Legislature(2017 - 2018)BARNES 124

02/16/2018 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 303 WORKERS' COMP; REHAB/REEMPLOYMENT TELECONFERENCED
Heard & Held
-- Public Testimony --
+= HB 110 MASSAGE THERAPY LICENSING; EXEMPTIONS TELECONFERENCED
Moved CSHB 110(L&C) Out of Committee
+= HB 83 TEACHERS & PUB EMPLOYEE RETIREMENT PLANS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                       February 16, 2018                                                                                        
                           3:15 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Sam Kito, Chair                                                                                                  
Representative Adam Wool, Vice Chair                                                                                            
Representative Andy Josephson                                                                                                   
Representative Louise Stutes                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Chris Birch                                                                                                      
Representative Gary Knopp                                                                                                       
Representative Bryce Edgmon (alternate)                                                                                         
                                                                                                                                
OTHER LEGISLATOR PRESENT                                                                                                      
                                                                                                                                
Representative Justin Parish                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 303                                                                                                              
"An  Act  relating  to workers'  compensation  benefits  for  the                                                               
rehabilitation and reemployment of injured employees."                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 110                                                                                                              
"An Act relating to the  practice of massage therapy; relating to                                                               
the Board of  Massage Therapists; and providing  for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - MOVED CSHB 110(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 83                                                                                                               
"An  Act relating  to new  defined  benefit tiers  in the  public                                                               
employees'  retirement   system  and  the   teachers'  retirement                                                               
system;  providing certain  employees  an  opportunity to  choose                                                               
between  the defined  benefit and  defined contribution  plans of                                                               
the  public  employees'  retirement   system  and  the  teachers'                                                               
retirement system; and providing for an effective date."                                                                        
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 303                                                                                                                  
SHORT TITLE: WORKERS' COMP; REHAB/REEMPLOYMENT                                                                                  
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/24/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/18       (H)       L&C, FIN                                                                                               
02/16/18       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 110                                                                                                                  
SHORT TITLE: MASSAGE THERAPY LICENSING; EXEMPTIONS                                                                              
SPONSOR(s): KITO                                                                                                                
                                                                                                                                
02/08/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/08/17       (H)       L&C, FIN                                                                                               
02/15/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/15/17       (H)       Heard & Held                                                                                           
02/15/17       (H)       MINUTE(L&C)                                                                                            
02/17/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/17/17       (H)       Heard & Held                                                                                           
02/17/17       (H)       MINUTE(L&C)                                                                                            
02/16/18       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB  83                                                                                                                  
SHORT TITLE: TEACHERS & PUB EMPLOYEE RETIREMENT PLANS                                                                           
SPONSOR(s): KITO                                                                                                                
                                                                                                                                
01/27/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/27/17       (H)       L&C, STA, FIN                                                                                          
03/25/17       (H)       L&C AT 1:00 PM BARNES 124                                                                              
03/25/17       (H)       Heard & Held                                                                                           
03/25/17       (H)       MINUTE(L&C)                                                                                            
04/12/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
04/12/17       (H)       Scheduled but Not Heard                                                                                
04/14/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
04/14/17       (H)       Scheduled but Not Heard                                                                                
04/19/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
04/19/17       (H)       <Bill Hearing Canceled>                                                                                
02/16/18       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
GREG CASHEN, Acting Commissioner                                                                                                
Office of the Commissioner                                                                                                      
Department of Labor & Workforce Development                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during discussion of HB 303.                                                                   
                                                                                                                                
MARIE MARX, Director                                                                                                            
Central Office                                                                                                                  
Division of Workers' Compensation                                                                                               
Department of Labor & Workforce Development                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during discussion of HB 303.                                                                   
                                                                                                                                
BARBARA WILLIAMS                                                                                                                
Alaska Injured Workers Alliance                                                                                                 
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified during discussion of HB 303.                                                                   
                                                                                                                                
THERESA TOLBERT                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during discussion of HB 303.                                                                   
                                                                                                                                
KAREN DAVIS, Vocational Rehabilitation Specialist                                                                               
Davis Vocational Services                                                                                                       
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified during discussion of HB 303.                                                                   
                                                                                                                                
SANDY TRAVIS                                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 303.                                                                       
                                                                                                                                
MICHAEL JENSEN, Attorney                                                                                                        
Law Offices of Michael J. Jensen                                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during discussion of HB 303.                                                                   
                                                                                                                                
KAYA T. KADE, LPC, CDMS, TEP;                                                                                                   
Disability Management Specialist                                                                                                
Kade and Associates                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during discussion of HB 303.                                                                   
                                                                                                                                
GREG WEAVER                                                                                                                     
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified during discussion of HB 303.                                                                   
                                                                                                                                
CRYSTAL KOENEMAN, Staff                                                                                                         
Representative Sam Kito                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented the changes in the committee                                                                   
substitute (CS)for HB 110, for the sponsor of the bill,                                                                         
Representative Sam Kito.                                                                                                        
                                                                                                                                
GRETCHEN GRAEFF                                                                                                                 
Nikiski, Alaska                                                                                                                 
POSITION STATEMENT:  Testified during discussion of HB 110.                                                                   
                                                                                                                                
TRACI GILMOUR, Owner, TLC Massage Therapy; Member                                                                               
Board of Massage Therapists                                                                                                     
Division of Corporations, Business and Professional Licensing                                                                   
(DCBPL)                                                                                                                         
Department of Commerce, Community and Economic Development                                                                      
(DCCED)                                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 110.                                                                          
                                                                                                                                
VOLKER HRUBY, President                                                                                                         
American Massage Therapy Association (AMTA), Alaska Chapter                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during discussion of HB 110.                                                                   
                                                                                                                                
LAUREN PAAP, President                                                                                                          
American Organization for Bodywork Therapy of Asia (AOBTA)                                                                      
Cambridge, Massachusetts                                                                                                        
POSITION STATEMENT:  Testified during discussion of HB 110.                                                                   
                                                                                                                                
EDRIC CARRILLO, Staff                                                                                                           
Representative Sam Kito                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 83 on behalf of the bill                                                                    
sponsor, Representative Sam Kito.                                                                                               
                                                                                                                                
DIANE OAKLEY, Executive Director                                                                                                
National Institute on Retirement Security                                                                                       
Washington, DC                                                                                                                  
POSITION STATEMENT:  Testified during discussion HB 83.                                                                       
                                                                                                                                
JESSE KIEHL, Staff                                                                                                              
Senator Dennis Egan                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented a section-by-section  analysis of                                                             
HB 83 on behalf of the sponsor, Representative Sam Kito.                                                                        
                                                                                                                                
JACOB BERA, Public School Teacher                                                                                               
Eagle River, Alaska                                                                                                             
POSITION STATEMENT:  Testified during discussion of HB 83.                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:15:33 PM                                                                                                                    
                                                                                                                                
CHAIR  SAM KITO  called  the House  Labor  and Commerce  Standing                                                             
Committee meeting  to order at  3:15 p.m.   Representatives Kito,                                                               
Wool,  Chenault (alternate),  and Josephson  were present  at the                                                               
call  to  order.   Representatives  Stutes  and  Sullivan-Leonard                                                               
arrived as the  meeting was in progress.  Also  in attendance was                                                               
Representative Parish.                                                                                                          
                                                                                                                                
            HB 303-WORKERS' COMP; REHAB/REEMPLOYMENT                                                                        
                                                                                                                                
3:16:31 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that the  first order of business  would be                                                               
HOUSE BILL  NO. 303,  "An Act  relating to  workers' compensation                                                               
benefits  for  the  rehabilitation and  reemployment  of  injured                                                               
employees."                                                                                                                     
                                                                                                                                
3:16:59 PM                                                                                                                    
                                                                                                                                
GREG  CASHEN, Acting  Commissioner, Office  of the  Commissioner,                                                               
Department of Labor  & Workforce Development, stated  that HB 303                                                               
would  improve   the  process   of  determining   eligibility  in                                                               
developing reemployment  plans for  workers who cannot  return to                                                               
their former  jobs as the result  of a work-related injury.   The                                                               
bill  proposes  services to  support  injured  workers, so  these                                                               
injured workers can return to work quickly.                                                                                     
                                                                                                                                
ACTING  COMMISSIONER CASHEN  stated the  reemployment process  is                                                               
meant  to provide  severely injured  workers with  new skills  to                                                               
return to work.  However,  developing workable reemployment plans                                                               
within   the  statutory   constraints   has  grown   increasingly                                                               
difficult,  he said,  noting the  reemployment  process was  last                                                               
reformed over ten years ago.   This bill would update an outdated                                                               
process with  new approaches to  provide adequate  benefits while                                                               
controlling  costs, and  to enhance  the system's  efficiency and                                                               
fairness.                                                                                                                       
                                                                                                                                
3:18:29 PM                                                                                                                    
                                                                                                                                
MARIE  MARX,  Director,  Central  Office,  Division  of  Workers'                                                               
Compensation, Department of Labor  & Workforce Development, began                                                               
her  power  point  presentation  titled,  "Workers'  Compensation                                                               
Reemployment  Benefits:    HB  303,"  and  stated  that  workers'                                                               
compensation is a social contract [slide 1].                                                                                    
                                                                                                                                
MS. MARX directed  attention to slide 2, titled  "What is Workers                                                               
Compensation,  which   read  as  follows   [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
        A system of insurance that protects workers and                                                                         
       employers from some of the losses from on-the-job                                                                        
     accidents and job-related illnesses.                                                                                       
                                                                                                                                
MS.  MARX  directed  attention  to slide  3,  titled  "The  Grand                                                             
Bargain," which read as follows [original punctuation provided]:                                                                
                                                                                                                                
     An employer provides prompt, necessary medical and                                                                         
       wage loss benefits to an injured worker for a work-                                                                      
     related injury.                                                                                                            
                                                                                                                                
        In exchange, the injured worker receives limited                                                                        
     benefits and gives up the right to sue the employer                                                                        
                                                                                                                                
3:18:50 PM                                                                                                                    
                                                                                                                                
MS. MARX elaborated that the  employer provides limited benefits,                                                               
but not compensation for pain  and suffering or punitive damages.                                                               
The  benefits employers  provide  include medical  and wage  loss                                                               
benefits, retraining  benefits, if  eligible and  death benefits,                                                               
in the  case of a  work-related death.  Highlighting  the injured                                                               
workers part of the compromise,  she said that the injured worker                                                               
cannot   sue  the   employer.     She  explained   that  workers'                                                               
compensation  programs  began  during the  industrial  revolution                                                               
when  large lawsuits  would  put employers  out  of business  and                                                               
injured workers either were made whole or got nothing.                                                                          
                                                                                                                                
MS.  MARX turned  to slide  4, titled  "MISSION," which  read, in                                                               
part [original punctuation provided]:                                                                                           
                                                                                                                                
     To ensure  the quick,  efficient, fair  and predictable                                                                    
     delivery   of   indemnity,  medical,   and   vocational                                                                    
     rehabilitation  benefits   to  injured  workers   at  a                                                                    
     reasonable cost to employers                                                                                               
                                                                                                                                
MS.  MARX  added that  the  balancing  the five  pillars:  quick,                                                               
efficient, fair, predictable, and  reasonable cost is what guides                                                               
the administration of the Workers' Compensation Act [slide 4].                                                                  
                                                                                                                                
3:19:54 PM                                                                                                                    
                                                                                                                                
MS. MARX referred  to slide 5, titled  "Benefits Provided," which                                                               
read as follows [original punctuation provided]:                                                                                
                                                                                                                                
     ? Medical Care                                                                                                             
                                                                                                                                
     ? Indemnity (Wage Loss) Benefits                                                                                           
                                                                                                                                
     ? Death Benefits                                                                                                           
                                                                                                                                
     ? Reemployment (Retraining) Benefits                                                                                       
                                                                                                                                
MS. MARX,  referred to slide  6, titled  "Reemployment Benefits,"                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
     Intended to return  an injured worker to  work when the                                                                    
     worker cannot  return to the  job of injury or  to jobs                                                                    
     for  which   the  worker   has  relevant   training  or                                                                    
     experience.                                                                                                                
                                                                                                                                
MS. MARX  turned to slide  7, titled "Current  Challenges," which                                                               
read as follows [original punctuation provided]:                                                                                
                                                                                                                                
     ?Mandatory reemployment benefits eligibility                                                                               
     evaluations                                                                                                                
                                                                                                                                
     ?Maximum plan cost of $13,300                                                                                              
                                                                                                                                
     ?Retraining plans focus on quickest return to work                                                                         
     option, regardless of worker's interest in that                                                                            
     vocational goal                                                                                                            
                                                                                                                                
     ?Declining pool of rehabilitation specialists                                                                              
                                                                                                                                
     ?No rehabilitation specialist fee schedule                                                                                 
                                                                                                                                
MS. MARX highlighted that there has  long been a call for reform.                                                               
She  explained that  after being  off work  for 90  days, injured                                                               
workers  are forced  into the  reemployment system,  whether they                                                               
are  interested  in  retraining,   whether  they  are  ready  for                                                               
retraining, or whether they return to  work on the 91st day.  She                                                               
characterized  these   requirements  as  a  waste   of  time  and                                                               
resources.   Further, forcing workers into  reemployment training                                                               
when some do not want to be there  often does not lead to good or                                                               
successful outcomes.                                                                                                            
                                                                                                                                
