Legislature(1999 - 2000)
02/15/2000 01:45 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 15, 2000
1:45 P.M.
TAPE HFC 00 - 33, Side 1.
TAPE HFC 00 - 33, Side 2.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:45 P.M.
PRESENT
Co-Chair Therriault Representative Foster
Co-Chair Mulder Representative Phillips
Representative Austerman Representative G. Davis
Representative J. Davies
Representative Williams participated via teleconference.
Vice Chair Bunde, Representative Moses, and Representative
Grussendorf were not present for the meeting.
ALSO PRESENT
Representative Pete Kott; Patti Swenson, Staff,
Representative Con Bunde; Guy Bell, Director, Division of
Retirement and Benefits, Department of Administration; Dave
Stout, Retirement and Benefits Specialist, Department of
Administration; Karen Childers, Communications Supervisor,
Juneau Police Department, Juneau; Del Smith, Deputy
Commissioner, Department of Public Safety; John Cyr, Alaska
President, National Education Association (NEA), Juneau;
SUMMARY
HB 230 An Act granting certain dispatchers in police or
fire departments or for the state troopers status
as peace officers under the public employees'
retirement system; and providing for an effective
date.
CS HB 230 (FIN) was reported out of Committee with
a "do pass" recommendation and with an
indeterminent fiscal note by the Department of
Administration dated 2/4/00.
HB 236 An Act relating to credited service in the
teachers' retirement system for part- time
employment.
HB 236 was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note
by the Department of Administration dated 2/9/00.
HOUSE BILL NO. 236
An Act relating to credited service in the teachers'
retirement system for part- time employment.
PATTI SWENSON, STAFF, REPRESENTATIVE CON BUNDE, explained
that the purpose of HB 236 was to correct an inequity in the
Teachers Retirement System (TERS). Under the current
system, teachers working more than 50% of the time, but less
than full time, receive only one-half service credit for
time worked. In other words, teachers in this group
contribute more retirement dollars, but do not get a
retirement benefit consistent with their contribution.
Ms. Swenson stated that HB 236 would correct the inequity in
the teacher retirement system by giving teachers, who work
more than 50% of the time, but less than full time,
retirement service based on time worked.
Representative G. Davis inquired if the entire fund would
increase the calculated contribution rate by approximately
.06% and if all members of the group would pay that. Ms.
Swenson replied that teachers are currently paying that
rate. She requested that Guy Bell answer the question in
more depth.
GUY BELL, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION, explained that there is a
calculated cost of .06% of covered payroll. He noted that
since the employee calculation rate is fixed, 8.65% would go
to the employers. The employees are effectively paying in
based on the time that they put in. The legislation would
create a small additional liability to employers, because it
is an adjustment to the benefit. However, this will not
have an affect on the 12% contribution rate. The .06% rate
will be absorbed by the system's current rate of 12% for
employers.
Representative Phillips commented that several years ago,
the Legislature passed a similar bill for the non-certified
employees. She asked if the nurses would be classified the
same as the teachers. Mr. Bell advised that school nurses
are generally classified as teachers.
Representative Phillips asked if it was the intent of
Representative Bunde that nurses be covered under this
legislation. Ms. Swenson replied that it was. Mr. Bell
pointed out that decision would be each district's
discretion.
Co-Chair Mulder pointed out that Section #2, the retroactive
portion, was "troubling". That section would allow
employees that have worked in excess of ½ time in the past,
to come back and make application to the portion of the time
that they worked. Mr. Bell explained that had been included
in the calculation as well as the future costs to the State.
Co-Chair Mulder suggested that would be an administrative
nightmare. Mr. Bell requested the retirement specialist from
his Division testify regarding that concern.
DAVID STOUT, RETIREMENT AND BENEFITS SPECIALIST, DIVISION OF
RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION, noted
that his job required administering the functions as
prescribed in HB 230. He commented that with the
computerization of the system, it would not be difficult to
accomplish a change in the service from 50% to a prorated
base.
