Legislature(2017 - 2018)BUTROVICH 205
02/26/2018 08:00 AM Senate EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| SB185 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 185 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 185-REEMPLOYMENT OF RETIRED TEACHERS & ADMIN
7:59:57 AM
CHAIR STEVENS announced the consideration of SB 185 and his
intent to hear and hold the bill.
8:00:36 AM
SENATOR PETER MICCICHE, , Alaska State Legislature, sponsor of
SB 185 said the bill will reinstitute the retiree rehire
provision that was adopted in 2005 through HB 161 with a sunset
date of 2009. Alaska is experiencing a severe shortage of
teachers, particularly in rural Alaska, but also of specialists
throughout the state. Attracting and retaining teachers has
become a critical issue for school districts. He has seen
advertisements calling for high school graduates to take a prep
course to fill a classroom. He asked if the state wants a
lifetime of experience filling a position temporarily or a high
school graduate. The bill gives flexibility to hire retired
teachers to temporarily fill positions. This bill is another
tool in the short term while a long-term solution is worked on.
House Finance has requested an actuarial, but the reality is
that any other teacher filling that slot would have the same TRS
[Teacher Retirement System] impact. The fiscal note is
indeterminate at the moment.
8:03:06 AM
CHAIR STEVENS asked what impact the bill might have on the
retirement or medical system.
8:03:17 AM
RACHEL HANKE, Staff, Senator Micciche, Alaska State Legislature,
presented the sectional on SB 185 on behalf of the sponsor. She
said some of those questions might be answered by the sectional,
but Lisa Parady [Executive Director of the Alaska Council of
School Administrators] would also be presenting on the bill.
Section 1: Allows school districts to rehire educators
that have retired under the defined benefit plan or
the defined contribution plan. Before a retired member
can be considered to fill a position, the school
district must publicly advertise the position for 10
business days and actively recruit to fill it with a
person other than a retired member. A teacher whom is
retired from the defined benefit or contribution plan
must be retired for six months or more if they are
younger than 62 or 60 days if they are 62 or older
before they are considered for a rehire. The retired
member must also certify that there was no
prearrangement of reemployment made prior to
retirement.
8:04:12 AM
Section 2: Would allow for retirees who are rehired as
permitted by section 1, to continue to receive
retirement benefits during the period of reemployment.
8:04:21 AM
Section 3: Will make retirees who are reemployed as
permitted by section 1 of this bill ineligible to
receive additional retirement benefits based on their
service and salary during the period of reemployment.
8:04:30 AM
Section 4: Clarifies that a member who is reemployed
does not become an active member, will continue to
receive retirement benefits, deductions under TRS will
not be made to their salary and reemployed educators
will not receive credited time for service during
reemployment. This section also ensures that a retired
and rehired teacher will be eligible to receive the
group health plan coverage that is provided to active
members employed by the school district.
8:04:55 AM
Section 5: Conforms that an employer must make
contributions to the defined benefit plan of the TRS
system as proposed by section 1. This section also
requires employers to make contributions to TRS for
reemployed educators.
8:05:10 AM
Section 6: Would apply the bill's provision to
contracts that are made on or after the bill's
effective date.
8:05:25 AM
CHAIR STEVENS noted that a retired person would be receiving
medical benefits. He asked why they would receive the group
health plan coverage.
8:05:47 AM
SENATOR MICCICHE said they are carrying the bill for educators,
and Lisa Parady might be best suited to answer that question.
8:06:03 AM
SENATOR HUGHES said she was glad they are coming up with
solutions for the teacher solution. She asked why the bill
specifies a different amount of time someone must be retired
before rehire, six months if under 62 or 60 days if age 62 or
older.
8:07:52 AM
LISA SKILES PARADY, Ph.D., Executive Director, Alaska Council of
School Administrators, said the language incorporates an IRS
ruling requiring bona fide separation of employment. She noted
that Kathy Lea [Chief Pension Officer for the Division of
Retirement and Benefits], an expert on the retirement system,
was present to answer questions.
