Legislature(2025 - 2026)ADAMS 519
03/19/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| HB48 | |
| HB17 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 17 | TELECONFERENCED | |
| + | HB 48 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 19, 2025
1:36 p.m.
1:36:38 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Andy Josephson, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Jamie Allard
Representative Jeremy Bynum
Representative Alyse Galvin
Representative Sara Hannan
Representative Nellie Unangiq Jimmie
Representative DeLena Johnson
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Hunter Meachum, Staff, Representative Sara Hannan; Nancy
Meade, General Counsel, Alaska Court System; Maggie Humm,
Executive Director, Alaska Legal Services Corporation;
Lauree Morton, Deputy Director, Alaska Network on Domestic
Violence and Sexual Assault; Representative George
Rauscher, Sponsor; Craig Valdez, Staff, Representative
George Rauscher; Representative Ted Eischeid.
PRESENT VIA TELECONFERENCE
Jamie Kokoszka, Program Coordinator 2, The Governor's
Council on Disabilities and Special Education, Wasilla;
Lavada Simeonoff, Self, Anchorage; Britni Henry, Self,
Wasilla; Sandra Moller, Director, Division of Community and
Regional Affairs, Department of Commerce Community and
Economic Development, Anchorage; Brandon Roomsburg,
Retirement and Benefits Manager, Division of Retirement and
Benefits, Department of Administration; Mark Whisenhunt,
Self, Palmer; Austin Flavin, Self, Palmer; Dan Wayne,
Attorney, Legislative Legal Services.
SUMMARY
HB 17 DISABLED VETERANS: RETIREMENT BENEFITS
HB 17 was HEARD and HELD in committee for further
consideration.
HB 48 CIVIL LEGAL SERVICES FUND
HB 48 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the meeting agenda.
1:38:06 PM
AT EASE
1:39:30 PM
RECONVENED
HOUSE BILL NO. 48
"An Act relating to appropriations to the civil legal
services fund."
1:39:55 PM
Representative Hannan introduced the bill. The bill would
amend an existing statute and change the percentage of
court filing fees that could be appropriated to the Civil
Legal Services Fund (CLSF). She stressed that the Alaska
Legal Services corporation (ALSC) and access to civil legal
services was created to help safeguard low-income Alaskans'
access to civil actions and civil legal representation. The
bill would help create a more stable mechanism for state
funding for ALS. The bill would amend the statute creating
CLSF (AS 37.05.590) so up to 25 percent of court filing
fees could be appropriated by the legislature to CLSF to
provide civil legal aid to low-income Alaskans.
Representative Hannan continued that at current funding
levels, ALSC turned away hundreds of families seeking
assistance each year due to funding limitations. She shared
that ALSC was the most referred to legal provider in the
state, and she thought many members had referred
constituents there. She asserted that ALSC's work helped
reduce unnecessary lawsuits and reduced court costs. She
thought the self-help resources ALSC developed and
maintained helped people to navigate the system more
effectively and efficiently.
1:41:46 PM
HUNTER MEACHUM, STAFF, REPRESENTATIVE SARA HANNAN, reviewed
the sectional analysis (copy on file):
Section 1 amends AS 37.05.590. to allow for up to 25
percent of court system filing fees to be appropriated
by the Legislature to the existing Alaska Civil Legal
Services Fund each year to provide access to civil
legal aid for low-income Alaskans.
Representative Galvin asked if there were funds that were
not spent in one year, if the funds would be returned to
another fund. She asked if the funds would be tracked year
by year.
Representative Hannan responded that CLSF was a fund where
court filing fees were placed. The bill change would allow
the legislature to appropriate up to 25 percent of the
filing fees to ALSC, whose operational costs far exceeded
the state contribution.
Co-Chair Foster relayed that the general counsel for the
Alaska Court System was present.
1:43:45 PM
NANCY MEADE, GENERAL COUNSEL, ALASKA COURT SYSTEM, relayed
that she was mostly present to answer questions. She
detailed that all of the court's filing fees currently went
directly to the General Fund (GF), as did other funds
collected such as bail, fines, or other items. The GF was
subdivided into certain funds and some amount was put into
the CLSF. Currently 10 percent of the filing fees went into
CLSF, as opposed to the 25 percent proposed in the bill.
The funds were forwarded to ALSC by the Department of
Commerce, Community and Economic Development (CED).
Representative Stapp asked how ALSC was funded prior to the
10 percent.
Ms. Meachum responded that prior to 2018, the fund was made
up of punitive damages awarded in civil matters.
Representative Stapp asked if the current 10 percent of
court filing fees was an adequate sum for a period of time
before inflationary pressure changed matters, or if the
amount was a lifeline.
Representative Hannan replied that it was a lifeline. She
noted that the ALSC executive director was available to
answer questions. She recalled that at one time there were
substantial direct appropriations of Unrestricted General
Funds (UGF), and the court fees were not part of the
calculation. She pondered that civil cases did not
typically have punitive damages. She recounted that in
2018, the original bill to create the fund was for 25
percent, and there had been a political compromise to
reduce the amount to 10 percent. She felt it had never been
adequate to meet the needs. She thought the director would
discuss the number of requests and number of people turned
away because of a lack of resources. She thought ALSC had
to prioritize life/safety issues.
