Legislature(2005 - 2006)SENATE FINANCE 532
05/20/2005 04:30 PM House 2D FREE CONFERENCE COMMITTEE ON SB 141
| Audio | Topic |
|---|---|
| Start | |
| SB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| = | SB 141 | ||
ALASKA STATE LEGISLATURE
2D FREE CONFERENCE COMMITTEE ON SB 141
May 20, 2005
4:39 p.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator Ben Stevens
Senator Gretchen Guess
Representative Jay Ramras, Chair
Representative Jim Elkins
Representative Ethan Berkowitz
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 141(FIN)
"An Act relating to the teachers' and public employees'
retirement systems and creating defined contribution and health
reimbursement plans for members of the teachers' retirement
system and the public employees' retirement system who are first
hired after July 1, 2005; relating to university retirement
programs; establishing the Alaska Retirement Management Board to
replace the Alaska State Pension Investment Board, the Alaska
Teachers' Retirement Board, and the Public Employees' Retirement
Board; adding appeals of the decisions of the administrator of
the teachers' and public employees' retirement systems to the
jurisdiction of the office of administrative hearings; providing
for nonvested members of the teachers' retirement system defined
benefit plans to transfer into the teachers' retirement system
defined contribution plan and for nonvested members of the
public employees' retirement system defined benefit plans to
transfer into the public employees' retirement system defined
contribution plan; providing for political subdivisions and
public organizations to request to participate in the public
employees' defined contribution retirement plan; and providing
for an effective date."
HOUSE CS FOR CS FOR SENATE BILL NO. 141(FIN) am H
"An Act relating to the teachers' and public employees'
retirement systems and creating defined contribution and health
reimbursement plans for members of the teachers' retirement
system and the public employees' retirement system who are first
hired after July 1, 2005; relating to university retirement
programs; establishing the Alaska Retirement Management Board to
replace the Alaska State Pension Investment Board, the Alaska
Teachers' Retirement Board, and the Public Employees' Retirement
Board; adding appeals of the decisions of the administrator of
the teachers' and public employees' retirement systems to the
jurisdiction of the office of administrative hearings; providing
for nonvested members of the teachers' retirement system defined
benefit plans to transfer into the teachers' retirement system
defined contribution plan and for nonvested members of the
public employees' retirement system defined benefit plans to
transfer into the public employees' retirement system defined
contribution plan; providing for political subdivisions and
public organizations to request to participate in the public
employees' defined contribution retirement plan; and providing
for an effective date."
MOVED FCCS SB 141(2D FCC) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 141
SHORT TITLE: PUBLIC EMPLOYEE/TEACHER RETIREMENT/BOARDS