8:09:25 AM
DR. PARADY said her organization is in strong support of the
bill. It is another tool at a time when school districts need
immediate assistance. A huge crisis in staffing exists across
the state. SB 185 is not a silver bullet, but it provides some
relief. It is necessary for both urban and rural school
districts. The rural districts have never seen such turnover
rates.
8:10:32 AM
DR. PARADY said SB 185, which is a companion to HB 224, is the
first bill in her tenure with support from all of education.
They have partnered with school boards, which is common, but it
is less common for them to work with NEA-Alaska. The bill is
addressing something everyone in education sees as a crisis. The
bill incorporates suggestions from NEA-Alaska that would allow
contracts to be just for one year at a time and the districts
must show they have gone through the hiring process. Of course,
that is the reason they are here. Districts are posting and
advertising and not finding anyone.
8:11:40 AM
DR. PARADY said this is a supply-and-demand issue. One of the
highest priorities in their joint position statement is
training, attracting, and retaining qualified educators. In the
past thousands of people would be at job fairs in Anchorage. In
2017, 211 candidates and 36 districts were at the job fair. Many
of those candidates were moving around Alaska. Sometimes the
reasons they are moving from another district are not positive
for the state's kids. Sometimes they want to move onto the road
system, but 211 candidates are not meeting the state's need.
8:13:08 AM
DR. PARADY said they are supportive of President Jim Johnson's
[President of the University of Alaska] focus on increasing the
number of teachers prepared by the University of Alaska. The
goal is to produce 90 percent of Alaskan teachers by 2025, but
they need assistance now. This is a stop gap while working on
other strategies. From 2001-2010, when the previous retiree
rehire law was in effect, the total use was 325 people, which is
not an outrageous number of people, but 325 people would go a
long way toward filling some of these vacancies. The average
time reemployed was 18.7 months; the shortest period was three
months and the longest 46 months. The Lower Kuskokwim School
District was the largest employer. The largest number employed
in one year was 181. The majority of those positions was for
teachers, including 45 special education teachers. The turnover
rate in Alaska for superintendents has been about 60 percent, 26
percent for principals. Statewide, the teacher turnover rate is
about 22 percent, but remote, isolated villages have a 57
percent retention rate.
8:16:06 AM
SENATOR GIESSEL said the sponsor statement states retirees will
continue to receive retirement benefits during the period of
reemployment, but section 2 of SB 185 states "benefit payments
may not be made during the period of reemployment."
DR. PARADY said except as provided in section f, and section f
outlines this bill.
8:17:04 AM
DR. PARADY said it is an at-will, one year, no additional
benefits contract. Employers must pay 12.6 percent to offset the
unfunded pension liability, which is a compromise with the
Department of Administration and the retirement system. The
school district continues to pay for the unfunded pension
liability, which they pay for every employee. Other than that,
it is a salary contract. The employer must offer health
insurance as an option for the employee.
8:18:17 AM
SENATOR GIESSEL said she will keep listening but is still
thinking. It's double dipping.
8:18:25 AM
SENATOR HUGHES asked whether the bill would apply to
administrators.
8:18:53 AM
DR. PARADY said it is open to educators, so it could include
principals or superintendents.
8:19:05 AM
CHAIR STEVENS asked if any administrators are not in TRS.
8:19:12 AM
DR. PARADY said the law allows a CEO of a school district to be
in PERS [Public Employee Retirement System], but the bill is
specific to TRS.
8:19:29 AM
SENATOR HUGHES said, to clarify, the employer puts into TRS
while a retired person is employed. The employee is not paying
into TRS, but they are receiving their retirement check.
8:19:59 AM
DR. PARADY said the employee continues to receive retirement.
Any retiree from the lower 48 can work in Alaska and not have
their retirement affected, but Alaskan retirees cannot come back
on contract without a penalty. With this bill they can come
back, not at the level they retired at, but on a salary contract
for a one-year period to fill a classroom vacancy.
8:21:07 AM
SENATOR HUGHES said she wanted to clarify that just the employer
would be paying into TRS, and not the employee.
8:21:27 AM
DR. PARADY said the employer, the school district, would be
paying 12.6 percent, not the employee. The employee would only
have a salary relationship with district.
