Legislature(2001 - 2002)

05/04/2001 07:17 PM 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 second  hearing for  this bill in  the Senate  Finance                                                            
REPRESENTATIVE   PETE   KOTT   testified   this  bill   "offers   an                                                            
opportunity" for  retired members of the Teachers  Retirement System                                                            
(TRS) and the  Public Employees Retirement  System (PERS)  to return                                                            
to work within  the system. In addition, he said,  the bill provides                                                            
greater  incentive for  retaining these  PERS and  TRS members.   He                                                            
stressed  there is a recognized  shortage of  teachers in the  state                                                            
and he told of  the "brain drain" impact from the  departure of many                                                            
state  employees to  the private  sector.  He suggested  this  could                                                            
either be  because the private  sector is  paying salaries  that are                                                            
too high, or  that state government  is paying too little.  He noted                                                            
efforts other  states have  taken to attract  teachers by  providing                                                            
incentives. He gave as  an example the State of California, which is                                                            
providing  down payments on  home purchases  in addition to  signing                                                            
Representative Kott detailed the bill as follows.                                                                               
     Section  1 - requires  that a school  district must confirm  by                                                            
     resolution  and  adopt a  policy, indicating  that  there is  a                                                            
     shortage of teachers in that district.                                                                                     
     Sections  2  &  4 -  relates  to  the  incentives  for  retired                                                            
     teachers  to return to full-time  teaching for a TRS  employer.                                                            
     Provides  that a retired teacher  who returns to work  collects                                                            
     their earned  retirement income in addition to  the salary paid                                                            
     for  the teaching  position.  New  retirement  benefits do  not                                                            
     accrue for these employees.                                                                                                
Representative  Kott qualified that  teachers who retired  under the                                                            
Retirement Incentive  Plan (RIP) are not eligible  for re-hire under                                                            
the provisions of this legislation.                                                                                             
     Sections  3, 5, 12 & 16 - repeals  the "TRS Return Initiative"                                                             
     provided in this legislation effective in the year 2005.                                                                   
     Section  6  -  addresses  the  TRS  Tier  II  medical  benefits                                                            
     enhancement.   Teachers,  who  continue   to  work  in  TRS  an                                                            
     additional five years  beyond the normal retirement eligibility                                                            
     of 20 years,  qualify for full-system paid medical  coverage at                                                            
     age 60.                                                                                                                    
Representative Kott noted  this enhancement is an attempt to attract                                                            
new  teachers and  to retain  existing  teachers  who are  currently                                                            
members of  TRS in the  Tier II retirement  program. He stated  that                                                            
currently  these  employees  are not  eligible  to  receive  system-                                                            
provided  medical coverage  until the age of  60, at which  time the                                                            
retirement system  pays half and the retiree is responsible  for the                                                            
remaining half  of expenses. This, he pointed out,  is regardless of                                                            
the number of years the employee worked in TRS.                                                                                 
Representative  Kott  surmised  these  additional   benefits  should                                                            
ensure there are quality teachers in Alaska's schools.                                                                          
     Sections  7  &  8  -  provides  the  same  incentives  to  PERS                                                            
     retirees,  although the  state is not  required to determine  a                                                            
     Section  10 - gives incentives  for public employees  to remain                                                            
     in TRS or PERS for 30 years.                                                                                               
Representative  Kott pointed out that, as with TRS  members, Tier II                                                            
PERS employees are current  not eligible for system-provided medical                                                            
coverage until the age  of 60 at which time half of the premiums are                                                            
paid  by  the  retirement  system.  Under  the  provisions  of  this                                                            
Section, he  informed, full benefits  are paid for PERS members  who                                                            
worked at least 30 years.                                                                                                       
Representative   Kott  asserted,  "there  is  very  little   impact,                                                            
financially  on  the  state."  He  referenced  the  fiscal  note  to                                                            
     Section  11  - simplifies  the  geographical  pay differential                                                             
Representative  Kott  stated this  provision would  allow  employees                                                            
working in  remote locations to know  the exact amount of  increased                                                            
retirement benefits.                                                                                                            
Representative   Kott  indicated   the  changes  in  the   committee                                                            
substitute  primarily pertain  to the  TRS benefits.  He stated  the                                                            
committee   substitute  also  changes   the  repeal  date   of  this                                                            
legislation from  five, to four years. He explained  this change was                                                            
made  based  upon  projections  showing  the  effectiveness  of  the                                                            
program in five years.                                                                                                          
Co-Chair Donley offered  a motion to move SCS CS HB 242, 22-LS0885\L                                                            
from  Committee with  $91,000  fiscal note  from  the Department  of                                                            
Administration, Division of Retirement and Benefits.                                                                            
There was no objection and the bill MOVED from Committee.                                                                       

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