Legislature(1995 - 1996)
05/07/1996 01:05 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
MAY 7, 1996
1:05 P.M.
TAPE HFC 96 - 169, Side 1, #000 - #515.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:05 P.M.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Navarre
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Kohring
ALSO PRESENT
Alison Elgee, Deputy Commissioner, Department of
Administration; Robert Stalnaker, Director, Division of
Retirement and Benefits, Department of Administration.
SUMMARY
SB 152 An Act relating to geographic differentials for
the salaries of certain state employees who are
not members of a collective bargaining unit;
relating to periodic salary surveys and
preparation of an annual pay schedule regarding
certain state employees; relating to certain state
aid calculations based on geographic differentials
for state employee salaries; and providing for an
effective date.
HCS CS SB 152 (FIN) was reported out of Committee
with an "amended" recommendation and with fiscal
notes by the Office of the Governor dated 3/29/96
and two by the Department of Administration.
SENATE BILL 152
"An Act relating to geographic differentials for the
salaries of certain state employees who are not members
of a collective bargaining unit; relating to periodic
salary surveys and preparation of an annual pay
schedule regarding certain state employees; relating to
certain state aid calculations based on geographic
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differentials for state employee salaries; and
providing for an effective date."
ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, provided a sectional analysis of the
legislation. Section #1, the purpose statement, relates to
Section #7. This is the language establishing the
differential criteria for the cost-of-living differential
(COLD) for the marine units. Sections #2 - #6 deal with the
Court System, implementing a salary increase for judges in
the amount of 5.2%.
Ms. Elgee continued, Sections #8 - #10 keep the revenue
sharing provisions of the statute identical to the current
status, tied to the geographic differential schedule
contained in AS 39.27. Section #11 provides a technical
amendment which would allow the State to pay terminal leave
in a lump sum payment upon termination.
Section #12 would amend the exempt statute to include the
employees of the Division of Labor Relations.
Representative Martin asked the reason for including Section
appeared in a work draft proposed and adopted by the Senate
in their version of SB 152. It was not introduced by the
Governor. Representative Martin recommended that Section
Representative Martin's suggestion.
Ms. Elgee noted that Section #13 would amend the salary
schedule in statute which covers legislative and executive
branch non-covered employees, so as, to incorporate an
increase which would become effective July 1st of the next
three years. Section #14 begins the geographic differential
amendments, which are similar to legislation introduced at
the request of the Governor. Section #15 amends the
statutory language requiring development of the cost-of-
living and salary schedule survey on an annual basis, every
five years subject to appropriation.
ROBERT STALNAKER, DIRECTOR, DIVISION OF RETIREMENT AND
BENEFITS, DEPARTMENT OF ADMINISTRATION, spoke to the
retirement provisions. Section #17 addresses the
contribution rates for employers. Section #18 changes the
service requirement benefit for Peace Officers placing an
age requirement of 50 years old in order to exercise the
twenty year out option.
Representative Martin felt that employers should be
concerned with the retirement of an employee because of the
current status of our social security system. He
recommended that the contribution stay at the same level or
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more, rather than being reduced. Mr. Stalnaker remarked
that the intent of implementing Tier III would be to lower
future costs by reducing retirement and benefits. He added,
the Governor did not introduce a Tier III program, but
rather introduced a Retirement Incentive Program (RIP).
Representative Martin inquired if private and public
employers should be more alarmed regarding the employees
retirement system. Mr. Stalnaker agreed, reiterating the
weakness in the current social security system.
Mr. Stalnaker continued, Section #19 defines the early
retirement reduction. Currently, the law allows for an
actuarial reduction of which 1/2 of 1% per month is mixed
with the number. Section #20 establishes in statute what
the early retirement reductions are. This would not
detrimentally impact current employees. Section #20
addresses the benefit multiplier.
Section #21 would remove a portion of the joint survivor
options. The option would reduce a retirees benefit if
their survivor pre-deceased them, amounting to a technical
change. Section #22 prefaces Section #23 which addresses
the automatic post retirement pension adjustment. Mr.
Stalnaker explained that section would clarify that the post
retirement pension adjustment would be paid at 50% of the
increase to the cost-of-living once that retiree reaches the
age of sixty (60) years old.
He continued, Section #24 provides a conforming technical
amendment. Section #25 deals with insurance, providing
health insurance for the retiree only, while the family
would have to pay for spousal coverage independently.
Section #26 would change the definition of "average monthly
compensation" for calculating retirement and benefits from
three to five consecutive years.
Ms. Elgee stated that Section #27 was a conforming amendment
to the duties of the Department of Labor. It would include
the differential sections being moved into the revenue
sharing statutes. Section #28 includes repealers that would
remove the requirements for salary survey on behalf of the
University. Mr. Stalnaker commented that it would repeal
the level income option.
Mr. Stalnaker pointed out that Sections #29 - #43 address
the retirement incentive program, substantially the same as
provided in SB 148; the same as introduced by the Governor
in the Retirement Incentive Program. Ms. Elgee spoke to the
one exception in which the Governor introduced separate
incentive program, no longer reflective in the legislation.
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Representative Brown asked which employees would be covered.
Ms. Elgee replied that everyone would be covered except
school district employees. They are covered in HB 354,
which currently is in the Senate Rules Committee.
Representative Brown asked if that concern should be
incorporated into SB 152. Co-Chair Hanley noted that it
"could" fit into the title of the proposed legislation.
Ms. Elgee continued, Section #44 relates to increased
salaries for non-covered employees. This section clarifies
that similar adjustments would be made to exempt employees
as well as the non-exempt. Section #45 permits the
University of Alaska to be entitled to compensation
increases based on the Board of Regent's policy. Section
wage increase. That section would exclude judges salaries,
who would be covered as the "non-covered" employees.
Section #49 would be direction relative to legislative
employees, who are already covered in the statutory salary
schedule. Section #50 provides approval for the monetary
terms for all the contracts before the Legislature. She
added, Section #51 clarifies the transition language for
implementation of the geographic differential.
Ms. Elgee continued, Section #52 indicates that nothing in
the proposed act would modify or terminate the collective
bargaining agreement in effect on the day of the act.
Section #53 repeals the transition language for the
implementation of the geographical differential, July 1,
1998. Section #54 & #55 are repealers for the RIP
provisions. She concluded, Section #58 specifies the
effective date clause.
Co-Chair Hanley spoke to Amendment #1, 9-GS0049\M.4, Cramer,
5/7/96. [Copy on file]. He explained that Amendment #1
would amend Section #49 setting legislators salaries.
Representative Mulder MOVED to adopt Amendment #1. There
being NO OBJECTION, it was adopted.
Representative Mulder MOVED to delete Section #12 of the
bill. There being NO OBJECTION, it was deleted.
Representative Mulder MOVED to report HCS CS SB 152 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note. There being NO OBJECTION, it
was so ordered.
HCS CS SB 152 (FIN) was reported out of Committee with an
"amended" recommendation and fiscal notes (2) by the
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Department of Administration and (1) by the Office of the
Governor dated 3/29/96. #
ADJOURNMENT
The meeting adjourned at 1:40 P.M.
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