Representative J. Davies noted that this would not be
totally retroactive, but rather, would address those coming
up for retirement. Representative J. Davies added that this
calculation would have to be determined regardless.
Co-Chair Mulder asked the number of people eligible in this
category. Mr. Stout replied that there is a small amount of
teachers that teacher part time. He guessed that only 15% -
20% of all active teachers has some part-time service in
their careers. Co-Chair Mulder interjected that was a
significant number.
Co-Chair Therriault inquired if the total cost would be
absorbed. Mr. Bell replied that he had been advised that
the costs could be absorbed.
Co-Chair Mulder voiced concern with adding something to the
benefit. He commented that there has been a determination
made without the proper calculation used. He foresaw a
large fiscal note "down the road".
Representative G. Davis noted that the bill only related to
the TERS budget. He pointed out that the State budget would
not be directly affected, however, costs would be "passed
through" to the school districts. The problem down the line
exists with the employee and the employer. Representative
G. Davis noted that his concern was having an unfunded
mandate.
Co-Chair Therriault interjected that staff just informed him
that 20% far surpassed the "real" number.
JOHN CYR, ALASKA PRESIDENT, NATIONAL EDUCATION ASSOCIATION
(NEA), JUNEAU, responded that last year, it was determined
that there are about 250 people statewide that would be
affected through the proposed legislation. The problem
exists because those people are already paying into the
system. He noted that if a person works ¾ time, they are
paying into the system for the ¾ time rate, however, when
they retire, they only receive ½ time rate payment. He
emphasized that the system is currently making money from
those employees. When those employees leave the system, the
money is not retroactive.
Representative Foster understood that a net zero would
benefit the system and would relate to those employees
working 25% and getting 25% rather than 50%. He thought this
would be a "wash". Co-Chair Therriault explained that the
employee would be required to work a minimum of a certain
percentage before they would be eligible. Mr. Bell replied
that you would have to work a minimum of half time (50%) to
be a member of the system. Mr. Cyr added that each local
district decides who is part of either the TERS or PERS
system.
Representative G. Davis asked what state employees would be
affected by the legislation. Mr. Bell stated that there are
only 230 employees within that system. He did not know how
many of those were part-time.
Representative Foster asked where most of the part-time
teachers were located in the State. Mr. Cyr replied that
the majority of these teachers are located in Anchorage. He
acknowledged that there are very few part-time teachers in
the Bush area.
Co-Chair Mulder noted that he had a conflict of interest as
one of his past employees was on the list. [Copy on File].
Co-Chair Therriault objected to Co-Chair Mulder abstaining
from voting.
Representative J. Davies declared a conflict because his
wife could have been a part-time schoolteacher. Co-Chair
Therriault objected to Representative J. Davies abstaining
from voting.
Representative Foster MOVED to report HB 236 out of
Committee with individual recommendation and with the
attached fiscal note. There being NO OBJECTION, it was so
ordered.
HB 236 was reported out of Committee with a "do pass"
recommendation and with a zero fiscal note by the Department
of Administration dated 2/9/00.
HOUSE BILL NO. 230
An Act granting certain dispatchers in police or fire
departments or for the state troopers status as peace
officers under the public employees' retirement system;
and providing for an effective date.
Representative J. Davies MOVED that work draft #1-LS0958\H,
Cramer, 2/15/00, be the version before the Committee. There
being NO OBJECTION, the work draft was adopted.
REPRESENTATIVE PETE KOTT stated that HB 230 will require all
dispatchers under the Public Employees Retirement System
(PERS), who elect to change from a thirty year retirement to
a twenty year retirement, to pay the employees and the
employers contribution of the costs of that twenty year
retirement conversion.
Representative Kott noted that approximately 263 PERS
employees would be affected by the legislation and of that
number, approximately 65 are state employees. The cost to
each employee for the employee contribution would be
approximately $450 dollars per year of service under the
PERS system.