SPONSOR(s): FINANCE
03/14/05 (S) READ THE FIRST TIME - REFERRALS
03/14/05 (S) FIN
03/16/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/16/05 (S) Heard & Held
03/16/05 (S) MINUTE(FIN)
03/17/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/17/05 (S) Heard & Held
03/17/05 (S) MINUTE(FIN)
03/21/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/21/05 (S) Heard & Held
03/21/05 (S) MINUTE(FIN)
03/22/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/22/05 (S) Heard & Held
03/22/05 (S) MINUTE(FIN)
03/23/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/23/05 (S) Heard & Held
03/23/05 (S) MINUTE(FIN)
03/29/05 (S) FIN AT 4:30 PM SENATE FINANCE 532
03/29/05 (S) Heard & Held
03/29/05 (S) MINUTE(FIN)
03/30/05 (H) FIN AT 9:00 AM HOUSE FINANCE 519
03/30/05 (S) Heard & Held
03/30/05 (S) MINUTE(FIN)
03/31/05 (H) FIN AT 9:00 AM HOUSE FINANCE 519
03/31/05 (S) Heard & Held
03/31/05 (S) MINUTE(FIN)
04/01/05 (H) FIN AT 9:00 AM HOUSE FINANCE 519
04/01/05 (S) Heard & Held
04/01/05 (S) MINUTE(FIN)
04/02/05 (S) FIN AT 10:00 AM SENATE FINANCE 532
04/02/05 (S) Heard & Held
04/02/05 (S) MINUTE(FIN)
04/03/05 (S) FIN AT 10:00 AM SENATE FINANCE 532
04/03/05 (S) Heard & Held
04/03/05 (S) MINUTE(FIN)
04/04/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/04/05 (S) Scheduled But Not Heard
04/05/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/05/05 (S) Heard & Held
04/05/05 (S) MINUTE(FIN)
04/06/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/06/05 (S) Moved CSSB 141(FIN) Out of Committee
04/06/05 (S) MINUTE(FIN)
04/08/05 (S) FIN RPT CS 5DP 1DNP 1AM NEW TITLE
04/08/05 (S) DP: GREEN, WILKEN, BUNDE, DYSON,
STEDMAN
04/08/05 (S) DNP: HOFFMAN
04/08/05 (S) AM: OLSON
04/12/05 (S) ENGROSSED
04/14/05 (S) TRANSMITTED TO (H)
04/14/05 (S) VERSION: CSSB 141(FIN)
04/14/05 (H) READ THE FIRST TIME - REFERRALS
04/14/05 (H) STA, FIN
04/14/05 (H) STA AT 8:00 AM CAPITOL 106
04/14/05 (H) <Pending Referral>
04/16/05 (H) STA AT 9:30 AM CAPITOL 106
04/16/05 (H) <Bill Hearing Canceled>
04/19/05 (H) STA AT 8:00 AM CAPITOL 106
04/19/05 (H) Heard & Held
04/19/05 (H) MINUTE(STA)
04/20/05 (H) STA AT 8:00 AM CAPITOL 106
04/20/05 (H) Moved HCS CSSB 141(STA) Out of
Committee
04/20/05 (H) MINUTE(STA)
04/21/05 (H) STA AT 8:00 AM CAPITOL 106
04/21/05 (H) <Bill Hearing Canceled>
04/22/05 (H) STA RPT HCS(STA) 1DP 5NR
04/22/05 (H) DP: SEATON;
04/22/05 (H) NR: LYNN, GATTO, GRUENBERG, ELKINS,
RAMRAS
04/23/05 (H) FIN AT 10:00 AM HOUSE FINANCE 519
04/23/05 (H) Heard & Held
04/23/05 (H) MINUTE(FIN)
04/28/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/28/05 (H) Heard & Held
04/28/05 (H) MINUTE(FIN)
04/30/05 (H) FIN AT 2:00 PM HOUSE FINANCE 519
04/30/05 (H) Heard & Held
04/30/05 (H) MINUTE(FIN)
05/01/05 (H) FIN AT 1:00 PM HOUSE FINANCE 519
05/01/05 (H) Moved HCS CSSB 141(FIN) Out of
Committee
05/01/05 (H) MINUTE(FIN)
05/02/05 (H) FIN RPT HCS(FIN) 2DP 5NR 2AM
(FORTHCOMING HCS)
05/02/05 (H) DP: KELLY, FOSTER;
05/02/05 (H) NR: JOULE, STOLTZE, MOSES, MEYER,
CHENAULT;
05/02/05 (H) AM: HAWKER, WEYHRAUCH
05/02/05 (H) OBJECTION TO REFERRAL TO RULES
05/02/05 (H) OBJECTION TO REFERRAL TO RULES
WITHDRAWN
05/02/05 (H) RETURNED TO FIN COMMITTEE
