Legislature(2015 - 2016)BELTZ 105 (TSBldg)
04/09/2015 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB146 | |
| SB79 | |
| SB88 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 88 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | SB 79 | TELECONFERENCED | |
| += | HB 146 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 9, 2015
3:32 p.m.
MEMBERS PRESENT
Senator Click Bishop, Chair
Senator Bert Stedman, Vice Chair
Senator Lyman Hoffman
Senator Dennis Egan
MEMBERS ABSENT
Senator Anna MacKinnon
COMMITTEE CALENDAR
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 146(CRA)
"An Act relating to a municipal tax exemption for certain
subdivided property."
- MOVED SCS CSHB 146(CRA) OUT OF COMMITTEE
SENATE BILL NO. 79
"An Act relating to reemployment of persons who retire under the
defined benefit plan of the teachers' retirement system."
- HEARD & HELD
SENATE BILL NO. 88
"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 146
SHORT TITLE: MUNICIPAL TAX EXEMPTION
SPONSOR(s): REPRESENTATIVE(s) MUNOZ
03/12/15 (H) READ THE FIRST TIME - REFERRALS
03/12/15 (H) CRA
03/24/15 (H) CRA AT 8:00 AM BARNES 124
03/24/15 (H) Moved CSHB 146(CRA) Out of Committee
03/24/15 (H) MINUTE(CRA)
03/25/15 (H) CRA RPT CS(CRA) 2DP 5NR
03/25/15 (H) DP: SEATON, TILTON
03/25/15 (H) NR: REINBOLD, NAGEAK, DRUMMOND, ORTIZ,
HUGHES
03/27/15 (H) TRANSMITTED TO (S)
03/27/15 (H) VERSION: CSHB 146(CRA)
03/30/15 (S) READ THE FIRST TIME - REFERRALS
03/30/15 (S) CRA, FIN
04/07/15 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/07/15 (S) Heard & Held
04/07/15 (S) MINUTE(CRA)
04/09/15 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
BILL: SB 79
SHORT TITLE: REEMPLOYMENT OF RETIRED TEACHERS & ADMIN
SPONSOR(s): SENATOR(s) DUNLEAVY
03/18/15 (S) READ THE FIRST TIME - REFERRALS
03/18/15 (S) EDC, CRA
03/26/15 (S) EDC AT 3:30 PM BUTROVICH 205
03/26/15 (S) Heard & Held
03/26/15 (S) MINUTE(EDC)
03/31/15 (S) EDC AT 3:30 PM BUTROVICH 205
03/31/15 (S) Heard & Held
03/31/15 (S) MINUTE(EDC)
04/02/15 (S) EDC AT 3:30 PM BUTROVICH 205
04/02/15 (S) Scheduled but Not Heard
04/07/15 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/07/15 (S) <Pending Referral>
04/07/15 (S) EDC AT 3:30 PM BUTROVICH 205
04/07/15 (S) Moved CSSB 79(EDC) Out of Committee
04/07/15 (S) MINUTE(EDC)
04/08/15 (S) EDC RPT CS 1DP 1NR 3AM NEW TITLE
04/08/15 (S) DP: DUNLEAVY
04/08/15 (S) NR: HUGGINS
04/08/15 (S) AM: STEVENS, GIESSEL, GARDNER
04/09/15 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
BILL: SB 88
SHORT TITLE: TEACHERS & PUB EMPLOYEE RETIREMENT PLANS
SPONSOR(s): SENATOR(s) EGAN
03/25/15 (S) READ THE FIRST TIME - REFERRALS
03/25/15 (S) CRA, FIN
04/09/15 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/09/15 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
TERRY HARVEY, Staff
Representative Cathy Munoz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of HB 146 on behalf of
the sponsor.
SHEILA PETERSON, Staff
Senator Mike Dunleavy
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of SB 79 on behalf of
the sponsor.
LISA SKILES PARADY, Executive Director
Alaska Council of School Administrators, and Alaska
Superintendents Association
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 79.
