Legislature(2021 - 2022)ADAMS 519
05/10/2022 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB204 | |
| HB220 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 204 | TELECONFERENCED | |
| + | HB 66 | TELECONFERENCED | |
| + | SB 111 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 220 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
May 10, 2022
9:03 a.m.
9:03:55 AM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 9:03 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
Representative Ben Carpenter
Representative Bryce Edgmon
Representative DeLena Johnson
ALSO PRESENT
Senator Josh Revak, Sponsor; Emma Torkelson, Staff, Senator
Josh Revak; Representative Grier Hopkins, Sponsor.
PRESENT VIA TELECONFERENCE
Eddie Grasser, Director, Division of Wildlife Conservation,
Department of Fish and Game; David Kershner, Consulting
Actuary Principal, Buck Global LLC, Florida.
SUMMARY
HB 66 ELECTIONS, VOTING, BALLOTS
HB 66 was SCHEDULED but not HEARD.
HB 220 RETIREMENT SYSTEMS; DEFINED BENEFIT OPT.
CSHB 220(FIN) was REPORTED out of committee with
four "do pass" recommendations and three "no
recommendation" recommendations and with one new
fiscal impact note by the Department of
Administration.
CSSB 204(RES)
HUNTING PERMIT/TAG AUCTIONS/RAFFLES
CSSB 204(RES) was HEARD and HELD in committee
for further consideration.
SB 211 MISSING/MURDERED INDIGENOUS WOMEN; REPORT
SB 211 was SCHEDULED but not HEARD.
Co-Chair Merrick reviewed the agenda for the meeting.
CS FOR SENATE BILL NO. 204(RES)
"An Act relating to auctions or raffles for hunting
harvest permits and big game tags; and providing for
an effective date."
9:04:19 AM
SENATOR JOSH REVAK, SPONSOR, thanked the committee for
hearing the bill. He read the sponsor statement (copy on
file):
Since its passage in the 1997, the Governor's Auction
and Raffle Tag program has successfully and
substantially increased funding for the Alaska
Department of Fish and Game (ADF&G). In 2021, gross
revenue was just over $1.2 million. SB 204 seeks to
build on this success and expand the department's
ability to bring in revenue, which will support
wildlife conservation and protection programs and
education across Alaska.
Foundationally, Senate Bill 204 adds three species to
the available harvest permit list and standardizes the
number of game harvest permits that ADF&G grants each
year to qualified organizations for fundraising
auctions or raffles. By doing so, the department will
have the flexibility to issue up to four permits for
each species, taking into account the health of the
game population and recommendations of department
biologists when determining the actual number that
will be issued each year.
The increased revenue from this moderate expansion of
available harvest permits will ensure two important
outcomes. First, it allows the department to maintain
sufficient funds to continue critical conservation and
wildlife protection measures that have been the
mainstay of wildlife management for decades. Second,
with the large increase in firearms and ammunition
sales and approximately $18 million in new Pittman-
Robertson (PR) grants coming our way, ADF&G will need
sufficient matching dollars to prevent these new PR
funds from reverting back to the federal government.
Modern, effective wildlife management is becoming more
expensive. For example, an increase of a couple of
dollars to aviation fuel has a major impact on survey
and inventory operations which, in turn, are a key
element in setting game population and harvest
objectives. Without accurate objectives, for instance,
the Board of Game cannot make well-informed decisions
on yearly hunting seasons and bag limits.
In sum, SB 204 will allow more federal revenue to be
leveraged for critical sustainable wildlife education
and management programs and the proactive work needed
to prevent new listings under the Endangered Species
Act. Senate Bill 204 directly supports sustainable
wildlife populations, outdoor traditions, hunters, and
outdoor recreation users.
Co-Chair Merrick indicated the committee had been joined by
Representative Thompson.
9:07:43 AM
Representative Josephson inquired about the impacts of the
aerial survey work the senator had mentioned. He asked
whether the aerial work would help prevent Endangered
Species Act (ESA) listings.
EMMA TORKELSON, STAFF, SENATOR JOSH REVAK, responded that
the work that the Department of Fish and Game (DFG)
supported with the funds was wide-ranging. She offered that
online testifiers could answer the question in more detail.
Representative Josephson would follow up with Mr. Eddie
Grasser on his question.
9:08:52 AM
EDDIE GRASSER, DIRECTOR, DIVISION OF WILDLIFE CONSERVATION,
DEPARTMENT OF FISH AND GAME (via teleconference), supported
SB 204 and thanked Senator Revak for introducing the bill.
He had worked on the tag program since the 1990s. In 2014,
he strengthened the statutes to make fundraising easier. He
explained that the goal of the legislation was to make DFG
a self-sufficient operation. He provided some history
around the legislation. Hunters helped push through the
Wildlife Restoration Act in Washington D.C., which elicited
the Pittman-Robertson (PR) grants. He thought that hunters
seemed more willing to support wildlife conservation than
most other groups.