8:21:57 AM
SENATOR HUGHES said the health care for the reemployed retiree
comes from the active employment health care plan, not the TRS
system. She asked if it is cheaper to get health care that way
than through the TRS system. She also asked if it is cost
neutral for the employer to pay 12.6 percent when the employee
is not.
8:22:44 AM
DR. PARADY said efforts were made to be as cost neutral as
possible. They were not trying to impact the retirement system.
They worked on this for two years. Part of the compromise was to
address the unfunded pension liability. Also, the state does
want school districts to continue to try to find long-term
classroom teachers, principals, superintendents. But this is a
better alternative to other ways of filling vacancies or not
filling those vacancies. Only 385 people used this previously.
8:24:31 AM
SENATOR HUGHES said she would not want to increase the state
pension liability if the employee is not paying into the plan.
It may be a lower cost to TRS if an employee uses the active
health care plan.
8:24:57 AM
CHAIR STEVENS said it is an interesting point that teachers from
out of state can come and be hired, but not retired Alaska
teachers.
8:25:12 AM
SENATOR BEGICH asked if the reemployed educator could opt out of
the medical plan.
8:25:32 AM
DR. PARADY said yes.
8:25:35 AM
SENATOR BEGICH said the employee is not paying into the
retirement system because they are not adding to their
retirement.
8:25:55 AM
DR. PARADY said that is correct.
8:26:04 AM
CHAIR STEVENS said they need to better understand this clause: A
teacher whom is retired from the defined benefit or contribution
plan must be retired for six months or more if they are younger
than 62 or 60 days if they are 62 or older before they are
considered for a rehire.
8:26:29 AM
DR. PARADY said that language is specifically from the IRS
letter ruling that requires a bona fide separation of employment
to be reemployed in a retirement system. They worked with their
attorney general at the Department of Administration who took
the language of the IRS ruling and embedded it in the bill to be
in compliance.
8:27:25 AM
KATHY LEA, Deputy Director/Chief Pension Officer, Division of
Retirement and Benefits, Department of Administration (DOA),
introduced herself and offered to answer questions on SB 185.
8:27:56 AM
CHAIR STEVENS said that he recalled teachers in Kodiak who went
back into teaching after retirement and had to pay money back
into the retirement system. He asked if that were true and why
would teachers currently not be allowed back in the system.
8:28:20 AM
MS. LEA said the current rules prohibit retired teachers from
coming back into full-time, active teaching. If they are
reemployed for a school year, they would have to repay the
retirement benefits for the school year they are employed.
8:29:05 AM
MS. LEA said when retired teachers reemploy now, they must pay
their employee contribution and they do accrue additional
retirement credit. That is why their retirement benefit must be
stopped.
CHAIR STEVENS asked her to address the IRS issue of over and
under 62.
8:29:33 AM
MS. LEA said in-service distribution occurs when members are
still active in their retirement plan but are receiving
benefits. Some types of plan allow in-service distribution. The
state plans do not. To avoid an in-service distribution plan,
one must look to the IRS for the normal retirement age. The IRS
rules for normal retirement age as set by IRS is strictly for
tax purposes. Age 62 is the normal retirement age for all
private sector retirement plans since 2007. No age has been set
yet for government plans. The IRS has signaled that it will
continue to review plans with 62 as the normal retirement age.
The difference is when a person is eligible for a retirement
plan and when they are not. Age 62 is the normal retirement age
and to make sure there is a bona fide separation of service, a
person who is 62 or older must only have a 60-day break in
service to reemploy with the same employer.
8:31:41 AM
MS. LEA said a person under 62 is in the early retirement stage
and must have a longer break from service.
8:32:08 AM
SENATOR BEGICH asked whether someone who retires from the Lower
Kuskokwim School District cannot apply with the Anchorage School
District unless the rehire bill in this provision exists.
8:32:27 AM
MS. LEA said a retired teacher from any school district cannot
reemploy with any school district without stopping retirement
and becoming an active member in TRS with the exception of
substitute teaching and short-term contracts.
8:32:53 AM
SENATOR BEGICH asked what a short-term contract is.
MS. LEA said short-term is 60 to 90 days.
