Legislature(2015 - 2016)SENATE FINANCE 532

03/29/2016 01:00 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 207 TEACHERS RETIRE. EMPLOYER CONTRIBUTIONS TELECONFERENCED
Heard & Held
*+ SB 208 ELIMINATE AK PERFORMANCE SCHOLARSHIP TELECONFERENCED
Heard & Held
*+ SB 209 PERS EMPLOYER CONTRIBUTIONS TELECONFERENCED
Heard & Held
*+ SB 210 COMM. REV. SHARING;PROP. TAX EXEMPTIONS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 209                                                                                                           
                                                                                                                                
     "An Act relating to increasing employer contributions                                                                      
     to the defined benefit plan in the Public Employees'                                                                       
     Retirement System of Alaska."                                                                                              
                                                                                                                                
1:48:51 PM                                                                                                                    
                                                                                                                                
LAURA CRAMER,  STAFF, SENATOR  ANNA MACKINNON, introduced  SB
209:                                                                                                                            
                                                                                                                                
     Senate   Bill  209   proposes   a  gradual,   multi-year                                                                   
     increase  in  the  employer contribution  rate  for  the                                                                   
     Public  Employees  Retirement  System  (PERS)  from  the                                                                   
     current  level of  22  percent to  24.5  percent for  FY                                                                   
     2017, 25.5  percent in FY  2018, and 26.5 percent  in FY                                                                   
     2019.                                                                                                                      
                                                                                                                                
     In  2008,  with the  passage  of  Senate Bill  125,  the                                                                   
     uniform  rate was  established at  22 percent, with  the                                                                   
     State of Alaska  paying the difference in  costs between                                                                   
     the  uniform  rate and  the  actuarial cost,  which  was                                                                   
     determined  by the  Alaska  Retirement Management  Board                                                                   
     and  the actuary  consultants  to the  State of  Alaska.                                                                   
     This  made the  PERS a cost  sharing  plan in which  all                                                                   
     employers  pay  one  uniform   rate  and  share  in  the                                                                   
     liabilities  and the  assets of the  plan. This  allowed                                                                   
     the  state  to share  in  the  payment of  the  unfunded                                                                   
     liability of the system with the employers.                                                                                
                                                                                                                                
     The establishment  of the 22 percent and  the commitment                                                                   
     of  the state  to assist  in costs over  22 percent  was                                                                   
     made  at a  time when  oil  value was  setting not  only                                                                   
    record price, but generating record state revenue.                                                                          
                                                                                                                                
     From FY2008  through FY2016, PERS appropriations  ranged                                                                   
     from  $108  million  to $312  million  annually.  During                                                                   
     those nine  years, a cumulative total of  $1.708 billion                                                                   
     was  appropriated  to the  PERS unfunded  liability.  In                                                                   
     addition to  the state assistance payments,  in FY 2015,                                                                   
     an  appropriation  was made  to  the  PERS Fund  in  the                                                                   
     amount  of  $1,000,000,000   in  order  to  improve  the                                                                   
     health   of  the   system   and   reduce  the   unfunded                                                                   
     liability.  In total,  state  unrestricted general  fund                                                                   
     assistance  has  exceeded  $2.7 billion  over  the  past                                                                   
     nine years.                                                                                                                
                                                                                                                                
     Senate   Bill  209   is  a   conservative  approach   to                                                                   
     balancing  the state's  current fiscal  reality and  its                                                                   
     commitment  to assisting  PERS employers  with the  cost                                                                   
     and the unfunded liability of the system.                                                                                  
                                                                                                                                
     This  legislation  provides a  level  of stability  that                                                                   
     will assist  the State of  Alaska and PERS  employers in                                                                   
     fulfilling  the  obligation   to  a  healthy  retirement                                                                   
     system for its members.                                                                                                    
                                                                                                                                
Co-Chair MacKinnon felt the sectional analysis was covered                                                                      
in the bill introduction.                                                                                                       
                                                                                                                                
1:49:37 PM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  recalled  that  the  initiation  of  the  22                                                                   
percent was at  a period of time when the  unfunded liability                                                                   
obligation  was approximately  $4 billion.  He remarked  that                                                                   
the stock  market fell  in 2008,  which changed  it to  a $15                                                                   
billion unfunded liability.                                                                                                     
                                                                                                                                
Co-Chair  MacKinnon   queried  the  desired   information  to                                                                   
evaluate the bill.                                                                                                              
                                                                                                                                
Vice-Chair  Micciche requested  the  history  of the  state's                                                                   
contributions   to   municipalities   He   also   wanted   to                                                                   
understand the true rate.                                                                                                       
                                                                                                                                
Co-Chair  MacKinnon explained  that the  state covered  above                                                                   
the 22 percent, so municipalities covered the 22 percent.                                                                       
                                                                                                                                
Vice-Chair  Micciche wondered  what happened  to the  defined                                                                   
contribution   plan   piece.   He   wondered   if   the   new                                                                   
contribution would be higher than 24.5 percent.                                                                                 
                                                                                                                                
Co-Chair MacKinnon  hoped to  hear from  Buck on the  actuary                                                                   
analysis.                                                                                                                       
                                                                                                                                
