Legislature(2009 - 2010)BELTZ 211

02/12/2009 01:30 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 1 ALASKA MINIMUM WAGE TELECONFERENCED
Heard & Held
*+ SB 23 REPEAL DEFINED CONTRIB RETIREMENT PLANS TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
         SB  23-REPEAL DEFINED CONTRIB RETIREMENT PLANS                                                                     
                                                                                                                                
2:16:56 PM                                                                                                                    
CHAIR  PASKVAN called  the  meeting  back to  order  at 2:16  and                                                               
announced SB 23 to be up for consideration.                                                                                     
                                                                                                                                
SENATOR ELTON,  sponsor of  SB 23, said  this measure  is exactly                                                               
the same as  it was introduced last year. He  explained that four                                                               
years  ago  a  previous  legislature   passed  and  the  previous                                                               
governor signed  SB 141 that  created a new  defined contribution                                                               
(DC)  retirement  system for  teachers  in  the TRS  program  and                                                               
employees in  the state  and municipal  program (PERS)  into law.                                                               
The plan shifted  risk from the state to new  and future teachers                                                               
and public employees.  One of the major impetuses for  it was the                                                               
existing unfunded liability in both plans of about 70 percent.                                                                  
                                                                                                                                
2:19:44 PM                                                                                                                    
He used  the analogy of  a family's unfunded liability  being how                                                               
much  they  have  in  their  savings  if  the  bank  pulls  their                                                               
mortgage.  Actuaries use  the  unfunded liability  as  a tool  to                                                               
control liability,  but it is very  rare that any plan  is funded                                                               
100 percent.  It is also  important to note, Senator  Elton said,                                                               
that the unfunded liability problem is not fixed.                                                                               
                                                                                                                                
2:21:23 PM                                                                                                                    
SENATOR ELTON said  it took a special session to  get the DC plan                                                               
through  and the  argument used  was true  on its  face, but  not                                                               
quite so true in its application.  Advocates of a DC plan said it                                                               
would save the state money  when compared to the defined benefits                                                               
plans (DB) with an emphasis on  the plural. He didn't disagree in                                                               
comparing the new DC plan to  the defined benefit (DB) plans. But                                                               
it  obscured  a central  fact  that  was  very important  to  the                                                               
debate. The  debate should have been  whether or not the  DC plan                                                               
saves the  state and school  districts money if compared  to Tier                                                               
III in the PERS  plan and Tier II in the TRS  plan. The answer to                                                               
that question is no; it was probably a wash.                                                                                    
                                                                                                                                
It's important  to note, he  said, Tier I  - a "Cadillac  plan" -                                                               
has been  closed for 20 years.  New employees don't go  into Tier                                                               
I; they would  go into Tier III. The employer  cost for those new                                                               
employees  is essentially  the same  whether it's  DC or  the old                                                               
Tier III; same for the TRS plan.                                                                                                
                                                                                                                                
2:23:42 PM                                                                                                                    
SENATOR  ELTON said  it's  important to  note  that the  unfunded                                                               
liability for  a Tier I  PERS person is 13  times that of  a Tier                                                               
III PERS person  and there are almost exactly the  same number of                                                               
employees or  retirees in  the Tier  I plan as  there are  in the                                                               
Tier III  plan. This  is what  created the  vast majority  of the                                                               
unfunded liability.                                                                                                             
                                                                                                                                
2:24:54 PM                                                                                                                    
It's also  important to note, he  said, that the 2005  debate was                                                               
on employer costs  - how much it would cost  a school district or                                                               
a  municipality or  the state  government to  contribute to  a DC                                                               
plan as compared  to contributing to the old Tier  III or Tier II                                                               
plans. "And  it's almost a  wash; it was  almost a wash  then and                                                               
it's almost a wash now."                                                                                                        
                                                                                                                                