8:33:07 AM
CHAIR STEVENS asked what happens if a school district hires
someone on a one-year contract and keeps doing it year after
year.
8:33:15 AM
MS. LEA said state auditors would question whether it is
temporary. Under the IRS rules, a temporary contract can be no
longer than two years. If it is not temporary, the members will
be penalized because they will have to repay all retirement
collected during that period.
8:33:51 AM
CHAIR STEVENS asked about full- or part-time positions.
8:34:03 AM
MS. LEA said any service in TRS that is 50 percent or more of a
normal work week must participate in TRS.
8:34:20 AM
SENATOR HUGHES asked for clarification about the 12.6 percent
that would be paid by the employer.
8:35:00 AM
MS. LEA said under this bill the retiree can come back into
service without suspending benefits and would not accrue
additional service, and so does not need to pay into TRS. The
12.6 contribution from the employer is needed to keep the system
whole.
8:35:39 AM
SENATOR HUGHES asked whether it would help a district with
health care costs because a reemployed retired teacher 65 or
older would be covered by Medicare, even if they are also
covered by the active health care plan.
8:36:11 AM
MS. LEA said an active employee insurance is always primary,
either to Medicare or the retiree health care plan.
8:36:38 AM
SENATOR HUGHES asked if Medicare is the first payer if a teacher
is not reemployed.
8:36:58 AM
MS. LEA said for a retired person, Medicare is primary.
8:37:06 AM
CHAIR STEVENS said the University of Alaska opted out of the
social security system. He asked whether that was true of public
school teachers.
8:37:21 AM
MS. LEA said in 1945, when Social Security was first offered to
public and government employees, teachers voted not to
participate at that time, which is why they are not in social
security today.
8:38:13 AM
SENATOR HUGHES asked whether this impacts all state public
employees. They cannot be rehired and collect retirement.
8:38:46 AM
MS. LEA said that is a standard provision in Alaska retirement
plans. Someone cannot be a member of a plan while a retiree.
They must stop benefits before participating in a part- or full-
time permanent position.
8:39:09 AM
CHAIR STEVENS said he and Senator Coghill remembered the days
from years ago when Fish and Game employees would do the same
job and draw retirement and a salary. He asked for confirmation
that this bill would not do the same thing.
8:39:24 AM
MS. LEA said no, the bill does not do that. It requires a
recruitment period, evidence of a recruitment period, and only a
one-year contract.
8:40:06 AM
NORM WOOTEN, Executive Director, Association of Alaska School
Boards (AASB), testified in support of SB 185. He said two AASB
resolutions support SB 185. Alaska is competing with every other
state for the same pool of decreasing applicants. The rehire of
retired teachers and administrators is not the final solution to
the teacher shortage, but it is a temporary solution that allows
districts to find teachers for hard-to-fill positions, which is
a problem for all of the state.
8:41:25 AM
CHAIR STEVENS asked if people are teaching longer than they used
to.
8:41:37 AM
MR. WOOTEN said he has only anecdotal information. Some keep
working and enjoy it and others not so much.
8:42:13 AM
MARK MILLER, Ph.D., Superintendent, Juneau School District,
supported SB 185. He said he is in favor of the bill because it
deepens a shallow talent pool. While he was lying bed at 2 a.m.
thinking about how to close a $3 million deficit and wondering
whether the bus barn would call in for a snow day, he thought
that if he decided to retire tomorrow and work at Home Depot, he
could receive retirement benefits. But if he wanted to use his
education to help young students, he is prohibited from doing
that in the state of Alaska while retired. Alaska's greatest
resource is Alaskans and in tough times, the most important job
is to leverage resources for the maximum good of the state and
students. This bill does that.
8:44:43 AM
PETE HOEPFNER, Member, Cordova School Board, supported SB 185.
He said schools throughout Alaska have positions they unable to
fill, especially for special education and high school math and
science. The number of teachers at Alaska teacher job fairs has
dropped dramatically. In the past, 1,500 to 2,000 candidates
came. In 2014, 250 candidates came. In 2017, 211 candidates came
for 850-900 positions, which included janitors and nurses. Today
people come to Alaska to teach only for the Alaskan experience.