MS.  MARX elaborating  on another  challenge, said  that the  the                                                               
maximum plan cost of $13,300 was  established in 2000 and has not                                                               
been adjusted since  then.  This amount is  often insufficient to                                                               
retrain someone.   With respect to another  challenge, she stated                                                               
that the  retraining plans focus  on the quickest return  to work                                                               
option,  which,  if the  employee  is  not interested,  leads  to                                                               
outcomes that are not successful.   She pointed out the declining                                                               
pool  of   reemployment  specialists  results  in   some  delays,                                                               
especially in areas such as Anchorage  where demand is high.  She                                                               
said  the lack  of a  specialist fee  schedule combined  with the                                                               
declining pool  of rehabilitation  specialists really  limits the                                                               
effectiveness of the system.                                                                                                    
                                                                                                                                
3:22:05 PM                                                                                                                    
                                                                                                                                
MS. MARX  directed attention to  slide 8, titled "HB  303," which                                                               
read as follows [original punctuation provided]:                                                                                
                                                                                                                                
      ? Improves the delivery of reemployment benefits to                                                                       
     injured workers                                                                                                            
                                                                                                                                
       ? Provides eligible employees with more choices in                                                                       
     reemployment goals and plans                                                                                               
                                                                                                                                
     ? Encourages injured employees' early return to work                                                                       
                                                                                                                                
     ? Helps employers control costs                                                                                            
                                                                                                                                
MS. MARX  offered her belief  that proposed HB 303  would address                                                               
these  challenges.   Recently,  the  Workers' Compensation  Board                                                               
issued  a  resolution,  signed  by  members  of  both  labor  and                                                               
industry   that  supported   reemployment   system  changes   and                                                               
specified general areas needing to  be addressed.  The resolution                                                               
is  listed as  a  supporting document  in  members' packets,  she                                                               
stated.   In developing  the bill, the  department met  with many                                                               
stakeholders,   including    industry,   labor,    and   workers'                                                               
compensation  attorneys.   In addition,  the department  met with                                                               
specialists and  received significant  input on  crafting changes                                                               
to the  reemployment benefit system.   Early in the  process, the                                                               
administration  considered  the policy  of  whether  to cash  out                                                               
injured  workers or  to retrain  them.   She emphasized  that the                                                               
administration decided it wanted to retrain them.                                                                               
                                                                                                                                
3:23:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STUTES  asked  if   they  met  with  the  injured                                                               
employees.                                                                                                                      
                                                                                                                                
MS.   MARX  answered   that  the   department   met  with   labor                                                               
organization representatives,  who often represent  the interests                                                               
of injured workers.                                                                                                             
                                                                                                                                
3:23:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL asked  whether anyone  represented non-union                                                               
workers.                                                                                                                        
                                                                                                                                
MS.  MARX answered  that  the department  met  with the  workers'                                                               
compensation claimants  bar, and the claimants'  attorneys raised                                                               
a lot of issues that were aligned with injured workers, as well.                                                                
                                                                                                                                
MS. MARX, in  response to a question for  clarification, said she                                                               
was  not aware  of an  organization  of injured  workers to  meet                                                               
with,  but  the department  met  with  the workers'  compensation                                                               
claimants  bar,  who  often represent  injured  workers  and  are                                                               
familiar with the challenges they  face.  This group brought many                                                               
concerns and the department incorporated  many of the suggestions                                                               
offered.                                                                                                                        
                                                                                                                                
MS.  MARX  emphasized that  reemployment  benefits  are meant  to                                                               
provide  retraining skills  and  provide an  opportunity for  the                                                               
injured worker to become employable.                                                                                            
                                                                                                                                
3:25:29 PM                                                                                                                    
                                                                                                                                
MS.  MARX continued  with the  section-by-section analysis  of HB                                                               
303,  stating  that  Sections  1  and  2  [included  in  members'                                                               
packets], which read as follows [original punctuation provided]:                                                                
                                                                                                                                
         Section 1 amends AS 23.30.005(h), by allowing                                                                          
      implementation of a fee schedule for rehabilitation                                                                       
     specialist services.                                                                                                       
                                                                                                                                
         Section 2 amends AS 23.30.012(a), by no longer                                                                         
      permitting employees to settle reemployment benefits                                                                      
     with their employers.                                                                                                      
                                                                                                                                
MS. MARX clarified Section 1,  noting that the currently fees are                                                               
unregulated.   Under  the change,  fees would  be adopted  as per                                                               
regulation and this change would help control costs.                                                                            
                                                                                                                                
3:26:01 PM                                                                                                                    
                                                                                                                                
MS.  MARX  reiterated  the  department's   goal  to  retrain  for                                                               
reemployment.    She said  that  in  instances when  the  injured                                                               
workers have opted for a lump  sum, the injured worker will often                                                               
not use the  funds for retraining.  For  example, injured workers                                                               
may  use the  settlement funds  to pay  their home  mortgages and                                                               
deplete  their funds.    Once that  happens  the injured  workers                                                               
often  ask the  division  for retraining;  however, the  division                                                               
will advise  them that  they waived  their right  to reemployment                                                               
benefits and  nothing further  can be  done.   Currently, injured                                                               
workers also have an option  for job dislocation benefits instead                                                               
of the  reemployment benefit  for retraining.   She  advised that                                                               
the  department  is  retaining the  dislocation  benefit  but  is                                                               
raising  the  amount;  however, the  settlement  offers  will  no                                                               
longer be an  option since only eight percent  of injured workers                                                               
are retrained.                                                                                                                  
                                                                                                                                
3:28:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL offered  his belief that most  of the injured                                                               
workers take  time to heal  and return to  their jobs.   He asked                                                               
whether the  department has  statistics for  those who  return to                                                               
their jobs and for those who are retrained.                                                                                     
                                                                                                                                
MS.  MARX  answered that  to  be  eligible for  the  reemployment                                                               
retraining program, the injured workers  must unable to return to                                                               
their jobs.   If the  injured workers  can return to  their jobs,                                                               
they are  not eligible for retraining.   She remarked that  it is                                                               
great when injured workers can return  to their jobs, but if they                                                               
cannot, reemployment retraining is available.                                                                                   
                                                                                                                                
REPRESENTATIVE  WOOL  asked  for clarification  for  workers  who                                                               
voluntarily choose not to go back  to their old jobs.  He related                                                               
a scenario in  which a worker fell off a  ladder and was injured.                                                               
That worker might decide he/she wants a desk job instead.                                                                       
                                                                                                                                
MS. MARX answered  that the injured worker would  not be eligible                                                               
to learn a  new skill set, but the determination  is based on the                                                               
doctor's recommendation  and is  not a  voluntary decision.   She                                                               
emphasized  that parties  generally  agree to  an amount  greater                                                               
than the  minimum plan  costs, which are  $13,300.   The proposed                                                               
bill raises that amount to $19,300  to adjust for inflation.  She                                                               
emphasized that this bill did  not limit the parties' flexibility                                                               
to  pay more.    They can  agree  to pay  more  than the  minimum                                                               
amount; however,  the maximum amount  covers instances  where the                                                               
parties are not in agreement.                                                                                                   
                                                                                                                                
3:30:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  asked   for  clarification   that  an                                                               
employer might pay more than the amount listed.                                                                                 
                                                                                                                                
MS. MARX answered  that the insurance companies are  the ones who                                                               
pay the  benefits and  it is  quite common for  them to  pay more                                                               
since insurance  companies are invested  in workers  getting back                                                               
to work.  She noted that the bill did not change this.                                                                          
                                                                                                                                
3:32:19 PM                                                                                                                    
                                                                                                                                
MS.  MARX then  referred  to  Section 3,  which  read as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     Section  3  amends  AS 23.30.041(b),  by  allowing  the                                                                    
     reemployment  benefit  administrator   (RBA)  to  offer                                                                    
     consultation  services for  employers on  early return-                                                                    
     to-work  policies and  programs and  providing the  RBA                                                                    
     greater  flexibility to  assign and  manage specialists                                                                    
     and their services.                                                                                                        
                                                                                                                                
MS. MARX said  that Section 3 provides for  the "early return-to-                                                               
work"  program.   The  division would  add a  position  to run  a                                                               
program,  based on  a  pilot  program in  New  Mexico, to  create                                                               
return-to-work  materials for  employers  and offer  consultation                                                               
services for injured  workers to help them figure out  how to get                                                               
back to  work earlier.   In fact,  studies have shown  the longer                                                               
injured workers are  out of work, the less likely  they will ever                                                               
return.   In  instances  in which  employers  already have  great                                                               
programs  in place,  such as  the  State of  Alaska, the  program                                                               
would not interfere  with their programs.  In  fact, the division                                                               
might turn  to some of  these larger employers for  assistance to                                                               
work  with smaller  employers who  do not  have the  resources to                                                               
implement a solid return-to-work program.                                                                                       
                                                                                                                                
3:33:31 PM                                                                                                                    
                                                                                                                                
MS. MARX  turned to  Section 4, which  read as  follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section   4   amends   AS   23.30.041(c),   by   making                                                                    
     eligibility evaluations voluntary  instead of mandatory                                                                    
     and establishing  a deadline  for an injured  worker to                                                                    
     request reemployment benefits.                                                                                             
                                                                                                                                
MS. MARX  added that  Section 4 would  also establish  a deadline                                                               
for injured workers to request  reemployment benefits.  The state                                                               
tried voluntary system  years ago and it did not  work, she said.                                                               
The  difference  in  this  voluntary  system  is  that  it  would                                                               
establish  a  deadline  by which  injured  workers  must  request                                                               
reemployment benefits.  Injured workers  must apply 90 days after                                                               
the temporary disability  ends.  The second piece,  which is new,                                                               
is that this section establishes  a mandatory meeting between the                                                               
reemployment benefits  office and the injured  workers to provide                                                               
them information  about their rights  and duties and  options for                                                               
retraining.                                                                                                                     
                                                                                                                                
3:34:32 PM                                                                                                                    
                                                                                                                                
MS. MARX  turned to  Section 5, which  read as  follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section  5 amends  AS  23.30.041(d),  by extending  the                                                                    
     deadline  for   specialists  to   complete  eligibility                                                                    
     evaluations to 60 days  and allowing reconsideration or                                                                    
     modification of the RBA's decision.                                                                                        
                                                                                                                                
3:34:42 PM                                                                                                                    
                                                                                                                                
MS. MARX referred  to Section 6, which read  as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section  6  amends  AS 23.30.041(e),  by  requiring  an                                                                    
     injured  worker's post  injury  job  meet the  worker's                                                                    
     remunerative wage  to be  considered in  the evaluation                                                                    
     for eligibility.                                                                                                           
                                                                                                                                
MS.  MARX  explained  that  currently  injured  workers  are  not                                                               
eligible for reemployment  benefits if the workers  can return to                                                               
a job the  workers have previously held in the  past ten years or                                                               
any job  the injured workers have  held after the injury.   If an                                                               
injured worker  takes a  new job after  the injury,  the division                                                               
adds  language  that  requires  the   job  must  meet  a  minimum                                                               
threshold of  60 percent  of their gross  wages.   She emphasized                                                               
that 60  percent represents  the standard.   She  reiterated that                                                               
the division's goal  is to incentivize injured  workers to return                                                               
to work;  however, not to use  a low-paying job against  them for                                                               
reemployment  retraining.   She  related a  scenario  in which  a                                                               
worker falls  off a roof and  suffers an injury, and  when healed                                                               
enough to work, takes a desk  job and answer phones as an interim                                                               
job.   Since that  job would  not return the  person to  the same                                                               
skilled job level  prior to the injury, the  injured worker would                                                               
not  be penalized.   She  reiterated the  goal is  to incentivize                                                               
injured workers to return to work.                                                                                              
                                                                                                                                
3:36:08 PM                                                                                                                    
                                                                                                                                
MS. MARX referred  to Section 7, which read  as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section  7   repeals  and  reenacts   AS  23.30.041(f),                                                                    
     removing   "previously   rehabilitated"  language   and                                                                    
     replacing it with more specific language.                                                                                  
                                                                                                                                
MS. MARX said this provides language  to clarify what it means to                                                               
be  "previously  rehabilitated"  such  that  the  injured  worker                                                               
accepted a job dislocation benefit,  completed a relocation plan,                                                               
or completed a retraining plan.                                                                                                 
                                                                                                                                
MS. MARX referred  to Section 8, which read  as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section  8   repeals  and  reenacts   AS  23.30.041(g),                                                                    
     allowing injured  workers more  time to choose  the job                                                                    
     dislocation benefit  over continuing to  participate in                                                                    
     the reemployment process.                                                                                                  
                                                                                                                                