Representative Stapp asked when the last time was that the
filing fees were increased.
Ms. Meade responded that the filing fees were set by the
Alaska Supreme Court through administrative rule and were
last amended (increased) in 2019.
1:47:40 PM
Representative Stapp asked if the court system had interest
in raising the fee structure in the near future.
Ms. Meade responded that the supreme court was probably
unaware of the bill or system. One the court deposited its
fees it did not track where the legislature chose to
appropriate. The court was not currently considering
raising its filing fees. The fees were always set with an
eye towards a blance of allowing people to access the
courts and an appropriate amount to charge for the service.
Representative Bynum observed that there was a fiscal note
for $468,000, coming out of the GF to go to ALSC. He asked
if there was anything currently prohibiting the legislature
from adding more UGF for the purpose.
Ms. Meade responded "no."
Representative Bynum understood that the 10 percent that
was going to CLSF fees were from all filing fees in the
court system, or if it was specifically for filing fees for
civil cases.
Ms. Meade responded that the court system did not charge
filing fees for criminal cases. She continued that the
court charged fees for civil cases ranging from divorce,
appeals, and small claims in different amounts. The amount
was generally $250.
Co-Chair Josephson asked about punitive damages.
Representative Hannan responded that from 2007 to 2018, 50
percent of punitive damage fees had been awarded. It was
very rare for punitive damages to be awarded.
Co-Chair Josephson noted that when he thought of punitive
damages, he thought of a civil lawsuit or personal injury
action in which damages went to a prevailing party because
of the egregious nature of the harm or misconduct of the
other party. He thought punitive damages went to human
beings and not the court system.
Representative Hannan responded that it was her
understanding. She would prefer to have an attorney answer
the nuances regarding why punitive damages did not work as
a funding mechanism.
1:51:56 PM
Ms. Meade added that the current language of the statute
starting shown in the bill on line 6, "the legislature can
appropriate to the fund from amounts deposited into the GF
of the state under AS.09.17.020(j)." There were two funding
sources under the bill. There was also discussion of filing
fees. She relayed that there was a change made to statute
in the late 1990s in conjunction with tort reform.
Subsection (j) of the statute referenced that if a person
received an award of punitive damages the court shall
require 50 percent of that amount be deposited into the GF
of the state. She thought the provision was odd and
probably did not work as intended as there was no
enforcement mechanism. The court put on an order when there
was a punitive damages award (which was vanishingly rare)
that the person needed to put 50 percent of the amount
collected into the GF. To her knowledge there had been zero
dollars collected into the GF under the provision and
thereafter into the CLSF under the provision of law.
Co-Chair Josephson pointed out that although the punitive
damages awards were vanishingly rare, the law that funds
that entered the GF get distributed to ALSC.
Ms. Meade responded yes if the funds entered the GF. She
pointed out that almost all cases were settled, and even
any award of punitive damages was very rare. If there was a
case where a jury awarded punitive damages (which was rare
to non-existent) the award would say that the person must
send 50 percent to the GF. The attorney general was
notified of the judgements but to her knowledge, she did
not know if any money had ever been deposited to the GF
under the provision during her tenure.
Co-Chair Josephson relayed that he would vote for the bill,
but he was engaging in academic discussion.
Representative Tomaszewski asked about the governor's
budget request of ten percent, which was about $312,000;
and the bill would raise it to 25 percent, which was an
additional $468,000 for a total of $781,000. He asked who
ALSC was and how it was organized.
Representative Hannan replied that she thought executive
director would come forward and speak to Representative
Tomaszewski's question.
1:55:59 PM
MAGGIE HUMM, EXECUTIVE DIRECTOR, ALASKA LEGAL SERVICES
CORPORATION, thanked the sponsor of the bill. She read from
prepared remarks:
ALSC is a non-profit law firm that has provided free,
critical, civil legal aid to low-income Alaskans in
all corners of this state since we opened our doors
almost 60 years ago. The services we provide help
protect Alaskans from domestic violence and other
abuse, protect Alaskan's livelihoods and benefits to
which they are legally entitled, and help Alaskans
gain access to healthcare and maintain safe housing.
The very best way to demonstrate the work that we do
is by sharing client impact stories and I'd like to
both open and close with an anecdote:
Becky and her husband are seniors who came to
ALSC for help removing unsafe family members that
were living on their land. As you know, this is
not an uncommon scenario in Alaska. Becky and her
husband tried to resolve his problem by
themselves, but the family members refused to
leave, even when given the proper notice to
vacate the property. Things unfortunately turned
violent. An ALSC attorney helped Becky and her
husband file an eviction case where they were
successful in removing the family members from
their property. Becky and her husband are now
able to live on their land in peace.
In SFY24, through our 14 locations throughout the
state, we provided legal assistance in over 6,200
cases impacting over 17,000 Alaskans in 204
communities. The communities you will find us in
include: Anchorage, Bethel, Dillingham, Fairbanks,
Kenai, Kodiak, Ketchikan, Kotzebue, Palmer, Nome,
Utqiagvik, and Wasilla. We are also located inside the
Alaska Native Medical Center and Providence Hospital
in Anchorage.
