Legislature(1995 - 1996)
04/12/1995 03:30 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 12, 1995
3:30 p.m.
TAPES
SFC-95, #32, Side 1 (000-575)
SFC-95, #32, Side 2 (560-end)
SFC-95, #34, Side 1 (000-200)
CALL TO ORDER
Senator Rick Halford, Co-chair, convened the meeting at
approximately 3:30 p.m.
PRESENT
Co-chairs Halford and Frank along with Senators Phillips and
Sharp were present. Senators Donley, Rieger and Zharoff
came shortly after the meeting began.
Also Attending: Senator Salo; Robert Stalnaker, Director,
Retirement & Benefits; Art Snowden, Administrative Director,
Alaska Court System; Willie Anderson, Representing the
National Education Association; Claudia Douglas, National
Education Association; Sheila Peterson, Department of
Education; Ms. P. Babcock, Committee Aid to Senate H&SS
Committee; Debra Garrish, and Parent/Juneau School District.
Teleconference: Joe Josephson, Attorney at Law, Josephson &
Bair, P.C.; Carl Rose, Executive Director, Alaska School
Board Association.
SUMMARY INFORMATION
SENATE BILL NO. 151
"An Act placing the administrative director of the
court system in the public employees' retirement
system."
Discussion was had by Art Snowden and Robert Stalnaker.
SB 151 REPORTED OUT of committee with individual
recommen-
dations and 2 zero fiscal notes from Department of
Admin-
istration and Alaska Courts System. Co-chairs Halford
and
Frank recommended "do pass"; Senators Rieger, Phillips,
and
Sharp signed "no recommendation"; and Senators Zharoff
and
Donley signed "do not pass".
SENATE BILL NO. 132
"An Act relating to judicial review of decisions of
school boards relating to nonretention or dismissal
of teachers."
Testimony was given by Robert Stalnaker, Senator Salo,
Ms. Babcock, Joe Josephson, Carl Rose, Willie
Anderson,
Claudia Douglas, Sheila Peterson and Ms.Garrish. After
considerable discussion, it was determined the bill
would
be brought back for further consideration.
SENATE BILL NO. 151
"An Act placing the administrative director of the
court system in the public employees' retirement
system."
Art Snowden, Administrative Director for the Court System
stated that the Supreme Court has asked that he testify in
opposition to the legislation. He offered background, noting
that the office of Administrative Director is a
constitutional office within this state. In 1980 the
Administrative Director was put under the judicial
retirement system. It is the only retirement system with a
10-year vest. This legislation updates changes that have
been made since statehood. At statehood, the chief justice
served forever. The voters of the state changed that
constitution some years later to say, the chief justice
serves for three years at which time it goes to another
elected member of the court and they may not succeed
themselves. At this time, the court felt it needed
continuity specifically in administration because the chief
justice was changing. The position of administrative
director, is a profession. There are 50 in the country. It
requires special training. The ten year vest was put on this
bill for the purpose of making sure that there was a
longevity in the office.
Co-chair Halford inquired as to the retirement system. Mr.
Snowden informed the committee that an employee working
their way up to administrative director would fall under
PERS and remain there in the first 9 years of being the
administrative director. On the 10th year, the state
employee is then able to buy into the judicial retirement
system, receive their PERS contribution back (which is a 3%
contribution, and pay 7 to 7-1/2% for the JRS retirement).
It is not a free system. The court and legislature wanted
continuity. He informed the committee of the administrative
director's responsibilities. He emphasized to the committee
that the American Bar Association standards on court
organizations say in part, the level of compensation and
retirement benefits of the director of the administrative
office of courts should be no less than a judge of the
intermediate court of appeals. The administrative director
for almost 40% of our states are under a judicial retirement
system. The Supreme Court wants this in place to attract
highly professional people who have been trained to do this
function.
Senator Sharp asked what the contribution is of the
administrative director for the first 9 years? Mr. Snowden
responded that the administrative director contributes 7 to
7-1/5% into the judicial retirement system. If the
administrator elects to leave prior to 10 years, they revert
to PERS. Under PERS, the administrator would be refunded
from the judicial system and then pay into PERS the
appropriate amount that it would have cost over those years.
Or, there is the option to take the money and elect not to
take retirement. Under five years, there is no retirement
benefits. After 10 years there is still an option.
