09:54 PM
REPRESENTATIVE WEYHRAUCH asked for verification that items 30,
37, and 38 are open.
CHAIR GREEN said that's her understanding and announced a break
until about 4:30 pm.
CHAIR GREEN reconvened the meeting at 4:55:01 PM and noted she
had a letter for members to sign and return to their respective
bodies.
REPRESENTATIVE SEATON said he distributed an amendment that
would replace items 37 and 38 if adopted. It reads:
The legislature shall adopt measures related to the
short and long-term funding of TRS and PERS based on
the report required by Section 140 of this Act. The
solutions to the unfunded liability issue may include
implementing debt or equity restructuring, increases
in employer contributions, pension bonds, refined
actuarial analyses, contributions from other state
sources or appropriations.
(b) If the legislature has not adopted legislative
measures that address the long-term unfunded liability
of TRS and PERS on or before July 1, 2007, the
retirement plan choice options set forth in Section
14.25.115 and Section 39.35.705 shall be enacted.
(c) Section (b) takes effect, employees hired between
the effective date of this act and the effective date
of section (b) may exercise the same option contained
in (b).
He then moved to adopt the amendment.
CHAIR GREEN objected.
REPRESENTATIVE WEYHRAUCH said the alternative is "let's get some
new eyes in here."
SENATOR SEEKINS said he appreciates members' efforts on this
committee but his concern is saying that if legislative measures
are not adopted, the court will interpret whether the measures
are all inclusive. He agreed a fresh set of eyes may be
necessary at this point.
4:59:25 PM
CHAIR GREEN asked for a roll call vote. The motion [to replace
conference sections 37 and 38] failed 5-1 with Senator Olson,
Representative Weyhrauch, Senator Seekins, Representative
Crawford, and Senator Green voting nay and Representative Seaton
voting yea.
REPRESENTATIVE SEATON asked Chair Green if item 30 would remain
open.
CHAIR GREEN replied yes.
5:00:18 PM
SENATOR SEEKINS moved to report back to the Senate and House
that the committee wasn't able to reach agreement on all pending
issues.
CHAIR GREEN ascertained there was no objection and said the
letter was being passed for signatures.
REPRESENTATIVE SEATON expressed hope that a solution would be
forthcoming.
CHAIR GREEN adjourned the SB 141 Conference Committee with
limited powers of free conference at 5:00:35 PM.
| Document Name | Date/Time | Subjects |
|---|