The pay and retirement are not there. In Texas teachers can
start at $56,000 with a bachelor's degree and zero experience.
Most Alaskan districts cannot afford that. It is another tool to
have a teacher in every classroom. All districts are trying to
fill these positions. This bill is supported by AASB by two
resolutions. The revised fiscal note shows minimal impact to the
state.
8:47:51 AM
DEENA BISHOP, Ph.D., Superintendent, Anchorage School District,
supported SB 185. She said as superintendent of the Anchorage
School District (ASD), she is in strong support of SB 185. For
many years ASD has accessed the extensive experience and
expertise of retired educators by allowing temporary and part-
term employment, but this has been very limited without the
provisions in SB 185. Districts could enter into at-will
employment agreements with retired educators without current
protections and benefits such as tenure, sick leave, and
retirement. She would support having these explicit restrictions
in the bill. She would also like to see the bill include
retirees under the defined contribution plan. The state would
benefit because districts pay 12.6 percent for the unfunded
pension liability. It is a win/win. The ASD does not pursue
hiring retired teachers to avoid hiring new teachers. Retirees
fill gaps when properly certified staff cannot be found. They
provide temporary or short-term expertise for special projects,
and they give needed support during high-demand times of the
year, such as summer months, the start of the school year, and
assessment periods. ASD wants to rehire retired teachers rather
than use contract agencies. Districts could save money because
of costs not directed to employees. The ASD appreciates the
legislature offering increased flexibility and discretion in a
time of constricting resources. The ASD embraces innovation and
supports creative solutions. SB 185 has the potential of great
benefits to the ASD and the state.
8:51:26 AM
JACK WALSH, Superintendent, Craig School District, supported SB
185. He said this is his 23rd year as an administrator in Alaska
and 23 years at job fairs and filling classrooms and leadership
needs, mostly in rural Alaska. This plan has worked in the past
and offers a real option for people. It is another tool to put
the best quality teachers in front of students. They have worked
to address all the issues around retirement with the Department
of Administration. Districts need this tool and resource. They
regularly deal with illnesses, with family emergencies. They
need people to come in on a short- or long-term basis to
maintain quality of services. This has some money going into
retirement system. It is a critical piece of how the future of
the Alaskan schools can be improved.
8:55:07 AM
SENATOR HUGHES asked why SB 185 has no sunset when the previous
bill did.
8:55:29 AM
DR. PARADY said with the gravity of the current teacher shortage
situation, they do not have a sense of when they can shift this
tide. They do not know how to identify when a sunset would be
appropriate, so they did not suggest one. The state is in
trouble. Their foundation is cracking because they cannot find
qualified staff to fill vacancies. Everyone is working on this,
the Department of Education and Early Development, the
university, groups like hers, the school board association. They
are thinking of how to solve this issue of students having the
best people in front of them. Alaska is not alone with this
problem. It is worse for Alaska because it gets its teachers
from the lower 48. Most teachers come from Oregon, and Oregon is
doing emergency waivers to get as many teachers in place. The
state that Alaska gets most of its teachers from is in crisis
also.
8:58:36 AM
SENATOR HUGHES said she has heard there is no magic date about
when the national teacher shortage will end. If this truly will
help the retirement liability as well as help districts, it
makes her want to think about expanding it for other situations,
such as the trooper situation.
8:59:52 AM
KATHERINE GARDNER, Executive Director Human Resources,
Matanuska-Susitna School District, supported SB 185. She said
that in Mat-Su the need to hire retired teachers or
administrators is very limited, but this would be a relief for
emergencies. Their recruitment challenges are not as difficult
as in other parts of the state, but there are certain situations
where flexibility is needed. Usually their preference is not to
hire retired person, but that is not always reality. She echoed
Dr. Bishop's comment about the need for explicit restrictions on
employment. She said the bill should be implemented for
individuals working at least half time so as not to impact
school districts that employee retired teachers for very limited
part-time positions that are not retirement eligible.