Robert Stalnaker, Director, Retirement & Benefits stated
that it is a zero cost bill to the system because whatever
system is chosen, there are contributions to pay. He
explained the process. A court administrator would start out
in the judicial system, make the appropriate contributions
and if their longevity is less than 10 years, they could
refund out of the judicial system and buy into PERS. This
option is available after 10 years as well.
Senator Zharoff MOVED to adopt SB 151 with individual
recommendations and two zero fiscal notes. No objection
being heard, SB 151 was REPORTED OUT of committee with two
fiscal notes from the Dept of Administration and Courts.
Trial Courts fiscal notes has a cost of $25.4 in 2001. Co-
chairs Halford and Frank recommended "do pass", while
Senators Rieger, Phillips, and Sharp signed "no
recommendation", and Senators Zharoff and Donley recommended
"do not pass".
The meeting adjourned at approximately 3:45 p.m.
The meeting reconvened at approximately 5:05 p.m.
PRESENT
Co-chair Halford, along with Senators Phillips, Donley, and
Sharp were present. Senators Zharoff and Rieger joined the
meeting shortly after it began. Co-chair Frank was unable
to attend.
SENATE BILL NO. 132
"An Act relating to judicial review of decisions of
school boards relating to nonretention or dismissal
of teachers."
Portia Babcock, Committee Aid to the Senate H&SS Committee,
testified that SB 132 gives local school districts and
school boards the flexibility necessary to make decisions
that are in the best interest of the student in the academic
program of each district. It also provides equity and
fairness among public employees, levels the playing field
among the different providers of education, and eliminates
costly procedures. In general terms, SB 132 (JUD) will
change tenure from 2 to 5 years for new teachers; allow for
the lay off of tenure teachers without the loss of tenure
rights in the event of a decrease in school attendance, loss
of revenue, or to better meet the academic needs of the
district; and deletes trial de novo requirements when the
district has met standards acceptable to the court. This
bill saves time and money and provides educators with the
same production that is provided to other public employees.
It requiring bargaining sessions be open to the public, and
provides for an early retirement incentive program for
teachers and school district employees. She explained that
there was an amendment added by Judiciary that deleted the
statutory requirement for duty free lunch. A change was
offered by Senator Green which deals with the effective date
on those sections applicable to first hired teachers by the
school district on or after the effective date of the act.
There was considerable discussion on trial de novo. Senator
Salo stated that there is an extensive discovery process at
a formal hearing, where both the attorneys are representing
the district and the employee. After that hearing, the
school board usually upholds the administrative firing. The
recourse for the teacher is a de novo trial in superior
court. De novo (meaning new trial) does not mean new
information, but it is more than a judicial review. If this
bill passed, there would be a court review of the records of
the school board hearing, but there would not be a chance to
provide witnesses and information directly to the superior
court judge. New information is not presented, nor can the
case be changed from the way it was at the hearing level. It
is the same information. New facts cannot be introduced.
Ms. Babcock confirmed that this process is different than
other professions in that it is an appeal and review, by the
superior court, of the facts presented at the hearing.
Other professions or other employees do not have this review
of the earlier hearing. Senator Sharp stated that trial de
novo is basically an appeal from the administrative board
which can take several years before it comes before the
court. By that time, the witnesses are grown up, left the
area and unavailable for testimony. All information
presented at trial de novo has to be represented. There
cannot be an expansion of the information, but in order for
all information that was previously reviewed to be
considered, it must be reviewed again. Trial de novo is
expensive, and there are very few that have taken place.
Senator Donley expressed his concerns with the higher cost
of administrative proceedings.
Robert Stalnaker, Director, Retirement & Benefits testified
that while the administration believes that this bill is a
valuable and useful tool for school districts, the
administration opposes including the retirement and
incentive in this bill. The administration has introduced a
bill that would provide that valuable tool to all public
employers, and believes that is the proper place for the RIP
so that it can be implemented for all public employers, not
just school districts. The RIP as proposed in this bill is
similar to the programs of the past. It provides window
periods for eligible members to retire, if the employer
designates them. This is totally at the employers
discretion on whether they want to participate. It is not a
mandatory program. If an employer, feels they can benefit
by the RIP and experience cost savings, they would then
participate with an agreement through the commissioner of
administration. The costs of the program including the
administrative costs will be identified and paid for
immediately. The cost for providing the incentives must be
paid within the three year period in which they are to show
a savings. This is not a provision that would require
additional funding. If in fact they are experiencing a
savings, they should pay for the cost of the RIP from the
savings they are experiencing.