PETER HOEPFNER, Member
Cordova School District Board of Education
Cordova, Alaska
POSITION STATEMENT: Testified in support of SB 79.
PEGGY COWAN, Superintendent
North Slope Borough School District
Barrow, Alaska
POSITION STATEMENT: Testified in support of SB 79.
CHRIS REITAN, Superintendent
Galena City School District
Galena, Alaska
POSITION STATEMENT: Testified in support of SB 79.
DEENA PARAMO, Superintendent
Matanuska-Susitna Borough School District
Palmer, Alaska
POSITION STATEMENT: Testified in support of SB 79.
PATRICK MAYER, Superintendent
Wrangell Public School District
Wrangell, Alaska
POSITION STATEMENT: Testified in support of SB 79.
MARY MCMAHON, President-Elect
Alaska Association of School Principals
Palmer, Alaska
POSITION STATEMENT: Testified in support of SB 79.
JESSE KIEHL, Staff
Senator Dennis Egan
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Supplemented the introduction of SB 88.
AARON DANIELSON, President
Public Safety Employees Association
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 88.
JACOB BERA, member
Region VI Board of Directors
National Education Association-Alaska
Chugiak, Alaska
POSITION STATEMENT: Testified in support of SB 88.
PEGGY COWAN, Superintendent
North Slope Borough School District
Barrow, Alaska
POSITION STATEMENT: Testified in support of SB 88.
ACTION NARRATIVE
3:32:05 PM
CHAIR CLICK BISHOP called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:32 p.m. Present
at the call to order were Senators Stedman, Hoffman, Egan, and
Chair Bishop.
HB 146-MUNICIPAL TAX EXEMPTION
3:33:18 PM
CHAIR BISHOP announced the consideration of HB 146. [Senate CS
for CSHB 146, labeled 29-LS0048\H, was before the committee.]
3:33:25 PM
TERRY HARVEY, Staff, Representative Cathy Munoz, Alaska State
Legislature, Juneau, Alaska, summarized that HB 146 is an
optional tool for municipalities to help develop land for
housing. He said HB 146 addresses a housing issue by
incentivizing development of three or more lots on a piece of
property. He specified that HB 146 would allow for a
municipality, if they choose, to abate the increase in property
tax above and beyond the property tax base at the time
development begins, until the property went into commercial or
residential use where the full assessment kicks in for the
municipality. He summarized that HB 146 has flexibility for a
municipality to choose to abate all or a portion of the increase
in property taxes.
CHAIR BISHOP confirmed that public testimony was closed at the
last meeting and noted that the bill had overwhelming public
support.
3:35:15 PM
At ease.
3:35:41 PM
SENATOR STEDMAN moved to report the bill [29-LS0048\H] from
committee with individual recommendations, attached fiscal note,
and title change.
CHAIR BISHOP found no objection and announced that [SCS CSHB
146(CRA)] was moved from the Senate Community and Regional
Affairs Standing Committee.
3:36:06 PM
At ease.
SB 79-REEMPLOYMENT OF RETIRED TEACHERS & ADMIN
3:37:30 PM
CHAIR BISHOP announced the consideration of SB 79.
3:38:05 PM
SHEILA PETERSON, Staff, Senator Mike Dunleavy, Alaska State
Legislature, Juneau, Alaska, said she would address SB 79 and
the committee substitute that passed out of the Senate Education
Committee.
MS. PETERSON revealed that Alaska is experiencing a shortage of
qualified educators, especially in hard to fill areas, and the
situation is compounded by the drastic reduction in state
revenue due to lower oil prices. SB 79 expands the pool for
experienced and qualified teachers available to school
districts. SB 79 becomes another tool for the school districts
to be able to reach and educate Alaska's students.