MS. MARX explained that right now,  an injured worker has 30 days                                                               
to decide  whether to  accept a  small lump  sum or  move forward                                                               
with retraining; however, the injured  worker often does not know                                                               
what an eligibility plan would look  like.  Thus, this bill would                                                               
extend that to  150 days from eligibility to decide.   That would                                                               
allow injured workers  to take classes at a  university and still                                                               
decide that the new  field is not for them.   Under the bill, the                                                               
injured workers would  have an option.  Under  current law, after                                                               
30 days these injured workers would not have a choice, she said.                                                                
                                                                                                                                
3:37:13 PM                                                                                                                    
                                                                                                                                
MS. MARX referred  to Section 9, which read  as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section  9  amends  AS  23.30.041(h),  by  requiring  a                                                                    
     rehabilitation  specialist progress  report at  60 days                                                                    
     and  allowing  an  employee in  some  circumstances  to                                                                    
     select a  desired occupational  goal that  might result                                                                    
     in wages lower than what the law usually allows.                                                                           
                                                                                                                                
MS. MARX  explained that  Section 9 would  allow the  division to                                                               
check in  on the process.   She stated  that a specialist  has 90                                                               
days to create a  plan, but if the plan is  not moving forward at                                                               
60 days, the reemployment benefit  administrator can check in and                                                               
figure out how to proceed.                                                                                                      
                                                                                                                                
MS. MARX referred to Section  10, which read as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section  10  repeals   and  reenacts  AS  23.30.041(j),                                                                    
     requiring the  employee and employer within  30 days to                                                                    
     either approve  and sign a  reemployment plan,  or deny                                                                    
     the  plan  by  providing  a  specific  reason  for  the                                                                    
     denial,  and allowing  reconsideration or  modification                                                                    
     of the  RBA's decision approving, denying,  or changing                                                                    
     the plan.                                                                                                                  
                                                                                                                                
MS. MARX explained  that Section 10 would require  the parties to                                                               
act on  a plan.   Currently, a specialist  can come with  a plan,                                                               
but the parties may  not agree to it.  If  neither party asks for                                                               
the administrator  to approve  or deny  it, it  remains stagnant,                                                               
sometimes  for  years, while  stipend  benefits  are being  paid.                                                               
This  proposed  change would  require  some  action to  be  taken                                                               
within 30 days,  either agree or disagree.   This provision would                                                               
also allow parties to ask  for reconsideration or modification of                                                               
the reemployment benefit.                                                                                                       
                                                                                                                                
3:38:43 PM                                                                                                                    
                                                                                                                                
MS. MARX referred to Section  11, which read as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section 11 amends AS  23.30.041(k), by limiting payment                                                                    
     of stipend benefits to not  more than one year before a                                                                    
     plan is  approved and not  more than two years  after a                                                                    
     plan is approved.                                                                                                          
                                                                                                                                
MS.  MARX explained  that the  two-year limit  already exists  in                                                               
statute; however, before a plan  is developed the stipend benefit                                                               
continues.  There currently is  not any incentive to move forward                                                               
with a plan.  This proposed  change would help employers know the                                                               
amount  of the  liability  and help  keep  costs reasonable,  she                                                               
said.                                                                                                                           
                                                                                                                                
3:39:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON pointed  out that  he did  not see  the                                                               
cost savings for the "rebalancing" reflected in the fiscal note.                                                                
                                                                                                                                
MS. MARX deferred  to Division of Risk  Management, Department of                                                               
Administration to respond.  She  agreed that the Division of Risk                                                               
Management's fiscal note was zero.                                                                                              
                                                                                                                                
3:40:19 PM                                                                                                                    
                                                                                                                                
MS. MARX referred to Section  12, which read as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section 12  amends AS  23.30.041(l), by  increasing the                                                                    
     maximum  cost for  a reemployment  plan to  $19,300 and                                                                    
     providing an  annual adjustment  based on  the consumer                                                                    
     price index.                                                                                                               
                                                                                                                                
MS.  MARX  reiterated that  nothing  would  prevent parties  from                                                               
paying more  than the maximum  amount.  The amount  was increased                                                               
to adjust for inflation.                                                                                                        
                                                                                                                                
MS. MARX referred to Section  13, which read as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section  13  amends  AS 23.30.041(n),  by  allowing  an                                                                    
     employer to  controvert benefits  if an  injured worker                                                                    
     does not cooperate with the reemployment process.                                                                          
                                                                                                                                
MS. MARX referred to Section  14, which read as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Section   14  amends   AS  23.30.041(o),   by  allowing                                                                    
     reconsideration or  modification of the  RBA's decision                                                                    
     on noncooperation.                                                                                                         
                                                                                                                                
MS. MARX highlighted that currently,  if the administrator missed                                                               
something or  if new  evidence or a  new doctor's  opinion arose,                                                               
the only  option is  to go  before the board  for a  full hearing                                                               
instead  of   sending  it  back   to  the   reemployment  benefit                                                               
administrator for review.                                                                                                       
                                                                                                                                
3:41:35 PM                                                                                                                    
                                                                                                                                
MS.  MARX referred  to Section  15, Section  16, and  Section 17,                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
     Section  15 repeals  and reenacts  AS 23.30.041(q),  no                                                                    
     longer  permitting  employees  to  settle  reemployment                                                                    
     benefits with their employers.                                                                                             
                                                                                                                                
     Section 16 amends AS  23.30.041(r)(6), by providing the                                                                    
     RBA   greater   flexibility   to  assign   and   manage                                                                    
     specialists and their services.                                                                                            
                                                                                                                                
     Section  17  adds  new  subsections  to  AS  23.30.041,                                                                    
     allowing an  injured worker 150 days  after eligibility                                                                    
     to choose  the job dislocation benefit  over continuing                                                                    
     to participate in  the reemployment process, increasing                                                                    
     the job  dislocation benefit  amount, allowing  the RBA                                                                    
     to  suspend  the  reemployment  process  under  certain                                                                    
     circumstances,   allowing  parties   to  request   plan                                                                    
     modification  based  on a  change  in  conditions or  a                                                                    
     factual  mistake,  permitting   an  injured  worker  to                                                                    
     voluntarily exit the reemployment  process at any time,                                                                    
     allowing parties to  request reconsideration of certain                                                                    
     RBA   decisions,  and   establishing   a  process   for                                                                    
     reconsideration.                                                                                                           
                                                                                                                                
MS. MARX  briefly read the  sectional analysis and added,  as she                                                               
previously mentioned,  that Section 17 would  extend the deadline                                                               
to accept the  job relocation benefit amount.  It  would give the                                                               
injured worker  150 days after  eligibility to choose  whether to                                                               
accept  the job  dislocation benefit.   As  previously discussed,                                                               
the plan needs  to be in place within the  90-day period, so this                                                               
language  would  provide  injured   workers  additional  time  to                                                               
develop a plan or try one out for a few months.                                                                                 
                                                                                                                                
3:42:28 PM                                                                                                                    
                                                                                                                                
MS. MARX  referred to Sections 18  and 19, which read  as follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     Section  18  adds a  new  subsection  to AS  23.30.130,                                                                    
     allowing  parties to  request modification  based on  a                                                                    
     change  in   conditions  or  a  factual   mistake,  and                                                                    
     establishing a process for modification.                                                                                   
                                                                                                                                
     Section  19   repeals  AS  23.30.041(i),   because  the                                                                    
     language was moved to Section 9.                                                                                           
                                                                                                                                
MS.  MARX  explained   that  the  language  in   Section  19  was                                                               
reorganized and  was moved to  a new  section.  In  addition, the                                                               
requirement  that  plans  be  the shortest  amount  of  time  was                                                               
removed and allows other factors to be considered.                                                                              
                                                                                                                                
3:43:01 PM                                                                                                                    
                                                                                                                                
MS. MARX referred to Section  20, which read as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
      Section 20 amends the uncodified law of the State of                                                                      
     Alaska, by adding applicability language.                                                                                  
                                                                                                                                
3:43:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SULLIVAN-LEONARD asked  whether  the Division  of                                                               
Workers'  Compensation currently  has reemployment  administrator                                                               
positions on staff.                                                                                                             
                                                                                                                                
MS.  MARX answered  that the  reemployment benefit  administrator                                                               
position  exists  in  statute.    The division  seeks  to  add  a                                                               
position  specifically to  manage  and create  materials for  the                                                               
early to work return program.   The proposed bill would not add a                                                               
reemployment benefit administrator.                                                                                             
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD  further asked whether  there was                                                               
a fiscal note for the new position.                                                                                             
                                                                                                                                
MS. MARX directed attention to  the fiscal note from the Division                                                               
of Workers'  Compensation, which is  $57,852 for salary  and with                                                               
benefits a total  of $95,322.  The position  would coordinate the                                                               
early return-to-work program  [added in Section 3].   In response                                                               
to  Representative   Sullivan-Leonard,  she  answered   that  the                                                               
position  is in  the attached  fiscal note  from the  Division of                                                               
Risk Management.   In  further response,  she offered  to provide                                                               
the fiscal note.                                                                                                                
                                                                                                                                
MS. MARX restated  the salary is $57,852 and the  total cost with                                                               
benefits  is  $95,322.    She  indicated  this  person  would  be                                                               
responsible for  running the early return-to-work  program, which                                                               
is like  New Mexico's pilot  program.  The  Workers' Compensation                                                               
Board  requested   this  position.     In   fact,  many   of  the                                                               
stakeholders advised that states  which have been successful have                                                               
had  an early-to-work  program, a  program that  is proactive  in                                                               
getting injured  workers back to  work with their employer.   She                                                               
remarked that it benefits everyone.                                                                                             
                                                                                                                                
3:46:28 PM                                                                                                                    
                                                                                                                                
CHAIR KITO opened public testimony on HB 303.                                                                                   
                                                                                                                                
3:46:57 PM                                                                                                                    
                                                                                                                                
BARBARA WILLIAMS, Certified ADA  Advocate, Alaska Injured Workers                                                               
Alliance, Research  and Development Corporation, stated  that she                                                               
has  been  helping  injured  workers  for  the  past  years  with                                                               
educational information.   She  offered her  belief that  none of                                                               
the injured workers have been contacted.                                                                                        
                                                                                                                                
MS. WILLIAMS  said that it has  been 17 years since  she has seen                                                               
an increase in the benefits  for rehabilitation.  She offered her                                                               
belief  that  the bill  does  not  provide adequate  funding  for                                                               
injured  workers to  retrain.   Further, vocational  reemployment                                                               
and  stipend  benefits were  eliminated.    In addition,  injured                                                               
workers would  receive a voucher  based on an  impairment rating,                                                               
yet $19,000 was  not enough compensation for  workers to retrain;                                                               
instead, it  should start it  around $30,000.  Under  proposed HB                                                               
303, workers  would be forced to  cover costs while out  of work,                                                               
she said.                                                                                                                       
                                                                                                                                
MS.  WILLIAMS stated  that current  reemployment retraining  only                                                               
offers  60  percent of  the  remunerative  wage, which  does  not                                                               
include   overtime  some   workers   regularly   receive.     She                                                               
characterized the  bill as unfair  to injured workers,  who would                                                               
receive cuts  to their benefits  and not enough money  to support                                                               
their  families.   She  emphasized  the  reason for  reemployment                                                               
training is to support injured  workers while they are retraining                                                               
so they  have a chance  to successfully return to  the workplace.                                                               
Many workers would  not receive a voucher  for retraining, unless                                                               
they  have a  permanent, partial  impairment (PPI)  rating of  at                                                               
least five  percent or  more.  Under  the current  guidelines for                                                               
permanent disability,  there are many conditions  rated less than                                                               
five  percent.   The  reemployment  process  often commences  the                                                               
impairment is  even determined, she  said.  Some payments  in the                                                               
proposed bill  would not  be allowed,  but injured  workers often                                                               
use these monies  to retrain on their own,  start businesses, and                                                               
complete their  degree.  Employers  would not have  incentives to                                                               
hire disabled  workers, she  said.   Washington and  Oregon offer                                                               
more  options  for  workers  who  need  to  be  rehabilitated  or                                                               
retrained.   Injured  workers need  support, rehabilitation,  and                                                               
retraining  when these  workers cannot  return to  the jobs  that                                                               
they held at the time of injuries.                                                                                              
                                                                                                                                
MS.  WILLIAMS said  the proposed  bill, HB  303, is  not only  an                                                               
oppressive  plan, but  it is  unfair.   She did  not believe  the                                                               
premise of  cost savings  at the expense  of injured  workers was                                                               
the legislature's  intent.  Other  states that have  made drastic                                                               
changes to programs like this  have failed, and she reported that                                                               
these states  have subsequently reversed their  changes.  Injured                                                               
workers need support and retraining  to successfully make it back                                                               
to the  workplace after being  injured.  Many injured  workers do                                                               
not belong to  labor organizations and it is  difficult to obtain                                                               
and interpret  the information, particularly  for those  who lack                                                               
education.   In closing, she said  the rehabilitation specialists                                                               
need  to work  more closely  with the  injured workers  to obtain                                                               
input on the current  reemployment rehabilitation process instead                                                               
of making it a more adversarial process.                                                                                        
                                                                                                                                
