Legislature(2001 - 2002)
05/04/2001 10:52 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 242(FIN)
"An Act relating to reemployment of and medical benefits for
retired members of the teachers' retirement system and public
employees' retirement system; relating to the inclusion of
cost-of-living differentials on compensation and benefits
under the public employees' retirement system; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
DENISE HENDERSON, staff to Representative Pete Kott, testified read
a statement into the record as follows.
Basically, what House Bill 242 is designed to provide a tool
to bring back retired employees into the public service
workforce as well as retain those who are about to retire and
possibly aide in the further recommendation and recruitment of
younger, qualified employees.
The bill itself will make a modest improvement to the Alaska
retirement statutes to assist Alaska's public employers in
attracting and retaining qualified workers as workforce
shortages become more pronounced. Employers throughout the
state now are having difficulty in filling certain vacancies
and this is occurring at all levels: the teaching,
professional, technical and clerical.
GUY BELL, Director, Division of Retirement and Benefits, Department
of Administration detailed the bill, noting that Sections 1,2,4 and
6 - relate to the teachers retirement system. He pointed out these
sections contain segments equivalent to those in SB 149, that
passed the Senate a week prior.
Mr. Bell detailed Section 1, which permits school districts to hire
retired teachers after a declaration of a shortage or an
anticipated shortage by a school district. He shared that this
section also allows those retired teachers an option of continuing
to receive their retirement benefits during their return to
teaching, but no long accrue an additional benefit during their
return. He pointed out there is a sunset provision of the year 2006
to these provisions. He qualified that a proposed committee
substitute changes this date to the year 2005.
Mr. Bell informed that Section 6 relates to a "modest enhancement"
to medical benefits for Tier II teachers. He explained this is
designed as a retention plan in that it provides full medical
coverage paid by the Teachers Retirement System (TRS) after 25
years of teaching. He noted that currently a teacher is allowed to
retire after 25 years, but does not become eligible to receive
medical benefits until age 60, when the system pays half of the
costs. He also noted there is a "modest" cost to the TRS fund of
.17 percent. He calculated the additional cost based on a $40,000
annual salary to be $68 per teacher per year.
Mr. Bell next addressed Sections 7 and 8, which makes equivalent
changes to the Public Employees Retirement System (PERS). He listed
this applies to state as well as political subdivision, such as
municipal government employees, peace officers, professional and
technical employees, and "other workers."
Mr. Bell stated that Section 10 similar provides similar
enhancement of medical benefits to public employees as TRS
employees, as detailed above.
Mr. Bell concluded with Section 11, which simplifies the method the
geographic pay differential is included in the calculation of a
retirement benefit and applies to state employees. He shared this
is related to legislation adopted in 1986, which required employees
hired after that date to spend at least 50 percent of their time in
a pay differential area in order for the pay differential to be
included in the calculation of their retirement benefits. He noted
this legislation also included a provision requiring a comparable
amount or "equivalent steps" in the total service to qualify for
the retirement pay differential. He stressed the confusing second
portion is hard to interpret and explain to members, which makes
career planning difficult. He relayed concerns from the Alaska
State Troopers and the Department of Fish and Game because these
agencies tend to transfer employees across the state during their
careers. He stated that HB 242 changes the geographic pay
differential provision to only require an employee to spend at
least 50 percent of their career in a pay differential area to
qualify for the increased benefits in their retirement.
Senator Austerman asked if this legislation applies to employees
who retired under the Retirement Incentive Plan (RIP) or other
early retirement efforts.
Mr. Bell answered that this bill specifically prohibits an early
retiree from returning to work and also does not allow such
employees to receive these additional considerations. He explained
an employee must have a "full service" retirement in order to
qualify for the added benefits.
Co-Chair Kelly announced that because members have not had ample
opportunity to review this legislation, he planned to keep it in
the Committee.
Senator Leman moved to adopt CS HB 242, 22-LS0885\J as a working
draft.
Co-Chair Kelly asked if the sponsor supported the committee
substitute.
Ms. Henderson answered yes.
Without objection, the committee substitute was ADOPTED.
TIM ROGERS, Legislative Program Coordinator, Municipality of
Anchorage, testified in support of the bill. He told of the "brain
drain" of qualified teachers and the economic necessity for
teachers to retire from teaching and work in a second career rather
than continue to teach.
Co-Chair Kelly ordered the bill HELD in Committee.
AT EASE 11:52 AM / 11:56 AM
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