Co-chair Halford asked if there are differences in the
drafted CS and the bill introduced by the governor as it
would apply to teachers? Mr. Stalnaker responded that there
are no differences. The program is the same, though this
bill restricts it to school districts only. He noted that
the bill requires that an employer save money, to that
extent the retirement systems do not get involved. There
was a legislative audit done for the last RIP, and they
found substantial savings in auditing employers and the
state. At the request of the legislature from the last RIP,
legislative audit found savings experienced by school
districts. The largest savings come from teachers at the
upper end of the pay structure being replaced by new
teachers. Salary differences can be as high as 30%. He
testified that it is not the administrations desire to
question the employer regarding the savings.
Senator Sharp asked if the past service liability or
contribution rates have increased respectively because of a
increase in tax liability? Mr. Stalnaker responded that when
the first RIP was introduced, there was a conservative
assumption made in coming up with the costs. Since that
time, the actuary has been asked to track each year in order
to monitor the assumption, with the idea that if a RIP is
done in the future and there are miscalculations, it can be
readjusted. In each actuarial evaluation, the actuary is
required to respond to the question: "Has there been any
adverse impact on the rate, or the unfunded liability
attributable to the RIP", and the answer is consistently
"no". If there is error, it is on the side of collecting
more money than necessary. He stated that in 1986 in the
PERS, the law was changed to provide for Tier II, a lower
level of benefits for employees first hired after that date.
Part of that was to prefund cost of living increases,
opposed to the then ad hoc. In so doing, there was a large
unfunded liability. The lower benefits and cost savings by
the lower benefits have been paying that off very well. The
most recent evaluation has the PERS at 94% funded. The TRS
is at 89%, but they just had the change made in 1990.
End Tape #32, Side 1
Begin Tape #32, Side 2
Mr. Stalnaker in responding to Senator Rieger, asked to
clear the record. He stated that the funding method was
recommended by the actuaries. It is a common practice when
a dramatic change is made to a defined benefit plan which
happened in 1990. With the recognition that as part of that
change there is recognition of unfunded liability
immediately, even though there is a payback over a long
period of time. The actuaries recommended the level funding
method because it is an accepted method. The system was not
underfunded. The level funding method was recommended by
the actuaries and the board adopted that. At that time the
rate was 19% and 14% opposed to the 12% they recommended.
Since that time last year, the rate was a calculated rate of
12.1%. Even though there had been a projected in the
actuarial evaluation that the 12% would not be reached for
another 4 or 5 years, that point was reached very early. It
was out in the open, the actuaries put a lot of work into
it, and the board adopted what they recommended. The wisdom
in passing the legislation to prefund the cost of living
increases was a sound funding practice. The ad hoc PRPA was
recognized after it was granted and would have nothing but
the effect of ratcheting the cost continually higher and
higher with no prefunding, now we have a prefunded PRPA
which is much more sound. Both systems are back into the 90%
funded ratios and have recovered from those actions and are
among the best funded systems in the country.
Mr. Stalnaker said that past testimony from the university
has been that there are advantages for short term hires, as
there were with the legislature. The provision of the
University of Alaska entering into a personal services
contract with individuals for the purpose of teaching or
research, can happen as long as there are no benefits. This
holds true for the legislature as well. There was
considerable discussion to gain understanding of this issue.
Joe Josephson, Attorney at Law, testified by teleconference
from Anchorage on SB 132. He stated that the logic of the
present de novo hearing provision is that it gives the judge
tools needed to decide factual issues properly. The judge
could actually hear witnesses testify, and from their
demeanor and behavior, the judge can get insights as to the
truth. Reviewing administrative records do not provide an
adequate substitute from that process. He suggested that
the Asevedo case was not a good example regarding high trial
costs. It was costly to the Anchorage School District
because the school district asserted that a trial de novo
can be held without any evidence being taken before the
judge, simply by the judge's reading independently the
administrative record. That issue was taken to the supreme
court, as expected, won on that point. It was costly to the
district. It was not the trial de novo that was costly, it
was the consequence of the school district's taking of their
mistaken view of the statute which required correction in
the supreme court. He also mentioned that the Asevedo case
stands for another proposition. That a school district
cannot present evidence to the court that it failed to bring
before the school board. In fact, the Asevedo case stands
for just the opposite rule. In that case, a young women who
had read about the case in the daily news, came forward to
say that years before when she had been in junior high, the
teacher had touched her inappropriately. She was allowed to
testify about that matter in court even though her claim was
not even known of at that time of the administrative
hearing. Finally, in other legislation dealing with teacher
dismissal, there are provisions for arbitrating dismissal
under Title 9, Chapter 43. The advantage of such an
approach, assuming there is not going to be trial de novo in
superior court would be, at least under arbitration, an
assurance for the employee of one decision being made by a
neutral person who is independent of the school board.
