Legislature(2019 - 2020)ADAMS ROOM 519

05/15/2019 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
-- Continued from 05/14/19 at 1:30 pm --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 43 EXTEND BIG GAME BOARD; OUTFITTER LICENSE TELECONFERENCED
Moved HCS SB 43(FIN) Out of Committee
+= SB 10 EXTEND SUICIDE PREVENTION COUNCIL TELECONFERENCED
Moved SB 10 Out of Committee
+= SB 16 ALCOHOL LIC:FAIRS,THEATRES,CONCERTS;BONDS TELECONFERENCED
Moved HCS SB 16(FIN) Out of Committee
+= HB 79 PEACE OFFICER/FIREFIGHTER RETIRE BENEFITS TELECONFERENCED
Heard & Held
                  HOUSE FINANCE COMMITTEE                                                                                       
                       May 15, 2019                                                                                             
                         8:59 a.m.                                                                                              
                                                                                                                                
8:59:36 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Wilson  called the House Finance  Committee meeting                                                                    
to order at 8:59 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tammie Wilson, Co-Chair                                                                                          
Representative Jennifer Johnston, Vice-Chair                                                                                    
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Kris  Curtis,   Legislative  Auditor,  Alaska   Division  of                                                                    
Legislative  Audit;  Sara  Chambers, Director,  Division  of                                                                    
Corporations,    Business   and    Professional   Licensing,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Representative  Chuck Kopp,  Bill Sponsor;  Erika McConnell,                                                                    
Director, Alcohol  and Marijuana Control  Office, Department                                                                    
of  Commerce, Community  and  Economic Development;  Senator                                                                    
Peter Micciche, Sponsor;  Kent Truitt, Staff, Representative                                                                    
Chuck   Kopp;  Bob   Mitchell,  Chief   Investment  Officer,                                                                    
Department of Revenue.                                                                                                          
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 79     PEACE OFFICER/FIREFIGHTER RETIRE BENEFITS                                                                             
                                                                                                                                
          HB 79 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
SB 10     EXTEND SUICIDE PREVENTION COUNCIL                                                                                     
                                                                                                                                
          SB 10  was REPORTED  out of  committee with  a "do                                                                    
          pass"  recommendation  and  with  one  new  fiscal                                                                    
          impact note  from the House Finance  Committee for                                                                    
          the Department of Health and Social Services.                                                                         
                                                                                                                                
CSSB 16(FIN)                                                                                                                    
          ALCOHOL LIC:FAIRS,THEATRES,CONCERTS;BONDS                                                                             
                                                                                                                                
          HCS CSSB  16 (FIN)  was REPORTED out  of committee                                                                    
          with  a  "do  pass" recommendation  and  with  two                                                                    
          previously published fiscal  notes: FN2 (REV), FN3                                                                    
          (CED).                                                                                                                
                                                                                                                                
CSSB 43(FIN)                                                                                                                    
          EXTEND BIG GAME BOARD; OUTFITTER LICENSE                                                                              
                                                                                                                                
          HCS  CSSB 43(FIN)  was REPORTED  out of  committee                                                                    
          with a  "do pass" recommendation and  with one new                                                                    
          fiscal  note   by  the  Department   of  Commerce,                                                                    
          Community and Economic Development.                                                                                   
                                                                                                                                
Co-Chair Wilson relayed the agenda for the day. The                                                                             
committee had a full schedule.                                                                                                  
                                                                                                                                
SENATE BILL NO. 10                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the                                                                              
     Statewide Suicide Prevention Council; and providing                                                                        
     for an effective date."                                                                                                    
                                                                                                                                
9:01:19 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:01:40 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Wilson drew  attention  to the  new fiscal  impact                                                                    
note  from  the Department  of  Health  and Social  Services                                                                    
(DHSS)/House  Finance  Committee,   Behavioral  Health,  OMB                                                                    
Component Number  2651. She read directly  from the comments                                                                    
box on the first page:                                                                                                          
                                                                                                                                
     This revised  fiscal note reflects  a funding  level of                                                                    
     $400.0 for  pass-through grants in  FY20. Additionally,                                                                    
     the following intent language will be added:                                                                               
                                                                                                                                
     It is the intent of  the legislature that grant funding                                                                    
     be divided  50% to  rural school  districts and  50% to                                                                    
     urban school  districts. Further,  it is the  intent of                                                                    
     the  legislature that  the  Suicide Prevention  Council                                                                    
     and the  Department of Education and  Early Development                                                                    
     work  together to  develop  a long-term  sustainability                                                                    
     plan for  suicide prevention training. The  plan should                                                                    
     include implementation  of a "Train the  Trainer" model                                                                    
     so  districts can  provide ongoing  training. The  plan                                                                    
     should be  submitted to the  Presiding Officers  of the                                                                    
     legislature  and the  Legislative  Finance Division  by                                                                    
     December 1, 2019                                                                                                           
                                                                                                                                
Co-Chair   Wilson  thanked   Representative  Tarr   for  her                                                                    
comments   regarding  the   language.   She  reported   that                                                                    
obtaining   detailed  information   about  the   grants  was                                                                    
difficult,  and  she  wanted to  ensure  the  grantees  were                                                                    
getting  the  right  type  of  training. She  had spoken  to                                                                    
Commissioner  Johnson,  Commissioner, Department  of  Health                                                                    
and Social Services  (DHSS) and with his  permission put his                                                                    
comments  on  record:  "He commits  to  working  during  the                                                                    
interim on  transparency and accountability with  the school                                                                    
districts on these grants going  forward to ensure that when                                                                    
a suicide  happens the  right team  would respond  and focus                                                                    
more on  the prevention  portion and help  students identify                                                                    
when they  might be experiencing  major issues  and identify                                                                    
who receives  the reporting.  She  noted that the  grant was                                                                    
made   a  one-time   increment.  She   requested  that   the                                                                    
department  testify  to  the   committee  in  the  following                                                                    
session  to discuss  the improvements  regarding the  intent                                                                    
language and whether it implemented  the "Train the Trainer"                                                                    
model. Currently,  the program  consists of  online training                                                                    
for teachers  and others. She  envisioned the  program aimed                                                                    
more directly  at the  students. She  thanked the  House and                                                                    
Senate  bill sponsors  for assisting  with  the changes  and                                                                    
felt the changes were positive.                                                                                                 
                                                                                                                                
9:04:44 AM                                                                                                                    
                                                                                                                                
Representative  Carpenter appreciated  the  new language  in                                                                    
the fiscal note.  However, he was concerned  with being able                                                                    
to   measure  the  effectiveness  of the  program. He  noted                                                                    
that  the suicide  rate had  hardly decreased  in the  seven                                                                    
years the  program was operating. He  questioned whether the                                                                    
program  was effective  in  preventing  suicides. He  wanted                                                                    
 some  sort  of a  gauge   to  ensure the  training  reduced                                                                    
suicide.  He opined  that the  state  provided training  was                                                                    
unable to address the real  issue that existed at the family                                                                    
and community level. He thought  the state would be spending                                                                    
a  significant amount  of money  yet, not  address the  root                                                                    
cause of the problem.                                                                                                           
                                                                                                                                
