Legislature(2021 - 2022)BELTZ 105 (TSBldg)

04/16/2021 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 6 RIP FOR PUBLIC EMPLOYEES/TEACHERS TELECONFERENCED
Moved CSSB 6(L&C) Out of Committee
-- Testimony <Invitation Only> --
+= SB 123 ENERGY INDEPENDENCE PROGRAM & FUND: AIDEA TELECONFERENCED
Moved SB 123 Out of Committee
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
            SB   6-RIP FOR PUBLIC EMPLOYEES/TEACHERS                                                                        
                                                                                                                                
1:30:38 PM                                                                                                                    
                                                                                                                                
CHAIR COSTELLO announced the consideration of SENATE BILL NO. 6                                                                 
"An  Act relating  to retirement  incentives for  members of  the                                                               
defined  benefit  retirement  plan of  the  teachers'  retirement                                                               
system  and the  defined benefit  retirement plan  of the  Public                                                               
Employees'  Retirement System  of  Alaska; and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
1:31:01 PM                                                                                                                    
SENATOR  GRAY-JACKSON moved  to  adopt  the Committee  Substitute                                                               
(CS) for SB 6, work order 32-LS0028\I, as the working document.                                                                 
                                                                                                                                
CHAIR COSTELLO objected for an explanation of changes.                                                                          
                                                                                                                                
1:31:24 PM                                                                                                                    
SENATOR REVAK joined the committee.                                                                                             
                                                                                                                                
1:31:30 PM                                                                                                                    
MELODIE  WILTERDINK, Staff,  Senator Mia  Costello, Alaska  State                                                               
Legislature,   Juneau,   Alaska,    paraphrased   the   following                                                               
explanation of changes from SB 6 version A to version I.                                                                        
                                                                                                                                
     Page 1, Lines 14                                                                                                       
        The title is updated to include "reemployment of                                                                        
       persons who retire under the teachers' retirement                                                                        
     system."                                                                                                                   
                                                                                                                                
     Sec. 2  AS 14.20.136(b), Page 2, Lines 210                                                                             
     Is amended  to update  the statute under  which members                                                                    
     (individuals  who are  eligible to  participate in  the                                                                    
     retirement  plan  and  are covered  by  the  plan)  are                                                                    
     retired  from AS 14.25.110(a) to AS 14.25.110.                                                                             
                                                                                                                                
     Sec. 3  AS 14.20.136(f), Page 2, Lines 1117                                                                            
     Is   amended   by   adding    a   new   subsection   AS                                                                    
     14.20.136(f)(2) to  specify that  (c), (d),  and (e)(1)                                                                    
     of this section do not apply  to the rehire of a member                                                                    
     who is  paid by  the hour to  mentor teachers  who have                                                                    
     taught for fewer than four  years. (c), (d), and (e)(1)                                                                    
     require,  in  other   circumstances,  that  the  school                                                                    
     district  describe a  shortage before  rehiring retired                                                                    
     members,   publicly   advertise  the   position,   make                                                                    
     contracts  for no  longer than  12 months,  and provide                                                                    
     the administrator with related documentation.                                                                              
                                                                                                                                
     Sec. 4  AS 14.25.043(f), Page 2, Lines 1827                                                                            
     Is amended  to update  the statute under  which members                                                                    
     are retired from AS 14.25.110(a) to AS 14.25.110.                                                                          
                                                                                                                                
     Sec. 5   AS 14.25.043(g),  Page 2, Lines 2831,  Page 3,                                                                
     Lines 14                                                                                                               
     Is amended  to update  the statute under  which members                                                                    
     retire.                                                                                                                    
     Is  amended  to  specify that  this  subsection,  which                                                                    
     allows for  retired and  reemployed members  to receive                                                                    
     group health  plan coverage, does not  apply to retired                                                                    
     members who are rehired and  paid by the hour to mentor                                                                    
     teachers who have taught for fewer than four years.                                                                        
                                                                                                                                
     Sec. 6  AS 14.25.070(a), Page 3, Lines 513                                                                             
     Is  amended   to  clarify  that  each   employer  shall                                                                    
     contribute to  the retirement  system 12.56  percent of                                                                    
     all base  salaries paid to  active and  retired members                                                                    
     who  are   eligible  to   receive  group   health  plan                                                                    
     coverage, which  does not  include retired  members who                                                                    
     are rehired and paid by the hour to mentor teachers.                                                                       
                                                                                                                                
     [Sec. 7 - Sec. 12 have no changes.]                                                                                    
                                                                                                                                
     Sec. 13  Sec. 18, Pages 812                                                                                            
     Are amended to update referenced section numbers.                                                                          
                                                                                                                                
     Sec. 19  Page 12, Lines 1013                                                                                           
      Is amended to specify that the only sections 1 and 7                                                                      
     17 are repealed on July 1, 2024. The teacher mentoring                                                                     
     provisions remain in effect.                                                                                               
                                                                                                                                
1:35:19 PM                                                                                                                    
CHAIR  COSTELLO   removed  her  objection.  Finding   no  further                                                               
objection, version I was adopted. She  said the idea in the CS is                                                               
to  allow teachers  who opt  for  early retirement  to return  to                                                               
serve as mentors.                                                                                                               
                                                                                                                                
CHAIR COSTELLO asked the sponsor's staff to comment on the CS.                                                                  
                                                                                                                                
1:36:20 PM                                                                                                                    
JOE   HAYES,  Staff,   Senator  Scott   Kawasaki,  Alaska   State                                                               
Legislature,  Juneau, Alaska,  stated that  the sponsor  supports                                                               
the changes.                                                                                                                    
                                                                                                                                