05/02/05 (H) FIN RPT HCS(FIN) 3DP 4NR 1AM
(FORTHCOMING HCS)
05/02/05 (H) DP: FOSTER, KELLY, CHENAULT;
05/02/05 (H) NR: HOLM, STOLTZE, MOSES, MEYER;
05/02/05 (H) AM: HAWKER
05/02/05 (H) OBJECTION TO FISCAL ANALYSIS WITH
FINANCE RPT
05/02/05 (H) REPLACE FISCAL ANALYSIS FAILED Y15 N25
05/02/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
05/02/05 (H) Moved HCS CSSB 141(FIN) Out of
Committee
05/02/05 (H) MINUTE(FIN)
05/03/05 (H) HCS(FIN) NT RECEIVED
05/03/05 (H) MOVED TO BOTTOM OF CALENDAR
05/03/05 (H) BEFORE THE HOUSE
05/03/05 (H) MOTION TO DIVIDE AM NO 3 NOT IN ORDER
05/03/05 (H) ADJOURNED TO 5/4
05/05/05 (H) BEFORE THE HOUSE
05/06/05 (H) ENGROSSED
05/07/05 (H) VERSION: HCS CSSB 141(FIN) AM H
05/07/05 (S) CONCURRENCE MESSAGE READ AND HELD
05/07/05 (S) CONFERENCE COMMITTEE APPOINTED
05/07/05 (S) GREEN (CHAIR), SEEKINS, OLSON
05/07/05 (H) RECEDE MESSAGE
05/07/05 (H) CONFERENCE COMMITTEE APPOINTED
05/07/05 (H) SEATON, WEYHRAUCH, CRAWFORD
05/08/05 (S) LIMITED POWERS FREE CONFERENCE GRANTED
05/08/05 (H) LIMITED POWERS FREE CONFERENCE GRANTED
05/09/05 (S) CONFERENCE COMMITTEE DISCHARGED
05/09/05 (S) FREE CONFERENCE COMMITTEE APPOINTED
05/09/05 (S) STEDMAN (CHAIR), WILKEN, ELTON
05/09/05 (H) SPECIAL SESSION BILL - SEE H. JOURNAL
PAGE 1854
05/09/05 (H) CONFERENCE COMMITTEE DISCHARGED
05/09/05 (H) FREE CONFERENCE COMMITTEE APPOINTED
05/09/05 (H) KELLY, HAWKER, KERTTULA
05/09/05 (S) SPECIAL SESSION BILL - SEE S. JOURNAL
PAGE 1493
05/10/05 (H) 141 AT 2:30 PM SENATE FINANCE 532
05/10/05 (H) PUBLIC EMPLOYEE/TEACHER
RETIREMENT/BOARDS
05/11/05 (H) 141 AT 10:00 AM SENATE FINANCE 532
05/11/05 (H) -- Meeting Canceled --
05/11/05 (S) 141 AT 6:00 PM SENATE FINANCE 532
05/11/05 (S) -- Meeting Postponed to 5/12/05 --
05/12/05 (H) 141 AT 8:00 AM SENATE FINANCE 532
05/12/05 (H) -- Postponed to 5/13/05 at 9:00 am --
05/12/05 (S) 141 AT 6:00 PM SENATE FINANCE 532
05/12/05 (S) -- Meeting Delayed to 05/13/05 --
05/13/05 (S) FCC REPORT: FCCS SB 141 (FCCS
FORTHCOMING)
05/13/05 (H) FCC REPORT READ
05/13/05 (H) 141 AT 9:15 AM SENATE FINANCE 532
05/13/05 (S) 141 AT 5:15 PM SENATE FINANCE 532
05/13/05 (S) Moved FCCS SB 141 Out of Committee
05/13/05 (S) MINUTE(141)
05/14/05 (S) FREE CONFERENCE COMMITTEE REPORT TAKEN
UP
05/14/05 (S) FCCS RPT ADPTD Y12 N5 E3 FCCS SB
141(CORRECTED)
05/14/05 (S) FCCS SB 141(CORRECTED) RECEIVED NEW
TITLE (TECHNICAL)
05/17/05 (H) FCCS SB 141(CORRECTED) RECEIVED
05/17/05 (H) CC REPORT FAILED Y18 N22
05/19/05 (S) 2ND FREE CONFERENCE COMMITTEE APPTD
05/19/05 (S) G. STEVENS (CHAIR), B. STEVENS, GUESS
05/20/05 (H) 141 AT 4:30 PM SENATE FINANCE 532
WITNESS REGISTER
TRACI CARPENTER
Staff to Lyda Green
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 141.
MELANIE MILLHORN, Director
Division of Retirement and Benefits
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Commented on SB 141.
ACTION NARRATIVE
SB 141-PUBLIC EMPLOYEE/TEACHER RETIREMENT/BOARDS
D
CHAIR GARY STEVENS called the 2 Free Conference Committee
Meeting on SB 141 to order at 4:39:00 PM. All members were
present. He stated the committee would be working off of the
FCCS SB 141(Corrected), version N.
REPRESENTATIVE RAMRAS moved Amendment 1, 24-LS0637\N.2.