Last SFY:
? Nearly ? of our clients were seniors
? Over 1/3 were live with one more disabilities
? Hundreds - at least 17% - of our clients identify as
victims of domestic violence
? At least 7% identified as veterans
While there are a number of critical legal services we
can provide and populations we can serve, I also want
to mention that there are a number of types of cases
that we do not do and are prohibited from doing by
federal law. These include but not limited to:
criminal matters, representation of prisoners in
litigation, class actions, cases on welfare reform,
cases about abortion or assisted suicide, cases about
redistricting, representation of undocumented
immigrants except were DV or human trafficking is
involved; evictions from Public Housing Involving
Illegal Drugs, and fee generating cases that private
lawyers will take on contigency.
The critical legal services that we do provide
stabilize households that are in crisis and help to
prevent problems upstream. In doing this, we save the
state and our local communities money. A 2012 study
commissioned by the AMTHA found that ALSC has a 5:1
ROI on investment. Annually we bring $17.8 million
dollars Economic Benefits to communities across
Alaska.
These returns come in a variety of ways, for example:
? $600,000K in Shelter costs avoided when we prevent a
family from becoming homeless
? $2.6 Million in Avoided medical and counseling costs
for survivors of dv and their children
2:00:00 PM
Ms. Humm continued to address her prepared remarks:
A comprehensive study on Alaska's justice ecosystem
showed that ALSC is the most referred to entity in the
State for households facing legal problems.
? By providing clients with advice, referring them to
resources, helping them fill out forms, or
representing them in court, we reduce the burden on
the court system and other state systems
? We also partner closely with the state court system,
state and local agencies, and other legal service
providers to increase efficiencies in court cases and
referrals. These partnerships also bring additional
efficiencies and reduce costs.
Despite this hard work by ALSC and other justice
partners, Alaska continues to face a crisis when it
comes to Alaskans being able to identify and get help
for their civil legal problems:
? Last year, ALSC had to turn away hundreds of
families who sought assistance w/ compelling needs. On
average, we turn away roughly 1 family for each one
that we serve. Not because there weren't laws to
protect them but because we lacked the resources to
help.
? A recent national study found that low-income
Americans do not get enough legal help for almost all
- 92% - of their civil legal problems. When we turn
people away, they often have nowhere else to go. When
these problems are not addressed, they result in a
cascade of legal, social, and economic consequences.
Many of which are dire, like losing a home or being
subjected to continued violence.
? Individuals are not entitled to attorneys in civil
matters as they are in criminal matters. Further,
there are remedies that crime victims cannot obtain in
criminal matters and must turn to the civil legal
system for. For example, a domestic violence
protective order is a civil proceeding.
? Equal access to justice is a cornerstone of our
democracy. Our state and federal constitutions
guarantee due process and equal protection under the
law, but when it comes to the civil legal justice
system, we are facing an enormous justice crisis
because there is a significant gap between those who
can actually identify, address, and get help for their
civil legal needs and those who can't.
The fact is our target population continues to grow
each year and funding is not keeping pace. Our funding
through the state is about half of what it was 40
years ago but the poverty population has more than
doubled.
HB 48 relates to one of our critical funding sources -
the Civil Legal Services Fund.
? The fund operates as follows - At legislature's
discretion, it is funded by a 50% of the State's share
of civil punitive damage awards and up to 10% of court
system filing fees collected in the most recent Fiscal
Year.
? The statute was last amended (2018) with nearly
unanimous support after widespread bi-partisan
acknowledgement that ALSC was severely underfunded.
? Because the availability of funds is dependent on
court system filings and punitive damages awards to
the state, the amount available from the fund can vary
greatly. Since established over 15 years ago, funds
have fluctuated greatly from $0 to $360K.
? In FY24 $296,400 is being appropriated
? HB 48 would increase that 10% of court system filing
fees to 25%/ For every extra 100K we receive, we
estimate that we can help another 182 Alaskans.
We are doing as much as we can with our current
resources - every dollar is extremely important to us.
We stretch and leverage our funding and we are
incredibly efficient:
? We are leveraging resources wtih donated office
space and support from all local communities where we
have offices
? Attorneys are paid far less than the private bar or
attorneys that work for the state. Attorney in
Anchorage starts at $66K compared to a state attorney
that starts at $96K. This was after making significant
improvement to our salary scales two years ago.
? Our volunteer program leveraged nearly 2,000
volunteer hours last year. This was the work of
community justice workers, pro bono lawyers, law
clerks and other volunteers in hundreds of cases.
? And, to move the needle on addressing the justice
crisis that I just described, we are innovating. ALSC
has set up the first of its kind in the nation
training and resource center to train and credential
community members who are not lawyers to provide
targeted civil legal assistance. This approach to
closing the justice gap - the development of a network
of Community Justice Workers across our state - is
being watched across the nation with multiple states,
including TX and AZ, either actively in the process of
replicating it or looking at it as a solution to their
own justice gap.
I'd like to close with another client impact story:
? Ronald came to ALSC for help because his adult son
was refusing to leave his home, stealing from him, and
creating an unsafe situation for Ronald. Ronald had
acute health problems that made him very vulnerable.
An ALSC attorney helped Ronald secure a temporary and
long-term financial abuse protective order. As a
result, his son was removed from the home and Ronald
is now safe. With the protective order in place, If
his son returns, Ronald is able to call law
enforcement for help.