Mr. Grasser relayed there was a bill currently being
discussed by the United States Congress called the
Recovering America's Wildlife Act (RAWA), and if it passed,
the department would receive an influx of money almost
equal to the money it received in PR grants. The bill would
provide money to states for the purpose of recovering
species listed as threatened or endangered. He emphasized
the importance of recovering these species in Alaska and
added that the failure to do so could negatively affect the
state's economy. However, RAWA would require funds to be
matched by the state in order to receive the funds, and it
would be very difficult for Alaska to match $32 million
under the current system. He thought SB 204 would help
bring financial stability to the state and would be a good
first step. He had been looking at other ways for the
department to be self-supporting and it was likely that he
would be back before the committee with additional
solutions in coming years.
9:17:25 AM
Senator Revak offered clarity on the suggestion that the
bill would prevent new listings under ESA. The bill was
essentially focused on effective wildlife management. If
hunters were educated and wildlife management was
effective, accidental over-hunting would be less likely.
Representative Josephson wanted to support the bill.
However, he was concerned that 70 percent of the profits
would go to the department and 30 percent would go to a
non-profit. He was worried that there would be
misconceptions about where the money was going. He asked
whether language could be added to ensure that the monies
could not be used for consumptive purposes.
9:20:07 AM
Co-Chair Merrick indicated Representative Rasmussen had
joined the meeting.
Senator Revak asked Mr. Grasser to comment on
Representative Josephson's concerns. He did not know if
specific funds could be directed to specific types of
management.
Mr. Grasser thought there was a way to direct the funds to
specific management. He thought it would fall under the
same statutes that provided for the non-diversion of funds
for the waterfowl and fur-bearing programs. He shared that
he had already compiled a team to put together another
piece of legislation in the following year that would
address some of Representative Josephson's concerns. He
reiterated that if RAWA passed, the state would need
matching funds to obtain federal dollars.
Senator Revak noted that it was his intent and the intent
of the department to use the funds for non-consumptive
purposes.
9:23:19 AM
Co-Chair Merrick OPENED public testimony.
Co-Chair Merrick CLOSED public testimony.
Co-Chair Merrick provided an amendment deadline for the
following day.
CSSB 204(RES) was HEARD and HELD in committee for further
consideration.
9:24:21 AM
AT EASE
9:25:42 AM
RECONVENED
HOUSE BILL NO. 220
"An Act relating to the Public Employees' Retirement
System of Alaska and the teachers' retirement system;
providing certain employees an opportunity to choose
between the defined benefit and defined contribution
plans of the Public Employees' Retirement System of
Alaska and the teachers' retirement system; and
providing for an effective date."
9:26:02 AM
Co-Chair Merrick reported that the bill had been returned
back to the committee from the Rules Committee to approve
of a new fiscal note.
9:26:10 AM
DAVID KERSHNER, CONSULTING ACTUARY PRINCIPAL, BUCK GLOBAL
LLC, FLORIDA (via teleconference), reviewed the new fiscal
impact note from the Department of Administration with
control code szCfR. He indicated that the original fiscal
note was dated March 24, 2022. The revised fiscal note
reflected changes made in Version B of the committee
substitute (CS). The CS changed the following: the normal
retirement eligibility requirements for employees under the
Public Employees' Retirement System (PERS) and Teachers'
Retirement System (TRS), the average compensation for
teachers changed from three years to five years, the member
contribution rate for public employees other than police
and firefighters [PERS Other] increased from six percent to
eight percent, and all employees would be required to
retire from active service in order to qualify for
retirement benefits.
9:30:25 AM
Vice-Chair Ortiz asked how requiring employees to retire
from active service to qualify for benefits would affect
potential retirees.
Mr. Kershner responded that if an employee ended their
employment before retirement and ultimately retired later
on, they would still receive retirement benefits upon
retiring under the original version of HB 220. The language
in the committee substitute [version B] reverted back to
statutory language that required an employee to retire from
active service to receive benefits. The healthcare
liabilities would increase if a higher population of people
were eligible for benefits, which is why the liabilities
decreased under version B.
Co-Chair Merrick invited the bill sponsor to the table for
questions.
9:33:50 AM
Representative Josephson asked Mr. Kershner about page 2 of
the fiscal note (copy on file) that showed a savings to
PERS and TRS of $28.5 million in FY 24. However, the
savings in FY 28 would be about a fifth of the savings in
FY 24. He wondered why the savings decreased over time.
Mr. Kershner responded that currently, the defined benefit
plans were closed to new entrants. It was assumed that
anyone hired on or after July 1 of 2006 would be entered
into the defined contribution plan. As the system currently
stood, it was projected that as the number of employees
covered by defined benefit plans decreased over time and
employees entering into defined contribution plans
increased, contributions from employers into the defined
contribution plans would increase. However, if HB 220 were
to pass, current members of the defined contribution plans
would be given a choice between remaining in a defined
contribution plan or transferring to a defined benefit
plan. All future hires would be given the choice between a
defined contribution plan and a defined benefit plan. For
the purpose of the fiscal note, Buck had assumed that all
current members of the defined contribution retirement plan
would elect to transfer to the defined benefit plan. It was
also assumed that all future hires would enter the defined
benefit plan. As a result, there would be a shift in
employer contributions between the two plan types as the
defined benefit plan membership increased over time.