SENATOR ELTON said  the state has just received  new numbers from                                                               
Buck Consultants,  actuaries, that demonstrate that  the employer                                                               
contribution  for the  PERS DC  plan is  slightly lower  than the                                                               
employer contribution for  the old Tier III plan; for  the TRS DC                                                               
plan  the  employer  contribution  is slightly  higher  than  the                                                               
contribution that was  made to the old TRS Tier  II plan. He said                                                               
that graphs and  charts in the coming days  would illustrate that                                                               
they are talking about slight  differences in cost - one slightly                                                               
up and  the other  slightly down.  But he  also hoped  they would                                                               
read  some  of the  verbiage  that  accompanies the  charts.  For                                                               
instance a  quote from the actuary  says, "For both PERS  and TRS                                                               
the normal cost rate of the DB  plan is less than the DC employer                                                               
contribution rate."                                                                                                             
                                                                                                                                
They  don't have  to rely  on just  what the  actuaries say,  but                                                               
there is experience  elsewhere. A couple of states had  gone to a                                                               
DC plan  well before Alaska  did. Nebraska had  a DC plan  for 20                                                               
years  and they  went  back to  a  DB plan  because  it was  less                                                               
expensive.  West Virginia  had a  DC plan  for teachers  and they                                                               
went back to a DB plan because it was cheaper.                                                                                  
                                                                                                                                
SENATOR  ELTON  said  he  thought  it was  easier  to  have  cost                                                               
discussions today because  they are now dealing  with more facts,                                                               
and the  facts along with experiences  elsewhere demonstrate that                                                               
going back  to a DB  plan is not going  to be expensive  and they                                                               
already  know  it  doesn't  do anything  to  lower  the  unfunded                                                               
liability that the plans have.                                                                                                  
                                                                                                                                
A couple of minutes ago he said  that savings to the state of the                                                               
new DC  plan was essentially  a wash.  His analysis when  he said                                                               
that was  narrow because it  spoke to the  employer contributions                                                               
to  the  new  and  old  retirement  plans  only.  But  there  are                                                               
significant sometimes  quantifiable losses the state  incurs with                                                               
a DC plan and he wanted to speak  to two of them because they are                                                               
easily understood  and pertinent  to the  discussion: recruitment                                                               
and retention.                                                                                                                  
                                                                                                                                
He said that  smart, talented, new employees tend  to think ahead                                                               
when they  make a decision  about where  they are going  to work,                                                               
and what they  are going to do,  and who they are going  to do it                                                               
for. They  can make a  choice - they can  work for the  feds, for                                                               
another  state,  or  for  municipalities  outside  the  state  of                                                               
Alaska. And  if they  make that  choice, one  of the  things they                                                               
will consider is if they should  work in Alaska where there is no                                                               
DB plan  or for a  public employer  that has two  defined benefit                                                               
plans. The  first DB plan  would be the  one that is  provided by                                                               
the  other public  employers; the  second  DB plan  would be  the                                                               
social  security plan.  "We're not  competitive any  more. Alaska                                                               
has  neither of  those safety  net  defined benefit  plans. So  I                                                               
think that  does get  in the  way when a  new person  is deciding                                                               
where they are going to go to work."                                                                                            
                                                                                                                                
2:30:39 PM                                                                                                                    
He stated that the  nub of this is retention - how  to keep a new                                                               
state or  school employee on the  farm once they are  hired - and                                                               
the  new DC  plan has  created an  incentive for  them to  leave.                                                               
Because they can  stay for five years; maybe they  get to age 28;                                                               
they're  married; they  want a  family and  they are  starting to                                                               
wonder how  they can afford a  house - in Juneau,  for instance -                                                               
but after five years he said:                                                                                                   
                                                                                                                                
     We have  made that decision  for them to  leave easier,                                                                    
     because  they can  take  the money  they  put into  the                                                                    
     defined contribution plan; they  can take the money the                                                                    
     employer put  into the defined contribution  plan; they                                                                    
     can  go someplace  else outside  the boundaries  of the                                                                    
     State of  Alaska; they  have a nice  nest egg  of money                                                                    
     they can use  as a down payment on a  home and they can                                                                    
     find  an  employer  that  will   give  them  a  defined                                                                    
     benefit,  give  them  two  defined  benefits  -  social                                                                    
     security and  what every  other public  employer around                                                                    
     the nation does.                                                                                                           
                                                                                                                                