She set forth that the bill allows school districts to reemploy
educators younger than 62 who have been retired for one year, or
educators older than 62 who have been retired for at least 3
months. She specified that SB 79 will not require any school
district to reemploy any particular individual, the bill only
gives the school district the option to do so. She noted that
educators rehired under the bill's proviso receive their
retirement benefits during the period of reemployment.
3:39:47 PM
She explained that the Division of Retirement Benefits
recommended that the CS in the Senate Education Committee
require school districts to pay the standard 12.56 percent to
the Teachers' Retirement System (TRS) that is based on the
educator's salary. She noted that the standard 12.56 percent is
the same rate that the school districts must pay for active
employees.
She revealed that a recent Alaska Teacher Placement (ATP) Job
Fair had 707 openings for teachers and administrators, only 265
candidates attended. She asserted that the job fair shows the
disparity between people looking for jobs and the openings that
school districts have.
She summarized that SB 79 does not replace active employees, but
provides school districts with another tool to be able to staff
their schools.
SENATOR HOFFMAN asked where the job fair openings were located.
MS. PETERSON replied that she did not know, but would provide
additional information.
3:41:37 PM
SENATOR STEDMAN asked to verify that a local school district
pays the normal 12.56 percent TRS rate. He asked what the future
accumulated benefits are when a rehired-teacher is pulling in a
pension.
MS. PETERSON explained that Senator Dunleavy envisioned a school
district first going to active employees to fill positions and
then turning to retired teachers if a position cannot be filled.
She added that a reemployed teacher would maintain their
retirement benefits throughout their reemployment period.
SENATOR STEDMAN asked that Ms. Peterson address the accumulation
of any future additional benefits.
MS. PETERSON replied that there is no accumulation of any future
benefits.
SENATOR STEDMAN asked to verify that there is no impact on
potential unfunded liabilities where the school district just
pays the 12.56 percent to help mitigate the unfunded liability.
MS. PETERSON answered that Senator Dunleavy asked the Division
of Retirement and Benefits to submit a reasonable fiscal note
that would not slow down the bill's concept and provide school
districts with another hiring tool. She noted that the
division's actuary was concerned that current employees might be
incentivized to retire early and go back on the rolls as
reemployed retired teachers. She asserted that Senator Dunleavy
does not think the actuary's concerns would be the case, but the
CS proposed in the Senate Education Committee helps mitigate any
potential increase into the unfunded liability.
3:44:21 PM
CHAIR BISHOP asked how many school districts will be impacted by
SB 79.
MS. PETERSON replied that school districts have been asking for
the option provided by SB 79. She surmised that a third to a
half of Alaska's 53 school districts will be interested in
rehiring retired teachers. She explained that Senator Dunleavy
envisions the bill's benefit, particularly in rural Alaska with
30 percent turnover rate, is to supplement new hires with
experienced teachers that know Alaska and can act as a mentor to
the new teachers. She noted that Senator Dunleavy was a leader
several years ago of the mentor program and saw firsthand the
benefits from mentoring.
3:47:02 PM
LISA SKILES PARADY, Executive Director, Alaska Council of School
Administrators, and Alaska Superintendents Association (ASA),
Juneau, Alaska, said she had prepared testimony but would also
answer questions.
CHAIR BISHOP asked for hypotheticals that could be employed if
SB 79 became law.
MS. SKILES PARADY revealed turnover rates as follows:
· 30 percent or higher in rural areas,
· 7 percent or higher for teachers in urban areas,
· 14 percent for principals,
· 50 percent for superintendents new to Alaska over the past
2 years.
She explained that in terms of answering Senator Bishop's
question will depend on the position's greater need where
rehiring retired superintendents will be used more than rehiring
retired urban teachers.
She provided a breakdown of 707 positions available at the ATP
Job Fair as follows:
· administrative positions: 53,
· athletic positions: 15,
· elementary teaching positions: 125,
· high school teaching positions: 115,
· middle school teaching positions: 43,
· nutrition services and other: 116,
· student support services: 131.