Representative Kott advised that would be a total cost of
approximately $900 dollars per year for years of service
under the PERS system for each employee that elects to
change his or her retirement terms. Under the proposed
legislation, there would be no cost to the employer and the
employee would pay all costs when they voluntarily elect to
make the change in their retirement system.
Representative Kott noted that dispatchers are in training
for a year, which, he pointed out was a major financial
commitment. He believed that training would help to prevent
burnout and retain personnel. There is zero cost associated
with the legislation and participants would be able opt for
a longer period than the 20 years.
Co-Chair Therriault pointed out that the original fiscal
note accompanying the bill had been indeterminate. He
explained that in the original legislation, there was an
unknown cost, whereas, the language contained in the
committee substitute changed that status.
Representative G. Davis asked if a person had worked for ten
years and then decided to work for a total of twenty years,
would they then be able to begin payments at that time.
Representative Kott explained that the bill does not provide
for that option. He pointed out that in the previous
version of the bill, the employee would be required to buy
it up front. He added, in the proposed legislation, there
exists an unknown quantity, which would be fairly close to
how much that person would be responsible to pay for the 20-
year period. He suggested that the employee could set aside
money on a monthly basis in order to make a bulk payment.
Co-Chair Therriault did not believe that it would be good to
place an employee into a situation where they would be
responsible for making an additional contribution. He
suggested that the best way to address this would be for the
employee to have the option to either increase their
deferred compensation to set money aside or establish an
annuity to make contributions. The Division of Retirement
and Benefits could help those employees determine a
realistic number to target at the end of the 20 years.
KAREN CHILDERS, COMMUNICATION SUPERVISOR, JUNEAU POLICE
DEPARTMENT, JUNEAU, stated that public safety dispatching is
like no other job. The nature of the job requires
technical, communication, multitasking and interpersonal
skills. What separates the job from others is that a
dispatcher must have the ability to disengage their emotions
in order to do what needs to be done. She advised that
dispatchers deal with the worst of life's realities. They
talk with people that are angry, scared, intoxicated,
suicidal, mentally ill, victims of domestic violence and
child abuse. She stated that true dispatchers are capable
of doing the job because it satisfies something inside them.
They do it for reasons that are difficult to understand.
Ms. Childers concluded that with HB 230, the State of Alaska
would have the opportunity to do the just and equal thing.
Not to discount dispatchers as clerical help, but instead to
recognize dispatchers as in integral member of the public
safety and law enforcement team. She urged passage of the
legislation, noting that Alaska now has the opportunity to
show their support for these front-line workers.
DELL SMITH, DEPUTY COMMISSIONER, DEPARTMENT OF PUBLIC
SAFETY, commented that he has supervised dispatchers for the
past 30 years. He emphasized that it is a very stressful
job. The opportunity to get out of a stressful job and
maintain a good attitude is extremely important. The
proposed legislation provides an opportunity to retain and
keep good dispatchers who can see "a light at the end of the
tunnel". Mr. Smith reiterated how important it is to
maintain and keep good dispatchers.
Mr. Smith pointed out that the Alaska Association Chief's of
Police strongly supports this legislation.
GUY BELL, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION, in response to Representative
Foster, explained that the retirement determination was
based on your three to five high year average salary,
multiplied by the number of years worked. He explained that
the multiplier for the first ten years is 2% per year. As
the bill is written, the PERS other benefit applies, which
only would go to the Peace Officers service, not the Peace
Officer benefit. After 20 years, a persons retirement
benefit would be 42.5%, 20% for the first ten years and
22.5% for the second ten years equaling the final average
salary and including the actuarial adjustment for the cost
of the benefit.
Mr. Bell continued that another portion of the question was
"Is one worth more than the other". The answer is yes, one
does cost more than the other. The additional 10 years of
benefits has a net present cost of a lot more than waiting
until 30 years. He did not know if it would be a livable
income.