Under Title 9, Chapter 43, it is noted, after an arbitrator
reaches a decision, there is no right to have the
arbitrator's award vacated in an ordinary case, unless there
was proof of fraud or corruption. If the goal is to do away
with a role for the court, the best way would be to have
arbitration instead of the present administrative hearings.
Arbitration has the virtue of being fair, since the parties
pick the arbitrator; while the hearing officer today is
appointed by the employer and paid by same.
Senator Zharoff inquired as to Section 6 in the proposed
legislation. His understanding is, it would take away the
teacher's right to a trial de novo. Mr. Josephson confirmed
that it is true. The idea would be an administrative
hearing conducted by the board, and/or a hearing officer
appointed by the board, at which time the teacher could go
to the court and ask for judicial review. The problem is,
judicial review decides whether there was a rational basis
or substantial evidence to support the school board's
decision. The judge would not be making an independent
judgement, and the judge would not be exposed to any of the
actual witnesses. From the teacher's prospective that means
that the teacher never gets a level playing field on the
issue of retaining his/her employment. He stated that if
there is an idea that the school board makes a decision on
the advice of a hearing officer, and then subject the
teacher to a very limited review on the record before the
hearing officer, there is not fairness. It would be better
to leave the system as it is, it works very well. There are
very few cases that do go before the superior court. If it
is the legislature's wisdom to delete the trial de novo,
then there has to be a substitute for the existing
administrative process. Mr. Josephson recommends arbitration
because at least there is a greater chance of fairness in
that process without bias. He emphasized that the number of
cases that go to administrative hearings is much larger than
the smaller subset that goes to the court. In many cases,
the outcome is favorable to the teacher, or the teacher
decides not to pursue the matter in court.
Senator Sharp asked how to speed up the process of review.
Mr. Josephson suggested a few areas to investigate. The
superior court now has "fast track" cases, which is a
procedure which expedites cases. The legislature could
direct the courts to conduct the de novo hearings within so
many days. It is not usually a problem of the parties
getting ready, because they have been through the procedure
at the administrative stage. In the Asevedo Case, the delay
was in the faulty reasoning of the school district adhering
to the fact there was no need for a de novo hearing which
required the parties go to the supreme court for an answer.
The alternative of arbitration would be speedier than any
other solution. The arbitrator makes an award one way or
another and there is very little recourse except in extreme
situations such as corruption.
Mr. Josephson commented on the element of academic freedom.
Teachers are very susceptible to criticism because they are
on the front lines, dealing with our most precious resource
(children), and dealing with ideas. This makes them
susceptible to capriciousness that may not be true in other
fields. As government employees, the employer must give due
process in a way other employers do not have to do. Private
employers may have contractual obligations, but they do not
have the same constitutional obligations as the governmental
employer. He noted the statute of trial de novo is not
unique to Alaska.
Carl Rose, Executive Director of the Association of Alaska
School Board reviewed CSSB 132 (JUD), offered testimony. He
noted the bill removes from the nonretention statutes an
economical factor, and that is student decline. The board
supports the removal from nonretention because there are
only 4 reasons for nonretaining tenured teachers. The
layoff statute would give more latitude in terms of
enrollment decline designed to address a fiscal need. The
board is facing another fiscal need, revenue decline. It is
suggested that the bill remove from nonretention a financial
issue, enrollment decline and create a layoff standard for
economic reasons that would address enrollment decline as
well as revenue decline. Those issues should be handled in
a layoff because fairness can be provided: in protection of
tenure rights; seniority rights; and a rehire clause.