2:32:36 PM                                                                                                                    
SENATOR  ELTON  said he  would  anticipate  a question  based  on                                                               
arguments they no longer need to  anticipate - it goes like this.                                                               
PERS/TRS changes  are complex  and they deserve  all the  time we                                                               
need to study and review, talk  to professionals - it takes a lot                                                               
of  time.  "Let's not  rush."  Sometimes  this argument  is  made                                                               
because it's  easier to  kill a  bill than to  pass a  bill; it's                                                               
even  easier  to  kill a  bill  in  90  days  than in  121  days.                                                               
Sometimes the argument  is used honestly and  sometimes it's used                                                               
by opponents, but it is flawed  here on several levels. The first                                                               
is this  bill doesn't  create anything new;  there is  nothing in                                                               
this bill  that isn't  already in law.  This bill  doesn't change                                                               
Tier III;  it just says  new employees are  going to Tier  III if                                                               
they are a PERS employee or Tier  II if they have a TRS employer.                                                               
"Nothing new," he said, "I mean  the state is managing a Tier III                                                               
and a  Tier II  plan for  PERS employees  and TRS  employees." So                                                               
that  is  one of  the  things  that  would mitigate  against  the                                                               
argument of waiting.                                                                                                            
                                                                                                                                
2:34:34 PM                                                                                                                    
The second  argument he  said is  this year  they can  talk about                                                               
facts and  figures. When  the DC  plan was  passed in  2005, they                                                               
were debating concepts.  Now managers can actually  say it's hard                                                               
to hire  because Alaska  is not competitive  - because  we're not                                                               
competitive on a  benefits package - and  we're unfortunately not                                                               
competitive on wages in many cases,  as well. So, they don't need                                                               
to wait  because they have facts  and figures that can  lead them                                                               
to a good conclusion and support this bill.                                                                                     
                                                                                                                                
Another argument  that mitigates against the  waiting approach is                                                               
that it's  not like  they are  starting the  debate on  this bill                                                               
right now.  This debate  has happened outside  the walls  of this                                                               
building for three years. It's  happened in constituent meetings;                                                               
it's  happened  during campaigns.  It  also  occurred inside  the                                                               
building  -  this  bill  moved  through  two  committees  in  the                                                               
previous legislature.                                                                                                           
                                                                                                                                
2:36:31 PM                                                                                                                    
Finally,  Senator  Elton  said,  the fourth  reason  against  the                                                               
waiting argument  "gets my goat."  The take our time  approach to                                                               
getting back to a plan the state  already has is that in 2005 the                                                               
legislature  adopted  a  DC contribution  plan,  and  the  Senate                                                               
discussion  and  debate on  that  brand  new plan,  which  wasn't                                                               
prepared  by an  actuary or  professionals -  it was  prepared by                                                               
politicians - took 28 days!                                                                                                     
                                                                                                                                
     I just  leave you  with this final  thought. If  we can                                                                    
     adopt a  radical brand spanking  new pension  plan that                                                                    
     nobody else  had - no  other public jurisdiction  had -                                                                    
     if  we can  do that  in 28  days, and  I don't  want to                                                                    
     sound sarcastic here, but it  may come across that way,                                                                    
     it would  seem to me that  they can make a  decision to                                                                    
     utilize a  pension plan that  is already on  the books,                                                                    
     that we've  had 20 years  of experience with.  We ought                                                                    
     to be  able to make  that decision in two  weeks. Let's                                                                    
     not fall into  the trap that this  is complicated stuff                                                                    
     -  we're creating  something  new.  We're not  creating                                                                    
     anything new. We're  just going back to a  plan that we                                                                    
     had for  20 years, a  plan that doesn't  cost employers                                                                    
     more,  a   plan  that  doesn't  inflate   the  unfunded                                                                    
     liability, but also  a plan that provides  a secure and                                                                    
     safe  retirement. It  provides  a  benefit package  for                                                                    
     retirees that  won't die  before they  do. And  I would                                                                    
     suggest that  that's very,  very important  because the                                                                    
     retirement economy  in the  State of  Alaska is  a $1.5                                                                    
     billion economy.  Those are dollars  that are  spent in                                                                    
     restaurants and  drug stores,  hospitals, car  lots, to                                                                    
     landlords, and  we don't want  to stick with a  plan in                                                                    
     which a  brand new retiree  says, 'Okay, this is  a lot                                                                    
     more  iffy  than a  defined  benefit  package. Maybe  I                                                                    
     should live  someplace where the  cost of  living isn't                                                                    
     higher by  a factor  of 1.36 than  it is  in Anchorage,                                                                    
     Juneau,  Fairbanks,   Kenai,  MatSu   and  considerably                                                                    
     higher than that in bush communities.'                                                                                     
                                                                                                                                