24-LS0637\N.2
Craver
7/1/05
A M E N D M E N T 1
OFFERED IN CONFERENCE
TO: FCCS SB 141
Page 16, line 18:
Delete "five"
Insert "seven"
Page 29, following line 5:
Insert new material to read:
"Sec. 14.25.485. Occupational disability benefits and
reemployment of disabled members. (a) A member is eligible
for an occupational disability benefit if employment is
terminated because of a total and apparently permanent
occupational disability before the member's normal
retirement date.
(b)The occupational disability benefits accrue
beginning the first day of the month following termination
of employment as a result of the disability and are payable
the last day of the month. If a final determination
granting the benefit is not made in time to pay the benefit
when due, a retroactive payment shall be made to cover the
period of deferment. The last payment shall be for the
first month in which the disabled member
(1) dies;
(2) recovers from the disability;
(3) fails to meet the requirements under (f) or
(h) of this section; or
(4) reaches normal retirement age.
(c)If the disabled member becomes ineligible to
receive occupational disability benefits before the normal
retirement date, the disabled member shall then be entitled
to receive retirement benefits if the member would have
been eligible for the benefit had employment continued
during the period of disability. The period of disability
constitutes membership service in regard to determining
eligibility for retirement.
(d)The monthly amount of an occupational disability
benefit is 40 percent of the disabled member's gross
monthly compensation at the time of termination due to
disability. While a member is receiving disability
benefits, based on the disabled member's gross monthly
compensation at the time of termination due to disability,
the employer shall make contributions to the
(1)member's individual account under AS 14.25.340
on behalf of the member, without deduction from the
member's disability payments; and
(2)appropriate accounts and funds on behalf of
the member under AS 14.25.350.
(e) A member is not entitled to an occupational
disability benefit unless the member files an application
for an occupational disability benefit with the
administrator within 90 days after the date of terminating
employment. If the member is unable to meet a filing
requirement of this subsection, the filing requirement may
be waived by the administrator if there are extraordinary
circumstances that resulted in the member's inability to
meet the filing requirement.
(f) A disabled member receiving an occupational
disability benefit shall undergo a medical examination as
often as the administrator considers advisable, but not
more frequently than once each year. The administrator
shall determine the place of the examination and engage the
physician or physicians. If, in the judgment of the
administrator, the examination indicates that the disabled
member is no longer incapacitated because of a total and
apparently permanent occupational disability, the
administrator may not issue further disability benefits to
the member.
(g) A disabled member's occupational disability
benefit terminates when the disabled member first attains
eligibility for normal retirement. At that time, the
member's retirement benefit shall be determined under the
provisions of AS 14.25.420 -14.25.440, 14.25.470, and
14.25.480. A member receiving disability benefits up until
eligibility for retirement shall be considered to have
retired directly from the plan.
(h) A member appointed to disability benefits shall
apply to the division of vocational rehabilitation of the
Department of Labor and Workforce Development within 30
days after the date disability benefits commence. The
member shall be enrolled in a rehabilitation program if the
member meets the eligibility requirements of the division
of vocational rehabilitation. Unless the member
demonstrates cause, benefits shall terminate at the end of
the first month in which a disabled member
(1) fails to report to the division of vocational
rehabilitation;
(2) is certified by the division of vocational
rehabilitation as failing to cooperate in a vocational
rehabilitation program;
(3) fails to interview for a job; or
(4) fails to accept a position offered.
(i) Upon the death of a disabled member who is
receiving or is entitled to receive an occupational
disability benefit, the administrator shall pay the
surviving spouse a surviving spouse's pension, equal to 40
percent of the member's monthly compensation at the
termination of employment because of occupational
disability. If there is no surviving spouse, the
administrator shall pay the survivor's pension in equal
parts to the dependent children of the member. The first
payment of the surviving spouse's pension or of a dependent
child's pension shall accrue from the first day of the
month following the member's death and is payable the last
day of the month. The last payment shall be made for the
last month in which there is an eligible surviving spouse
or child. On the date the normal retirement of the member
would have occurred if the member had lived, the retirement
benefit shall be determined under the provisions of
AS 14.25.420 - 14.25.440, 14.25.470, and 14.25.480. A
member who died while receiving disability benefits shall
be considered to have retired directly from the plan on the
date the normal retirement of the member would have
occurred if the member had lived.