3:50:35 PM                                                                                                                    
                                                                                                                                
THERESA TOLBERT stated  that she is an  unemployed injured worker                                                               
on workers'  compensation and her  case has not been  resolved in                                                               
four  years.   She  has not  been given  the  tools necessary  to                                                               
return to work, she said.  She  reported that she has been to two                                                               
IME's  [insurance medical  exams];  yet, she  is currently  being                                                               
sent out  of state for another  one.  She has  animals she cannot                                                               
leave  while  she  goes  out  of state,  but  she  cannot  obtain                                                               
reimbursement for  pet housing.  The  board does not want  to pay                                                               
for  injured workers'  education,  but many  injured workers  who                                                               
want to work cannot obtain the tools to do so.                                                                                  
                                                                                                                                
3:52:59 PM                                                                                                                    
                                                                                                                                
KAREN   DAVIS,   Vocational  Rehabilitation   Specialist,   Davis                                                               
Vocational   Services,  stated   she   is  currently   performing                                                               
eligibility evaluations to determine  whether injured workers are                                                               
eligible for  workers' compensation  reemployment benefits.   She                                                               
said  she shares  concerns raised  by a  previous testifier,  Ms.                                                               
Williams,  about  injured  workers with  PPI  [permanent  partial                                                               
impairment]  ratings of  less than  five percent.   She  remarked                                                               
that the  proposed bill, HB  303, does  not seem to  provide much                                                               
protection for  those injured workers.   Numerous injured workers                                                               
have PPI ratings  less than five percent.  She  liked some of the                                                               
changes,  she   said,  but   overall  the   bill  has   room  for                                                               
improvement.                                                                                                                    
                                                                                                                                
3:54:02 PM                                                                                                                    
                                                                                                                                
SANDY  TRAVIS  stated  that  she  is an  injured  worker  who  is                                                               
representing  injured  workers.    In response  to  Chair  Kito's                                                               
request  that she  not impugn  any testifier,  Ms. Travis  agreed                                                               
that  everyone including  injured  workers  should be  respected.                                                               
She voiced  her opposition to HB  303 because she does  not think                                                               
the voucher system  or settlements would work.   Further, she did                                                               
not  believe that  stripping stipend  benefits would  work.   She                                                               
offered her  belief what would work  is to listen to  someone who                                                               
would provide  facts; however,  she could not  give the  facts in                                                               
less than  two minutes.  She  characterized HB 303 as  a very bad                                                               
bill.   She  emphasized  that taking  away  from injured  workers                                                               
would not get  them back to work or provide  rehabilitation.  She                                                               
said  that when  she  first started  the rehabilitation  process,                                                               
injured workers  had more than  90 days to determine  whether the                                                               
injured worker could go back to  work.  She characterized the new                                                               
limits as ridiculous  as they would not help  the injured worker.                                                               
Instead, she suggested that if  the division wants to get injured                                                               
workers back to  work they need to provide them  with benefits to                                                               
do so, not take away benefits or  not listen to them.  In closing                                                               
she characterized  the bill as a  "very bad bill" that  should be                                                               
thrown in the trash and not be considered.                                                                                      
                                                                                                                                
CHAIR  KITO  offered to  accept  additional  written comments  by                                                               
letter or email.                                                                                                                
                                                                                                                                
3:57:18 PM                                                                                                                    
                                                                                                                                
MICHAEL J.  JENSEN, Attorney, Law  Offices of Michael  J. Jensen,                                                               
said he  has been representing workers  since 1984.  In  1995, he                                                               
opened  the  Law  Offices  of  Michael J.  Jensen.    As  a  sole                                                               
proprietor, he  has continued to predominantly  handle claims for                                                               
benefits under  the Alaska Workers' Compensation  Act, he stated.                                                               
Although  he  has  also  worked  on  some  longshore  and  social                                                               
security cases,  his primary effort  is on  workers' compensation                                                               
cases.  He  commented that significant changes have  been made to                                                               
the Workers' Compensation Act since 1984.   His intent was not to                                                               
condemn this  bill, HB 303,  but he pointed  out that it  did not                                                               
give any incentives  to hire disabled workers,  unlike Oregon and                                                               
Washington.    Instead  this  bill   seeks  to  further  restrict                                                               
benefits to  injured workers,  he said.   He referred  to Section                                                               
11, noting the  stipend is limited to one year  from the date the                                                               
temporary  and permanent  benefits  end until  the  start of  the                                                               
plan.  Frequently, this is  not enough since the plan development                                                               
may  take  much longer  depending  on  the circumstances  of  the                                                               
injured  worker, he  explained.   Temporary benefits  are limited                                                               
until the  injured worker  reaches stability.   It does  not mean                                                               
the worker  is cured, just that  the doctor does not  believe the                                                               
patient  will get  any better.    Under the  current system,  the                                                               
permanent benefits are very limited  with low ratings considering                                                               
the  nature  of the  injury.    Thus,  he recommended  two  years                                                               
instead of the one year in this provision.                                                                                      
                                                                                                                                
3:59:08 PM                                                                                                                    
                                                                                                                                
MR. JENSEN  referred to Section 12,  offering that it was  a good                                                               
start to  increase the rehabilitation  cost maximum  from $13,300                                                               
to  $19,300; however,  even  that number  is  insufficient.   For                                                               
example,  that   does  not  include  modifications   for  injured                                                               
workers, such  as an ergonomic  chair, desk, computer,  or tools.                                                               
Further,  $19,300 is  insufficient to  cover tuition,  books, lab                                                               
fees or  other equipment  to allow injured  workers to  return to                                                               
work.  He suggested the  figure be increased to reflect realistic                                                               
costs  for retraining  and  to  include additional  modifications                                                               
necessary  for  them  to  return  to work.    He  turned  to  the                                                               
remunerative wage,  stating his  belief this  is the  main reason                                                               
the rehabilitation process does not  work.  The remunerative wage                                                               
goal was  too low, he stated,  since it represents 60  percent of                                                               
the gross  hourly wage  at the  time of  injury.   He highlighted                                                               
that firemen, policemen,  and oil field workers make  the bulk of                                                               
their income  in overtime  wages, which is  not reflected  in the                                                               
remunerative wage  goal.  For  example, he calculated  60 percent                                                               
of a $20  per hour job equals  $12 per hour, which  would be much                                                               
less  than  the injured  workers  earned  at  the time  of  their                                                               
injuries.                                                                                                                       
                                                                                                                                
4:00:47 PM                                                                                                                    
                                                                                                                                
MR.  JENSEN  directed attention  to  Section  15, which  prevents                                                               
workers from receiving  a lump sum settlement.   Thus, if injured                                                               
workers  discover their  plans  are not  suitable,  and will  not                                                               
allow them  to support their  families, they are  prohibited from                                                               
settling the value of their plans.   They cannot use the funds to                                                               
pay  off  their  debts  for  a fresh  start,  or  for  additional                                                               
education, or to  add other funds to  obtain additional training,                                                               
or start  their own businesses.   He emphasized he  has mentioned                                                               
only a few  motivations that exist for injured  workers to settle                                                               
their stipends  in a lump sum.   He suggested one  way to improve                                                               
the  lump sum  settlements of  their  stipends would  be for  the                                                               
board to predetermine whether injured  workers have good cause to                                                               
settle and if it is in their best interest to do so.                                                                            
                                                                                                                                
4:01:59 PM                                                                                                                    
                                                                                                                                
MR.  JENSEN  directed  attention   to  Section  17,  which  would                                                               
increase the job dislocation benefits  by $1,000 to $6,500, which                                                               
is not  a significant change or  much of an improvement  over the                                                               
current  system.   Further, the  dislocation benefits  would only                                                               
apply to anyone rated at 15  percent or less PPI; however, he has                                                               
represented workers with 5 percent  impairment who cannot go back                                                               
in construction,  oil field work, or  work as firemen and  in law                                                               
enforcement.  If those injured  workers opt out of the vocational                                                               
rehabilitation system, they  would be limited to  $6,500 in total                                                               
settlements,  he said.    He suggested  that  provision could  be                                                               
improved by increasing the amount.                                                                                              
                                                                                                                                
4:02:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  for  clarification  of when  the                                                               
proposed $6,500 figure for dislocation was last adjusted.                                                                       
                                                                                                                                
MR. JENSEN offered  his belief that the current  amount of $5,000                                                               
figure was last updated during the Murkowski administration.                                                                    
                                                                                                                                
4:03:52 PM                                                                                                                    
                                                                                                                                
KAYA T.  KADE, LPC, CDMS, TEP,  Disability Management Specialist,                                                               
Kade and  Associates, stated she  is a  vocational rehabilitation                                                               
specialist.   She  began her  testimony by  relating an  anecdote                                                               
about an injured worker.  She  stated that during the IME process                                                               
the injured worker  was withheld surgery for almost  a year until                                                               
he finally  obtained a secondary medical  evaluation that allowed                                                               
him to  have surgery.   She advised members that  because surgery                                                               
was delayed,  the injured worker had  suffered additional damage.                                                               
She said she  wrote his reemployment benefits plan.   She said he                                                               
was very  upset at his  treatment by  the insurance company.   He                                                               
finished his plan a year ago and  worked for a year yet could not                                                               
continue to work with his insurance  company, so he settled for a                                                               
lump sum.  She  considered this plan to be a  failure, due to the                                                               
insurance company's negativity, noting  the injured worker needed                                                               
to be out from under the insurance company.                                                                                     
                                                                                                                                
MS. KADE offered her belief  that many people settle because they                                                               
think they are  strong enough to proceed on their  own.  Said has                                                               
had  numerous clients  finish their  plans, and  some who  settle                                                               
because she  cannot write a  plan to  meet the regulations.   For                                                               
example, she currently  has an injured worker  who is considering                                                               
settling,  that the  person has  been attending  a university  to                                                               
seek a  double major;  however, a double  major fell  outside the                                                               
regulations, she said.                                                                                                          
                                                                                                                                
MS. KADE  said she did  not understand why the  department wanted                                                               
to adopt regulations to set fees  and establish fines.  She could                                                               
understand  establishing qualifications;  however,  she said  the                                                               
administration  does not  understand her  business and  expensive                                                               
costs, including  insurance coverage, and medical  coverage.  She                                                               
recalled  20 years  ago when  the eligibility  evaluation process                                                               
was voluntary,  which did  not work.   She reminded  members that                                                               
injured workers face surgeries, are  on pain medications, and are                                                               
trying to  get their lives  back together.   She did  not believe                                                               
the deadline  was appropriate, that  90 days  was too soon.   She                                                               
suggested that injured workers with  injuries such as broken arms                                                               
or having surgeries also need  physical therapy, that four to six                                                               
months would be better  for reemployment eligibility evaluations.                                                               
At  that point,  most injured  workers  would be  better able  to                                                               
determine whether they  would need more services.   She applauded                                                               
the increase  to $19,300, since  the provision allows  for annual                                                               
increases, which would be better.                                                                                               
                                                                                                                                
MS.  KADE  pointed out  that  many  of  her clients  lack  formal                                                               
education.    She  emphasized  that  many  peer  review  articles                                                               
indicate  the importance  of  vocational  rehabilitation, as  key                                                               
aspects for returning workers to  the workplace.  She stated that                                                               
the   division  director   met  with   vocational  rehabilitation                                                               
specialists;  however, it  was  after  the Workers'  Compensation                                                               
Board's (WCB)  decisions were  made.  She  lamented that  the WCB                                                               
does   not  have   any   representation   of  either   vocational                                                               
rehabilitation specialists  or injured workers to  provide input.                                                               
In  closing,  she  reiterated  that  many  injured  workers  have                                                               
obtained significant benefit  from vocational rehabilitation, she                                                               
said.   She offered her  belief that those finishing  their plans                                                               
without insurance company involvement exceeded 80 percent.                                                                      
                                                                                                                                
4:11:26 PM                                                                                                                    
                                                                                                                                
GREG WEAVER stated  that as a disabled worker he  has been one of                                                               
many  workers let  down by  the workers'  compensation system  in                                                               
Alaska.  Further, he is a  disabled U.S. Marine Corps veteran and                                                               
a  second-generation Alaska  construction  worker.   He  remarked                                                               
that  workers like  him supply  all Alaskans  with the  goods and                                                               
services  they use,  perform  rig-ups on  the  North Slope,  log,                                                               
fish, and extract Alaska's natural resources.                                                                                   
                                                                                                                                
MR.  WEAVER  provided chronological  details  of  his injury  and                                                               
subsequent workers' compensation case  number, 201320030.  At the                                                               
time, he worked for the  Arctic Slope Regional Corporation (ASRC)                                                               
as a construction worker and had  worked for them for five or six                                                               
years.  In 2013, which was  a particularly strenuous year for him                                                               
and  his co-worker,  he became  injured.   They  had been  flying                                                               
throughout  the state,  working  at remote  U.S.  Air Force,  FAA                                                               
radar sites, performing maintenance  and upgrades to these sites.                                                               
While working in  Kaktovik, he realized he could  barely walk and                                                               
was flown to  Anchorage for treatment and his  doctor referred to                                                               
Algone Pain Management in  the Matanuska-Susitna Valley (Mat-Su).                                                               
At that  time, he  opened a workers'  compensation claim  and his                                                               
case  was initially  handled by  a  senior workers'  compensation                                                               
adjuster at ASRC, who subsequently  assigned a nurse case manager                                                               
to guide  him through the  health care and  workers' compensation                                                               
system.  After an independent  medical examination (IME) his case                                                               
was  controverted, which  means  he was  taken  off his  workers'                                                               
compensation  claim, and  the Division  of Workers'  Compensation                                                               
(DWC) did not object.                                                                                                           
                                                                                                                                