She pointed out that the 265 people attending the recent ATP Job
Fair in addition to the University of Alaska (UA) producing
about 250 people shows that there is a supply-demand issue.
She said questions have been asked whether new teachers will be
denied the opportunity to take the positions; school districts
wish they had that problem, but that is not the current
situation.
She summarized that rehiring retired teachers will see limited
use, but the ability to rehire retired teachers will add an
additional tool. She surmised that under half of the school
districts will rehire retired teachers.
3:50:34 PM
CHAIR BISHOP noted that there are 53 school districts in Alaska.
He asked that Ms. Skiles Parady provide an approximation of how
many positions would be filled by rehired retirees.
MS. SKILES PARADY answered that less than 200 teachers were
hired the last time rehiring retirees was in law. She said the
school districts' needs are greater now, but rehiring retirees
should be comparable. She noted that 85 percent of UA graduates
are working in education occupations, but a greater need still
exists.
3:52:02 PM
SENATOR STEDMAN asked what the current status was for retire-
rehirees.
MS. SKILES PARADY answered that school districts are allowed to
hire up to 49 percent of the time for a position. She admitted
that recruiting someone for a halftime position in a highly
qualified or high needs area like special education, math, or
science is almost impossible to do.
3:54:01 PM
SENATOR STEDMAN asked that Ms. Skiles Parady explain what 49
percent means.
MS. SKILES PARADY answered that 49 percent refers to time where
49 percent is less than halftime.
SENATOR HOFFMAN noted that the turnover rates for rural Alaska
was 30 percent and 7 percent in urban Alaska. He asked why the
intent was to make the program statewide when the obvious
problem is in rural Alaska. He inquired why the legislation is
not made to address only hiring retired individuals in areas
that have the highest turnover percentage.
MS. SKILES PARADY concurred that there is a greater need in
rural Alaska, but noted that one of the largest school districts
has suffered from not being able to recruit special education
teachers. She stated that the teachers and administrators
shortage is a statewide issue that impacts both rural and urban
Alaska.
3:56:19 PM
SENATOR HOFFMAN asked if there is anything that can be done to
address the areas in the state that have the highest turnover.
He said the legislation seems to set into motion a program to
hire retirees to address a statewide problem, but four times as
much of a problem in rural Alaska versus urban Alaska. He
asserted that the majority of retire-rehires will occur in the
urban areas.
MS. SKILES PARADY answered that she agreed that recruiting for
rural areas is more difficult, but urban areas struggle equally
to recruit highly specialized areas where teachers in special
education, math, and science are in short supply both in Alaska
and nationally. She noted that retire-rehire is one of ASA's
highest priorities.
3:58:55 PM
SENATOR HOFFMAN asked what the special education teacher
turnover rates were in rural versus urban Alaska. He assumed
that special education teachers are more specialized and tend to
look at getting employed in urban areas.
MS. SKILES PARADY responded that she will provide specific data.
She conceded that specialized positions are hard to recruit for.
She said 131 specialized openings exist and the number of
positions open climbs every day.
SENATOR HOFFMAN asked if the Legislature should wait on SB 79 to
see exactly what happens with teacher layoffs due to the budget
cuts that are being contemplated.
MS. SKILES PARADY replied that ASA hopes that the Legislature
passes SB 79 because districts are not required to rehire
retirees, but the legislation provides another tool as a
possibility.
SENATOR HOFFMAN asked if there are programs or legislation that
can be proposed to target hiring teachers in rural Alaska and
does ASA have any recommendations in that regard.
4:01:38 PM
MS. SKILES PARADY replied that ASA supports all districts. She
noted that ASA has been on record supporting things like
mentoring. She stated that mentoring focuses on rural Alaska and
is a best practice to retain teachers.
SENATOR HOFFMAN responded that mentoring is an existing program.
He asked if ASA has any new recommendations to address the high
turnover rate in rural Alaska.
MS. SKILES PARADY answered that SB 79 is legislation that has
come directly from superintendents in rural areas.