(j) In this section, "occupational disability" has the
meaning given in AS 39.35.680.
Sec. 14.25.487. Occupational death benefit. (a) If
(1) the death of a member occurs before the member's
retirement and before the member's normal retirement date,
(2) the proximate cause of death is a bodily injury
sustained or a hazard undergone while in the performance
and within the scope of the member's duties, and (3) the
injury or hazard is not the proximate result of wilful
negligence of the member, a monthly survivor's pension
shall be paid to the surviving spouse. If there is no
surviving spouse or if the spouse later dies, the monthly
survivor's pension shall be paid in equal parts to the
dependent children of the member.
(b) The first payment of the surviving spouse's
pension or of a dependent child's pension shall be made for
the month following the month in which the member dies, and
payment shall cease to be made beginning with the month in
which the member would have first qualified for retirement.
(c) The monthly survivor's pension in (b) of this
section for survivors of members is 40 percent of the
member's monthly compensation in the month in which the
member dies. While the monthly survivor's pension is being
paid, the employer shall make contributions on behalf of
the member's beneficiaries based on the deceased member's
gross monthly compensation at the time of occupational
death
(1) to the member's individual account under
AS 14.25.340, without deduction from the survivor's
pension; and
(2) to the appropriate accounts and funds on
behalf of the member under AS 14.25.350.
(d) If a member's death is caused by an act of
assault, assassination, or terrorism directly related to
the person's status as a member, whether the act occurs on
or off the member's job site, the death shall be considered
to have occurred in the performance of and within the scope
of the member's duties for purposes of (a)(2) of this
section. If the expressed or apparent motive and intent of
the perpetrator of the harm inflicted upon the member was
due to the performance of the member's job duties or
employment, the death shall be considered to be directly
related to the member's status as a member. A member's job
duties are those performed within the course and scope of
the person's employment with an employer.
(e) On the date the normal retirement of the member
would have occurred if the member had lived, the retirement
benefit shall be determined under the provisions of
AS 14.25.420 - 14.25.440, 14.25.470, and 14.25.480. A
member who died and whose survivors receive occupational
death benefits under this section shall be considered to
have retired directly from the plan on the date the normal
retirement of the member would have occurred if the member
had lived."
SENATOR GUESS objected for discussion purposes.
4:41:06 PM
TRACI CARPENTER, staff to Lyda Green, said Amendment 1 cleans up
Public Employee Retirement System (PERS) disability statutes.
Drafting inadvertently created a scenario where a disabled
person, once he reached normal retirement age, would be able to
receive a retirement from both the defined benefits (DB) system
and the defined contribution (DC) system.
MS. CARPENTER explained that Amendment 1 applies to the
Teachers' Retirement System (TRS) statutes and increases the
employer contribution from 5 percent to 7 percent. It also adds
the death and disability benefits that are similar to the PERS
statutes. References to firefighters and police officers have
been removed.
4:42:59 PM
REPRESENTATIVE BERKOWITZ moved to divide the question and asked
if there is a fiscal assessment of what the increase in
employment contribution would mean to the employers.
MS. CARPENTER replied that right now, under SB 141, the total
normal cost rate is approximately 10.25 percent. This would add
2 percent on to that for TRS employees.
REPRESENTATIVE BERKOWITZ asked what that would mean to the
Anchorage School district or to the State of Alaska.
MS. CARPENTER responded that every 1 percent increase to the
employer rate base for the entire population of PERS and TRS
employers is approximately $22 million. The payroll for the
school districts is $522 million.
REPRESENTATIVE BERKOWITZ asked if this would be a $10 million
increase to the school districts.
MS. CARPENTER replied that is correct.
CHAIR GARY STEVENS asked if that was statewide.
MS. CARPENTER replied yes.
4:45:04 PM
SENATOR BEN STEVENS asked if this is an employer contribution
increase, not an employee contribution increase.
MS. MILLHORN, Director, Division of Retirement and Benefits,
Department of Administration (DOA) answered yes.
SENATOR BEN STEVENS asked if this contribution only applies to
new employees on school district payrolls or existing Tier 2
employees, as well.