Ms.  Cramer  stated   that  the  system  allowed   for  every                                                                   
employee  to  be covered.  She  remarked  that there  was  no                                                                   
differentiation  between  the  two  plans.  She  stated  that                                                                   
there would be a more thorough discussion.                                                                                      
                                                                                                                                
Co-Chair  MacKinnon explained  that  if  an average  employee                                                                   
made $100,000  under tier 1 with  a cash call of  36 percent,                                                                   
the  state would  contribute $36,000.  A  new employee  under                                                                   
the defined  contribution, the state may  contribute $12,000,                                                                   
creating a disadvantage.  The system looked at  the employees                                                                   
as  a whole,  so all  employees were  treated equitably  when                                                                   
applying  for a job.  She remarked  that it  would be  unfair                                                                   
for a new employee to outpace an older employee.                                                                                
                                                                                                                                
Vice-Chair  Micciche   wanted  to   clarify  the   burden  to                                                                   
municipalities and the state.                                                                                                   
                                                                                                                                
Senator Hoffman queried  the annual costs over  the course of                                                                   
the five-year increment.                                                                                                        
                                                                                                                                
Senator Dunleavy wanted to examine the time of inception.                                                                       
                                                                                                                                
1:56:12 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  shared  that  there was  a  new  general                                                                   
accounting  rule,  so  the  municipalities  were  working  on                                                                   
keeping up with the debt.                                                                                                       
                                                                                                                                
Co-Chair Kelly felt  that there was not a  connection between                                                                   
the APS and  the bill. He felt  that the money would  be used                                                                   
as a  "shock absorber" to  the communities  in SB 207  and SB
208.                                                                                                                            
                                                                                                                                
Co-Chair  MacKinnon  stated  that  SB  207 and  SB  208  were                                                                   
linked  in an  effort to  use  a one-time  funding source  to                                                                   
TRS.                                                                                                                            
                                                                                                                                
Vice-Chair  Micciche   stressed  that   he  wanted   to  best                                                                   
research  the municipalities  who were  in the  most need  of                                                                   
relief.                                                                                                                         
                                                                                                                                
Co-Chair  MacKinnon stressed  that  SB 209  and  SB 210  were                                                                   
interrelated    in    order    to   share    the    financial                                                                   
responsibility.                                                                                                                 
                                                                                                                                
SB  209  was   HEARD  and  HELD  in  committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB 207 Sponsor Statement - LHead.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208 Sectional Analysis 032616.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Sponsor Statement 032816.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
PERS Sponsor Statement.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 209 - Sectional Analysis PERS.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 209 Public Testimony Roberts.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 210 Public Testimony - Roberts.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 210 Public Testimony - Somerville.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 208 Public Testimony Packet 1.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207 - SB 209 ASD Opposition.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 209
SB 207 Public Testimony Opposition Bronson.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 Public Testimony Opposition Homzas.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 Public Testimony Opposition Spalding.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 SB 208 Public Testimony Lelake.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 208 Public Testimony Opposition Krieter.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Opposition Bekeris.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207 Sb 208 Public Testimony Opposition Stahl.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 207 SB 208 Public Testimony Opposition Richotte.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 207 Sb 208 Public Testimony Opposition Meyn.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 208 Public Testimony Opposition Story.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207 SB 208 Public Testimony Opposition Rector.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 208 Public Testimony Opposition Stephens.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Opposition Kief.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207, 208, 209 Public Testimony Opposition Bernard.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 SB 208 Public Testimony Opposition Pausback.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 208 Public Testimony Opposition Leiter.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Opposition Dauenhauer.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Support Pulczinski.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 210 Public Testimony Opposition Sullivan.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 210 Public Testimony - Somerville.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 210 Sponsor Statement.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 210 - Sectional Analysis.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 209 AML Questionnaire.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 207 SB 209 Public Testimony Support Hodges.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 209
SB 208 Public Testimony Opposition LeNorman.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 208 Public Testimony Opposition Dean.pdf SFIN 3/29/2016 1:00:00 PM
SB 208
SB 207 Sb 208 Public Testimony Opposition Gardey.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 207 SB 208 Public Testimony Opposition Wilkas.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 207, 208, 209, 210 Public Testimony Opposition Geroge.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 210 Public Testimony Opposition Pierce.pdf SFIN 3/29/2016 1:00:00 PM
SB 210
SB 207 SB 209 Cordova School District Opposition.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 209
SB 207 SB 208 SB 209 SB 210 3 31 16 PERS TRS CAP Backup Documents.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207, SB 208, SB 209
SB 208
SB 209
SB 210
SB 207 - Actuarial Analysis.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 DOA-TRS-040316.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 207 SB 208 Public Testimony Opposition LaRue.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 208
SB 209 - Actuarial Analysis.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 207 SB 209 Cordova School District Opposition.pdf SFIN 3/29/2016 1:00:00 PM
SB 207
SB 209
SB 209 DOA-PERS 040316.pdf SFIN 3/29/2016 1:00:00 PM
SB 209
SB 209 Public Testimony Opposition Massie.pdf SFIN 3/29/2016 1:00:00 PM
SB 209