9:06:41 AM                                                                                                                    
                                                                                                                                
Co-Chair Wilson did not believe  some of his statements were                                                                    
accurate. She spoke  of her experience with being  a part of                                                                    
the  state   education  taskforce   when  the   program  was                                                                    
initially   implemented.  The   taskforce   traveled  to   a                                                                    
community  and created  a student  taskforce  in the  school                                                                    
district  that  were  trained   to  communicate  with  other                                                                    
students. The  school had  the highest  suicide rate  in the                                                                    
state  and currently  had the  lowest rate  of suicide.  The                                                                    
students   learned  to   identify  when   a  classmate   was                                                                    
experiencing  problems and  had a  reporting mechanism.  She                                                                    
indicated  that Representative  Carpenter could  be correct.                                                                    
However, the  changes added parameters to  the grant program                                                                    
and  alerted the  council to  the committees   concerns. She                                                                    
knew of  programs that were  effective in lowering  the rate                                                                    
of suicide.  She agreed the  problem began at home,  but the                                                                    
student brought the  issues to school and  expressed them to                                                                    
their peers. She advocated for  providing proper training to                                                                    
students to  be able to  recognize when their peers  were in                                                                    
trouble  and how  to  respond. She  believed  in making  the                                                                    
program accountable  and enable the collection  and analysis                                                                    
of  statistical  data  that   was  available.  She  had  had                                                                    
personal  discussions  with  folks in  communities  and  the                                                                    
legislature  and emphasized  that all  wanted to  reduce the                                                                    
number of suicides in the state.                                                                                                
                                                                                                                                
9:09:06 AM                                                                                                                    
                                                                                                                                
Representative Carpenter wanted to  see the data showing the                                                                    
effectiveness of  the program. He agreed  and understood the                                                                    
need to  prevent and  reduce suicide in  the state  and that                                                                    
some  type  of  training  was  warranted.   He  relayed  his                                                                    
personal   experience   of  receiving   suicide   prevention                                                                    
training  for over  20 years.  He  had not  heard about  the                                                                    
effectiveness  of  the  states    program.  He  was  looking                                                                    
forward to seeing  the results of the  program the following                                                                    
session.                                                                                                                        
Co-Chair Wilson thought  the committee had made  it clear to                                                                    
the commissioner  he would be held  accountable. She related                                                                    
that the grant had previously  been a pass through grant and                                                                    
the  commissioner  was  aware   that  the  committee  wanted                                                                    
details by school  district. She intended to  hear from each                                                                    
member  of  the  council  regarding  implementation  of  the                                                                    
changes in the following session.                                                                                               
                                                                                                                                
9:11:12 AM                                                                                                                    
                                                                                                                                
Vice-Chair Johnston MOVED  to report SB 10  out of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
SB  10  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation and with one new  fiscal impact note from the                                                                    
House  Finance Committee  for the  Department of  Health and                                                                    
Social Services.                                                                                                                
                                                                                                                                
9:11:28 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:14:15 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 43(FIN)                                                                                                
                                                                                                                                
     "An Act extending the termination  date of the Big Game                                                                    
     Commercial  Services  Board;  relating  to  a  person's                                                                    
     eligibility  to   hold  a   registered  guide-outfitter                                                                    
     license,  master  guide-   outfitter  license,  class-A                                                                    
     assistant  guide license,  assistant guide  license, or                                                                    
     transporter  license; and  providing  for an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:14:15 AM                                                                                                                    
                                                                                                                                
Co-Chair  Wilson  explained that  the  sponsor  of the  bill                                                                    
allowed  for the  addition of  the Barbers  and Hairdressers                                                                    
Board  that  would otherwise  sunset  in  June 2019  with  a                                                                    
perfect audit. She noted that  the bill granted the Big Game                                                                    
Commercial Services Board (BGCSB) a five year extension.                                                                        
                                                                                                                                
9:15:07 AM                                                                                                                    
Representative Knopp MOVED to ADOPT Conceptual Amendment 1.                                                                     
                                                                                                                                
Co-Chair Wilson OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative Knopp explained his  Amendment. He pointed to                                                                    
Page 1,  Line 12 of the  bill and wanted to  delete 2024 and                                                                    
insert 2022. He  had concerns regarding the  issues with the                                                                    
board  and   believed  another  three  year   extension  was                                                                    
appropriate  to   ensure  the   board  was   rectifying  the                                                                    
problems. He  shared that his  intent was to support  a full                                                                    
term the following sunset.                                                                                                      
                                                                                                                                
Co-Chair Wilson clarified that a  written amendment had been                                                                    
distributed to  the committee that  was the same  except the                                                                    
year was changed  to 2023. The committee  was addressing the                                                                    
conceptual amendment.                                                                                                           
                                                                                                                                
Vice-Chair Ortiz asked whether  the date change would affect                                                                    
the extension for Barbers  and Hairdressers. Co-Chair Wilson                                                                    
responded  in the  negative and  indicated  the Barbers  and                                                                    
Hairdressers board received an 8 year term.                                                                                     
                                                                                                                                
Representative Tilton  commented that the cost  of the audit                                                                    
was $70  thousand, and the auditors  initially recommended a                                                                    
six    year   extension.    The   audits     concerns   were                                                                    
administrative and not directed  at the boards  actions. She                                                                    
opposed the amendment.                                                                                                          
                                                                                                                                
9:17:49 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Johnston  surmised   that  the  amendment  would                                                                    
initiate the  audit process in  two years. She  relayed that                                                                    
the  issues   were  with   the  investigations   versus  the                                                                    
administration.   She  wondered  what  Representative  Knopp                                                                    
hoped  to  discern  from  the  audit.  Representative  Knopp                                                                    
responded  that  some  of  the   conflict  was  between  the                                                                    
administration   and   the  boards    responsibilities   and                                                                    
liabilities. He  thought there were  larger issues  with the                                                                    
board.  He questioned  having to  wait until  another sunset                                                                    
audit  occurred before  being able  to  address issues  that                                                                    
were presently known.  He noted the lengthy  process it took                                                                    
to  initiate a  performance  audit  through the  Legislative                                                                    
Budget and Audit  Committee (LBA). He wanted  to ensure that                                                                    
the issues were addressed.                                                                                                      
                                                                                                                                
Representative  Sullivan-Leonard  echoed comments  from  her                                                                    
college,  Representative Tilton.  She  pointed  to a  letter                                                                    
included in  the legislative audit [titled   A Sunset Review                                                                    
of  the  Department  of Commerce,  Community,  and  Economic                                                                    
Development, Big Game  Commercial Services Board,  September                                                                    
14, 2018,  Audit Control Number 08-20114-19]  (copy on file)                                                                    
from the board  chairman, Henry D Tiffany  IV, dated January                                                                    
2,  2019  that acknowledged  the  concerns  outlined in  the                                                                    
audit.  The letter  indicated that  the  board and  division                                                                    
were implementing significant changes.  She felt assured the                                                                    
issues were  being addressed and  favored the  bills  sunset                                                                    
date.                                                                                                                           
                                                                                                                                