MS. MILLHORN replied that it applies only to new employees, not
to Tier 2 employees.
SENATOR BEN STEVENS pointed out that he didn't think applying
the employers' 2 percent to the whole payroll was accurate since
they were talking only about new employees. It might apply to
only 10 percent of new employees, which would only be $50
million and 2 percent of that is $1 million.
MS. CARPENTER replied that he was absolutely correct.
MS. MILLHORN agreed.
REPRESENTATIVE BERKOWITZ restated his motion to divide the
question on page 1, line 4, the death and disability component,
from the increase in benefits component.
SENATOR BEN STEVENS objected.
A roll call vote was taken. Representatives Berkowitz and
Senators Guess voted yea; Representatives Elkins and Ramras and
Senators Ben Stevens and Gary Stevens voted nay; and Amendment 1
to Amendment 1 failed.
4:48:35 PM
REPRESENTATIVE RAMRAS asked if it was fair to interpret this as
a 40 percent increase to the employers' defined contribution
plan over what they had been working with previously.
MS. CARPENTER replied that there are other employer costs
involved than just the contribution to the defined contribution
account - a 1.75 percent for medical, 3 percent for health
reimbursement and approximately .3 percent for death and
disability. "It would go from 10 percent roughly to 12 percent."
REPRESENTATIVE RAMRAS said his understanding is that the
employer contribution to retirement was previously at 5 percent
and that is being moved to 7 percent. He interpreted that as
being a 40 percent increase to new teachers coming into the
system.
MS. CARPENTER agreed.
REPRESENTATIVE BERKOWITZ said the rate of turnover in different
districts varies considerably. Increasing the employer
contribution from 5 percent to 7 percent would have a
disproportionate impact on districts that have higher turnover
and he was concerned that there is no fiscal assessment of what
that means to those districts or to the state.
MS. CARPENTER responded that there has not been any assessment
at either level.
REPRESENTATIVE BERKOWITZ asked how many new teachers the state
hires in a year.
MS. MILLHORN responded in 2004 57 TRS employers hired 1,200 new
TRS positions.
4:52:26 PM
SENATOR GUESS asked her to explain why the change from 5 percent
to 7 percent is needed.
MS. CARPENTER replied that the concern is that teachers do not
participate in social security and have no safety net. It is
thought that an increase to their defined contribution account
would offset that.
REPRESENTATIVE RAMRAS shared Senator Guess' concerns. He
calculated that 1,200 new teaching positions would cost
$800,000. Hundreds in the teaching community related that they
don't participate in SBS and don't have access to social
security. They felt they weren't getting a fair bite at the
apple compared to those in the private sector who are eligible
for the federal plan. This compromise was an opportunity to
offset that concern and his caucus hoped it would help attract
teachers and retain current ones.
REPRESENTATIVE ELKINS commented that teachers as a whole make
$20,000 more on an average than people in PERS. So a 2 percent
bump to teachers is a lot of money in reality. This doesn't pick
up what they would get through social security, but it gets real
close.
SENATOR GUESS asked Ms. Carpenter to explain the second part of
the amendment and asked if it is modeled after other
occupational disability benefits or statutes.
MS. CARPENTER replied that the TRS language used existing PERS
statutes on defined benefits. They are not dealing with a brand
new statute.
REPRESENTATIVE BERKOWITZ asked if anyone else in the teaching
community would testify in support of this provision or not.
CHAIR GARY STEVENS replied that no one is scheduled to speak to
the committee.
REPRESENTATIVE BERKOWITZ pointed out that the assumption is that
2 percent equates to the amount of social security and SBS
benefits that are being given up and he wanted to know if that
is true.
SENATOR BEN STEVENS explained that SBS is available to PERS
employers. Of the 160 PERS employers, 16 participate in the
program. It is a misconception that all employees in the PERS
system participate in SBS, because it is up to the employer to
provide that. School districts choose to not provide SBS for
their PERS employees.
The action here is to say because school districts
don't provide SBS, PERS is available to those
political subdivisions that choose it. We looked at a
concept to say how [indisc.] SBS for TRS, but because
the state cannot force an employer to implement the
SBS or an SBS-type system for TRS, the way to make up
for it is to increase the contribution from the
employer side. The employee side - it's still the same
at 8 percent. The employer now goes from 5 to 7
percent. So the increase to defined contribution now
is at 15. That's how this came about. To compare it to
a PERS system from the TRS system is inaccurate -
because TRS does not have SBS [indisc.]....