SENATOR  ELTON said  that he  and his  staff, Jesse  Kiehl, would                                                               
answer questions.                                                                                                               
                                                                                                                                
2:40:35 PM                                                                                                                    
MICHAEL  LAMB,  representing  himself,  said he  is  CFO  of  the                                                               
Fairbanks North  Star Borough.  He stated that  he spent  a great                                                               
deal of time researching the two  systems and the issues that got                                                               
us into the unfunded state we  are in now. He stated that neither                                                               
the mayor nor the assembly have  had discussions on the DB versus                                                               
the DC plan;  these are his own comments. He  also stated that he                                                               
has not  talked with Senator Elton,  but he concurred with  a lot                                                               
of what he  said. He fully acknowledged that  there are differing                                                               
valid views on this issue.                                                                                                      
                                                                                                                                
He  concurred  with  the   recruitment  and  retaining  employees                                                               
comments in the sponsor statement for  SB 23 and believed that it                                                               
will  become  a  bigger  issue   in  the  future  as  the  boomer                                                               
demographics changes continue to occur.                                                                                         
                                                                                                                                
MR. LAMB said  that most new public employees are  put at greater                                                               
risk   as  relates   to  their   retirement  capabilities   using                                                               
individual savings  plans because  these accounts earn  much less                                                               
than professionally managed pension funds.                                                                                      
                                                                                                                                
Third, he agreed that oversight  of the state's pension funds has                                                               
been  beefed up  substantially  with two  actuaries  and all  the                                                               
other systemic improvements.                                                                                                    
                                                                                                                                
2:44:24 PM                                                                                                                    
MR. LAMB said  he wanted to make four points.  The first point is                                                               
that he would continue both  plans. The development of both plans                                                               
has been  paid for, and they  are both being maintained.  In most                                                               
instances  the  DB plan  should  be  used,  but sometimes  it  is                                                               
beneficial  to  both   the  employee  and  the   employer  for  a                                                               
particular employer  to enter into  a DC plan. For  example, many                                                               
short  term employees  intend  to  be short  term  and those  are                                                               
better in  a DC plan. When  Melanie Milhorn was the  director and                                                               
Charlie Morrison was  the CFO for the Division  of Retirement and                                                               
Benefits, they  did analysis  that showed  within 15-17  years an                                                               
individual was  better off  in a  DC plan  if they  got out  of a                                                               
plan.  Employees who  actually retire  from the  DB plan  and who                                                               
could go back  and provide service to employers  once they retire                                                               
should only be allowed to come back and be part of a DC plan.                                                                   
                                                                                                                                
His second point is that the  cost to the employer for both plans                                                               
is about  the same -  the DB might  be cheaper depending  on what                                                               
year you  are talking about. The  FY10 normal cost rate  is to be                                                               
9.46 percent for  PERS as compared a DC rate  of slightly over 10                                                               
percent. Further,  in the DB  plan, if an employee  leaves before                                                               
they are  vested, the  employer's contribution  into the  plan on                                                               
behalf  of that  employee  over their  employment period  remains                                                               
with the plan.                                                                                                                  
                                                                                                                                