MR.  WEAVER asked  to "fast  forward" a  bit.   He expressed  his                                                               
gratitude  for  his  Veterans' Administration  benefits.    After                                                               
having  several  other  IMEs,  he   was  referred  to  a  leading                                                               
neurological  surgeon,   [Louis  L.]  Kralick,   M.D.  [Anchorage                                                               
Neurosurgical   Association]   at    Providence   Hospital,   who                                                               
eventually  performed  surgery,  fusing three  of  his  vertebrae                                                               
together and  completely replacing two  discs in his  lower back.                                                               
After  three  years of  taking  opioid  pain medication,  he  has                                                               
recently been  able to wean off  opioids, he said.   He could not                                                               
understand why the Workers' Compensation  Board denied his claim,                                                               
he  said.     His  attorney,  Mr.  Jensen,  filed   a  claim  for                                                               
reconsideration on appeal where he  cited over 20 instances where                                                               
the  board erred  in  its judgment;  however,  those errors  were                                                               
completely ignored  in his workers'  compensation case.   He said                                                               
that the workers'  compensation system is broken and  needs to be                                                               
completely rebuilt.   Further, he  would like Ms. Marx  to review                                                               
his  case.     In  addition,  he  has  recently   spoken  to  the                                                               
Ombudsman's office  about his case  who also agreed  the workers'                                                               
compensation system is broken, he said.   He remarked that he has                                                               
lost everything.   He  advised members  that he  has subsequently                                                               
been  awarded disability  by the  Social Security  Administration                                                               
(SSA),  who recognized  the  2013  date as  the  initial date  of                                                               
injury.   In closing, he reiterated  that he would like  Ms. Marx                                                               
to look  at his claim.   He thanked  members for allowing  him to                                                               
describe his workers' compensation case.                                                                                        
                                                                                                                                
4:18:18 PM                                                                                                                    
                                                                                                                                
[HB 303 was held over.]                                                                                                         
                                                                                                                                
          HB 110-MASSAGE THERAPY LICENSING; EXEMPTIONS                                                                      
                                                                                                                                
4:18:35 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that  the next order  of business  would be                                                               
HOUSE BILL NO.  110, "An Act relating to the  practice of massage                                                               
therapy;  relating  to  the  Board  of  Massage  Therapists;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
4:19:00 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
4:19:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL  moved  to   adopt  the  proposed  committee                                                               
substitute  (CS)  for  HB   110,  labeled  30-LS0157\U,  Radford,                                                               
2/9/18, as the working draft.                                                                                                   
                                                                                                                                
CHAIR KITO objected for discussion purposes.                                                                                    
                                                                                                                                
4:19:36 PM                                                                                                                    
                                                                                                                                
CRYSTAL KOENEMAN,  Staff, Representative  Sam Kito,  Alaska State                                                               
Legislature, reviewed  the changes contained  in Version U  of HB                                                               
110.  First, on page 1,  a new section was inserted that modifies                                                               
the language  regarding the qualifications  of the  public member                                                               
for the Board  of Massage Therapists by  removing the restriction                                                               
of  being  a  former  member of  another  occupational  licensing                                                               
board.   This recommendation  was also  mentioned in  the state's                                                               
Legislative   Audit   Division,    [Audit   08-20109-17],   Audit                                                               
Recommendation three, she said.                                                                                                 
                                                                                                                                
MS. KOENEMAN  reported the second  change, noting that  Version U                                                               
removes all  language regarding an application  for exemption for                                                               
those currently  in the exception  category under  Alaska Statute                                                               
(AS) 08.61.080, which relates  to energy workers, reflexologists,                                                               
and structural integrators.  She  said with that change Version U                                                               
would  only apply  to licensure  of massage  therapists under  AS                                                               
08.61].   The final change  is in Section  4 of Version  U, which                                                               
amends the  standards of license  renewal by changing  the annual                                                               
fingerprint requirement  from every  renewal cycle to  once every                                                               
six years or every three licensing cycles.                                                                                      
                                                                                                                                
4:21:19 PM                                                                                                                    
                                                                                                                                
CHAIR  KITO  removed  his  objection.   There  being  no  further                                                               
objection, Version U was adopted as the working document.                                                                       
                                                                                                                                
4:22:43 PM                                                                                                                    
                                                                                                                                
GRETCHEN  GRAEFF,  Massage  Therapist   and  Rolfer,  shared  her                                                               
concerns with  the proposed bill.   She said she was  unclear why                                                               
the  board has  been slow  to  require infection  control in  its                                                               
safety education requirements.   She previously testified on this                                                               
last year, noting  this change was recommended  at previous board                                                               
meetings.   She expressed concern  that the board refers  to last                                                               
century's  recommendations  instead of  more  current  ones.   An                                                               
additional  concern  was  that   the  issue  of  massage  therapy                                                               
establishments  has  distracted  the board  from  regulating  the                                                               
practice of massage therapy.  She  added that the current Code of                                                               
Ethics  and Standards  of Practice  are ambiguous  and confusing.                                                               
The interpretation  by licensed massage therapists  of the Health                                                               
Insurance  Privacy and  Portability Act  (HIPPA) and  the Centers                                                               
for Disease Control and Prevention  (CDC) are broad, occasionally                                                               
inaccurate, and quite varied throughout the state.                                                                              
                                                                                                                                
MS. GRAEFF added  that at the board's December  2017 meeting, the                                                               
board  had stated,  "The standards  of practice  are currently  a                                                               
recommendation and  do not have  a disciplinary matrix."   It was                                                               
time that was  put in place, although it may  be possible that it                                                               
already is, she said.  That  was problematic, she said, given the                                                               
letter  from  David  Edward  Smith,   who  advised  that  massage                                                               
therapists must adhere  to the standards of practice  and code of                                                               
ethics in our  state.  She said that the  biggest concern was for                                                               
the licensing  of businesses  in the state.   The  implication of                                                               
the board  needing to  help law enforcement  by having  a massage                                                               
therapy   establishment  indicates   that  currently,   unless  a                                                               
business  in Alaska  is under  the regulation  of a  professional                                                               
board, that business  may sell illegal services.   She was unsure                                                               
if that is true.                                                                                                                
                                                                                                                                
MS.  GRAEFF said  that if  the board  is going  to recognize  the                                                               
Board  of Massage's  jurisdiction  to the  regulation of  massage                                                               
establishments to  help law enforcement with  trafficking, sexual                                                               
assault,  and  exploitation, she  would  like  this committee  to                                                               
recognize  these potential  crimes  are more  extensive than  the                                                               
nefarious use of her profession as  a front.  She lauded the work                                                               
by  the board  for  regulations for  governing  the licensing  of                                                               
massage therapists.   Since the  massage therapists are  in their                                                               
third  year of  licensure,  the standards  should  be clear,  she                                                               
said.   She offered  her belief that  the law  enforcement issues                                                               
are  large  enough to  be  concerned  at the  business  licensing                                                               
level, she  said.  She was  unsure why law enforcement  could not                                                               
stop  prostitution  advertising  as  massage  services  when  the                                                               
licensing requirement governing massage therapists is in place.                                                                 
                                                                                                                                
4:28:47 PM                                                                                                                    
                                                                                                                                
TRACI  GILMOUR,  Owner, TLC  Massage  Therapy;  Member, Board  of                                                               
Massage  Therapists,  Division   of  Corporations,  Business  and                                                               
Professional   Licensing   (DCBPL),   Department   of   Commerce,                                                               
Community &  Economic Development (DCCED), as  a licensee, stated                                                               
her support  for the  proposed committee  substitute for  HB 110.                                                               
She  emphasized that  increased  continuing  education hours  and                                                               
licensure has  created better consumer expectations  for massage.                                                               
Therapists can  coordinate better  with medical  professionals to                                                               
serve  clients  and provide  a  better  course of  treatment  for                                                               
clients.    Massage  therapists  are  learning  to  network  with                                                               
outside  agencies  and  better  represent  their  professions  in                                                               
working  with state,  local, and  federal law  enforcement.   She                                                               
added  that   licensure  for  massage  therapists,   as  well  as                                                               
requiring  fingerprinting for  background  checks  can help  stop                                                               
human  trafficking.     She  fully  supported   the  decrease  in                                                               
continuing education  for the bloodborne  pathogens since  it has                                                               
been difficult  to find  providers for a  four-hour course.   She                                                               
added that  reducing the burden  of fingerprinting to  once every                                                               
third renewal  period reduces  costs to  licensees.   She offered                                                               
her support for the proposed CS for HB 110.                                                                                     
                                                                                                                                
4:31:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   WOOL    asked   about   board    regulation   of                                                               
establishments.  He said it  was difficult to understand previous                                                               
testimony; however, he recalled  that some businesses engaging in                                                               
illegal activity would  be easier to identify and  monitor if the                                                               
[legitimate] massage therapy businesses  had physical licenses on                                                               
their premises.                                                                                                                 
                                                                                                                                
MS.  GILMOUR  agreed.   She  identified  a  professional  massage                                                               
business in Anchorage that has  been cited four times for illegal                                                               
activity.  Since businesses are  not licensed, it is difficult to                                                               
determine  if  the  business is  providing  legitimate  services.                                                               
Although  not  required to  do  so,  she posts  her  professional                                                               
license  and  puts  her license  number  on  all  correspondence.                                                               
Without  investigations, the  [illegal]  businesses can  operate.                                                               
She said she supports professional  business licenses for massage                                                               
therapists; however, she would like to keep licensure costs low.                                                                
                                                                                                                                
4:33:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SULLIVAN-LEONARD    asked   whether   bloodborne                                                               
pathogen  training is  available at  hospitals or  the [American]                                                               
Red Cross.                                                                                                                      
                                                                                                                                
MS. GILMOUR said that the  new exam would be administered through                                                               
massage  therapist schools,  but  continuing  education could  be                                                               
online  or  available  as  part  of a  first  aid  course.    She                                                               
explained that it  has been difficult to  obtain four-hour online                                                               
courses  in  bloodborne  pathogens.     In  further  response  to                                                               
Representative  Sullivan-Leonard, she  said it  was difficult  to                                                               
find the four-hour courses.                                                                                                     
                                                                                                                                
CHAIR  KITO stated  that the  initial training  was available  to                                                               
massage  therapists;  however,  for  renewal  purposes,  two-hour                                                               
courses  were available  in first  aid courses,  but it  was more                                                               
difficult to find four-hour courses.                                                                                            
                                                                                                                                
4:35:33 PM                                                                                                                    
                                                                                                                                
VOLKER  HRUBY, President,  American  Massage Therapy  Association                                                               
(AMTA), Alaska  Chapter, stated  that he  is a  life-long Alaskan                                                               
who  has  been a  massage  therapist  for  13  years in  the  spa                                                               
industry, medical  massage, and in  private practice.   The AMTA,                                                               
Alaska  Chapter, represents  many massage  therapists in  Alaska.                                                               
and offers its support of  the proposed committee substitute (CS)                                                               
for HB  110.  The  new version of  the bill [Version  U] requires                                                               
massage  boards to  adopt regulations  governing massage  therapy                                                               
establishments in addition to individual  therapists.  He offered                                                               
his belief that  this would give the state the  authority to shut                                                               
down operations of human  trafficking and prostitution activities                                                               
by those  who use massage therapy  as a front.   In addition, the                                                               
proposed  bill would  increase the  minimum course  of study  for                                                               
licensure from  500 to  625 hours,  which represents  the current                                                               
national minimum standard.  It  would also reduce the requirement                                                               
of safety  education for  bloodborne pathogens  from four  to two                                                               
hours  as recommended  by the  national standard.   Finally,  the                                                               
proposed  bill would  change the  requirement for  fingerprinting                                                               
every  six  years instead  of  every  two  years.   The  enabling                                                               
legislation   established  the   Board  of   Massage  Therapists,                                                               
statutes, and  requirements for  licensure of  massage therapists                                                               
almost four years  ago.  Thus, the need for  minor adjustments to                                                               
licensure has  arisen.  He urged  members to move this  bill from                                                               
committee.                                                                                                                      
                                                                                                                                
4:37:50 PM                                                                                                                    
                                                                                                                                
LAUREN  PAAP,  President,   American  Organization  for  Bodywork                                                               
Therapy  of  Asia  (AOBTA),  stated  that  she  represents  Asian                                                               
Bodywork  therapists,  such  as  shiatsu,  acupressure,  amma  or                                                               
qigong.  She  asked for clarification on whether  her members, if                                                               
not exempted would have been required  to pay a fee.  She further                                                               
asked  if  her  group  was  required to  be  licensed  under  the                                                               
proposed CS for HB 110.                                                                                                         
                                                                                                                                