SENATOR HOFFMAN asked specifically if legislation is being put
forward that is aimed at those areas that have 30 percent
turnover, not over-arching legislation that addresses the whole
state.
MS. SKILES PARADY replied that ASA has not put forward ideas
specific to the 30 percent turnover rate in rural Alaska.
SENATOR HOFFMAN asked which state organization is looking at the
high turnover rate in rural Alaska and is trying to find a
solution.
MS. SKILES PARADY answered that ASA and the Alaska School Boards
Association are the two organizations. She remarked that not
splitting between urban and rural is a very important tenet for
both organizations. She said ASA advocates for the entire state
and both urban and rural areas are suffering from the high
turnover rate.
SENATOR HOFFMAN replied that he is not trying to divide urban
and rural. He detailed that he is trying to acknowledge that
there is four times the problem in rural Alaska than there is in
urban Alaska. He said students suffer when there are high
turnover rates and asked what can be done to get the students in
rural Alaska on parity by reducing the turnover rate.
4:04:52 PM
CHAIR BISHOP asked that when exit reviews are done, why teachers
and superintendents are leaving. He remarked that fixing the
turnover rate cannot be done until the reason for leaving is
known. He pointed out that there are rural districts with
teachers that have served for 20 years. He recommended that
rural districts that have retained teachers for 20 years be
asked how they are doing it. He noted another problem where he
knows UA-Fairbanks graduates that have applied for teaching
positions that could not get hired in Alaska, but states like
Arizona have hired them immediately.
4:07:17 PM
SENATOR STEDMAN revealed that he has 12 of the 53 school
districts in his district and he monitors turnover rates and
performance scores. He said he does not have a good feel for
regional data on the state's other school districts. He said
having additional data for the bill will allow the committee to
focus on either the problem areas versus a broad statewide
approach.
MS. SKILES PARADY replied that she will provide a turnover rate
breakdown by geographic area. She addressed Chair Bishop's
previous statement and noted that districts do read their exit
interviews. She added that part of what has happened is the
state has lost competitiveness in terms of salaries and
retirement benefits. She asserted that Alaska no longer is able
to hold its own against the Lower 48, particularly with pending
district cuts. She noted that rural areas also face
technological issues due to internet limitations.
4:10:35 PM
PETER HOEPFNER, member, Cordova School District Board of
Education, Cordova, Alaska, stated that SB 79, the retire-rehire
bill, is a good bill. He revealed that the Cordova School
District faced a sudden departure of its superintendent in mid-
July and was allowed special dispensation to hire a retired
superintendent for the school year. He said SB 79 will allow
districts to utilize teachers and administrators during a
crisis. He set forth that the bill would be an excellent tool
that districts could use to fill positions critical to schools
when facing an unexpected vacancy outside of the regular hiring
season. He pointed out that there are not an adequate number of
teachers applying for all of the open positions and the
superintendent pool has been diminishing over the past number of
years.
4:13:35 PM
PEGGY COWAN, Superintendent, North Slope Borough School
District, Barrow, Alaska, stated that she supports SB 79 and
noted that the Alaska Council of School Administrators made the
bill's legislation one of its statewide priorities. She revealed
that the North Slope Borough School District has 27 vacancies
remaining and added that a teacher resigned prior to the start
of the previous year and the position was not replaced until
January. She asserted that the bill would help provide
flexibility for a district in high quality hires. She noted that
she was superintendent in Juneau when a similar bill was in
place and the district rarely used it, but the district did hire
retirees mostly for specialist positions. She pointed out that
the new amendment where the districts are billed for the TRS
retirement was different than it has been with Alaska Public
Employees' Retirement System (PERS). She remarked that she was
wondering why there is a difference with TRS and PERS.