Another item to add to the layoff regulations would be,
program needs of school districts. Currently, there are two
areas of endorsement: elementary and secondary. The
secondary endorsement has low standards for secondary
schools, the board would like to see subject area
endorsement. This would allow the board to go to the,
layoff and rehire standards, and apply qualifications before
resorting to seniority. Most large school districts with
departments for english, math, etc., seniority is
appropriate. Smaller schools the standard of secondary
endorsement is too general. Three things could be done if
there is a move to subject area endorsement: 1) improve the
quality of instruction in the classroom; 2) improved
workforce, because the issue of subject area endorsement
will encourage people to use their credits and apply them
toward additional endorsement; and 3) the issue of
employment and security should be housed within the area of
multi-endorsement areas. The employment status is secured.
He spoke to the area of trial de novo. He stated it is a
new trial. Under the law a tenured teacher can be
nonretained. They have a right to the hearing. Under the
hearing a record is established. Many times a teacher and
school district will be represented by an attorney. There
will be an unbiased third party as a hearing officer who
will make the case. If the hearing is not favorable to the
employee, under the current law, they have the right to
request a new trial. The problem with the new trial is that
everyone starts all over again and the record is recreated.
A new trial does not examine the record that is established
at the hearing level. It is a costly and duplicative
process and the board asks that this process be extended to
any school employee. He addressed mandatory open bargaining.
Currently, there is an ability to do that with mutual
agreement. The public wants this. In speaking to the early
retirement incentives, he stated there is not an established
position, though the membership does want it and feels it
will be useful as long as there is the ability at the local
level to make that determination. Overall, he stated this
is an issue of fairness. Going back to the acquisition
point, in Section 2, they support a 5 year tenure. He noted
that the board also supports Section 7. There was testimony
and discussion regarding the practice of Section 7.
Senator Zharoff talked about the discussions between groups
of people representing NEA, School Districts and others who
play an instrumental role associated with the issues
involved. Mr. Rose noted there has been compromise. He
stated that they are looking for a way to manage the
schools. There are a number of obligations and mandates
that the school districts are obligated to meet. There is
an inability to finance the state policy as directed. This
is of a great concern to the membership. He related that
the school districts should be held totally accountable for
carrying out the mandates, and the municipalities and
legislature should be accountable for funding the mandates.
They want latitude in managing the schools. The layoff
provision is not wanted. It is difficult to teach more
children with less teachers.
Mr. Rose stated that under Alaska 2000, the board created a
proposal. The board went to NEA. The board asked for a
longer extension for the probationary period to enable
mentoring, professional development, and supervision to
create a better pool of talent and a better experience for
young teachers. The idea of incorporating subject area
endorsement was also an attempt to fill positions by
qualifications first. Alaska 2000 was not the appropriate
forum. The needs are still there, but it was not possible
to reach a compromise.
Senator Salo questioned the compromise. She recognized the
work done, but she stated that the work done fell apart
because there was a requirement that supervision of new
employees actually be done. The board backed off that
compromise once there was a requirement regarding
administrators. Mr. Rose responded that school districts
have been under attack for years, in terms of having too
much administration. Administration has been reduced to low
levels. The issue of compliance and demand for
administration with less dollars is a real problem. The
issue is not one of providing more administration. The
issue is one of preparing people for the classroom and
creating the time to make the assessments.
There was considerable discussion regarding the psychology
of the 2 year versus 5 year tenure timeframe.
Willie Anderson, National Education Association, stated the
NEA's opposition to the bill. He stated that the extention
of 2 to 5 years allows for a lag in administrative neglect.
He went throughout the bill giving his testimony in
opposition. Testimony is attached from Stephen Sorensen to
Vernon Marshall, NEA Executive Vice President dated 4/11/95.
Debra Garrish, a parent from the Juneau School District
spoke to the Committee in favor of the 5 year tenure which
allows flexibility. She expressed affirmation of early
retirement. She stated that teachers need a lunch time.
She noted the frustration of the parents and PTA members
regarding the need for open public negotiations. She noted
that parents had ideas and solutions, but that there was no
place to go and solve the problems.
Claudia Douglas, NEA-AK, testified that the bill is
repulsive to teachers. NEA has a commitment to help, and
parents have solutions. The layoff provision is a big area
that needs representation.
Sheila Peterson, Special Assistant to the Commissioner of
Education, stated that the new State Board of Education did
discuss the issues and they could not agree on the
legislation. The message they wish to convey is that there
is a need for full funding.
ADJOURNMENT
The meeting was adjourned at approximately 7:00 p.m.
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