CHAIR KITO said  that portion of the bill was  removed and is not                                                               
in the current CSHB 110, {Version U].                                                                                           
                                                                                                                                
MS. PAAP referenced whether there  was an intent to include Asian                                                               
bodywork  members  in  the  future.   If  so,  she  had  specific                                                               
questions.                                                                                                                      
                                                                                                                                
CHAIR  KITO  assured Ms.  Papp  that  the  only bill  before  the                                                               
committee  was  the  current committee  substitute  for  HB  110,                                                               
[Version U], that includes three  changes to licensing of massage                                                               
therapists.                                                                                                                     
                                                                                                                                
MS. PAAP  directed attention to  the provision that  requires 625                                                               
hours.                                                                                                                          
                                                                                                                                
CHAIR  KITO asked  her to  limit  questions to  the bill  version                                                               
before  the committee  and to  contact his  staff for  discussion                                                               
questions.                                                                                                                      
                                                                                                                                
MS. PAAP offered to do so.                                                                                                      
                                                                                                                                
4:40:25 PM                                                                                                                    
                                                                                                                                
CHAIR KITO closed public testimony on HB 110.                                                                                   
                                                                                                                                
4:40:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL  moved  to  report  the  proposed  committee                                                               
substitute  (CS)  for  HB   110,  Version  30-LS0157\U,  Radford,                                                               
2/9/18, out of committee with  individual recommendations and the                                                               
accompanying fiscal  notes.  There  being no objection,  the CSHB                                                               
110(L&C) was reported from the  House Labor and Commerce Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
4:41:10 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:41 p.m. to 4:42 p.m.                                                                       
                                                                                                                                
         HB 83-TEACHERS & PUB EMPLOYEE RETIREMENT PLANS                                                                     
                                                                                                                                
4:42:08 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that the  final order of business  would be                                                               
HOUSE BILL NO. 83, "An Act  relating to new defined benefit tiers                                                               
in  the public  employees'  retirement system  and the  teachers'                                                               
retirement system; providing certain  employees an opportunity to                                                               
choose  between  the  defined benefit  and  defined  contribution                                                               
plans  of  the  public  employees'   retirement  system  and  the                                                               
teachers'  retirement  system;  and providing  for  an  effective                                                               
date."                                                                                                                          
                                                                                                                                
4:42:48 PM                                                                                                                    
                                                                                                                                
EDRIC  CARRILLO, Staff,  Representative  Sam  Kito, Alaska  State                                                               
Legislature,  presented the  bill.   He stated  that HB  83 would                                                               
allow  public employees  to choose  one of  two state  retirement                                                               
systems, the  defined contribution  (DC) or defined  benefit (DB)                                                               
pension.   Alaska's  teachers and  public employees  do not  earn                                                               
social  security benefits,  and many  lose their  social security                                                               
benefits earned under previous employment.   This bill would also                                                               
allow  newly-hired  public  servants  in  Alaska  to  choose  the                                                               
benefit plan  that best serves them,  he said.  For  most, the DB                                                               
pension  makes sense;  however,  other choose  the  DC plan  that                                                               
allows flexibility,  portability, and  control.  This  bill would                                                               
keep smart reforms to retirement  benefits made several years ago                                                               
and makes  Alaska's pensions stronger  than ever, he said.   This                                                               
bill  would create  a more  stable, predictable,  and DB  pension                                                               
tier.  Since  the DB pensions include sharing the  risk of rising                                                               
health costs, the employees would  never cost employers more than                                                               
the DC system,  saving money for schools, cities,  and the state.                                                               
He thanked members for their support.                                                                                           
                                                                                                                                
4:44:07 PM                                                                                                                    
                                                                                                                                
DIANE   OAKLEY,  Executive   Director,   National  Institute   on                                                               
Retirement  Security the  (NIRS), stated  the NIRS  is a  not for                                                               
profit, non-partisan,  research organization based  in Washington                                                               
D.C.   She directed  attention to a  Power Point  presentation in                                                               
members' packets.  She turned to  slide 2, titled "DB Pension are                                                               
Cost Efficient:   Still a Better  Bang for the Buck,"  which read                                                               
as follows [original punctuation provided]:                                                                                     
                                                                                                                                
     Cost Comparison                                                                                                          
                                                                                                                                
     NIRS looked at the cost to replace 53% of final income                                                                     
     under three retirement plan structures.                                                                                    
                                                                                                                                
     The  DB pension  cost  48% less  than using  Individual                                                                    
     Accounts  in a  DC  Savings Plan  to  provide the  same                                                                    
     amount of income.                                                                                                          
                                                                                                                                
MS. OAKLEY  explained that the  DB plan  cost 16 percent  of pay,                                                               
which is designed to provide the  same amount of income from a DC                                                               
plan;  alternatively, for  the same  cost  retirees will  receive                                                               
more income per the actuaries.                                                                                                  
                                                                                                                                
MS. OAKLEY  directed attention to  the next slide, titled  "3 Key                                                               
Reasons Why  Defined Benefit  Pension (DB)  Plans Cost  Less than                                                               
Defined  Contribution   (DC)  Plans,"   which  read   as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     1. Pool the longevity risks.                                                                                               
     2.  Maintain  optimally balanced  investment  portfolio                                                                    
     compared to down-shifting to  a lower risk/return asset                                                                    
     allocation in DC plan.                                                                                                     
     3.  DB plan  have higher  investment returns  and lower                                                                    
     fees compared to individual investors in DC accounts.                                                                      
                                                                                                                                
4:47:19 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease from 4:47 p.m. to 4:49 p.m.                                                                  
                                                                                                                                
4:49:23 PM                                                                                                                    
                                                                                                                                
JESSE   KIEHL,  Staff,   Senator   Dennis   Egan,  Alaska   State                                                               
Legislature, paraphrased the section-by-section analysis HB 83,                                                                 
Sections  1-8,  which  read   as  follows  [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Sections 1  and 2 Clarify that  the Teachers Retirement                                                                    
     System (TRS)  defined benefit (DB) statutes  apply only                                                                    
     to employees  who participate  in the  DB plan  and did                                                                    
     not convert  to defined contribution (DC).  No employee                                                                    
     can participate  in both  the DB and  DC plans.  Sec. 1                                                                    
     also  puts all  TRS employers  on an  equal footing  by                                                                    
     requiring  them  to  offer  new  employees  the  choice                                                                    
     between DB and DC systems.                                                                                                 
                                                                                                                                
     Sections  3 and  4 Set  employee contributions  for the                                                                    
     new  DB tier  at eight  percent of  pay, while  leaving                                                                    
     prior tier employees' contributions unchanged.                                                                             
                                                                                                                                
     Sections 5 and 6  Require a person receiving disability                                                                    
     benefits under the DB tiers  to seek work and receive a                                                                    
     medical examination.  Sets limits  on the  frequency of                                                                    
     the exams.                                                                                                                 
                                                                                                                                
     Section  7 Closes  the Tier  II DB  health plan  to new                                                                    
     hires and  those DC  members who  choose to  convert to                                                                    
     the new TRS DB tier.                                                                                                       
                                                                                                                                
     Section  8  Establishes  the eligibility  standard  for                                                                    
     retiree medical  benefits in  the new  TRS DB  tier. In                                                                    
     the new DB tier, a member  with 25 years of service may                                                                    
     receive medical  benefits partially paid by  the system                                                                    
     at  any age.  A member  without 25  years must  have at                                                                    
     least  eight  years  of service  and  be  eligible  for                                                                    
     Medicare.   Disabled  members   also  get   system-paid                                                                    
     medical benefits.                                                                                                          
                                                                                                                                
     A   TRS   DB   retiree   who  does   not   meet   those                                                                    
     qualifications can  buy health  care coverage  from the                                                                    
     system, but must pay the full cost of premiums.                                                                            
                                                                                                                                
     Establishes a  premium share  schedule for  retirees to                                                                    
     pay a  portion of  their health insurance  and requires                                                                    
     actuarial adjustments  to keep the pre-funding  rate of                                                                    
     the  new DB  tier no  higher than  the cost  of the  DC                                                                    
     plan.                                                                                                                      
                                                                                                                                
     Sets vesting  rules for  the premium  share percentages                                                                    
     so that  the schedule  can change during  an employee's                                                                    
     working life, but is fixed at the date of retirement.                                                                      
                                                                                                                                
4:51:24 PM                                                                                                                    
                                                                                                                                
MR. KIEHL  elaborated that  Section 8 is  one of  the significant                                                               
cost savings provisions  in this bill compared  to previous tiers                                                               
since all  retirees will  pay a portion  of their  monthly health                                                               
premium based on their years of  service.  This provision sets up                                                               
that schedule.  One safety mechanism  in this bill to ensure that                                                               
the new  pension tier does not  cost the school districts  or the                                                               
state more  than the DC  tier is  a periodic five-year  review by                                                               
the actuaries.   During an  employee's working life  those shares                                                               
of the  premium at retirement  can vary.   Thus, it  sets vesting                                                               
rules for the premium share  percentages so that the schedule can                                                               
change during an employee's working life,  but it is fixed at the                                                               
date  of retirement.    He  reiterated that  this  refers to  the                                                               
percentage of  the health  premium, not  the dollar  amount since                                                               
health premiums may rise and this is a risk shared by all.                                                                      
                                                                                                                                
4:52:44 PM                                                                                                                    
                                                                                                                                
MR.  KIEHL continued  the section-by-section  analysis of  HB 83,                                                               
Sections  9-11,  which  read  as  follows  [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Section  9 Clarifies  that the  TRS  DC statutes  apply                                                                    
     only to  employees who participate  in the DC  plan and                                                                    
     did not convert to DB.  No employees can participate in                                                                    
     both the DB and DC plans.                                                                                                  
                                                                                                                                
     Section 10 Puts  all TRS employers on  an equal footing                                                                    
     by  requiring them  to offer  new employees  the choice                                                                    
     between DB and DC.                                                                                                         
                                                                                                                                
     Section  11  Gives a  newly  hired  teacher the  choice                                                                    
     between  DB   and  DC  systems.  This   is  a  one-time                                                                    
     irrevocable choice.  Sets timeframes and rules  for the                                                                    
     process.                                                                                                                   
                                                                                                                                
MR.  KIEHL emphasized  that it  is noteworthy  to emphasize  that                                                               
this provides a  one-time irrevocable choice.  He  said that this                                                               
decision requires  an employee must receive  some education prior                                                               
to making the choice so that  no one makes the irrevocable choice                                                               
blind.                                                                                                                          
                                                                                                                                
4:53:36 PM                                                                                                                    
                                                                                                                                
MR.  KIEHL continued  the section-by-section  analysis of  HB 83,                                                               
Sections  12-13,  which  read as  follows  [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Section   12  Clarifies   that   the  Public   Employee                                                                    
     Retirement  System (PERS)  DB  statutes  apply only  to                                                                    
     employees who  participate in the  DB plan and  did not                                                                    
     convert to DC. No employee  can participate in both the                                                                    
     DB  and  DC plans.  This  section  also puts  all  PERS                                                                    
     employers  on an  equal footing  by  requiring them  to                                                                    
     offer  new  employees  the choice  between  DB  and  DC                                                                    
     systems.                                                                                                                   
                                                                                                                                
     Section  13 Sets  the same  minimum wage  threshold for                                                                    
     elected  officials  in the  new  DB  tier as  the  2004                                                                    
     reforms implemented for prior tiers.                                                                                       
                                                                                                                                
4:54:02 PM                                                                                                                    
                                                                                                                                
MR. KIEHL said  that Section 13 is unique to  PERS and it matches                                                               
the DC  system by  setting a minimum  wage threshold  for elected                                                               
officials in  the new  DB tier.   This is one  of the  safety net                                                               
features  that  Mr.  Carrillo   mentioned  earlier,  noting  that                                                               
elected officials  who only make  an honorarium now would  have a                                                               
minimum salary if they were to  be employed as full PERS members,                                                               
he said.  There would need  to be an adequate contribution to the                                                               
system  to  fund  that.    He turned  to  Section  14-18  of  the                                                               
Sectional  Analysis of  HB 83,  which read  as follows  [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Sections 14  and 15 Set employee  contributions for the                                                                    
     new  PERS  DB  tier  at eight  percent  of  pay,  while                                                                    
     leaving prior tier employees' contributions unchanged.                                                                     
                                                                                                                                
     Sections  16   and  17   Require  a   person  receiving                                                                    
     disability  benefits under  the PERS  DB tiers  to seek                                                                    
     work and receive a medical  examination. Sets limits on                                                                    
     the frequency of the exams.                                                                                                
                                                                                                                                
     Section  18  Establishes  an eligibility  standard  for                                                                    
     retiree medical  benefits in the  new PERS DB  tier. In                                                                    
     the new  DB tier, a  peace officer or  firefighter with                                                                    
     25  years  of  service  may  receive  medical  benefits                                                                    
     partially  paid  by the  system  at  any age.  A  peace                                                                    
     officer or  firefighter who does  not have 25  years of                                                                    
     service  must  be eligible  for  Medicare  and have  at                                                                    
     least 10  years. Other PERS employees  require 30 years                                                                    
     of service  to get  medical benefits partially  paid by                                                                    
     the system unless they are  Medicare eligible, in which                                                                    
     case  they  require a  minimum  of  10 years.  Disabled                                                                    
     members also get system-paid medical benefits.                                                                             
                                                                                                                                