9:20:39 AM                                                                                                                    
                                                                                                                                
Vice-Chair Ortiz  asked Representative Knopp about  the time                                                                    
change in the amendment and  whether he would effectively be                                                                    
able to  address his  concerns with  his constituents  or if                                                                    
his assessment  depended on the audit.  Representative Knopp                                                                    
responded,  "not necessarily."  He  referenced Ms.  Curtiss                                                                     
testimony noting  that some  issues were  not subject  to an                                                                    
audit via  statute. He mentioned  that some of  his concerns                                                                    
could not  be addressed  in an audit,  which was  the reason                                                                    
for his amendment.                                                                                                              
                                                                                                                                
Co-Chair Wilson invited Ms. Curtis  to comment about whether                                                                    
there was  some other mechanism  to look at  specific issues                                                                    
being reviewed without requesting an earlier audit date.                                                                        
                                                                                                                                
9:22:28 AM                                                                                                                    
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE  AUDIT, observed  that in  the past  legislators                                                                    
had  reached  out to  the  board  and posed  questions  that                                                                    
addressed concerns  or provided additional  information that                                                                    
was not part  of the sunset process. She  continued that the                                                                    
purpose of an audit was  limited to an extension and roughly                                                                    
85 percent  of the bills  were  clean  and  merely requested                                                                    
an  extension. Concerns  that required  statutory or  policy                                                                    
changes were  better addressed though  a separate  bill that                                                                    
could  be introduced  at  any time.  She  stressed that  the                                                                    
division  and   board  would  be   open  to   providing  the                                                                    
legislature its desired information.                                                                                            
                                                                                                                                
9:23:41 AM                                                                                                                    
                                                                                                                                
SARA CHAMBERS, DIRECTOR,  DIVISION OF CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY  AND   ECONOMIC  DEVELOPMENT,  offered   that  she                                                                    
appreciated  feedback. She  assured the  committee that  her                                                                    
office  took concerns  extremely  seriously.  She had  heard                                                                    
rumors  and viewed  letters  based  on rumor  and incomplete                                                                    
facts  with  a political  spin   regarding  SB 43.  She  had                                                                    
sought  out necessary  facts to  discover whether  there was                                                                    
actually  a   problem.  She  was   keenly   aware   of  best                                                                    
practices and  the divisions  approach was   grounded in law                                                                    
and administrative process.  She  reiterated that the rumors                                                                    
were  not based  on  facts,  but she  took  the issue   very                                                                    
seriously.   She indicated  that  she did  not  wait for  an                                                                    
audit or  sunset to  address concerns  that were  brought to                                                                    
the  divisions   attention.   She  intended  to  immediately                                                                    
address  any  concerns  regarding the  Big  Game  Commercial                                                                    
Services Board.                                                                                                                 
                                                                                                                                
Representative  Knopp  had  no  idea what  rumors  had  been                                                                    
expressed to Ms. Chambers. He  had heard concerns and wanted                                                                    
to  further investigate  the issues  on his  own as  soon as                                                                    
time  permitted.  He  did  not  want  to  report  rumors  or                                                                    
innuendo to  the department. He  requested a  shorter length                                                                    
of time  in case  the legislature  wanted to  address issues                                                                    
before waiting  another 5 years  but was aware  another bill                                                                    
could address any desired statutory changes.                                                                                    
                                                                                                                                
Co-Chair Wilson  interjected that  the question  was whether                                                                    
the issue was  better handled through an audit  request or a                                                                    
review by the department.  She suggested that a departmental                                                                    
review might best address the concerns.                                                                                         
                                                                                                                                
Representative  Knopp WITHDREW  Conceptual  Amendment 1.  He                                                                    
conceded that  he had other options  including requesting an                                                                    
LBA audit.                                                                                                                      
                                                                                                                                
Co-Chair   Wilson   suggested   that  during   the   interim                                                                    
Representative   Knopp  investigate   the  issues   and  the                                                                    
committee  could  discuss  the  matter  without  introducing                                                                    
legislation in the following session.                                                                                           
                                                                                                                                
9:28:27 AM                                                                                                                    
                                                                                                                                
Representative  Josephson expressed  concern. He  noted that                                                                    
the department  was attempting to improve  its processes. He                                                                    
mentioned an email (copy on  file) from Jason Bunch, member,                                                                    
BGCSB,  that accounted  for the  current 56  open cases.  He                                                                    
also cited a  letter from Ms. Chambers dated  March 10, 2019                                                                    
[copy  on file]  that stated,   during the  three-year audit                                                                    
period, this  investigator opened  382 cases and  closed 450                                                                    
cases.   He  thought  that  the  amount  of  complaints  was                                                                    
extraordinary and troubling.                                                                                                    
                                                                                                                                
Ms.  Chambers  responded that  based  on  its resources  the                                                                    
division   was    complaint   driven    and   Representative                                                                    
Josephson's  concerns  were  valid.  However,  many  of  the                                                                    
opened  cases  were   administrative  relating  to  document                                                                    
delays  and  was  not  egregious.  She  noted  there  was  a                                                                    
significant amount of paperwork that  had to be submitted by                                                                    
the  guides. However.  even minor  complaints were  counted.                                                                    
Complaints  generally  came   through  the  Alaska  Wildlife                                                                    
Troopers. There  was a significant  amount of  activity that                                                                    
did not rise to a  disciplinary level. She indicated that in                                                                    
2018 there  were 118 activities,  only 16 of  which required                                                                    
disciplinary  actions   due  to  wildlife,   regulation,  or                                                                    
statute   violation.   The   activities   were   complaints,                                                                    
investigations,  monitoring, and  probation. The  board only                                                                    
had   one   investigator   and   prioritized   and   managed                                                                    
complaints.    Administrative   complaints    were   managed                                                                    
differently    than   criminal    activity.   Representative                                                                    
Josephson provided  an example in  his own office  of hiring                                                                    
staff for  the interim and  forgetting to submit  the proper                                                                    
paperwork. He  asked whether the administrative  issues were                                                                    
similar  and were  merely a   technical flaw.   Ms. Chambers                                                                    
concurred  with   his  scenario.  She  indicated   that  the                                                                    
division   had  to   identify  whether   the  administrative                                                                    
complaints were  a wanton violation  or a mere mistake  by a                                                                    
busy individual in the field that missed a deadline.                                                                            
                                                                                                                                
9:34:12 AM                                                                                                                    
                                                                                                                                
Vice-Chair Johnston MOVED  to REPORT SB 43  out of committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
HCS CSSB  43(FIN) was REPORTED  out of committee with  a "do                                                                    
pass" recommendation  and with  one new  fiscal note  by the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
9:34:32 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:41:08 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 79                                                                                                             
     "An  Act relating  to  participation  of certain  peace                                                                    
     officers and  firefighters in  the defined  benefit and                                                                    
     defined  contribution plans  of  the Public  Employees'                                                                    
     Retirement  System of  Alaska; relating  to eligibility                                                                    
     of  peace   officers  and  firefighters   for  medical,                                                                    
     disability, and  death benefits; relating  to liability                                                                    
     of the  Public Employees' Retirement System  of Alaska;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
9:41:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHUCK  KOPP,  BILL  SPONSOR,  indicated  the                                                                    
hearing  was the  second  for  HB 79  in  the House  Finance                                                                    
Committee. He explained that the  since the prior hearing he                                                                    
had  met with  individuals from  the Division  of Retirement                                                                    
and  Benefits  and  the  Attorney  Generals   office,  which                                                                    
resulted  in a  committee  substitute version.  He also  had                                                                    
received an  actuary report from  the state's  actuary, Buck                                                                    
Consultants.  In  addition,  the  states   Chief  Investment                                                                  
Officer, Bob Mitchell, Department  of Revenue, was available                                                                    
to  testify. He  indicated that  Mr. Mitchell  had performed                                                                    
modeling on  the current effectiveness  of the plan  for the                                                                    
peace  officers  and  firefighters. The  brief  presentation                                                                    
would  put into  perspective  why HB  79  was important.  He                                                                    
wanted to also hear from the states actuary.                                                                                    
                                                                                                                                