Thirdly, he said,  PERS created a short term  problem, a mid-term                                                               
and then  a long-term issue.  The short term problem,  which they                                                               
are all  dealing with  right now,  really impacts  budgets across                                                               
the state because of increased  costs that resulted from the very                                                               
large past  service cost rate -  that part of the  component that                                                               
paid for and is paying  for the unfunded obligation. The mid-term                                                               
issue  is focused  around the  entities' ability  to actually  be                                                               
competitive in  the market  place and their  ability to  hire and                                                               
retain employees to  provide the programs and  services that they                                                               
are charged  with delivering. Mr.  Lamb said he believed  we have                                                               
been,  and  are  now  feeling  the effects  of,  the  hiring  and                                                               
retaining  issue.  "I  believe  that  without  reinstating  a  DB                                                               
option, I am quite fearful that  our abilities to hire and retain                                                               
will only get progressively worse."                                                                                             
                                                                                                                                
In the long  term, decades, he really feared that  not going back                                                               
to  a  DB will  surely  create  a  situation where  another  huge                                                               
component of our  population will not be  prepared for retirement                                                               
and  will, in  the  end,  actually cost  the  government more  to                                                               
provide assistance to  them than if the government  had managed a                                                               
DB plan on their behalf in the first place.                                                                                     
                                                                                                                                
He  said  the  underpinnings  of  his  thoughts  about  this  are                                                               
analogous  to the  discussions that  occurred several  years when                                                               
some  wanted a  portion  of employees'  pay to  not  go into  the                                                               
social security system,  which is, in fact, a DB  plan, but to be                                                               
individually managed. He stated:                                                                                                
                                                                                                                                
     But  recent times  should  have  made abundantly  clear                                                                    
     that   there  are   very  few   individuals  that   are                                                                    
     knowledgeable  enough, that  are informed  enough, that                                                                    
     are  disciplined enough  that  are long-term  horizoned                                                                    
     enough to  set up and manage  a multi-decade retirement                                                                    
     plan  with proper  allocation of  their assets.  Should                                                                    
     they  have  been  disciplined enough  to  set  aside  a                                                                    
     proper amount  on a  continuous basis  throughout their                                                                    
     lifetime, I'm  fearful that even with  a well-set-up DC                                                                    
     plan,   most  individuals   are,  in   fact,  emotional                                                                    
     investors,  the  result  being  that  they'll  be  ill-                                                                    
     prepared  financially for  retirement. A  DB plan  is a                                                                    
     great  equalizer for  hard  working  persons who  don't                                                                    
     have  the time,  the  knowledge or  the inclination  to                                                                    
     diligently manage their retirement funds over decades.                                                                     
                                                                                                                                
2:50:26 PM                                                                                                                    
The fourth point he thought  weighed on legislators' with regards                                                               
to their  decision about the  DB versus the  DC and that  is that                                                               
the existing unfunded  liability issue is really  not relevant in                                                               
this decision. He reasoned:                                                                                                     
                                                                                                                                
     For this  position and statement  to not be true  - for                                                                    
     what  I said  to not  be true  - one  would have  to be                                                                    
     willing  to argue  that future  normal  cost rates  are                                                                    
     going  to be  set  lower  than they  should  be by  the                                                                    
     actuary.                                                                                                                   
                                                                                                                                
     The  rate an  individual employer  pays as  we know  is                                                                    
     comprised of  two components, the normal  cost rate and                                                                    
     the past service  cost rate. When the  normal cost rate                                                                    
     is set  properly, there is  no need for  a supplemental                                                                    
     past service cost  rate. If normal cost  rates had been                                                                    
     set properly  in prior  years, there  would be  no past                                                                    
     service  cost  component  or  it  would  an  immaterial                                                                    
     amount and  there would be  no discussion  with regards                                                                    
     to PERS and TRS.                                                                                                           
                                                                                                                                
     Essentially, the normal cost rate  is set, and it's set                                                                    
     properly, and  we pay that amount  throughout the year;                                                                    
     it  doesn't matter  whether we  end/stop service  as an                                                                    
     entity  and  all  those  employees  are  gone,  whether                                                                    
     somebody  retires or  not. But  if that  amount is  set                                                                    
     properly,  then the  amount of  funding that  should be                                                                    
     available  in  those  future  decades  to  provide  the                                                                    
     payments should be there.                                                                                                  
                                                                                                                                