2:06:33 PM
Ms. Humm continued her remarks:
Civil legal aid is critical to help those who need it
- often a lifeline - but the cost of providing these
services is increasing along with the demand for these
services. If our funding does not keep pace, we will
be forced to turn away hundreds of people like Ronald
and Becky who I mentioned in my opening. This is not
acceptable. Passing HB48 is critical to adequately
fund civil legal services and addressing the justice
crisis in Alaska. Thank you so much for your time and
consideration.
Representative Tomaszewski about ALSC's budget and its
other funding sources.
Ms. Humm responded that ALSC's overall budget was just over
$10 million. She noted that ALSC got funding from a variety
of sources including federal funds, state funds, local
grants, private donations, and tribal contracts.
Co-Chair Foster noted that Ms. Humm had mentioned that for
every one client ALSC took on, it had to turn away another.
He asked how many more people the corporation could help
with the additional funding proposed in the bill.
Ms. Humm responded that ALSC's best estimate was that for
each additional $100,000 it could help 182 people, and with
an additional $400,000 it could help roughly 750 to 800
additional people.
2:09:04 PM
Representative Bynum asked if criminal fines and fees were
applied in criminal cases when people were found guilty. He
asked about the original intent for the fees and what they
would be used for.
Ms. Meade responded that the court had charged a filing fee
for civil cases for decades and had always deposited the
funds into the GF. She was not sure of the precise nature
of Representative Bynum's question.
Representative Bynum pondered that the fees were put in
place for a reason, and although the funds might not be
designated as such, he assumed the purpose was to support
the functions of the court system. He asked why the fees
would not be increased to support the endeavor. He was
trying to understand what would not be funded when the
funds were moved to ALSC.
Ms. Meade clarified that the court was neutral on the bill.
She continued that the assumption the court charged filing
fees and put them into the GF to support the court system
was not the case. She explained that every court system in
the country had some filing fees. She thought the fees were
partially to ensure that a person who filed a court case
had a stake in the matter, and though the fees could
potentially cut down on frivolous lawsuits. The dollars
currently went into the GF that could be appropriated by
the legislature as it wished. The fees were fungible, GF
funds that had nothing to do with the court system's
operating budget request or anything that it did. She could
not answer the question of what would been funded if the
funds did not go to ALSC.
Representative Bynum appreciated that the organization
looked for other funding. He mentioned being on the
Ketchikan Borough Assembly and noted that the borough
provided $25,000 per year for the services through the
Community Grant Program.
2:13:43 PM
Representative Hannan added that nearly every state
supported civil legal aid with its court fees and fines and
with direct appropriation. She cited that Alabama, Oregon,
and Idaho were the only states that did not receive state
funding into legal services. She noted that many times
grant funds on who the grants could serve.
2:14:51 PM
Co-Chair Foster OPENED public testimony.
2:15:14 PM
LAUREE MORTON, DEPUTY DIRECTOR, ALASKA NETWORK ON DOMESTIC
VIOLENCE AND SEXUAL ASSAULT, testified in support of the
bill. She relayed that the Alaska Network on Domestic
Violence and Sexual Assault (NDVSA) was the state coalition
of 24 community-based domestic violence and sexual assault
response service providers. She contended that ALSC was one
non-profit legal corporation that that assisted victims of
domestic violence and sexual assault. The Alaska Native
Justice Center, the Alaska Institute for Justice, and the
network worked with ALSC to ensure that as many victim
survivors as possible were served when they sought
assistance to navigate the civil justice system. She
stressed that the state needed a strong, well-funded ALSC.
Ms. Morton cited that survivors rated the filing of
protective orders as one of the two most effective tools in
stopping domestic violence, second only to leaving. She
cited statistics that indicated an 80 percent reduction in
police report reductions and reports of physical violence
in the following 12 months. She noted that protective
orders could be the difference between life and death, and
survivors turned to the courts for protective orders, child
custody, and divorce when seeking to escape violence.
Having an attorney in their corner made it more likely a
victim would receive a favorable outcome, and research
showed legal assistance of any kind had been demonstrated
to improve outcomes. The tangible benefits were increased
physical and economic security. Many studies showed a
larger societal benefit. She cited a reduction in the need
for other services such as foster care and police services.
Ms. Morton discussed cost-benefit analyses that indicated
civil legal assistance almost always provided economic
return for society. She emphasized that the expansion of
civil legal assistance for victims must be contemplated if
the state was serious about preventing domestic violence.
2:19:15 PM
JAMIE KOKOSZKA, PROGRAM COORDINATOR 2, THE GOVERNOR'S
COUNCIL ON DISABILITIES AND SPECIAL EDUCATION, WASILLA (via
teleconference), testified in support of the bill. She
thanked the sponsor and co-sponsors. She discussed the
activities of the Governor's Council on Disabilities and
Special Education and how ALSC helped by providing
assistance to low-income Alaskans with disabilities in
legal matters. She read a list of examples of people
seeking help for civil legal matters. She reminded that
half of people were turned away due to lack of resources.
She noted that people with disabilities were more likely to
be victims of financial fraud. She emphasized that the
council supported the bill.