9:43:10 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:45:23 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 16(FIN)                                                                                                
                                                                                                                                
     "An   Act  relating   to  certain   alcoholic  beverage                                                                    
     licenses and permits; relating  to the bond requirement                                                                    
     for  certain alcoholic  beverage  license holders;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
9:45:28 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Johnston  MOVED   to  ADOPT  proposed  committee                                                                    
substitute for CSSB 16(FIN),  Work Draft 31-LS0283\H (Bruce,                                                                    
5/14/19)(copy on file).                                                                                                         
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
Co-Chair  Wilson commented  on the  changes. She  noted that                                                                    
the  committee  substitute  (CS)  addressed  surrendering  a                                                                    
license for  renewal and removed the  proposed Fair license.                                                                    
The  bill was  solely a  bill that  grandfathered in  the 11                                                                    
licenses  where renewals  were revoked  due  to new  statute                                                                    
interpretations  by the  Alaska  Alcoholic Beverage  Control                                                                    
(ABC) Board.                                                                                                                    
                                                                                                                                
9:46:44 AM                                                                                                                    
                                                                                                                                
ERIKA  MCCONNELL, DIRECTOR,  ALCOHOL  AND MARIJUANA  CONTROL                                                                    
OFFICE,  DEPARTMENT  OF  COMMERCE,  COMMUNITY  AND  ECONOMIC                                                                    
DEVELOPMENT, introduced herself.                                                                                                
                                                                                                                                
Co-Chair  Wilson spoke  of an  undisclosed  business with  a                                                                    
unique problem  that she had  discussed with  Ms. McConnell.                                                                    
She  asked whether  the establishment  would  be allowed  to                                                                    
sell one of its  licenses even if it took a  year or two and                                                                    
would  not  be  an  issue   for  the  board.  Ms.  McConnell                                                                    
responded that it would not be an issue.                                                                                        
                                                                                                                                
Representative Knopp  asked whether  the CS contained  a new                                                                    
fair license.  Co-Chair Wilson commented  that the  new fair                                                                    
license   was   removed   because  the   Palmer   Fair   was                                                                    
grandfathered in with their  current recreational license in                                                                    
the CS and did not desire  a new type of license. They would                                                                    
remain under the recreational license.                                                                                          
                                                                                                                                
Representative Knopp  noted that Section  4 of the  CS dealt                                                                    
with fair license language.                                                                                                     
                                                                                                                                
9:48:44 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:51:16 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Wilson explained  that the fair license  was in the                                                                    
bill and  she was incorrect.  The language allowed  the fair                                                                    
to  do  what it  had  previously  done  and was  moved  from                                                                    
regulation and  placed in statute.  The bill  disallowed any                                                                    
new entity to  participate or any new type  of activity. She                                                                    
noted  the  date  had  been   changed  to  ensure  that  the                                                                    
businesses  would  be allowed  to  renew  as a  recreational                                                                    
license instead of  the fair license if  preferred. The fair                                                                    
license only  allowed for specific activities.  She provided                                                                    
a clarifying example.                                                                                                           
Representative  Josephson  learned  that  recreational  site                                                                    
licenses  for ski  areas  and bowling  alleys  lack all  the                                                                    
benefits proposed  under the fair license.  He believed that                                                                    
the provision should be cleaned up.                                                                                             
                                                                                                                                
9:53:23 AM                                                                                                                    
                                                                                                                                
SENATOR PETER MICCICHE, SPONSOR, introduced himself.                                                                            
                                                                                                                                
Co-Chair Wilson  asked whether there  was another  bill that                                                                    
 cleaned  up   alcohol statutes  and  dealt  with the  issue                                                                    
identified by Representative Josephson.                                                                                         
                                                                                                                                
Senator Micciche responded in  the affirmative but cautioned                                                                    
that unless the bill passed  in the current session the fair                                                                    
issue would  not be addressed  and that eliminating  the ski                                                                    
areas  and bowling  alleys  would  significantly impact  the                                                                    
current businesses.                                                                                                             
                                                                                                                                
Co-Chair Wilson  indicated that the  state currently  had 11                                                                    
businesses that under no fault of their own were revoked.                                                                       
                                                                                                                                
Representative  Josephson  asked  whether  the  CS  included                                                                    
provisions dealing with  pub licenses to allow  them to move                                                                    
within  noncontiguous areas  on  a  campus. Co-Chair  Wilson                                                                    
responded in the negative.                                                                                                      
                                                                                                                                
9:54:57 AM                                                                                                                    
                                                                                                                                
Representative LeBon MOVED to ADOPT Conceptual Amendment 1.                                                                     
                                                                                                                                
Co-Chair Wilson OBJECTED for discussion.                                                                                        
                                                                                                                                
Representative   LeBon    explained   his    amendment.   He                                                                    
highlighted that  the amendment  was for music  festivals in                                                                    
rural unorganized boroughs to  allow serving alcohol through                                                                    
vendors that hold  a restaurant or eating  place license. He                                                                    
specified that  the event  was held  in Chicken,  Alaska for                                                                    
the last 12 years and  a local restaurant called the Chicken                                                                    
Goat Camp had  been selling beer and wine  during the event.                                                                    
He welcomed committee comments.                                                                                                 
                                                                                                                                
Co-Chair Wilson indicated that the  event was currently able                                                                    
to use  the catering license  for Chena Hot Springs  and had                                                                    
the ability  to sell beer  and wine. She indicated  that the                                                                    
festival desired its own license  and she believed the issue                                                                    
was a  policy call  and should be  entertained in  the other                                                                    
bill. She objected to the amendment.                                                                                            
                                                                                                                                
Senator  Micciche emphasized  that the  current bill  was an                                                                    
attempt  to  literally  save  the  11 business  at risk.  He                                                                    
requested that  the committee  take into  consideration that                                                                    
it was the  last day of the legislative  session. He offered                                                                    
to  help the  other businesses  in the  other bill  but felt                                                                    
that  they could  continue to  operate another  year without                                                                    
interruption.                                                                                                                   
                                                                                                                                
Representative  LeBon asked  if the  Chicken Festival  would                                                                    
lose its ability  to sell beer and wine  to event attendees.                                                                    
Senator Micciche responded that  there were many other types                                                                    
of  Beverage  Dispensary  Licenses  in  the  state  and  the                                                                    
festival had other  choices. He was focused on  the other 11                                                                    
businesses that did not have another choice.                                                                                    
                                                                                                                                