     The unfunded  liability that drives this  discussion so                                                                    
     often  - that  in fact  drove to  a DC  plan -  which I                                                                    
     think was  - the analysis  of what  caused it I  do not                                                                    
     believe is  correct - because  the research I  did came                                                                    
     to the same  conclusion as Senator Elton  stated also -                                                                    
     that  if you  go back  and you  look at  the amount  of                                                                    
     unfunded obligations,  they reside - the  vast majority                                                                    
     of them come from Tier  1 retirements, which also ended                                                                    
     20 years ago.                                                                                                              
                                                                                                                                
     The unfunded  liability which a  lot of  people thought                                                                    
     about  and I'm  sure are  going to  be concerned  about                                                                    
     right now  was not  driven by investment  problems. And                                                                    
     many  people  believe  that. The  Callan  &  Associates                                                                    
     conveyed on  10/20/06 to  the ARM  Board that  PERS and                                                                    
     TRS have  achieve annualized full  returns of  8.89 and                                                                    
     8.96 percent respectively. The  expected rate of return                                                                    
     on  investments to  pay those  future benefits  is 8.25                                                                    
     percent.  And   in  the  two   years  after   Callan  &                                                                    
     Associates  had  done  their  analysis,  the  rates  of                                                                    
     return were,  as I  recalled, something  like 17  or 19                                                                    
     percent. The Department of  Revenue does an outstanding                                                                    
     job,   professionally   managing  the   state's   funds                                                                    
     including the retirement funds. There  is and I have it                                                                    
     here and  I could go through  it if you wanted  to, but                                                                    
     there is  substantial testimony that  has been  made to                                                                    
     the  legislature on  the fact  that the  unfunded costs                                                                    
     were really driven  by actuarial - let me  use the work                                                                    
     'miscalculations.' There  is a report that  was done by                                                                    
     the Alaska Division of Legislative  Audit in January 06                                                                    
     that stated the same thing.  If you look at the lawsuit                                                                    
     that  was filed  by the  ARM Board  against Mercer,  it                                                                    
     states clearly  that they made  - Mercer -  here's what                                                                    
     it   -  never   left,   made   fundamental  errors   in                                                                    
     methodology and  even in basic calculations  and failed                                                                    
     to find competent experienced personnel.                                                                                   
                                                                                                                                
     The  whole history  of the  unfunded obligation,  which                                                                    
     I'm  fearful  will  become  the   lynch  pin  of  where                                                                    
     decisions  get made  of moving  on and  not moving  on,                                                                    
     really  would never  have occurred  and  really has  no                                                                    
     impact on the  future as long as the  normal cost rates                                                                    
     are correct.  And as we  talked about  - I said  in the                                                                    
     very  beginning  -  and  as is  noted  in  the  sponsor                                                                    
     statement - that Alaska has  beefed up its oversight of                                                                    
     the  pension  system.  I  have   a  lot  of  difficulty                                                                    
     imagining  in  the  near  term,   the  next  decade  or                                                                    
     whatever, that we  are going take our eyes  off of what                                                                    
     the  actuary produces.  And if  that's  the case,  then                                                                    
     we're right back  to - does the DB plan  cost more than                                                                    
     a DC  plan, which gets  to the  basic question of  - is                                                                    
     the normal cost  rate higher than the DC  cost. And the                                                                    
     projection  for next  year for  PERS, 9.46  percent, is                                                                    
     lower.                                                                                                                     
                                                                                                                                
     So,  in short,  let  me just  restate  that unless  you                                                                    
     believe the  future normal cost  rates are going  to be                                                                    
     set as  irresponsibly as those brought  forth by Mercer                                                                    
     in  the late  90s, the  existing unfunded  liability is                                                                    
     not relevant to a DB versus a DC discussion.                                                                               
                                                                                                                                
     2:55:34 PM                                                                                                               
     Again, I still  believe that quite frankly  - I've been                                                                    
     a CFO  for almost  20 years  - that  we have  two tools                                                                    
     that  have been  set up.  They're established,  they're                                                                    
     maintained  and  in  my  world,   we  would  have  both                                                                    
     available with  a majority of employees  going into the                                                                    
     DB plan.                                                                                                                   
                                                                                                                                