2:22:16 PM
LAVADA SIMEONOFF, SELF, ANCHORAGE (via teleconference),
testified in support of the bill. She provided testimony on
behalf of Mark Webber to accommodate his disability, which
affected his ability to communicate. She described Mark's
story and experience seeking legal services. He sought
assistance from at least 11 law firms before getting
assistance from ALSC. She described how ALSC took action in
helping Mark seek justice. Mark was guided through the
legal process with clarity and professionalism. She could
not overstate the significance of ALSC's involvement. She
stressed that ALSC made sure they had a voice in the
matter. She expressed gratitude for ALSC and its assistance
after it had made an immeasurable difference in Mark's
life.
2:26:47 PM
BRITNI HENRY, SELF, WASILLA (via teleconference), testified
in support of the bill. She had reached out to ALSC on
several occasions. She had left a long-term marriage and
had been in a vulnerable position. She recounted reaching
out for assistance and not receiving it because ALSC did
not have the capacity. She had received help the previous
year and described it as making a remarkable difference in
her life. She described the help from ALSC as making a
significant impact. She wished that ALSC could help more
people. She wished more women could get the same support
from ALSC.
2:29:57 PM
Co-Chair Foster CLOSED public testimony.
2:30:41 PM
SANDRA MOLLER, DIRECTOR, DIVISION OF COMMUNITY AND REGIONAL
AFFAIRS, DEPARTMENT OF COMMERCE COMMUNITY AND ECONOMIC
DEVELOPMENT, ANCHORAGE (via teleconference), reviewed the
fiscal note with control code tRzkm and OMB component 2879.
There was $468.9 thousand in the governor's budget for the
fund, and with a change to 25 percent it would add an
additional $312.6 thousand. In following years there would
be $781.5 thousand if the entire 25 percent were allocated.
2:31:38 PM
Ms. Meade reviewed the zero fiscal note for the Alaska
Court System, OMB component 768 and control code EyJrz. The
court system deposited any funds it collected (fees, fines,
or bail) on to the GF for distribution by the legislature.
None of the funds went to the court system or its
operations, and it was inconsequential to the court system
how much the legislature decided to put into the sub-fund
of the GF.
Co-Chair Foster asked for the publish date of the fiscal
note Ms. Meade was referencing. He clarified the control
code.
Ms. Meade clarified that her fiscal note did not have a
public date. She noted that regardless of the publish date,
her testimony would remain the same.
Representative Bynum asked if the change was possible
without a bill. He asked if, since 2018, there had been any
funds appropriated outside the 10 percent of the sub-fund.
Ms. Meade responded that the previous year there had been
an additional appropriation. She deferred to Ms. Humm as to
the exact amount.
Ms. Humm affirmed that ALSC had a $400,000 appropriation
the previous year, and the same amount was also in the
budget for the current year. The funds were separate than
the CLSF.
Representative Bynum asked if the intention was to utilize
the additional funds proposed in the bill as well as the
appropriation.
Ms. Humm replied that ALSC was falling behind in funding
since the poverty population had grown. The organization
would not be using the additional CLSF funds as a
substitute for the appropriation because it would not gain
any ground if the amount of funding remained the same.
Representative Bynum understood that when someone was in
need, civil cases were non-monetary in nature. He asked if
there were cases where there was significant monetary gain,
and if ALSC charged for services in such cases.
Ms. Humm responded that ALSC was prohibited from charging
for their services. On occasion, ALSC would receive an
award for attorney fees if it prevailed in a case and it
was appropriate under Alaska law. The funds would come to
ALSC like it would to a law firm, but the funds had
spending restrictions.
2:37:39 PM
Representative Stapp did not like the messiness of the
funding situation and would like to clean it up. He asked
if ALSC would be open to having 50 percent of the court
filing fees go to ALSC and then getting rid of the GF
appropriation in the budget.
Ms. Humm thought the situation would be possible, but only
if the amount were increased to accommodate for the loss of
the GF.
Co-Chair Foster set an amendment deadline for March 27 at
5pm.
HB 48 was HEARD and HELD in committee for further
consideration.
2:39:11 PM
HOUSE BILL NO. 17
"An Act relating to retirement benefits and military
service."
2:39:36 PM
REPRESENTATIVE GEORGE RAUSCHER, SPONSOR, explained that the
bill was a reintroduction of the previous year's HB 232. He
recounted that HB 232 had successfully advanced through the
House Military and Veterans Affairs Committee, and the
House Finance Committee before reaching the House Rules
Committee on May 8, 2024, too late for passage. He thanked
the committee for its unanimous support in the prior year.
He noted that there had been nine "do pass" designations on
the bill.
Representative Rauscher relayed that HB 17 ensured that
veterans that were totally and permanently disabled could
access accrued Public Employees' Retirement System (PERS)
benefits a few years earlier without penalty. The bill also
clarified that the military service purchased under PERS
rules counted as credited service requirements for normal
retirement. He noted the veterans with total and permanent
disabilities often encountered significant barriers to
employment, financial stability due to their service-
connected conditions. He contended that by passing HB 17,
the legislature could ensure the veterans received the
benefits they had already earned at a time when they needed
them the most. The bill did not expand benefits but simply
removed unnecessary hurdles for disabled veterans that had
already served the country and the public. He contended
that with the support of the committee and the legislature,
the state could take a meaningful step towards providing
stability and certainty for those that sacrificed and gave
so much of their lives and bodies for our nation.