4:17:16 PM
CHRIS REITAN, Superintendent, Galena City School District,
Galena, Alaska, stated that SB 79 was a good bill and provides
one extra tool for school districts in the recruiting process
with no financial harm to the state. He pointed out that
superintendents have turned over quite a bit in the state and
districts are scrambling to find administrators who have Alaskan
experience and success who can provide dedicated leadership in
difficult times. He summarized that the bill provides one more
avenue to fill high needs areas and positions that cannot be
filled.
4:19:06 PM
DEENA PARAMO, Superintendent, Matanuska-Susitna Borough School
District, Palmer, Alaska, stated that for years the Mat-Su
School District has accessed the extensive experience and
expertise of retired employees and educators by allowing for
temporary and part-time employment opportunities. She asserted
that the district's efforts to capitalize on a talented veteran
workforce have been severely limited without a provision to
allow for the unrestricted reemployment of retirees such as SB
79.
MS. PARAMO stated that as she understands the proposed bill
would permit districts to essentially enter into an at-will
employment agreement with a retired teacher or administrator, so
long as the individual has been retired for 3 months or a year,
depending on age. She detailed that current protections and
benefits such as tenure, sick leave, and health insurance would
not be required as the nature of the employment relationship
with a retired individual.
She assured the committee that the reemployment of retired
teachers is not pursued in Mat-Su to avoid the hire of new
teachers. She said retirees fill gaps when properly certified
staff cannot be hired in hard to fill areas. She added that SB
79 can provide significant savings where certain costs, most
notably health insurance, would not need to be provided to
retirees. She remarked that savings could be redirected back to
the classroom environment or even used to hire new classroom
teachers.
She concurred with Senator Hoffman's sentiment in regards to
incentivizing rural Alaska for teachers. She proposed that
another bill come forward where individuals are offered an extra
$10,000 per year to be collected after the third or fifth year
of rural-service. She summarized that having a stable
educational environment was an imperative for children all
around Alaska.
4:22:26 PM
PATRICK MAYER, Superintendent, Wrangell Public School District,
Wrangell, Alaska, said he supports the legislation but was
puzzled to see the amendment suggesting a 12 percent
contribution for rehires paid for by the school district. He
said there is a shortage of teachers, principals, and
superintendents. He added that the turnover rate for
superintendents has been 50 percent over the past 2 years. He
noted that there is a national shortage of teachers and asserted
that Alaska was not competitive in benefits and salaries with
the Lower 48, especially in recruiting special education, math,
and science educators.
MR. MAYER remarked that the bill is not a tool to misuse and
will be used when needed, but he asserted that the district
encourages new hires to fill vacant spots. He set forth that SB
79 would allow districts to fill positions in a manner that
won't negatively impact a retired teacher where the individual
would continue to collect their retirement benefits while the
cost of the district would be minimal. He summarized that SB 79
would be a great tool in the district's toolbox in allowing the
option of employing retired teachers.
4:24:57 PM
MARY MCMAHON, President-Elect, Alaska Association of School
Principals, Palmer, Alaska, stated that SB 79 would provide the
best educators by increasing the pool of candidates for Alaska's
students, especially when the state is experiencing a shortage
in securing quality candidates. She remarked that she did not
have a concern in people retiring and wanting to get back into
the system right away. She set forth that retirees that return
to public education could very well be the best candidates to do
the job in serving the best interests of students and schools.
4:27:46 PM
CHAIR BISHOP closed public testimony and announced that SB 79
would be held in committee. He called on school districts to
consider how they are planning for succession in growing their
own teachers, principals, and superintendents.
4:29:07 PM
At ease.
SB 88-TEACHERS & PUB EMPLOYEE RETIREMENT PLANS
4:30:06 PM
CHAIR BISHOP called the committee back to order and announced
the consideration of SB 88.
4:31:16 PM
SENATOR EGAN, as the sponsor, introduced SB 88 as follows:
SB 88 let's teachers, police, firefighters, and other
public employees choose one of two state retirement
systems: an individual defined contribution retirement
account, or earning a new defined benefit pension.
