Legislature(2001 - 2002)

05/04/2001 10:52 AM FIN

Audio Topic
* first hearing in first committee of referral
+ 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                                                            
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                                                            
Co-Chair  Kelly  asked  if  the  sponsor  supported   the  committee                                                            
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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