2:42:04 PM
CRAIG VALDEZ, STAFF, REPRESENTATIVE GEORGE RAUSCHER, went
through the sectional analysis (copy on file).
Section 1: AS 39.35.370(a) This section amends AS
39.35.370(a) to add additional language related to
eligibility requirements when a terminated employee is
eligible for a normal retirement benefit. Specifically
adding new subsections, A and B to section 1, lines 7
through 10.
Section 2: Repeals three statutes.
Representative Stapp commented that he supported the bill.
He asked about the discount rate given and understood that
the veterans would be able to use military service to buy
into retirement. He asked what the discount rate would be.
2:43:50 PM
BRANDON ROOMSBURG, RETIREMENT AND BENEFITS MANAGER,
DIVISION OF RETIREMENT AND BENEFITS, DEPARTMENT OF
ADMINISTRATION (via teleconference), assumed that
Representative Stapp was asking about being able to retire
sooner than being vested or meeting normal early-eligible
requirements.
Representative Stapp answered in the affirmative. He
thought typically people could buy into it with money to
make sure the actuarial realized value was the same.
Mr. Roomsburg answered affirmatively. He asked if
Representative Stapp was speaking to the ability to accept
an actuarial reduction to the benefit and not having to pay
for the claim itself.
Representative Stapp asked if the bill proposed to make the
veterans buy the time, or if the veterans were just
receiving the time.
Mr. Roomsburg would follow up at a later time.
Co-Chair Josephson thought the sponsor had indicated that
the bill did not propose to expand benefits. He pondered a
person with 5 years in credited service, for defined
benefit (DB) or defined contribution (DC) plans. He assumed
that if a person could get into retirement sooner, there
benefits were expanded in terms of timeline if not in
quantity or quality of the benefit.
Mr. Valdez responded that it was only for DB plans and only
covered Tier 1 employees. He understood Co-Chair
Josephson's reasoning.
2:46:37 PM
Representative Hannan asked if the number of people
potentially affected was known. She recalled that two
people were affected. She thought the people both needed to
already have 5 years credited service in the DB system and
be permanently and totally disabled service-connected. She
thought the scope was narrow.
Mr. Valdez relayed that the state did not have precise
numbers but had narrowed it down to potentially two Tier 2
individuals. The fiscal note mentioned there were
potentially up to 48 people that could meet the
qualifications. He suggested addressing the question to the
authors of the fiscal note.
Representative Hannan wanted to hear from DRB as to whether
it had come up with a broader number.
Mr. Roomsburg did not hear the question.
Representative Hannan asked how many people would be
captured under the law if the bill was implemented.
Mr. Roomsburg replied that it would be approximately 48
members.
Representative Hannan asked about the 48 people who
potentially could qualify because of having five years of
service. She asked if it was not known if they were all
living and currently receiving disability.
Mr. Roomsburg responded that it could be a combination of
active, inactive, or retired members. He offered to split
up the demographics for her review.
2:49:10 PM
Representative Bynum thought that under the bill the
individuals would still have to meet the five years of
service requirement. He asked about the term "terminated"
being used twice. He asked about the current definition for
"permanently and totally disabled for service-connected
conditions."
Mr. Roomsburg responded that when he read the language, he
did not see the portion about five years of service as part
of the bill. He would have the same question for the bill
sponsor.
Co-Chair Josephson asked Mr. Roomsburg to repeat his
answer.
Mr. Roomsburg replied that he would have the same question
as Representative Bynum had regarding the "at least 5
years" of service.
Mr. Valdez relayed that he would look into the language.
Mr. Roomsburg responded that Section 1 stated "with at
least five years of credited service."
Co-Chair Foster suggested that the sponsor do some research
on the credit service.
Representative Rauscher responded that the phrase "at age
60" was removed. He was not sure he was following the
question, but he would return to the committee with more
information.
2:52:53 PM
Representative Bynum acknowledged that the bill stated "at
least five years," but wanted to ensure that it was a
requirement with the way the bill was written. He thought
it would be a question for the Division of Legal and
Research Services. He asked about the specific terminology
relating to a terminated employee. He discussed terminology
regarding veterans that were permanently disabled, and
whether it was specifically defined in the federal code. He
discussed classifications of disability.
Mr. Valdez responded that he would follow up with
legislative legal services to determine why certain
terminology was used. He relayed that the bill used the
Veteran's Administration (VA) definition of permanent
disability.
Co-Chair Josephson asked when Tier 2 had ended.
Mr. Roomsburg responded that Tier 2 closed on June 30,
1996.
2:54:58 PM
MARK WHISENHUNT, SELF, PALMER (via teleconference),
advocated on behalf of disabled veterans and supported the
bill. He wanted to address some of the questions members
had asked. He explained that disabled veterans often faced
challenges like limited employment opportunities,
difficulty accessing quality healthcare, and higher rates
of mental health issues such as Post-Traumatic Stress
Disorder (PTSD). He discussed the transition to civilian
life, which could be challenging. He thought veterans often
downplayed the impact of service. He discussed the category
of veterans with permanent disabilities, who could face
even greater challenges with employment and often struggled
with income stability. He had personally experienced the
challenges and had seen the same in others.