CHAIR COSTELLO  noted that  her office  received an  email asking                                                               
why  the  retirement  program limits  participation  to  PERS/TRS                                                               
members who  are 50 years of  age and older. She  asked Mr. Hayes                                                               
to talk about the reason for the age limitation.                                                                                
                                                                                                                                
1:37:17 PM                                                                                                                    
MR. HAYES  answered that  it is because  of the  actuarial costs;                                                               
including members  younger than  age 50  would be  more expensive                                                               
for the retirement system.                                                                                                      
                                                                                                                                
CHAIR COSTELLO  said a  second email  asked about  the retirement                                                               
for employees who have accrued service  in both PERS and TRS. She                                                               
asked the  committee if they  wanted to  hear more about  how the                                                               
bill addresses those individuals.                                                                                               
                                                                                                                                
SENATOR  STEVENS said  yes  and  asked if  the  bill would  limit                                                               
employees from moving from one retirement system to the other.                                                                  
                                                                                                                                
MR. HAYES  answered no.  The question  was whether  an individual                                                               
who  had accrued  10 years  in  PERS and  10 years  in TRS  could                                                               
combine the two  and retire with 20 years'  service. He suggested                                                               
that Mr. Puckett was better suited to answer the question.                                                                      
                                                                                                                                
SENATOR STEVENS indicated he would  like to hear from Mr. Puckett                                                               
to ensure that all the t's are crossed.                                                                                         
                                                                                                                                
CHAIR  COSTELLO   clarified  that   the  question  was   that  an                                                               
individual  who had  accrued time  as  a teacher  became a  state                                                               
employee  and then  retired in  the  PERS system.  She asked  Mr.                                                               
Puckett   how   the   state  addresses   retirement   for   these                                                               
individuals.                                                                                                                    
                                                                                                                                
1:39:30 PM                                                                                                                    
JIM  PUCKETT,   Deputy  Director,  Division  of   Retirement  and                                                               
Benefits,  Department of  Administration, Juneau,  Alaska, stated                                                               
that in almost  all cases, somebody who has 10  years in PERS and                                                               
10 years in TRS could not combine  the two. They have to accrue a                                                               
retirement  from  each  system.  The exception  is  somebody  who                                                               
retires under AS  39.35.375 with a public service  benefit. It is                                                               
difficult to qualify for that  specific situation and there is an                                                               
associated expense  so it  does not happen  very often.  His team                                                               
could think of  just 15 examples of people  qualifying under that                                                               
statute.                                                                                                                        
                                                                                                                                
SENATOR  STEVENS asked  if there  might  be an  advantage to  the                                                               
employee  in retirement  to have  10  years PERS  service and  10                                                               
years  TRS  service  versus  20  years  accrued  service  in  one                                                               
retirement system or the other. "Why  would they not just take 10                                                               
years in each and retire?"                                                                                                      
                                                                                                                                
MR. PUCKETT  answered that the  IRS restricts how  Retirement and                                                               
Benefits  can  use  time  credited  in  each  of  the  retirement                                                               
systems.  With  the  exception  of  the  public  service  benefit                                                               
mentioned  earlier under  AS 39.35.375,  the retirements  must be                                                               
separate.                                                                                                                       
                                                                                                                                
1:42:39 PM                                                                                                                    
SENATOR STEVENS  asked if an  employee who retires with  10 years                                                               
in PERS and  10 years in TRS receives less  in retirement than if                                                               
they had a 20-year retirement in one system or the other.                                                                       
                                                                                                                                
MR. PUCKETT  answered that  he was not  sure how  that calculates                                                               
and whether there would be an advantage either way.                                                                             
                                                                                                                                
SENATOR STEVENS  said he  would like  an answer  because it  is a                                                               
crucial question.                                                                                                               
                                                                                                                                
MR.  PUCKETT offered  to talk  to  the processing  teams and  run                                                               
scenarios to see if there would  be a disadvantage. He noted that                                                               
the contribution rate in TRS is  higher than in PERS and that may                                                               
be an important consideration.                                                                                                  
                                                                                                                                
CHAIR COSTELLO said  she too would like to  have the information.                                                               
She  wondered why  it  should  matter if  a  person  worked as  a                                                               
teacher and  then switched careers  and entered the  PERS system.                                                               
She asked Mr. Hayes if he had anything to add.                                                                                  
                                                                                                                                
1:45:16 PM                                                                                                                    
MR. HAYES recalled  years ago that a constituent had  10 years in                                                               
each retirement system  and his office could not  find a solution                                                               
to get the  individual a retirement. His belief is  that it would                                                               
require a legislative fix.                                                                                                      
                                                                                                                                
SENATOR STEVENS asked who requested this legislation.                                                                           
                                                                                                                                
MR. HAYES replied  the requests were primarily  from teachers but                                                               
municipalities and  the university are  looking at this as  a way                                                               
of allowing  senior employees to  retire to make way  for younger                                                               
hires who cost less, thereby helping the state financially.                                                                     
                                                                                                                                
SENATOR  STEVENS said  it is  a  complex situation  and he  could                                                               
understand why a solution has not been easy to come by.                                                                         
                                                                                                                                
1:47:12 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
1:47:46 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting and solicited a motion.                                                                   
                                                                                                                                
1:47:53 PM                                                                                                                    
SENATOR GRAY-JACKSON moved to report the  CS for SB 6, work order                                                               
32-LS0028\I, from  committee with individual  recommendations and                                                               
attached fiscal note(s).                                                                                                        
                                                                                                                                
1:48:11 PM                                                                                                                    
CHAIR COSTELLO found no objection  and CSSB 6(L&C) moved from the                                                               
Senate Labor and Commerce Standing Committee.                                                                                   

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