2:56:36 PM                                                                                                                    
CHAIR PASKVAN  asked if  he would be  available on  Thursday next                                                               
week to discuss this bill.                                                                                                      
                                                                                                                                
2:56:58 PM                                                                                                                    
DANIEL  GARCIA,  Police   Officer,  Anchorage  Police  Department                                                               
(APD),  supported SB  23. He  supported Senator  Elton's comments                                                               
and said  his concerns are  all the same  as his. He  related his                                                               
personal story that he came to Alaska  in 2005 as a law clerk for                                                               
a superior  court judge  in Anchorage. He  was a  temporary full-                                                               
time employee  so he wasn't in  PERS at that point  - although he                                                               
was paying  into SBS. When  he concluded his clerkship  in August                                                               
2006, he went  to the District Attorney's Office where  he was an                                                               
assistant district attorney. So he was  Tier IV by 1.5 months. He                                                               
went to  the APD in  November 2007 which is  where he is  now. He                                                               
said   the    Anchorage   Policy   Employees    Association   has                                                               
approximately 100  Tier IV members.  His academy  class graduated                                                               
25; 23  of those  were Tier IV.  He'll vest in  2.5 years  and at                                                               
that point he will have 3.5  years of police experience. He could                                                               
take that  experience with the  law degree, licensed  in Colorado                                                               
and Alaska, as Senator Elton said,  to the feds - to anywhere. He                                                               
loves Alaska;  he is starting a  family here; he doesn't  want to                                                               
leave, but he may be forced to.                                                                                                 
                                                                                                                                
SENATOR  BUNDE  said  he understands  that  police  officers  are                                                               
actually coming  to Alaska  because of  the economic  downturn in                                                               
the  Lower 48  and  that  the APD  has  plenty  of applicants  of                                                               
experienced police officers.                                                                                                    
                                                                                                                                
MR. GARCIA  said he  had a  meeting in  Anchorage a  little while                                                               
back  where  a  sergeant  who   is  the  director  of  recruiting                                                               
testified  that recruiting  for  APD has  "gotten  more and  more                                                               
difficult as Tier IV  has come into effect."  There  are a lot of                                                               
applicants, but qualified applicants is a different story.                                                                      
                                                                                                                                
SENATOR BUNDE asked  if the news account was  inaccurate that the                                                               
APD  is hiring  experienced  police officers  from  the Lower  48                                                               
because they are looking for jobs.                                                                                              
                                                                                                                                
MR. GARCIA answered yes.                                                                                                        
                                                                                                                                
3:00:48 PM                                                                                                                    
BRETT  GILLAN, West  High School  teacher,  Anchorage, said  that                                                               
teacher recruitment especially in the  fields of math and science                                                               
is incredibly  difficult. He guaranteed  that within 10  years if                                                               
he doesn't  have defined benefits,  even though he  loves Alaska,                                                               
he will  take the  money he  has invested  and go  somewhere that                                                               
will give  him a safe retirement.  He sees more and  more of what                                                               
he thinks  of as mercenary teachers  who come up for  five years;                                                               
then leave  to spend  their money somewhere  else where  they can                                                               
have the surety  of a defined benefit retirement.  "And then they                                                               
can use your  money to see if  they can make some on  top." It is                                                               
bad for  the state's finances  and it is  an awful trend  for the                                                               
state's schools where, "You lose your leadership."                                                                              
                                                                                                                                
3:03:01 PM                                                                                                                    
CHAIR  PASKVAN thanked  all the  people who  testified today  and                                                               
held  SB 23  for further  hearings and  adjourned the  meeting at                                                               
3:03.                                                                                                                           

Document Name Date/Time Subjects
SB01 - Alaska Minimum Wage - Bill Packet.pdf SL&C 2/5/2009 1:30:00 PM
SL&C 2/12/2009 1:30:00 PM
SL&C 2/17/2009 1:30:00 PM
SL&C 2/24/2009 1:30:00 PM
SB 1
SB23 - Restore Defined Benefit - Bill Packet.pdf SL&C 2/12/2009 1:30:00 PM
SL&C 2/19/2009 1:30:00 PM
SL&C 2/26/2009 1:30:00 PM
SB 23