Co-Chair Wilson MAINTAINED her OBJECTION.                                                                                       
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: LeBon, Ortiz, Sullivan-Leonard                                                                                        
OPPOSED:  Johnston,   Knopp,  Merrick,   Tilton,  Carpenter,                                                                    
Josephson, Wilson                                                                                                               
                                                                                                                                
Co-Chair Foster was absent from the vote.                                                                                       
                                                                                                                                
The MOTION to adopt Conceptual Amendment 1 FAILED (3/7).                                                                        
                                                                                                                                
9:59:24 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
10:00:25 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair  Johnston MOVED  to REPORT  HCSCS 16(FIN)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
HCS CSSB 16  (FIN) was REPORTED out of committee  with a "do                                                                    
pass"  recommendation  and  with  two  previously  published                                                                    
fiscal notes: FN2 (REV), FN3 (CED).                                                                                             
                                                                                                                                
HOUSE BILL NO. 79                                                                                                             
                                                                                                                                
     "An  Act relating  to  participation  of certain  peace                                                                    
     officers and  firefighters in  the defined  benefit and                                                                    
     defined  contribution plans  of  the Public  Employees'                                                                    
     Retirement  System of  Alaska; relating  to eligibility                                                                    
     of  peace   officers  and  firefighters   for  medical,                                                                    
     disability, and  death benefits; relating  to liability                                                                    
     of the  Public Employees' Retirement System  of Alaska;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
Co-Chair Wilson invited Representative Kopp to the table.                                                                       
                                                                                                                                
10:02:10 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:04:16 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
BOB  MITCHELL,  CHIEF   INVESTMENT  OFFICER,  DEPARTMENT  OF                                                                    
REVENUE, began  the PowerPoint Presentation titled    Target                                                                  
Date Fund  Simulation Exercise.   He explained that  in July                                                                    
2006,  the state  moved from  a  defined benefit  plan to  a                                                                    
defined  contribution  plan. He  turned  to  slide 2  titled                                                                    
 Background:                                                                                                                    
                                                                                                                                
      In  2017, the  Department of  Administration requested                                                                    
     that  the  Department  of Revenue  build  a  stochastic                                                                    
     model   that  simulates   the  experience   of  defined                                                                    
     contribution  employees enrolled  in the  Alaska Target                                                                    
     Date Retirement Trusts.                                                                                                    
      The purpose  of the model  was to test  the likelihood                                                                    
     that 30-year  employees will have sufficient  assets to                                                                    
     last 30 years into retirement.                                                                                             
      Four  cases were  tested: PERS  with SBS,  Police/Fire                                                                    
     with   SBS,   TRS,   and  TRS   with   6.13%   deferred                                                                    
     compensation contributions.                                                                                                
      In  2019,  the  ARMB  requested   an  update  to  this                                                                    
     analysis  at  the  upcoming June  defined  contribution                                                                    
     committee meeting.                                                                                                         
      Also in 2019, Representative  Kopp requested an update                                                                    
     to    this     analysis,    incorporating    additional                                                                    
     occupational  scenarios, including  Police/Fire without                                                                    
     SBS,  25-Year  Career  Police/Fire  with  SBS,  25-Year                                                                    
     Career Police/Fire without SBS.                                                                                            
                                                                                                                                
Mr.  Mitchell  delineated  that   he  built  a  Monte  Carlo                                                                    
simulation  model.  The  model   calculated,  based  on  the                                                                    
participants  income  each  month,  what  the  employee  and                                                                    
employer  contributions were  and how  the investments  grew                                                                    
over  time.  The  department  used   the  target  date  fund                                                                    
simulation exercise,  which took  a default  investment fund                                                                    
based  on participants  age and  retirement  date where  the                                                                    
asset allocation adjusted  automatically. The division built                                                                    
the  model and  ran it  10,000 times,  called  trials.   The                                                                    
trials were ranked  from the lowest terminal  asset value to                                                                    
the  highest. He  indicated  that if  there  was a  positive                                                                    
number, the  trial was a  success. The analysis  occurred in                                                                    
2017.                                                                                                                           
                                                                                                                                
10:08:50 AM                                                                                                                   
                                                                                                                                
He moved  to slide 3  titled  Target Date Fund  Glide Path.                                                                     
He elucidated that  the slide showed a  graphic depiction of                                                                    
the  target  date   glide  path  and  was   what  the  asset                                                                    
allocation  would look  like over  time  beginning 30  years                                                                    
prior to  retirement. He noted  that it began as  90 percent                                                                    
equity and  10 percent  fixed income allocation  that became                                                                    
more  conservative as  retirement approached;  at retirement                                                                    
equity  was  30  percent.  He  highlighted  slide  4  titled                                                                    
 Callan  2019  Return  and   Risk  Assumptions.   The  slide                                                                    
contained a chart of capital  market assumptions, which were                                                                    
estimates   of  returns   and  their   volatility  and   the                                                                    
correlation  of  the  performance   of  each  of  the  asset                                                                    
classes. The  information compiled by Callan  and Associates                                                                    
was used as the engine of investment performance.                                                                               
                                                                                                                                
Mr. Mitchell outlined slide 5 titled "Assumptions."                                                                             
                                                                                                                                
      A blend  of Callan's 2019 10-year  & long-term capital                                                                    
     market  assumptions  were  used.   10-year  assumptions                                                                    
     were  assumed during  the first  10 years,  were scaled                                                                    
     linearly to  the long-term assumptions during  the next                                                                    
     10 years,  and the  long-term assumptions  were assumed                                                                    
     thereafter.   Callan's generic fixed  income assumption                                                                    
     was  used in  place of  the specific  fixed income  mix                                                                    
     employed by the target date funds.                                                                                         
      Inflation  was   set  at  2.25%/year,   with  employee                                                                    
     salaries  assumed  to  grow  at  2.75%/year.    Initial                                                                    
     consumption in  retirement was set  at 70%  of earnings                                                                    
     at retirement.   Consumption was  assumed to  grow with                                                                    
     inflation thereafter.                                                                                                      
      10,000  trials were  used for  each  simulation.   The                                                                    
     trials  were  rank-ordered,  and the  simulations  that                                                                    
     represented  the  25th-, 50th-and  75th-percentiles  of                                                                    
     the distribution of outcomes are displayed.                                                                                
      A summary of the scenarios examined can be found in                                                                       
     the table below.                                                                                                           
                                                                                                                                
Mr.  Mitchell  explained that  given  the  model focused  on                                                                    
replacement  income,  the  model   results  was  not  overly                                                                    
sensitive to the salary assumption.                                                                                             
                                                                                                                                
10:10:38 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Ortiz asked  how important  the accuracy  of the                                                                    
2.5  percent estimated  inflation rate  was and  its impact.                                                                    
Mr.  Mitchell  answered that  2.5  percent  had been  chosen                                                                    
because  it was  the  inflation number  used  by Callan.  He                                                                    
delineated that the  rate was important because  it made the                                                                    
model internally  consistent. He expected that  if inflation                                                                    
was  materially  different,  asset class  performance  would                                                                    
move in a similar direction over  a long period of time. The                                                                    
actual number should not overly impact the results.                                                                             
                                                                                                                                