REPRESENTATIVE BERKOWITZ said it was presented that the
additional 2 percent would somehow equate to the fact that
there's no social security benefits and he wanted to know where
that figure came from and if it's a fair representation.
REPRESENTATIVE RAMRAS said his name is on the amendment and, "I
think it's a fair bite at the apple." He wants to see teachers
stay in Alaska, but at the same time doesn't want to unfairly
burden school districts. He said the education community savings
rate is [indisc.] and the employer rate is at 7 percent. There
is some parity to the self-employment rate in the private
sector. Someone who wants to save in addition to that would do
so with his own additional vehicles.
MS. MILLHORN added that it's important to recognize that even if
teachers did participate in social security in 1983, the federal
government enacted the Windfall Elimination Provision and the
Government Pension Offset, both of which reduce social security
benefits as a result of receiving a state pension. The
Government Pension Offset is a pure dollar for dollar
elimination. The Windfall Elimination Provision calculates
pensions individually.
A roll call vote was taken on adopting Amendment 1.
Representatives Elkins and Ramras, Senators Ben Stevens, Guess
and Gary Stevens voted yea; Representative Berkowitz voted nay;
and Amendment 1 was adopted.
CHAIR GARY STEVENS announced Amendment 2 to be up for
consideration.
24-LS0637\N.3
Craver
7/1/05
A M E N D M E N T 2
OFFERED IN CONFERENCE
TO: FCCS SB 141
Page 100, line 28:
Delete "AS 39.35.840 and 39.35.870"
Insert "AS 39.35.820 - 39.35.840, 39.35.870, and 39.35.880"
Page 101, lines 3 - 6:
Delete all material and insert
"(1) employee's retirement benefit calculated
under the provisions of AS 39.35.820 - 39.35.840; or
(2) employee's retirement benefit calculated as
if the provisions of AS 39.35.370(c) were to apply;
however, retirement benefits paid under this paragraph may
not be made from the trust fund of the public employees'
defined benefit retirement plan."
Page 102, line 1:
Delete "AS 39.35.840 and 39.35.870"
Insert "AS 39.35.820 - 39.35.840, 39.35.870, and 39.35.880"
Page 103, line 11:
Delete "AS 39.35.840 and 39.35.870"
Insert "AS 39.35.820 - 39.35.840, 39.35.870, and 39.35.880"
5:04:31 PM
SENATOR GUESS objected for an explanation.
REPRESENTATIVE RAMRAS explained that Amendment 2 is a technical
clean up of SB 73.
MS. CARPENTER added that it is basically a correction to a
drafting error. When the drafters first took the language from
the existing benefits plan and transfered it into the new plan,
it allowed police officers and firefighters to receive both
retirements. This language gives them a choice of one or the
other.
REPRESENTATIVE BERKOWITZ asked how the firefighters and
policemen feel about this amendment.
MS. CARPENTER replied that she didn't know.
CHAIR GARY STEVENS noted that this is double dipping and that
wasn't the intent of the legislation - at all.
REPRESENTATIVE RAMRAS asked if the amendment gives first
responders a choice of taking either the pension or the defined
contribution amount.
MS. CARPENTER replied yes.
A roll call vote was taken. Representatives Berkowitz, Ramras
and Elkins, Senators Ben Stevens, Guess and Gary Stevens voted
yea; and Amendment 2 was adopted.
CHAIR GARY STEVENS announced that Amendment 3 was up for
consideration and apologized that it the draft had not been
received and that it was in conceptual form. There were no
objections to taking the amendment up in conceptual form.
REPRESENTATIVE RAMRAS moved conceptual Amendment 3.
SENATOR GUESS objected for an explanation.
MS. CARPENTER explained that errors were made in adopting
different statutes and, "All this attempts to do is to clean up
the bill as much as possible."
CHAIR GARY STEVENS asked her to go through the changes step by
step with definitions first.