Mr. Whisenhunt contended that the bill could serve a unique
role in supporting disabled veterans. He suggested that
support of the bill would show commitment to veterans. The
bill allowed totally permanently disabled veterans to
access retirement benefits they had earned. He thought the
legislation was a lifeline and cited that the VA had deemed
less than 4 percent of veterans were totally permanently
disabled. He cited a study that indicated that the small
group of veterans had diminished life expectancy when
compared to the civilian population. Disabled veterans were
dying on average 15 years earlier than their civilian
counterparts. He estimated that there were approximately 48
totally permanently disabled veterans that had a PERS
account. He believed that allowing approximately 48 totally
disabled veterans with a significantly lowered life
expectancy to access their hard-earned retirement funds
would in now way cause an undue hardship to the PERS
system.
Mr. Whisenhunt addressed earlier questions relating to how
one would buy military time back. He noted that the
circumstance applied to Tiers 1, 2, and 3. In order to get
any type of benefits, a person would have to be vested by
at least 5 years of service. To purchase military time, it
could only be up to 5 years, and it was done at a rate of
8.5 percent of your annual wage on a vesting year. At year
5, if a person made $50,000 per year, they would have to
pay 8.5 percent of the annual wage, which for the maximum
service credit of five years the person would pay about
$21,000. He noted that the phrases "temporary" and
"permanent" were defined in federal law. The only way to
obtain the specific rating was to be 100 percent disabled
and the VA had to determine the condition would not
improve.
3:01:18 PM
Representative Allard asked about Mr. Whisenhunt's sources
and if he was an expert. She relayed that she had heard
from some veterans that had indicated that the bill would
have a negative impact.
Mr. Whisenhunt replied that he was not an expert but had
done a lot of research. He noted that the data he
referenced was directly from the VA.
Representative Allard was in disagreement with some of what
Mr. Whisenhunt had stated.
Co-Chair Josephson was also confused. He asked if a person
were born in 1988 and at age 18, they could have just
become a Tier 3 employee when the program ended and had
state or municipal service. He discussed the hypothetical
situation of the individual having five years state service
before entering the miliary and becoming totally and
permanently disabled. He pondered that the individual would
currently be 37 years old and would be able to qualify for
retirement decades before others. He pondered that maybe it
was a perfectly good policy call because it was affordable
(because of the low number of people) and the person
defended our country. He asked if under the bill such a
person could get retirement.
Mr. Whisenhunt responded that the person would not regard a
full retirement but would be eligible for the years that
they worked. If the person worked for five years, they
would be eligible for ten percent of their retirement,
which would be a few hundred dollars a month but could be a
significant difference in a person's life.
3:04:49 PM
Co-Chair Josephson asked about Mr. Whisenhunt's comment
about being eligible for ten percent of retirement. He
thought the person would be eligible for all of the
retirement, but it would be fairly small after only working
five years.
Mr. Whisenhunt responded that Tier 2 and 3 retirement was
based off years worked, and ultimately the percentage of
income. If the person made $50,000 per year they would be
eligible for 10 percent of that per month.
Co-Chair Josephson asked why there was no cost to the state
or the Department of Administration [ref: FN 1 from DOA,
OMB Component 64].
Mr. Whisenhunt understood that the fiscal note was
indeterminate because the division did not collect data on
veterans' status.
3:06:43 PM
Representative Hannan thought that Mr. Whisenhunt had
raised a couple of issues that were not in the bill. She
thought he had stated that a person could only bring in
five years of service. She thought line 7 said the person
had to be 60 years of age before drawing the benefit. She
asked if she was reading the bill differently.
Mr. Whisenhunt responded that the five years was defined
within AS 35, which stipulated it was the maximum amount of
time a person could purchases from military service. If a
person had served three years, they could purchase a
maximum of three years of service. He noted that there was
an "or" between a and b; meaning that one had to reach age
60 or be deemed permanently and totally disabled. Vesting
was required for both circumstances. If a person was
permanently and totally disabled at age 44, a person could
retire at that time with the service they had in the
system.
Mr. Valdez reiterated that there were two circumstances in
(a) and (b) to qualify.
Representative Allard asked if anyone had reached out to
the sponsor to indicate it was negatively impacting them.
Representative Rauscher responded in the negative.
Representative Allard shared that she had people reach out
who indicated the bill would negatively impact them. She
referenced Mr. Whisenhunt's testimony about veterans'
shorter life span and challenges with employment. As a
veteran she took offense with many of Mr. Whisenhunt's
statements. She stressed that veterans were not inept but
were capable. She thought it was demoralizing to say that
veterans would need handouts. She thought there needed to
be more information, and questioned the quality of Mr.
Whisenhunt's testimony. She relayed that she would proceed
with caution and gather more information on how the bill
could affect veterans that had retired and had paid into
the system.
Co-Chair Foster asked if Mr. Whisenhunt had an affiliation.
Mr. Whisenhunt responded that he was representing himself.
He noted he had put many hours of research into the topic.
He appreciated Representative Allard's position. He
clarified that as a disabled veteran he would never say
that veterans were not good or needed a handout. He
commented that veterans are resilient. He relayed that his
goal was to point to VA statistics on the struggles of some
veterans. He thought the bill would only help veterans and
in no way hurt veterans, whether retired or not.