A defined benefit pension takes time to earn, but it
rewards public servants by letting them earn a
guaranteed monthly benefit when they retire. For long-
term employees, they can earn help paying for
healthcare, they can stay in Alaska and pay property
taxes to their local municipality. Alaska's teachers
and public employees don't earn the private sector's
defined benefit of Social Security and many even lose
Social Security benefits they earned in their past
jobs. For most, a defined benefit pension makes sense,
but many will still choose defined contribution; as an
example, some have a military or private sector
pension or some have a spouse employed in Alaska and
only plan to stay a few years. Others want to control
their investments or take their savings to their next
job, they could choose defined contribution.
SB 88 creates a new, more stable and more predictable
defined benefit pension tier. A few years ago, Alaska
beefed up oversight of the pension system; SB 88 keeps
those smart safeguards, making Alaska's retirement
system stronger than ever. Analysis of a previous
version of this bill showed it saved the state about
$70 million in 5 years and it is cost neutral in the
long term, it shares the risk of rising health costs
between employees and employers, and it adds nothing,
not one red-cent to the unfunded liabilities from the
past. To make the new system cost neutral, employees
will share the risk of health costs rising in the
future, that's a risk worth taking, I think, and is
fair to Alaskans.
4:33:55 PM
JESSE KIEHL, Staff, Senator Dennis Egan, Alaska State
Legislature, Juneau, Alaska, noted that testimony from the
previous bill pointed out some of the difficulties in the very
complex question of teacher retention. He stated that he would
focus on the economic impact of pensions as follows:
The total economic impact of just the PERS and TRS
pensions to Alaska, according to an independent
research group, is about $1.4 billion in our economy.
More than 70 percent of Alaska's PERS and TRS retirees
stay in-state and that's by design, the pension system
has a cost of living increase if you retire in Alaska.
The PERS and TRS trust together paid more than $1
billion in fiscal year 2014 in pension payments,
roughly 90 percent of those dollars stayed in state.
So that really will show you how effective that is in
helping Alaska's public servants to retire here in
Alaska, and as Senator Egan said, have homes in their
communities and contribute to their local economies.
In that sense, the pension system has been one of the
shock-absorbers for our economy through the national
downturn, there have been a number of them, certainly
healthy capital budgets were a major piece; but,
through the coming years, that more than $1 billion in
functionally payroll, retirement payroll, and an
additional $500 million in medical benefits, will be a
huge element in keeping our local economies healthy.
4:36:35 PM
MR. KIEHL stated that SB 88 addresses turnover as follows:
SB 88 also addresses a major cost for the State of
Alaska from municipalities and school districts of
turnover. The cost of training new employees is very
high and when you can retain good employees, not lose
them to other places and other folks, you save a lot
of public dollars, you make a much more efficient use
of the public treasury, that is of course vital to
municipalities and school districts using local
property taxes. Just to give you a couple of, frankly
fairly dated estimates, ten years ago the Department
of Fish and Game estimated the cost of training a new
biologist was $16,000 in their first couple of years,
the Department of Public Safety estimated that a new
state trooper through the academy, equipment, and
training was $150,000.
For those who wish to earn a pension, those who choose
to make that choice, at present, that is not available
to them in Alaska, and so we are beginning to see in
exit interviews an increasing number of folks who
elect to begin their careers here, get significant
training, and then take their portable retirement
benefit south. Now for those who want to do that,
that's the ideal choice and SB 88 retains that choice
for them, but for those who would prefer to stay in
Alaska throughout their lives, stay local as we grow
our own, the opportunity to earn a pension comes back
into existence with SB 88.
4:38:19 PM
CHAIR BISHOP noted that there was no need for a sectional
analysis, because the bill does not have a fiscal note at the
present time. He stated that he looks forward to ultimately
reviewing the bill's numbers in Senate Finance.