Co-Chair  Wilson cited  the 2.75  percent salary  assumption                                                                    
amount  and wondered  whether it  reflected the  contractual                                                                    
amount  or  were the  steps  incurred  over the  years.  Mr.                                                                    
Mitchell  explained that  the 2.75  percent  was the  number                                                                    
discussed with  the Division of Retirement  and Benefits and                                                                    
was not connected  to salary schedules. He  noted that given                                                                    
that  retirement  consumption  was  a  percentage  of  final                                                                    
salary,  if changes  were made  over  time it  would not  be                                                                    
 directionally  different   than  what was  experienced.  He                                                                    
stated that  the definition of  success was a  percentage of                                                                    
final  salary.  He did  not  think  there  would be  a  very                                                                    
different result using different numbers.                                                                                       
                                                                                                                                
Co-Chair Wilson  surmised that unlike  the prior  tiers, the                                                                    
outcome was accumulated over years  and was not based on the                                                                    
earnings of the participants top  3 or 4 years. Mr. Mitchell                                                                    
responded that she was correct.                                                                                                 
                                                                                                                                
10:13:27 AM                                                                                                                   
                                                                                                                                
Representative Carpenter  suggested that if a  random number                                                                    
was used such  as 2.75 percent and an  employee's salary was                                                                    
much  higher  than  what  their rate  had  been  over  their                                                                    
lifetime of employment, a spike  in liability would occur at                                                                    
the time of retirement. He  deduced the 2.75 percent was not                                                                    
reflective  of  what  would happen  at  retirement  for  the                                                                    
employee.                                                                                                                       
                                                                                                                                
Co-Chair  Wilson   asked  Mr.  Mitchell   if  Representative                                                                    
Carpenter's statement was accurate.                                                                                             
                                                                                                                                
Mr.  Mitchell responded  in  the  affirmative. He  indicated                                                                    
that a model  was simplification of reality.  He provided an                                                                    
example  of an  employee with  compensation higher  than the                                                                    
assumption  over  the  several   years  of  employment.  The                                                                    
question became whether the 70  percent was still a relevant                                                                    
number of  the much  higher income. He  voiced that  a model                                                                    
had difficulty  with the scenarios.  The utility of  a model                                                                    
was to provide  a directional sense of  the effectiveness of                                                                    
the program.                                                                                                                    
                                                                                                                                
Representative  Carpenter  ascertained  that that  the  plan                                                                    
incentivized maximizing  earnings in the final  years before                                                                    
retirement  in  order  to  gain   the  most  amount  out  of                                                                    
retirement.  He   thought  it  was   counterproductive  when                                                                    
forecasting costs and risks from the state's perspective.                                                                       
                                                                                                                                
10:15:39 AM                                                                                                                   
                                                                                                                                
Representative   Kopp   did   not   believe   Representative                                                                    
Carpenter  was  correct. He  clarified  that  the model  was                                                                    
based on Tier 4 and compared  it to what a new program would                                                                    
look like.  He suggested that  the new model  would disallow                                                                    
the spiking that occurred in  Tier 4. The model was designed                                                                    
to prevent income  spiking because it was spread  out over a                                                                    
longer time  period and had  to be  averaged. Representative                                                                    
Carpenter was  only referring to  the slide  and information                                                                    
presented  to the  committee presently.  He wanted  to point                                                                    
out the fallacy to the thinking.                                                                                                
                                                                                                                                
Mr. Mitchell pointed to the table  at the bottom of slide 5.                                                                    
He noted that the  table reflected the information requested                                                                    
by Representative  Kopp. He pointed  out that for  each case                                                                    
the  information   portrayed  the  level  of   employee  and                                                                    
employer contribution  as a  percentage of  the participants                                                                    
salary that  was summed  on the bottom  line. He  viewed the                                                                    
data as a reference to  determine the percent of salary that                                                                    
was invested  for retirement ranging  from 25 percent  to 13                                                                    
percent.                                                                                                                        
                                                                                                                                
10:18:00 AM                                                                                                                   
Mr.  Mitchell  moved  to slide  6  titled   Illustration  of                                                                    
Simulated Outcomes.  The slide  showed the simulated initial                                                                    
retirement  balance  and  the balances  over  time  for  250                                                                    
cases. He pointed to the very  high cases and viewed them as                                                                    
 unrealistic.   He offered  that for  that reason  he ranked                                                                    
the outcomes  at the  fiftieth percentile,  the twenty-fifth                                                                    
percentile, and seventy-fifth percentile as guiding data.                                                                       
                                                                                                                                
10:19:02 AM                                                                                                                   
                                                                                                                                
Mr. Mitchell  addressed slide 7 titled   Results.  The graph                                                                    
reflected a PERS and SBS  retirement 30-year retirement. The                                                                    
participant  had an  estimated $1.86  million in  retirement                                                                    
assets, which grew  to about $2.5 million over  30 years and                                                                    
was  the  median  case.  The lower  green  line  showed  the                                                                    
twenty-fifth   percentile   and   the  higher   green   line                                                                    
represented the seventy-fifth percentile.  He noted that not                                                                    
all  the  trial  outcomes  were successful.  The  amount  of                                                                    
contribution based  on percentage  of income and  the number                                                                    
of years were the variables of all the plans.                                                                                   
                                                                                                                                
Vice-Chair Ortiz asked Mr. Mitchell  to define what it meant                                                                    
to be unsuccessful. Mr. Mitchell  responded that success was                                                                    
defined as  a participant consuming  at 70 percent  of their                                                                    
final  income  that  grew  with inflation  over  a  30  year                                                                    
period.                                                                                                                         
                                                                                                                                
Vice-Chair  Ortiz  asked  whether "unsuccessful"  meant  the                                                                    
money ran out. Mr. Mitchell replied in the affirmative.                                                                         
                                                                                                                                
10:21:38 AM                                                                                                                   
                                                                                                                                
Mr.  Mitchell  described  slide  7  that  showed  the  total                                                                    
contributions  at  25 percent.  He  moved  to slide  8  that                                                                    
depicted  the   30-Year  Police/Fire   Plan  with   SBS.  He                                                                    
explained that the success rate  was similar, but the dollar                                                                    
figures were  slightly different.  Directionally it  was the                                                                    
same from a  success perspective. He discussed  slide 9 that                                                                    
showed  the   30-Year  Police/Fire  Plan  without   SBS.  He                                                                    
recalled  that PRS  plus SBS  comprised 25  percent and  SBS                                                                    
represented  12 percent  of the  amount. The  slide depicted                                                                    
the  contributions at  13 percent  resulting  in the  assets                                                                    
being depleted over time in  the median case depicted by the                                                                    
dark  blue line.  He  added that  even  the 75th  percentile                                                                    
showed a declining trend.                                                                                                       
                                                                                                                                
Co-Chair  Wilson  was  concerned  that if  a  new  tier  was                                                                    
introduced what guaranteed  that the state would  not end up                                                                    
with a huge unfunded  liability. She mentioned concerns with                                                                    
negative effects on  bonding if the state  implemented a new                                                                    
tier. Mr. Mitchell thought it  would be better to direct her                                                                    
question to the  ARM board and the states   actuary. The key                                                                    
distinction of  the defined benefit  plan was that  the risk                                                                    
for paying the benefits rested  with the employers. The risk                                                                    
in the defined contribution plan  was born by the employees.                                                                    
There was  no additional unfunded  liability as a  result of                                                                    
the  defined  contribution  component. He  deferred  to  the                                                                    
actuary for detailed data.                                                                                                      
                                                                                                                                
