Legislature(2001 - 2002)
05/04/2001 07:17 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Committee. 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 bonuses. 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 shortage. 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 demonstrate. Section 11 - simplifies the geographical pay differential method 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.