     A   PERS   DB  retiree   who   does   not  meet   those                                                                    
     qualifications can  buy health  care coverage  from the                                                                    
     system, but must pay the full cost of premiums.                                                                            
                                                                                                                                
     Establishes a  premium share  schedule for  retirees to                                                                    
     pay a  portion of  their health insurance  and requires                                                                    
     actuarial adjustments  to keep the pre-funding  rate of                                                                    
     the  new DB  tier no  higher than  the cost  of the  DC                                                                    
     plan.                                                                                                                      
                                                                                                                                
     Sets vesting  rules for  the premium  share percentages                                                                    
     so that  the schedule  can change during  an employee's                                                                    
     working life, but is fixed at the date of retirement.                                                                      
                                                                                                                                
MR.  KIEHL emphasized  that Section  18 sets  up the  eligibility                                                               
standards for  retiree medical benefits,  which is  comparable to                                                               
the TRS  and will provide a  significant cost savings in  the new                                                               
pension  system as  compared to  the old  system.   Every retiree                                                               
pays a share  of his/her monthly premium which  provides for risk                                                               
sharing for those retiree health insurance costs.                                                                               
                                                                                                                                
4:55:29 PM                                                                                                                    
                                                                                                                                
MR  KIEHL continued  the section-by-section  analysis  of HB  83,                                                               
Sections  19-24,  which  read as  follows  [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Sections 19 and  20 Put all PERS employers  on an equal                                                                    
     footing  by  allowing  employers that  return  to  PERS                                                                    
     after terminating  participation to hire  employees the                                                                    
     same way other PERS  employers do, and allows employees                                                                    
     to earn  service credits in  the appropriate  tier when                                                                    
     working for those employers.                                                                                               
                                                                                                                                
     Section 21  Clarifies that the  PERS DC  statutes apply                                                                    
     only to  employees who participate  in the DC  plan and                                                                    
     did not convert to DB.  No employees can participate in                                                                    
     both the DB and DC plans.                                                                                                  
                                                                                                                                
     Section 22 Puts all PERS  employers on an equal footing                                                                    
     by  requiring them  to offer  new employees  the choice                                                                    
     between DB and DC systems.                                                                                                 
                                                                                                                                
     Section  23 Gives  a newly  hired  public employee  the                                                                    
     choice between  DB and DC  systems. This is  a one-time                                                                    
     irrevocable choice.  Sets timeframes and rules  for the                                                                    
     process.                                                                                                                   
                                                                                                                                
     Section  24   Repeals  sections  that   let  non-vested                                                                    
     employees convert from DB to  DC and required employers                                                                    
     to  match  the  funds transferred  dollar  for  dollar.                                                                    
     Repeals  sections  related  to  political  subdivisions                                                                    
     that  participate  only  in  the  DC  plan.  Repeals  a                                                                    
     requirement    that   DB    employees   who    refunded                                                                    
     contributions from the system  and return to work after                                                                    
     July 1,  2010 participate  only in  the DC  plan. (Such                                                                    
     employees will thus be treated as new hires.)                                                                              
                                                                                                                                
MR. KIEHL added that Section  24 would allow non-vested employees                                                               
convert from DB to DC and  take employer funds along, which is no                                                               
longer necessary because the window  is closed and under the bill                                                               
new hires have a choice.                                                                                                        
                                                                                                                                
4:56:42 PM                                                                                                                    
                                                                                                                                
MR  KIEHL continued  the section-by-section  analysis  of HB  83,                                                               
Sections  25,   which  read  as  follows   [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Section 25 Gives employees hired  into the TRS and PERS                                                                    
     DC plans  who have  not refunded out  of those  plans a                                                                    
     90-day period  from the effective  date of the  bill to                                                                    
     irrevocably   convert    into   the   new    DB   tier.                                                                    
     Contributions  move from  the DC  plan to  the DB  plan                                                                    
     trust if they make the switch.                                                                                             
                                                                                                                                
MR.  KIEHL  clarified  that  Section  25  is  the  first  of  the                                                               
conversion options.   This would allow employees  who are working                                                               
in  the  DC   system  a  one-time  option   to  make  irrevocable                                                               
conversion  into the  new  DB  tier.   He  directed attention  to                                                               
Section  26,   which  read   as  follows   [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Section  26  Sets  the  procedure  for  the  conversion                                                                    
     election  in Sec.  25 and  allows the  administrator to                                                                    
     adopt  regulations  related   to  the  conversion.  The                                                                    
     choice   to  convert   is   irrevocable,  and   certain                                                                    
     information  must  be  provided  to  the  employee.  An                                                                    
     employee  who transfers  receives  credited service  in                                                                    
     the  defined benefit  plan equal  to the  value of  the                                                                    
     employee's DC  account. If that amount  is insufficient                                                                    
     to  'buy'  the  employee's  actual  service  time,  the                                                                    
     employee  may create  an indebtedness  to purchase  the                                                                    
     difference.  If the  employee's individual  account has                                                                    
     an  excess,  the  difference is  transferred  into  the                                                                    
     Supplemental Benefits  System or a  comparable account,                                                                    
     in keeping with federal tax law.                                                                                           
                                                                                                                                
4:57:05 PM                                                                                                                    
                                                                                                                                
MR. KIEHL  explained that Section  26 lays  out the rules  of the                                                               
conversion.  He  highlighted that if an employee wants  to earn a                                                               
pension instead,  the value of the  employee's account, including                                                               
employer contributions,  is actuarily  calculated and buys  up to                                                               
the employee's  actual years  of service  time.   If insufficient                                                               
funds exist to  purchase the employee's actual  years of service,                                                               
the  employee   may  create  an  indebtedness   to  purchase  the                                                               
difference, but  the employee is not  entitled to it as  a matter                                                               
of right.   The state or  municipality would not "kick  in" extra                                                               
funds  to buy  the time.    He offered  his belief  that in  rare                                                               
instances  in  which  an  employee  had  more  money  in  his/her                                                               
account, the  federal government  would require  it to  be rolled                                                               
over  into  a  supplemental  benefits account  or  an  individual                                                               
retirement account.  It would not  be taken from the employee, he                                                               
said.                                                                                                                           
                                                                                                                                
MR  KIEHL continued  the section-by-section  analysis  of HB  83,                                                               
Sections  27-29,  which  read as  follows  [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
      Section 27 Allows the Commissioner of Administration                                                                      
      to adopt regulations to implement and make specific                                                                       
     the bill's provisions.                                                                                                     
                                                                                                                                
     Section 28 Is an immediate effective date for sections                                                                     
     26 and 27 of the bill.                                                                                                     
                                                                                                                                
       Section 29 Makes the bill effective July 1, 2017,                                                                        
     except as provided in Sec. 28.                                                                                             
                                                                                                                                
4:58:26 PM                                                                                                                    
                                                                                                                                
MR. KIEHL  stated that  this provision  makes the  effective date                                                               
July 1, 2017, which needs to be adjusted going forward.                                                                         
                                                                                                                                
CHAIR KITO agreed that the date would be fixed.                                                                                 
                                                                                                                                
4:58:51 PM                                                                                                                    
                                                                                                                                
MS. OAKLEY  reiterated the three  "Key Reasons" as  the longevity                                                               
pool, maintaining an investment  portfolio, and since typically a                                                               
DB plan  will have  more assets than  an individual  account, the                                                               
fees  are lower.   Historically,  in reviewing  DB and  DC plans,                                                               
what economists  call behavioral drag exists,  in that individual                                                               
investors  invest on  their own,  she said.   She  clarified that                                                               
sometimes employees  do not make the  right investment decisions,                                                               
for example, buying or selling at the wrong time.                                                                               
                                                                                                                                
MS. OAKLEY referred  to slide 4, titled  "Colorado State Auditor:                                                               
DB Pension Higher  Income Replacement over DC."   She referred to                                                               
the graph  on the slide that  summarizes data from a  report that                                                               
is produced  by the Colorado  State Auditor.  She  explained that                                                               
Colorado does  give its employees  a choice between a  DB pension                                                               
and  a DC  plan.   The auditor's  analysis shows  the percent  of                                                               
income  being  replaced  by  PERA,  [Public  Employee  Retirement                                                               
Association],  the side-by-side  DB/DC  plan, and  a specific  DB                                                               
"Cash Balance" plan.  She  further clarified the DB "Cash Balance                                                               
plan is  one that works  like a  DB plan with  contributions, but                                                               
unlike  a regular  DB plan  in which  the individual  has control                                                               
over the investment,  this gives them a  fixed investment return.                                                               
She referred  to the bottom  line of  the chart, which  shows the                                                               
amount of  income that would  be replaced in a  self-directed DC.                                                               
Each column represents  an employee at a given  age, for example,                                                               
an  employee age  40  with  3 years  of  service  is compared  to                                                               
someone who retires  at 65 with 30 years of  service.  Over time,                                                               
the  DB plan  will ultimately  provide a  career employee  with a                                                               
higher income than  for a short-term employee.   It would provide                                                               
a higher  amount of  income than a  self-directed DC  plan would,                                                               
she said.                                                                                                                       
                                                                                                                                
5:02:26 PM                                                                                                                    
                                                                                                                                
MS.  OAKLEY refereed  to slide  5, titled  "Different Workforces:                                                               
Public Sector Has Job Tenure Twice  that of Private Sector."  She                                                               
explained that  this slide gives  an indication of the  tenure of                                                               
employees derived  from data by  the United States  Department of                                                               
Labor.  Referring  to a graph on slide 5,  she indicated the gold                                                               
line  reflects the  public  sector and  the  green line  reflects                                                               
private  employees.   She  explained  that  the public  employees                                                               
typically  have   a  longer  tenure   than  the   private  sector                                                               
employees,  about  twice  that  of  the  private  sector.    This                                                               
provides  one  reason why  the  DB  plan  is attractive  to  many                                                               
employees  in  the public  sector.    In  addition, the  DB  plan                                                               
encourages  them to  stay longer  and  maintain their  employment                                                               
relationship with the state or local agency.                                                                                    
                                                                                                                                
5:03:44 PM                                                                                                                    
                                                                                                                                
MS. OAKLEY  referred to slide  6, titled  "DB Plan's Role  in the                                                               
Public  Sector:  Workforce  Management," which  read  as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
        • DBs improve public sector productivity:                                                                               
          Employees are more likely to value their work and                                                                     
          tend to invest more in their skills.                                                                                  
        • Pensions help recruit and retain quality workers.                                                                     
          Moving to a DC design could affect recruitment,                                                                       
          retention, and productivity.                                                                                          
        • Teacher effectiveness increases with experience.                                                                      
          Greater teacher retention means higher overall                                                                        
          teacher productivity. When a mid-career teacher                                                                       
          is replaced by an inexperienced teacher, the                                                                          
         school as a whole sees a drop in productivity.                                                                         
                                                                                                                                
MS. OAKLEY  said this slide represents  a summary of some  of the                                                               
research that has been done to  examine how the DB plans help the                                                               
public sector manage  its workforce.  She  paraphrased the bullet                                                               
points, commenting  that firemen,  police officers,  and teachers                                                               
are  all  valued members  of  the  community.   Further,  greater                                                               
teacher retention means  higher overall educational productivity.                                                               
When  a  mid-career  teacher  is  replaced  by  an  inexperienced                                                               
teacher, the  overall productivity  in the  school tend  to drop,                                                               
she stated.                                                                                                                     
                                                                                                                                
5:05:41 PM                                                                                                                    
                                                                                                                                
MS.  OAKLEY directed  attention to  slide 7,  titled "Palm  Beach                                                               
Case Study:  Costs Due to  Employee Turnover  Wasn't Considered,"                                                               
which read, in part, as follows [original punctuation provided]:                                                                
                                                                                                                                
     In 2012, Palm Beach closed  its DB pension and opened a                                                                    
     Combined DB/DC plan,  greatly reducing benefits. During                                                                    
     the next four years (2012-2015),  a total of 109 police                                                                    
     officers  and  firefighters   left  the  forces  before                                                                    
     retirement, including 53 vested officers.                                                                                  
                                                                                                                                