10:25:10 AM                                                                                                                   
                                                                                                                                
Co-Chair Wilson  understood that the state  placed a certain                                                                    
amount of  funds to  offset the  prior Tiers  liability. She                                                                    
asked  if the  obligation  was the  same  with the  proposed                                                                    
plan.  Mr.   Mitchell  could  not  directly   speak  to  the                                                                    
question.  He offered  that the  proposed plan  contained an                                                                    
assessment  on  employers  that  was  a  function  of  total                                                                    
payroll, which was comprised of  defined benefit and defined                                                                    
contribution  employees   and  was  an  assessment   on  the                                                                    
employer and  the total number  of employees. He  noted that                                                                    
the defined contribution employees  were not subsidizing the                                                                    
defined benefit employees.                                                                                                      
                                                                                                                                
Representative   Knopp  wondered   what   aspects  had   the                                                                    
potential to  negatively impact the  model. He asked  if age                                                                    
or the  number of participants  were  risk factors  in terms                                                                    
of success.                                                                                                                     
                                                                                                                                
10:26:49 AM                                                                                                                   
                                                                                                                                
Representative Kopp responded  that the current presentation                                                                    
only looked at the effects of  Tier 4 and depicted that over                                                                    
time the result  was only slightly better  than a retirement                                                                    
based  solely  on  Social  Security.  He  advised  that  the                                                                    
state's actuary could  comment on the proposed  new tier and                                                                    
any  risk  for unfunded  liability.  He  indicated that  the                                                                    
presentation was  focused on the  current Tier 4 and  how it                                                                    
impacted the  class of  employees. He  was not  proposing to                                                                    
open  the  proposed  plan  to   other  employees.  The  bill                                                                    
proposed the  new plan for  a small number of  employees. He                                                                    
furthered  that the  plan  was a  hybrid and  had  a lot  of                                                                    
parallels with  the defined contribution plan  that kept the                                                                    
liability with  the employees and  contained self-correcting                                                                    
levers to ensure the fund would not go unfunded.                                                                                
                                                                                                                                
10:28:32 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Ortiz asked  what slide  9 showed.  Mr. Mitchell                                                                    
observed that the assets were  insufficient at retirement to                                                                    
sustain a participant for 30 years.                                                                                             
                                                                                                                                
Co-Chair Wilson  asked how the investments  were chosen. Mr.                                                                    
Mitchell  responded  that the  default  plan  was used,  and                                                                    
different investments would provide different outcomes.                                                                         
                                                                                                                                
Representative  LeBon  asked  how   self-correcting  levers                                                                     
would protect the  state with the proposed plan  and how had                                                                    
they failed the state in Tiers 1 to 3.                                                                                          
                                                                                                                                
10:29:57 AM                                                                                                                   
                                                                                                                                
Representative Kopp  replied that in the  proposed bill used                                                                    
annual   true-ups   to   determine  whether   the   employee                                                                    
contributions    should   increase,    and   the    employer                                                                    
contributions  could change.  In addition,  the post-pension                                                                    
retirement adjustments  and COLA would be  eliminated if the                                                                    
actuary  showed that  the plan  was not  maintaining a  high                                                                    
funding standard.  He noted that  the elements  were totally                                                                    
new and had never been  implemented in any plan. He recalled                                                                    
earlier testimony from Washington  state with a very similar                                                                    
program   that  was   currently  funded   at  110   percent.                                                                    
Representative  LeBon asked  whether the  employee bore  the                                                                    
brunt of the obligation to self-corrected the plan.                                                                             
                                                                                                                                
10:31:27 AM                                                                                                                   
                                                                                                                                
KENT  TRUITT, STAFF,  REPRESENTATIVE  CHUCK KOPP,  responded                                                                    
that  the employer  contribution  was a  variable lever.  He                                                                    
indicated  that if  the ARM  board found  that the  plan was                                                                    
accruing liability, they would  have the ability to increase                                                                    
the  employer contribution.  Currently,  the total  employer                                                                    
contribution  was  22  percent.  In  the  proposed  CS  [not                                                                    
introduced] the  total employer contribution was  22 percent                                                                    
and about 13  percent went to the plan,  while the remainder                                                                    
went to the unfunded liability of the prior unfunded tiers.                                                                     
                                                                                                                                
Mr. Mitchell  continued to slide  10. The slide  showed TERS                                                                    
for Tier 4  with similar conclusions as the  prior slide but                                                                    
at  approximately 15  percent (versus  13  percent in  prior                                                                    
slide) of the total contributions.                                                                                              
                                                                                                                                
Vice-Chair   Ortiz   conveyed   that  teachers   no   longer                                                                    
participated  in Social  Security.  Mr. Mitchell  understood                                                                    
that many  members of the  TRS opted out of  Social Security                                                                    
and did  not participate  in SBS,  but most  state employees                                                                    
had  access to  SBS. Vice-Chair  Ortiz noted  that the  term                                                                    
 opt  out   presumed  that  a  teacher  had  a  choice,  but                                                                    
teachers did not have the option to choose Social Security.                                                                     
                                                                                                                                
Co-Chair  Wilson relayed  that Vice-Chair  Ortiz's statement                                                                    
was accurate.                                                                                                                   
                                                                                                                                
Representative Kopp  had worked for a  municipality for many                                                                    
years  that  offered neither  SBS  nor  Social Security.  He                                                                    
added that many municipalities operated in the same manner.                                                                     
                                                                                                                                
10:35:38 AM                                                                                                                   
                                                                                                                                
Co-Chair Wilson provided an example  of a teacher working in                                                                    
the  summer  and  receiving Social  Security.  Mr.  Mitchell                                                                    
responded that  the analysis did  not take  other employment                                                                    
into consideration. Co-Chair  Wilson wanted more information                                                                    
regarding how outside employment would affect the plan.                                                                         
                                                                                                                                
Representative Knopp  asked if most of  the public employees                                                                    
had bargaining  units. He wondered  if they  participated in                                                                    
retirement    plans    through   the    bargaining    units.                                                                    
Representative  Kopp  responded  that all  bargaining  units                                                                    
were   different,   it   depended   on   the   municipality.                                                                    
Representative Knopp  wondered the  extent of  who qualified                                                                    
for the  proposed plan.  Representative Kopp  responded that                                                                    
volunteer firefighters  would not  be included in  the plan.                                                                    
epresentative   Knopp    asked   about    militia   members.                                                                    
Representative Kopp  responded that militia members  did not                                                                    
fall under the definition of a peace officer.                                                                                   
                                                                                                                                