She explained that the definition on page 2 cleans up language
describing the two plans. Page 6, lines 16 - 21, adds "under AS
14.25.540" which drafters said would clarify under which statute
things were being selected. Changes to pages 26 - 27 just clean
up the definition of the whole concept of retiring and being
eligible to receive medical benefits under this plan. The
Division of Retirement and Benefits requested the change on page
31 to clarify that employer matches for employees who convert
from the DB plan to the DC plan are not to be made from the DB
trust so that beneficiaries of that plan aren't impacted.
5:13:30 PM
Language on page 3 was changed back to the original language
from that of the first free conference committee.
SENATOR GUESS asked how that impacts language on page 38, lines
15 - 16, referring to a full-time or part-time instructor of the
Department of Labor and Workforce Development who has one or two
teaching certificates or earlier credit.
CHAIR GARY STEVENS responded that AVTEC often has teachers who
are certificated, but some vocational teachers don't require
certifications. "I think what this is saying is that everyone
who is in AVTEC is covered by this plan whether they are
certificated or not."
5:16:12 PM
MS. CARPENTER said this is correct. She explained that drafters
requested the change on page 40, line 23, which combined three
sections into one according to drafting style.
CHAIR GARY STEVENS clarified that there were no substantive
changes made in those sections.
5:18:03 PM
MS. CARPENTER replied that is correct. She explained further
that the change on page 58 corrected another error.
REPRESENTATIVE BERKOWITZ asked if that meant they were not going
to encourage cost saving measures now.
MS. MILLHORN replied that the division is working on a number of
cost saving initiatives, which the Legislature wants to receive
annual reports on. She said the division is working on a very
long list and generic drugs is on it.
5:20:03 PM
MS. CARPENTER explained that the change on page 105, lines 5 - 7
is cleanup and similar to the one on page 3 regarding the option
to convert from a DB to a DC plan. The last line says the
matching contribution will come from funds other than the DB
trust. Also, she said:
'Present value of the' language was eliminated to make
it clear that it's actually just the balance of the
member contribution account at the time that the
person chooses to convert - is the amount that will be
transferred.
MS. CARPENTER explained that medical eligibility language on
page 96 applies the TRS language on page 2 to PERS statutes. She
said the last change adds back in an annual report to the
Legislature by the Division of Retirement and Benefits on its
costs saving measures.
MS. MILLHORN explained that the report would include any of the
initiatives that the division had engaged in and a report of
cost savings associated with the active plan and the retiree
plan. "We have initiatives for both those plans."
A roll call vote was taken. Representatives Berkowitz, Elkins
and Ramras voted yea; Senators Guess, Ben Stevens and Gary
Stevens voted yea; and Amendment 3 was adopted.
MS. CARPENTER interrupted to say that the revisor of statutes
caught another error. Because of the delayed implementation date
of July 1, 2006, there are two places in the bill - page 16,
line 27 - which establish the costs of the medical insurance
cost for the employers at 1.75 percent for FY06 and that should
actually be for FY07.
5:25:49 PM
REPRESENTATIVE RAMRAS moved Amendment 4 that changes 2006 to
2007 on page 26, line 27, and on page 86, line 27. There were no
objections and it was so ordered.
REPRESENTATIVE RAMRAS moved to approve Free Conference Committee
Substitute to SB 141 (2D FCC).
REPRESENTATIVE BERKOWITZ objected saying AS 24.08.036 requires
fiscal notes on bills. He explained that:
This is really not in a bill status that would
technically require a fiscal note, but there has been
some serious modifications to a bill that exists
without any intended analysis of the impact of the
bill - on the actuarial soundness of the retirement
system. And to me, that's somewhat of a dereliction of
our responsibility. Similarly, there has been no
fiscal assessment to either the state or to the many
employers around the state that are going to be
impacted by this legislation, should it pass. Again, I
think this is somewhat of another instance of the
legislature passing costs on to local employers
without understanding the costs and I find that to be
irresponsible.
A roll call vote was taken. Representative Berkowitz and Senator
Guess voted nay; Representatives Elkins and Ramras and Senators
Ben Stevens and Chair Gary Stevens voted yea; and FCCS CS 141
(2D FCC) moved from committee.
CHAIR GARY STEVENS adjourned the meeting at 5:28:21 PM.
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