04/30/2003 07:10 AM House W&M

                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE SPECIAL COMMITTEE ON WAYS & MEANS                                                                           
                         April 30, 2003                                                                                         
                           7:10 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Jim Whitaker, Co-Chair                                                                                           
Representative Norman Rokeberg                                                                                                  
Representative Max Gruenberg                                                                                                    
Representative Carl Moses                                                                                                       
Representative Cheryll Heinze                                                                                                   
Representative Vic Kohring                                                                                                      
                                                                                                                              
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Peggy Wilson                                                                                                     
Representative Bruce Weyhrauch                                                                                                  
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Dan Ogg                                                                                                          
Representative Paul Seaton                                                                                                      
Representative Carl Gatto                                                                                                       
Representative Ralph Samuels                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PUBLIC  EMPLOYEES  RETIREMENT  SYSTEM: ACTUARIAL  VALUATION,  GUY                                                               
BELL                                                                                                                            
                                                                                                                                
TAPES                                                                                                                         
                                                                                                                                
03-18, SIDES(S) A & B                                                                                                           
                                                                                                                                
CO-CHAIR MIKE  HAWKER convened the  meeting of the  House Special                                                             
Committee on Ways  & Means at 7:10 a.m.   Representatives Hawker,                                                               
Whitaker, Kohring, and  Moses were present at the  call to order.                                                               
Representatives Heinze,  Rokeberg, and  Gruenberg arrived  as the                                                               
meeting   was   in   progress.      Also   in   attendance   were                                                               
Representatives Ogg, Seaton, Gatto, and Samuels.                                                                                
                                                                                                                                
SUMMARY OF INFORMATION                                                                                                        
                                                                                                                                
GUY  BELL,   Director,  Division  of  Retirement   and  Benefits,                                                               
Department  of Administration,  gave  an overview  of the  Public                                                               
Employees' Retirement System (PERS)  and the Teachers' Retirement                                                               
System (TRS).                                                                                                                   
                                                                                                                                
MR.  BELL  described the  two  systems  and provided  information                                                               
outlining  the  differences between  the  retirement  plans.   He                                                               
described  how the  plans were  funded.   Both  the employee  and                                                               
employer  (the   State  of  Alaska)   pay  into   the  employee's                                                               
retirement plan.   The employee's portion is set in  statute at 2                                                               
percent of  their salary the first  10 years and 1.5  percent the                                                               
second  10 years  (on a  20-year retirement  plan).   The state's                                                               
portion is  a calculation determined  by specific  system funding                                                               
goals  adopted  by  the respective  retirement  boards.    System                                                               
funding  goals are:  relatively  stable  contribution rates  over                                                               
time, actuarial funding of retiree  medical benefits, 100 percent                                                               
funded ratio of  assets to accrued liabilities,  pay for benefits                                                               
during  working lifetime  (of the  employee).   Actuarial methods                                                               
are  used  to allocate  system  costs  over  time in  an  orderly                                                               
fashion.  They  do not, however, change the ultimate  cost of the                                                               
system.                                                                                                                         
                                                                                                                                
MR. BELL gave examples of  how the contributions were calculated,                                                               
and  how   other  factors  such  as   salary  increases,  medical                                                               
inflation, employment  patterns, were built  into the model.   He                                                               
explained  the  forecasted increase  in  cost  to the  retirement                                                               
plans  due largely  to the  increased cost  of medical  expenses.                                                               
Mr. Bell provided various charts  and graphs displaying trend and                                                               
forecast data  for the PERS  and TRS  systems.  He  also provided                                                               
the results of the two boards adopted rates for FY 04 and FY 05.                                                                
                                                                                                                                
ANNOUNCEMENTS                                                                                                                 
                                                                                                                                
There were no announcements.                                                                                                    
                                                                                                                                
COMMITTEE ACTION                                                                                                              
                                                                                                                                
The committee took no action.                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The House  Special Committee on Ways  & Means took an  at-ease at                                                               
8:12 a.m. in order to prepare  for the regular meeting.  [For the                                                               
regular  meeting minutes,  see  the 8:15  a.m.  minutes for  this                                                               
date.]                                                                                                                          
                                                                                                                                
NOTE:   The meeting was  recorded and handwritten log  notes were                                                               
taken.  A  copy of the tape(s)  and log notes may  be obtained by                                                               
contacting the  House Records  Office at  State Capitol,  Room 3,                                                               
Juneau,  Alaska  99801  (mailing address),  (907)  465-2214,  and                                                               
after  adjournment  of the  second  session  of the  Twenty-Third                                                               
Alaska  State Legislature  this  information may  be obtained  by                                                               
contacting the Legislative Reference Library at (907) 465-3808.