Co-Chair Therriault noted that there were age restrictions
on the 30 year retirement plan, whereas, on the 20 year plan
there were none. Mr. Bell noted that the Tier I normal
retirement age is 55 years old, whether or not, there is a
20 or 30 year retirement. Many Peace Officers get to retire
before that age. Another consideration is the medical
benefit liability which applies to the Tier I employees that
were hired before July 1, 1986.
Co-Chair Mulder asked if people could receive retirement
with pay before 55 years old. Mr. Bell replied that they
could if. He stated that if you were a Peace Officer and
had 20 years of service, you could take a normal retirement
benefit. If you are a PERS "other" you would work 30 years
before you could take a normal retirement benefit. Co-Chair
Mulder clarified that a regular state employee would have to
wait until the age 55 or work for 30 years.
Representative Austerman advised that there is more than the
dollar amount being considered. He spoke to the amount of
stress related to this work.
Mr. Bell noted that the Department had not yet had an
opportunity to prepare a fiscal note to accompany the
current work draft version before the Committee. He stated
that the Department will show a zero fiscal note with this
legislation at this time.
Representative G. Davis noted that HB 159 had been included
with member's packets for review. He commented that it is
similar to HB 230 and that there would be no costs incurred
to the State or the municipalities.
(TAPE CHANGE, HFC 00 - 33, Side 2).
Representative G. Davis stated that the mechanism contained
in HB 159 speaks to the same stress level featured in HB
230. He invited Committee members to consider HB 159 as an
amendment to roll into HB 236.
Co-Chair Therriault noted that he had intended that HB 159
be heard at the Committee meeting but because of scheduling
complications, it had not been listed. He pointed out that
HB 159 has a $375 thousand dollar fiscal note. He noted
that he was not aware of the employee turnover and "burnout"
as exists in HB 230.
Representative G. Davis noted that he had not had time to
work on the concept of an amendment for HB 159.
Representative Austerman spoke in support of HB 236
acknowledging the stress associated with that work.
Representative G. Davis asked that the Committee consider
holding the bill until an amendment could be formalized.
Chair Therriault inquired regarding the fiscal for HB 159.
Mr. Bell stated that if HB 159 was included in HB 230, it
would have a similar non-fiscal impact. Effectively, the
burden would be carried totally by the employees. Co-Chair
Therriault stated that he had not heard that there was a
problem with the rate of turnover as associated with HB 230.
He noted that he supported HB 230 because of the problem
with retention of those employees.
Representative Austerman spoke against holding HB 159 for
further consolidation of the two bills. Co-Chair Therriault
agreed. He added that the Committee would need to hold HB
230 while waiting for the revised fiscal note, however that
should not take too long. He suggested that HB 159 could be
added as a possible floor amendment if Representative Kott
would support that consideration.
Representative Foster MOVED to report CS HB 230 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative J. Davies pointed
out that at this time, there is no fiscal note. Co-Chair
Therriault commented that the bill could be moved, expecting
the zero fiscal note to come forthright to Committee.
Representative Williams interjected that he believed that HB
159 would fit into HB 230. Co-Chair Therriault noted that
he would schedule the HB 159 for the House Finance Committee
calendar next week. Representative Williams reiterated that
HB 159 could be amended to fit into HB 230.
Co-Chair Mulder suggested that incorporating HB 159 into HB
230 would slow the passage of HB 230.
Representative J. Davies OBJECTED to moving HB 230 from
Committee and then waiting for the fiscal note. He advised
that he objected to that procedural process. He recommended
moving the bill when the fiscal note arrives.
Co-Chair Mulder agreed that in most situations the bill and
fiscal note should be moved together whenever there is a
substantive change, however, he noted that there have been
no important changes to this bill. The Department has
informed the Committee that the fiscal note will be net
zero.
Representative J. Davies WITHDREW his OBJECTION.
There being NO further OBJECTION, it was so ordered and the
bill passed from Committee.
CS HB 236 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note by the
Department of Administration.
ADJOURNMENT
The meeting adjourned at 2:40 P.M.
| Document Name | Date/Time | Subjects |
|---|