9:37:22 AM
Representative Josephson suggested that the legislature's
aggressive pay down of the unfunded liability had been
helpful. He wondered if the state would have realized
additional savings if the plan had been implemented
earlier.
Mr. Kershner responded that it was hard to answer the
question definitively. The total contribution rates as
proposed in the CS were about the same as they were in the
current system. Employers would continue to contribute the
same amount, which was 22 percent of pay for PERS and 12.56
percent of pay for TRS. The difference proposed by the bill
was an increase in employer contributions into the defined
benefit plans rather than the defined contribution plans.
It was a shuffling of funds. The shift would mean that the
state would have to make up a smaller difference, which
would lead to a decrease in state contributions. When
defined benefit plans were closed to new entrants in 2006,
it reduced the risk to the state of unfunded liabilities
and therefore higher contributions. Re-opening defined
benefit plans would mean that the state would reassume some
of the previously prevented risk and would likely have to
contribute at a higher rate. It was important to note that
if asset returns were lower than Buck's projections,
contributions to the state would be higher. Conversely, if
the returns were more favorable than projected, the state
contributions would be reduced.
Vice-Chair Ortiz suggested that the passage of the
legislation would result in a savings to the state.
Mr. Kershner responded in the affirmative as long as the
state's future experiences under the plan were not lower
than projected.
9:43:32 AM
REPRESENTATIVE GRIER HOPKINS, SPONSOR, responded the
committee had been previously presented with the Monte
Carlo analysis done by actuaries from Cheiron that looked
at risk analysis. There was a strong level of confidence in
the legislation's ability to uphold the projections. There
was a variable employee contribution rate built into the
bill, which mean that there was risk sharing with the
employee. If there were adverse market returns, the
employee contribution rate could be increased to compensate
for the lower returns. A one percent increase in employee
salary contributions would result in a $200 million
additional investment into the pension fund. He referred to
the Buck actuarial analysis (copy on file) on page 3, line
7. He highlighted the state's contribution percent
decreasing over the lifetime of the legislation.
9:46:39 AM
Representative LeBon asked about the assumed rate of
return, which he thought was about 7.8 percent. He asked
what the impact on the plan would be if a return of 6.5
percent was assumed instead.
Representative Hopkins responded that the specific
hypothetical scenario was discussed by Cheiron at a
previous hearing. He thought that Cheiron had considered
6.75 percent, but he would have to look at the analysis for
the exact figures. The unfunded liability that was
currently being whittled down due to the closure of the
system in 2006 would not be the responsibility of current
employees. The state would experience reduced costs as a
result of reopening the system in order for new employees
to participate.
Representative LeBon asked if the formula for contribution
percentages was defined in the bill. He suggested that once
the formula was enacted, the minimum retirement benefit
contribution would be established. He wondered if there was
a provision to increase the benefit in any way if the fund
became more successful than projected.
Representative Hopkins replied in the negative. He
explained that the post-retirement pension adjustment was
the only thing that could be changed. Additionally, if the
pension fund was more than 90 percent funded, a 10 percent
increase would be allocated to retirees. However, there
would not be a reduction below the eight percent employee
contribution minimum. A future piece of legislation could
accomplish a reduction, but HB 220 would not.
9:51:32 AM
Co-Chair Foster MOVED to report CSHB 220(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
CSHB 220(FIN) was REPORTED out of committee with four "do
pass" recommendations and three "no recommendation"
recommendations and with one new fiscal impact note by the
Department of Administration.
Co-Chair Merrick reviewed the agenda for the following
meeting.
ADJOURNMENT
9:52:19 AM
The meeting was adjourned at 9:52 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 204 Explanation of Changes 3.29.22.pdf |
HFIN 5/10/2022 9:00:00 AM |
SB 204 |
| SB 204 Sponsor Statement Version W 3.29.22.pdf |
HFIN 5/10/2022 9:00:00 AM |
SB 204 |
| SB 204 Sectional Analysis Version W 3.29.22.pdf |
HFIN 5/10/2022 9:00:00 AM |
SB 204 |
| SB 204 Supporting Document Action-Raffle Revenue by Year 2.28.22.pdf |
HFIN 5/10/2022 9:00:00 AM |
SB 204 |
| SB 204 Testimony APHA 3.2.22.pdf |
HFIN 5/10/2022 9:00:00 AM |
SB 204 |
| SB 204 Testimony DF&G 4.28.22.pdf |
HFIN 5/10/2022 9:00:00 AM |
SB 204 |
| SB 204 Testimony RHAK 2.14.22.pdf |
HFIN 5/10/2022 9:00:00 AM |
SB 204 |
| SB 204 Testimony SCI-AK 3.1.22.pdf |
HFIN 5/10/2022 9:00:00 AM |
SB 204 |
| HB220 - AK Stress Test Memo Cheiron 051222.pdf |
HFIN 5/10/2022 9:00:00 AM |
HB 220 |