MS.  OAKLEY explained  that slide  7 summarizes  the result  of a                                                               
case study.  She  said that the City of Palm  Beach closed its DB                                                               
pension and opened  a combined DB/DC plan,  which greatly reduced                                                               
benefits  in  the   DB  plan.    She  noted   that  the  matching                                                               
contribution was  100 percent for the  employees' contribution of                                                               
four  percent, which  went into  the DC  plan.   In 2011,  a year                                                               
prior  to the  plan  change, the  city had  about  60 police  and                                                               
firefighter employees.   In the  next four years,  the department                                                               
lost  109  employees,  who  left before  they  were  eligible  to                                                               
retire.   In  addition, 20  percent of  the workforce  retired as                                                               
soon  as the  new  DB/DC  plan was  adopted.    Thus, police  and                                                               
firefighter employees left in droves, she  said.  In fact, in the                                                               
four years  prior to the  change only two vested  employees left.                                                               
In  the  four years  after  the  combined  plan was  adopted,  53                                                               
experienced police and  firefighters left.  She  compared that to                                                               
the trend for new police and  firefighter employees.  In the four                                                               
years prior to  the change, only four new employees  left, yet in                                                               
2015,  31  firefighters  left.   She  explained  that  the  young                                                               
officers came to Palm Beach,  went through the academy and rookie                                                               
training, but  left as  soon as  an opportunity  arose to  join a                                                               
force  with a  DB  plan.   Ultimately,  the  lost training  funds                                                               
exceeded $20  million, she said.   She implied that the  city was                                                               
short-sighted,  thinking it  was saving  money in  pension funds,                                                               
but losing not only training  costs, but overtime costs, as well,                                                               
due to short staffing.                                                                                                          
                                                                                                                                
5:09:20 PM                                                                                                                    
                                                                                                                                
MS. OAKLEY  turned to slide  8, titled "92% of  Americans: Public                                                               
Pensions a Good Way to Recruit  and Retain Employees," and to the                                                               
illustration on the  slide that captured the  public sentiment in                                                               
a survey.  She reiterated  that plans are valuable for recruiting                                                               
and retaining employees.  In a  survey, when the public was asked                                                               
whether the person  agreed or disagreed that pensions  are a good                                                               
way to  recruit and retain  qualified teachers,  police officers,                                                               
and  firefighters,  92 percent  agreed,  of  which  6 out  of  10                                                               
strongly agreed.   She concluded  that demonstrates the  level of                                                               
support  that many  public pensions  have in  the broader  public                                                               
arena.                                                                                                                          
                                                                                                                                
5:10:05 PM                                                                                                                    
                                                                                                                                
MS. OAKLEY turned  to slide 9, titled "Economic  Impact of Alaska                                                               
Public  Retirees  Spending,"  which  read, in  part,  as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     Expenditures by state retirees provide steady economic                                                                     
         stream to Alaska. In 2016, these expenditures                                                                          
     supported in Alaska:                                                                                                       
                                                                                                                                
      • Over 7,600 jobs that paid $400 million in wages.                                                                        
        • $1.2 billion in total economic output. Each                                                                           
          dollar in DB benefits supported $1.12 in total                                                                        
          economic activity.                                                                                                    
        • $168 million in federal, state, and local tax                                                                         
          revenues.                                                                                                             
        • Each taxpayer   dollar   "invested"   in   plans                                                                      
          supported $4.39 in total economic activity in the                                                                     
          state.                                                                                                                
                                                                                                                                
MS. OAKLEY paraphrased statistics  on expenditures by retirees in                                                               
Alaska.   She recapped that  the pension enables the  retirees to                                                               
spend, knowing they  have an income stream.  If  retirees in a DC                                                               
plan were worried about running out  of money, they would be less                                                               
likely to take more money out of their pensions and spend it.                                                                   
                                                                                                                                
5:12:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT,  referring to  slide 7, asked  about the                                                               
Palm  Beach  employee turnover.    He  suggested that  the  chart                                                               
seemed  a bit  deceiving.    He asked  for  clarification on  the                                                               
actual numbers of employees between 2011 and 2015.                                                                              
                                                                                                                                
MS.  OAKLEY answered  that  in  each case  the  [year listed]  is                                                               
capturing the prior  four years, from 2012 to 2015.   She further                                                               
explained that 2011 is capturing from  2008 to 2011.  She offered                                                               
to  provide  information  that  details  the  difference  in  the                                                               
composition of  the staff  at that  time.   She recalled  that by                                                               
2015 half of  the firefighters and police officers  had less than                                                               
five years of service.                                                                                                          
                                                                                                                                
5:14:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD  asked whether she  had discussed                                                               
with the  Department of Administration  (DOA) what it  would take                                                               
to  change to  the proposed  system and  any actuarial  valuation                                                               
that  would need  to  be done  prior to  a  change in  retirement                                                               
systems.                                                                                                                        
                                                                                                                                
MS. OAKLEY answered  no; that she has not had  the opportunity to                                                               
have that discussion  with the department.   Currently, the state                                                               
operates a DB plan for employees  hired prior to 2006.  The skill                                                               
sets to invest  those dollars exists within  the departments that                                                               
administer the  retirement system.   She offered her  belief that                                                               
the state has been operating the  two systems, so it would not be                                                               
difficult to take it back to  one system.  She offered that these                                                               
choices  are ones  occurring throughout  the country,  that state                                                               
employees  in approximately  12  states currently  have a  choice                                                               
between a DB and DC plan.                                                                                                       
                                                                                                                                
5:16:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SULLIVAN-LEONARD    recalled   prior   committee                                                               
discussions that indicated an actuarial  study and analysis would                                                               
need to be performed so  the legislature could decide whether the                                                               
state could afford to move forward with this type of system.                                                                    
                                                                                                                                
CHAIR KITO  answered that  his office  had held  discussions with                                                               
DOA.  He reported that the  department has advised that it is not                                                               
prepared to  perform such an  intensive actuarial  analysis until                                                               
the bill  is before the House  Finance Committee.  The  DOA would                                                               
like the committee to provide  any recommended policy changes and                                                               
the actuarial would only perform the analysis once.                                                                             
                                                                                                                                
5:17:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  for clarification  on subsequent                                                               
hearings.  He offered his support for the bill.                                                                                 
                                                                                                                                
CHAIR KITO  was unsure of the  time commitment.  He  expressed an                                                               
interest  in having  the actuarial  review done  at the  time the                                                               
bill is before the House Finance Committee.                                                                                     
                                                                                                                                
5:18:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL  asked  whether   the  existing  Palm  Beach                                                               
employees were forced into the new plan.                                                                                        
                                                                                                                                
MS.  OAKLEY answered  that the  city  council voted  to move  the                                                               
employees into  the new  plan, thus,  employees were  forced into                                                               
the new plan.   She indicated that many of  the employees did not                                                               
feel  there were  any  benefits to  stay in  Palm  Beach.   Their                                                               
benefits  were  frozen based  on  their  salaries and  would  not                                                               
increase,   she  explained.     She   pointed  out   that  nearby                                                               
communities were offering retirement  plans like their old plans.                                                               
The "churning part" by the new  employees in the Palm Beach study                                                               
is something that the state would likely want to consider.                                                                      
                                                                                                                                
5:20:32 PM                                                                                                                    
                                                                                                                                
JACOB   BERA,  Public   School  Teacher,   shared  his   personal                                                               
background,  offering  his  support  for  HB  83,  based  on  his                                                               
experience as  a public-school teacher  for the past 15  years in                                                               
Eagle River.   His goal is  to help the committee  understand how                                                               
the  current retirement  plan affects  student  learning and  the                                                               
effective use  of the limited  budget and core education.   After                                                               
he finished his  time in the United States  Marine Corps Reserve,                                                               
he and his  wife, who is also a teacher,  moved from Wisconsin to                                                               
Alaska to  start their careers in  education.  The beauty  of the                                                               
state attracted them  since they both like to run  and spend time                                                               
in the mountains;  however, they also want to start  a family and                                                               
put down roots.  He emphasized  that the retirement plan has made                                                               
a  big difference  for his  decision to  stay in  Alaska.   Since                                                               
their teacher service  started in 2003, they fall  under the Tier                                                               
II DB  plan, which allows  them to  contribute to a  pension plan                                                               
after  they  retire.   When  the  plan  changed in  2006,  public                                                               
employees could  no longer contribute  to the  DB plan.   If they                                                               
had been  considering moving  to Alaska  after 2006,  they simply                                                               
would not have done so as  it would not have made economic sense.                                                               
He  said  they  learned  that all  new  public  employees  cannot                                                               
participate  in  the  Social Security  [Old-Age,  Survivors,  and                                                               
Disability Insurance  (OASDI) program administered by  the Social                                                               
Security Administration  (SSA)].  In fact,  employees lose Social                                                               
Security  benefits  in Alaska  by  becoming  public employees  in                                                               
Alaska.   They could contribute  to both plans in  Wisconsin, but                                                               
they opted to  stay to supplement their losses by  opening a Roth                                                               
IRA [individual retirement account].                                                                                            
                                                                                                                                
5:22:11 PM                                                                                                                    
                                                                                                                                
MR.  BERA  said  that  when he  explains  the  public  employee's                                                               
choices to  other Alaskans,  especially those  not in  the public                                                               
sector, they  better understand the  risks that  public employees                                                               
take.   He acknowledged  that he  and his wife  feel lucky  to be                                                               
under the Tier II plan, even  absent the ability to contribute to                                                               
the OASDI [Social  Security], that they are still  trying to make                                                               
their retirement  system work for  them.  Other  colleagues moved                                                               
to  Alaska for  a few  years for  the adventure,  but have  taken                                                               
their savings and left, in part  due to budget cuts and increased                                                               
demands.  For  those reasons, Alaska is  becoming less attractive                                                               
for teachers to  stay, he said.  The state  has continued to lose                                                               
the  money  it  invested  in attracting  and  training  teachers.                                                               
Teacher turnover  is rising in  Alaska and schools  and educators                                                               
suffer.                                                                                                                         
                                                                                                                                
MR. BERA said he hopes  the committee will understand the quality                                                               
of the educators who remain, noting  he is one of four nationally                                                               
board-certified teachers  in his  school, and one  of 200  in the                                                               
state.   His college friend  who teaches  in his school  just won                                                               
the  Milken Educator  Award.   He described  a recent  experience                                                               
that  illustrated   teacher  dedication.     Despite   his  son's                                                               
teacher's  facing family  medical  issues that  day, the  teacher                                                               
immediately  focused  on  the school  conference  and  his  son's                                                               
progress in  school.  He  emphasized the importance  of retaining                                                               
teachers, noting he  often hears students express  an interest in                                                               
teaching.   He  said  the  state is  not  competitive with  other                                                               
states in  terms of salary  and benefits.  Teacher  positions are                                                               
being cut and  relatively new teachers must make  choices to stay                                                               
in  Alaska or  to leave,  invest  and build  up their  retirement                                                               
plans, including  building their social security  benefits.  Even                                                               
he and his  wife must consider their options due  to job security                                                               
issues.                                                                                                                         
                                                                                                                                
MR.  BERA  offered  his  belief  that  HB  83  could  provide  an                                                               
incentive for  public employees  to stay  in Alaska  by providing                                                               
the ability  for them  to earn a  better retirement  security for                                                               
their future.   Attracting and  keeping the best  educators makes                                                               
the most economic  sense for Alaska, especially  for the children                                                               
who attend public schools.                                                                                                      
                                                                                                                                
5:25:24 PM                                                                                                                    
                                                                                                                                
[HB 83 was held over.]                                                                                                          
                                                                                                                                
5:25:59 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:25 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB110 Version U.pdf HL&C 2/16/2018 3:15:00 PM
HB 110
HB083 Supporting Document - Alaska Comparable Plans 4.18.17.pdf HL&C 2/16/2018 3:15:00 PM
HB 83
HB083 ver A 3.2.17.PDF HL&C 2/16/2018 3:15:00 PM
HB 83
HB083 Supporting Document - Compare DB to DC access 4.18.17.pdf HL&C 2/16/2018 3:15:00 PM
HB 83
HB083 Fiscal Note DOA-COM 2.9.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 83
HB83 Oakley Presentation.pdf HL&C 2/16/2018 3:15:00 PM
HB 83
HB83 Sectional Analysis 2.28.17.pdf HL&C 2/16/2018 3:15:00 PM
HB 83
HB083 Fiscal Note DOA-DRB 2.9.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 83
HB083 Supporting Document - 401k retirement readiness 4.18.17.pdf HL&C 2/16/2018 3:15:00 PM
HB 83
HB110 Fiscal Note DCCED-DCBPL 2.09.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 110
HB110 Supporting Documents - Support Letters 2.15.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 110
HB110 Supporting Documents - Opposition Letters 2.12.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 110
HB303 Sectional Analysis 2.6.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 303
HB303 Supporting Document-Workers' Compensation Board Resolution No. 17-01 2.6.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 303
HB303 Transmittal Letter 2.6.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 303
HB303 Fiscal Note DOA DRM 1.24.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 303
HB303 ver A 2.6.18.PDF HL&C 2/16/2018 3:15:00 PM
HB 303
HB303 Fiscal Note DOA-DRM 2.6.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 303
HB303 HLAC DOLWD presentation 2.16.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 303
HB303 Opposition Letter 2.15.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 303
HB110 Support Letters 2.15.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 110
HB110 Sponsor Statement 2.15.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 110
HB110 Sectional Analysis 2.15.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 110
HB083 Letters of Support 2.15.18.pdf HL&C 2/16/2018 3:15:00 PM
HB 83
HB083 Letters of Support 2.16.18 packet 2.pdf HL&C 2/16/2018 3:15:00 PM
HB 83