3:11:47 PM
Representative Rauscher referenced Representative Allard's
comments and did not think there were any handouts or pity.
He pondered that if a person was 100 percent disabled,
their body would deteriorate faster than others. He
explained that the bill related to awards for the service
and a thank you in understanding what disabled veterans
gave up for our country.
Representative Johnson referenced the first paragraph in
the language section of the fiscal note, which indicated
the bill would create an additional unfunded liability to
the PERS plan. The final paragraph referenced roughly 48
members and referenced repeal of statutes. She read from
the fiscal note:
Additionally, the repeal of the 3 statutes listed in
the bill open up the PERS to additional members who
can use prior military service. This information is
not tracked currently, and the Division is unable to
determine how many members this could impact nor the
impact on pension benefit costs to the PERS. As such,
the Division provides an indeterminate fiscal note
based on this analysis and conclusion.
Representative Johnson pondered that the fiscal note did
not go into the cost in-depth. She thought the bill could
create an unfunded liability to PERS.
3:14:15 PM
Co-Chair Foster OPENED public testimony.
3:14:30 PM
AUSTIN FLAVIN, SELF, PALMER (via teleconference), testified
in support of the bill. He was a member of a veteran's
association. He had followed the previous version of the
bill. He grew up in Dillingham and had enlisted in the navy
for six years. He recounted that around 2001, he had some
PERS service prior to enlisting and kept his Tier 3 status.
He discussed four deployments, including a 7-month
deployment to Iraq where he dealt with burn pit activity.
He described the cutting and welding of improper metals and
up-armoring of military vehicles, which involved ingesting
toxins. He had a rating with the VA and he had bought his
time back. He addressed comments related to the bill being
a kind of hand-out. He cited that he had paid over $30,000
to buy his military time back. He interpreted the bill as a
benefit he had already paid for. He addressed Section 3,
line 13, which he thought would affect himself or others
with at least 30 years of credited service. He discussed a
similar provision for police and fire personnel.
Mr. Flavin shared that he supported the bill because he had
a rating with the VA, which he could not disclose. He
relayed that he had Chronic Obstructive Pulmonary Disease
(COPD) directly associated with burn pits in Iraq. He
shared that he was 43 years old and endeavored to be
healthy. He would gladly take the opportunity to retire
sooner and live a better quality of life. He knew there
were individuals that had worse experiences that would also
be eligible. He saw the bill only as helping people that
had served their country, with a high likelihood of serving
in Iraq, Kosovo, and other areas. He mentioned the lower
life expectancy of veterans.
3:22:07 PM
Representative Tomaszewski thanked Mr. Flavin for his
service.
Co-Chair Josephson thanked Mr. Flavin for his service. He
knew that the previous Congress had fought hard for
benefits for people that were exposed to burn pits and
hoped he got what he was entitled to.
3:23:06 PM
Co-Chair Foster CLOSED public testimony.
Representative Hannan asked if the bill would impact anyone
who was already a retiree.
Mr. Roomsburg relayed that he would need to follow up.
Representative Hannan was confused. She understood that the
numbers could not be predicted and that the fiscal note
referenced potential unfunded liability but thought that
the bill would not affect the people who were already
retired or their benefits.
Mr. Roomsburg agreed.
Representative Bynum asked about questions for Legislative
Legal Services.
DAN WAYNE, ATTORNEY, LEGISLATIVE LEGAL SERVICES, JUNEAU
(via teleconference), was available for questions.
Representative Bynum asked about persons being aged 60 or
any age if the terminated employee was a veteran. He
thought the VA's definition would apply. He wondered if
there was a legal reason for saying "terminated" twice.
Mr. Wayne thought the language was for drafting purposes,
and instead of saying "person" the bill said "terminated
employee."
3:27:08 PM
Representative Bynum asked that the reference to terminated
employee in the language of the statute described a person
that was no longer working with the state or under the
retirement program.
Mr. Wayne responded in the affirmative.
Representative Bynum thought the language of the bill
stated that a 100 percent disabled veteran (under the VA
definition) would be able to qualify for early retirement.
If a person had worked under Tier 2 or Tier 3 for five
years then met the classification, the person would be able
to file for retirement. He asked if there had been
consideration of putting the new category under the section
where there would be an actuarial adjustment.
Mr. Valdez responded that he was not involved in the
drafting, but he could follow up.
Representative Bynum was just curious if it was taken into
consideration. He thought the fiscal note indicated there
was a small scope of individuals affected. He supported the
bill.
Co-Chair Foster asked to review the fiscal note.
Mr. Roomsburg reviewed a zero-cost fiscal note from DOA
with OMB component 64 and control code IUnPL. There were no
requested operating expenditures, fund sources, or
additional positions requested for the bill. The department
already had sections for processing the work. The
department anticipated regulations to be developed at a
later time if the bill was passed.
Co-Chair Foster set an amendment deadline of March 27 at 5
o'clock p.m.
Representative Rauscher expressed his appreciation for the
committee hearing the bill. He noted that the bill only
affected a small number of veterans with total disability.
Co-Chair Foster reviewed the agenda for the following
meeting.
HB 48 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
3:32:15 PM
The meeting was adjourned at 3:32 p.m.