Representative  LeBon  asked  whether  a  participant  in  a                                                                    
defined   contribution   plan   who   subsequently   secured                                                                    
employment  accruing  social  security  could  receive  both                                                                    
benefits.  He  relayed  his  own  experience  where  he  was                                                                    
entitled to both benefits.  Representative Kopp responded in                                                                    
the affirmative. He added that  it was difficult to maintain                                                                    
outside  employment as  a police  officer and  at retirement                                                                    
age  many police  and firefighters  had  limitations due  to                                                                    
disabilities that limited other job opportunities.                                                                              
Mr.  Mitchell moved  to slide  11 that  graphically depicted                                                                    
 30-Year TRS + 6.13%  Deferred Compensation  teachers with a                                                                    
deferred  compensation   amount  that  the   employee  would                                                                    
otherwise pay if  they participated in SBS.  He relayed that                                                                    
there was  a match with SBS  from 15 percent to  21 percent.                                                                    
The  outcome was  materially better  than  slide 10  without                                                                    
SBS.                                                                                                                            
                                                                                                                                
10:42:12 AM                                                                                                                   
                                                                                                                                
Mr. Mitchell reported that the  following slides portrayed a                                                                    
variation; working 25 years with  or without SBS. He briefly                                                                    
continued to  slide 12 that  graphically depicted    25-Year                                                                    
Police/Fire  +  SBS   and  slide  13  illustrating   25-Year                                                                    
Police/Fire w/o SBS.   He noted that the  shorter career and                                                                    
lower contribution  as a  percentage of  income demonstrated                                                                    
unsuccessful outcomes.  He emphasized that length  of career                                                                    
and contribution  rate as  a percentage  of income  were the                                                                    
largest factors in the success of the plan.                                                                                     
                                                                                                                                
Co-Chair  Wilson  asked  where   the  25  years  came  from.                                                                    
Representative Kopp responded  that Tier 3 with  25 years of                                                                    
continuous   service  entitled   the  participant   to  full                                                                    
retirement  including  medical   benefits.  Co-Chair  Wilson                                                                    
asked whether  it was realistic  to expect that  most police                                                                    
officers  would   make  it  to   25  years   of  employment.                                                                    
Representative Kopp  replied that 25  years could be  a hard                                                                    
lift for  some officers. However,  the cost of the  plan had                                                                    
to remain manageable and affordable.                                                                                            
                                                                                                                                
10:45:33 AM                                                                                                                   
                                                                                                                                
Vice-Chair Johnston asked if retirement  was 25 years or the                                                                    
age 55  to receive the medical  benefits in tier 3  and tier                                                                    
4.  Representative  Kopp  answered  that 20  years  of  work                                                                    
qualified tier 2  for full retirement benefits  and the tier                                                                    
3 qualifier was 25 years or age 60.                                                                                             
                                                                                                                                
Mr. Mitchell  returned to slide  13 and highlighted  that in                                                                    
plans where a relatively  low proportion of the participants                                                                    
compensation  was invested  for  retirement the  probability                                                                    
that their assets  would last for 30  years after retirement                                                                    
was below 50 percent.                                                                                                           
                                                                                                                                
10:47:39 AM                                                                                                                   
                                                                                                                                
Mr.  Mitchell  turned to  slide  14  titled  Probability  of                                                                    
Success:                                                                                                                        
                                                                                                                                
           30-Year PERS + SBS = 69%                                                                                             
           30-Year Police/Fire + SBS = 69%                                                                                      
           30-Year Police/Fire w/o SBS = 22%                                                                                    
           30-Year TRS w/o SBS = 31%                                                                                            
         30-Year TRS + 6.13% Deferred Comp. = 56%                                                                               
           25-Year Police/Fire + SBS = 43%                                                                                      
           25-Year Police/Fire w/o SBS = 6%                                                                                     
                                                                                                                                
     Success = retirement assets surviving 30 years into                                                                        
     retirement, assuming initial consumption level of 70%                                                                      
    of final take-home pay, increasing with inflation.                                                                          
                                                                                                                                
Representative Josephson  referred to  the top 2  bullets on                                                                    
the slide. He  surmised that the employee would  not be able                                                                    
to  draw down   their plan in order to  achieve the results.                                                                    
Mr.  Mitchell answered  in the  affirmative.  He added  that                                                                    
adjustments were not made for personal circumstances.                                                                           
                                                                                                                                
10:49:39 AM                                                                                                                   
                                                                                                                                
Representative Carpenter asked why 70 percent of final take-                                                                    
home pay was  used in the model. Mr.  Mitchell indicated the                                                                    
number had been  provided by the Division  of Retirement and                                                                    
Benefits as a reasonable goal.                                                                                                  
                                                                                                                                
HB  79  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
CS FOR SENATE BILL NO. 16(FIN)                                                                                                
                                                                                                                                
     "An   Act  relating   to  certain   alcoholic  beverage                                                                    
     licenses and permits; relating  to the bond requirement                                                                    
     for  certain alcoholic  beverage  license holders;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
10:50:26 AM                                                                                                                   
                                                                                                                                
Co-Chair Wilson MOVED to RECIND action taken on SB 16.                                                                          
                                                                                                                                
There  being  NO  OBJECTION, it  was  so  ordered.  Co-Chair                                                                    
Wilson   explained   that   she    wanted   to   make   sure                                                                    
Representative LeBon's concerns were addressed properly                                                                         
                                                                                                                                
10:50:54 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:01:48 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Wilson WITHDREW her RECENSION. There being NO                                                                          
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
11:02:48 AM                                                                                                                   
                                                                                                                                
Co-Chair Wilson RECESSED TO THE CALL OF THE CHAIR [note:                                                                        
the meeting never reconvened].                                                                                                  
ADJOURNMENT                                                                                                                   
                                                                                                                                
11:02:09 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:02 a.m.                                                                                         

Document Name Date/Time Subjects
HB079 Letter of Support Adam Lust 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Concern Baxter 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Adams 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Alaska Fire Chiefs Association Styers 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Albright 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Badalich 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Barbeau 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Barnes 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bell 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bender 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Biederman 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bird 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Blackburn 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support BMolle 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Booher 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bowey 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support CKiewik 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support BPierson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Buchta 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bundy 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Buness 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support CHanson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Davies 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Dennis 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support DGregg 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support DJones 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Duffy 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Farrel 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fellman 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fenton 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fifer 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Forth 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Foster 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fraize 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fuchs 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Glorioso 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Gunderson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Hanson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Harvey 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Harley 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Hawbaker 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Head 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Hendricks 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support HGallien 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Holeman 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Huf 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Jeffers 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Jensen 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Jones 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support JWolcott 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Joyner 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Karlberg 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Keene 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Kiewik 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Kneaper 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Kopplin 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Kroenig 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Lamphier 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Lewis 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Lex 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Marcini 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Mayes 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support McConnel 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support McDonald 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Meinhardt 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Molle 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support O'Connor 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Ohms 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Pereira 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Peterson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support PGregg 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Pierson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Potter 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Presser 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Quinton 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Robertson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Rojas-Villarreal 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Romero 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Schneider 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support SGallien 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Simonds 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Smith 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Spohn 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Stage-Harvey 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Stiler 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Strahan 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Thompson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Upchurch 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Vierra 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Wagner 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Winn 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Wallace 5.12.2019 (2).pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Wallace 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Walters 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Wells 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Whitney 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Winegarner 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB 79 PERS Plan Comparison.pdf HFIN 5/15/2019 9:00:00 AM
HB 79