9:02:08 AM
SHAWN ARNOLD, Superintendent, Nome Public Schools, supported SB
185. He said SB 185 is a tool to help school districts around
the state. In Nome they have had increasing difficulty filling
the specialist positions, school counselors and special
education. They need to find the best teachers for students with
the greatest needs, but it is harder and harder every year. Many
teachers remain in the community and some are hard-to-find
specialists. They are hesitant to work again because of the
retirement impact. This wouldn't be the only solution, but it is
definitely legislation moving in right direction.
9:04:41 AM
SEAN DUSEK, Superintendent, Kenai Peninsula School District,
supported SB 185. He said the Superintendents Association
supports this bill. Until the University of Alaska meets its
goal of producing enough teachers, this is a bridge. The
benefits of the bill outweigh possible complexities. Each year
in the Kenai Peninsula they have open positions that this bill
could fill. They always work hard to fill positions, but at
times they need retired teachers for gaps at the beginning of
the year. Students would benefit from experienced leadership and
educators working with new teachers to achieve a comprehensive
learning program for all students.
9:06:42 AM
PATRICK MAYER, Superintendent, Wrangell Public Schools,
supported SB 185. He noted that he is the president-elect of the
Alaska Superintendents Association. He said that in a few weeks
will be at the job fair in Anchorage. He will no longer have to
worry about the stampede of teacher candidates in the ballroom
of the Captain Cook. SB 185 is a mechanism for immediate help.
It is vital because of the critical shortage of educators and a
high turnover rate. The joint position statement of the Alaska
Council of School Administrators shows retiree rehire as a top
priority. The flexibility of SB 185 allows options best for
students. Students will benefit from the experience of retired
teachers.
9:09:15 AM
KAREN GABORIK, Ph.D., Superintendent, Fairbanks School District,
supported SB 185. She said Fairbanks for the first time has felt
the pain of teacher shortages. They have almost always had
unfilled special education positions, but now they have regular
education positions unfilled for music and high school math and
science teachers. The ability to rehire retired teachers on a
temporary basis would make a huge difference for students. Now
students have a revolving door of unqualified substitutes in
that content area. It equates to real time and learning lost in
critical content areas. It also requires other teachers to
support these classrooms. The priority will be always to recruit
for long-term basis, but more and more they are experiencing
gaps in hiring. Many communities have retired teachers willing
to assist, including some urban retired teachers who may be
willing to go to rural areas on a short-term basis.
9:12:08 AM
KERRY BOYD, Superintendent, Yukon Koyukuk School District,
supported SB 185. She noted that she is secretary of the Alaska
Superintendents Association. She said that as a superintendent
of a district that employs teachers in very rural, remote fly-in
areas, and also in Fairbanks, Anchorage, Juneau, and Wasilla,
this bill could be very beneficial. Over the years they have had
to fill in positions at the last minute and retired teachers are
reluctant to do so because of the impact on their benefits. This
would help the state over all. Her staff is in support of the
bill, and some said they may consider staying in Alaska to
utilize their strength as educators.
9:13:56 AM
ACTING CHAIR COGHILL said in the Interior, retired state,
federal, and military workers make up a huge chunk of his
working population. He reflected on the interesting dynamic of
their contributions to the economy.
9:14:54 AM
SENATOR BEGICH said most of the letters speak to HB 224. He said
it would be good to have letters that refer to SB 185.
ACTING CHAIR COGHILL held SB 185 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 001_SB185_RetireTeacherRehire_Sponsor Statement.pdf |
SEDC 2/26/2018 8:00:00 AM |
SB 185 |
| 002_SB185_RetireTeacherRehire_BillText_VersionA.PDF |
SEDC 2/26/2018 8:00:00 AM |
SB 185 |
| 003_SB185_RetireTeacherRehire_Sectional Analysis_VersionA.pdf |
SEDC 2/26/2018 8:00:00 AM |
SB 185 |
| 004_SB185_RetireTeacherRehire_FN1_Admin.pdf |
SEDC 2/26/2018 8:00:00 AM |
SB 185 |
| 009_SB185_RetireTeacherRehire_Support Letters_19Feb2018.pdf |
SEDC 2/26/2018 8:00:00 AM |
SB 185 |