MR. KIEHL summarized as follows:
Employees will pay more of their paychecks into this
new defined benefit tiers than any of the old defined
benefit tier. Employees will contribute more cash and
will always pay a share of their healthcare in
retirement; in the old defined benefit tiers, that was
not the case. In this tier, depending on how long you
serve, you will pay anywhere from 10 percent to 30
percent or more of your retiree health insurance; that
saves a great deal of money, it shares a great deal of
risk with the employees, and there is an adjuster in
the bill that ensures that the pre-funding cost, the
amount we put away each pay period, pre-fund these
benefits as they are earned, doesn't exceed the
defined contribution. So our pre-funding systems will
be equal no matter which system our employees choose.
Mr. Chairman, you alluded to the forth coming
analysis, the department has worked very closely with
our office, we understand that they are beginning work
on analysis and will work with us on the bill and we
appreciate their willingness to get that rolling and
work with the sponsor.
CHAIR BISHOP expressed that he looks forward to reviewing the
numbers to see if the state really can save money because the
Legislature needs to look at all ways to save revenue regardless
of economic conditions due to oil prices.
4:41:10 PM
AARON DANIELSON, President, Public Safety Employees Association,
Fairbanks, Alaska, remarked that the value of experience is what
Alaska is losing with having the current Tier IV plan. He
disclosed that many police and fire officers have left Alaska
because the state cannot keep up with Lower 48 offerings.
4:43:10 PM
JACOB BERA, member, Region VI Board of Directors, National
Education Association-Alaska, Chugiak, Alaska, said SB 88 would
greatly improve the current public employee retirement plan,
improve teacher quality and retention, and save the State of
Alaska money. He noted that according to statistics from Buck
Consultants, Alaska has hired 3,037 teachers since 2006, by 2012
only 632 of those teachers have stayed in Alaska more than 5
years; this has led to more cost in recruitment and training,
leading to the revolving door in the classroom that does not
contribute positively to educational outcomes for students. He
set forth that SB 88 creates a choice-pension system that helps
attract and retain quality and effective teachers for the long
haul, especially in specialized, high need areas in education
and for rural Alaska. He disclosed that according to state
actuaries, new healthcare costs safeguards and smaller employer
contributions, SB 88 would save $70 million over 10 years.
4:46:40 PM
PEGGY COWAN, Superintendent, North Slope Borough School
District, Barrow, Alaska, stated that she supports SB 88 for the
same reasons that she supports SB 79. She noted that SB 88 gives
options, especially in recruiting the "millennial" aged
workforce. She summarized that defined benefits do make a
difference for attracting long term teachers and asserted that
retention is good for Alaska's students.
4:47:46 PM
CHAIR BISHOP announced that public testimony is closed. He said
SB 88 will be held in committee.
4:48:27 PM
There being no further business to come before the committee,
Chair Bishop adjourned the Senate Community and Regional Affairs
Standing Committee hearing at 4:48 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 88.PDF |
SCRA 4/9/2015 3:30:00 PM |
SB 88 |
| SB 88 Sponsor Statement.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 88 |
| SB 88 Sectional 2015-04-02.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 88 |
| SB 88 Hearing req CRA 2015-04-02 Letterhead.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 88 |
| CSHB 146 version H.pdf |
SCRA 4/9/2015 3:30:00 PM |
HB 146 |
| CSHB 146 version H Resolution.pdf |
SCRA 4/9/2015 3:30:00 PM |
HB 146 |
| SB 79 Dr. Paramo Support.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| SB 79 Legislation.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| SB 79 Support Email.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| CS for SB 79 Legislation.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| CS for SB 79 (EDC) Sponsor Statement.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| CS for SB 79 (EDC) Changes.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| CS for SB 79 (EDC) Legislation.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| SB 79 Superintendent Turnover.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| CS for SB 79 (EDC) Sectional Analysis.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |
| CSHB 146 Fiscal Note.pdf |
SCRA 4/9/2015 3:30:00 PM |
HB 146 |
| CSSB 79 Fiscal Note.pdf |
SCRA 4/9/2015 3:30:00 PM |
SB 79 |