Legislature(2001 - 2002)
05/04/2001 07:17 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
May 04, 2001
7:17 PM
TAPES
SFC-01 # 96, Side A
SFC 01 # 96, Side B
CALL TO ORDER
Co-Chair Pete Kelly reconvened the meeting at approximately 7:17
PM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Loren Leman
Senator Gary Wilken
Senator Lyman Hoffman
Senator Alan Austerman
Senator Donny Olson
Senator Jerry Ward
Also Attending: REPRESENTATIVE PETE KOTT; DIANE BARRANS, Executive
Director, Alaska Postsecondary Education Commission, Department of
Education and Early Development; GAIL FENUMIAI, Election Program
Specialist, Division of Elections, Office of the Lieutenant
Governor
SUMMARY INFORMATION
HB 242-TRS & PERS REEMPLOY & MED BENEFITS; COLA
The Committee heard from the sponsor and moved the bill from
Committee.
HB 204-STUDENT LOANS/COMN. ON POSTSECONDARY ED.
The Committee heard from the Department of Education and Early
Development
CS FOR HOUSE BILL NO. 242(FIN)
"An Act relating to reemployment of and medical benefits for
retired members of the teachers' retirement system and public
employees' retirement system; relating to the inclusion of
cost-of-living differentials on compensation and benefits
under the public employees' retirement system; and providing
for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE PETE KOTT testified this bill "offers an
opportunity" for retired members of the Teachers Retirement System
(TRS) and the Public Employees Retirement System (PERS) to return
to work within the system. In addition, he said, the bill provides
greater incentive for retaining these PERS and TRS members. He
stressed there is a recognized shortage of teachers in the state
and he told of the "brain drain" impact from the departure of many
state employees to the private sector. He suggested this could
either be because the private sector is paying salaries that are
too high, or that state government is paying too little. He noted
efforts other states have taken to attract teachers by providing
incentives. He gave as an example the State of California, which is
providing down payments on home purchases in addition to signing
bonuses.
Representative Kott detailed the bill as follows.
Section 1 - requires that a school district must confirm by
resolution and adopt a policy, indicating that there is a
shortage of teachers in that district.
Sections 2 & 4 - relates to the incentives for retired
teachers to return to full-time teaching for a TRS employer.
Provides that a retired teacher who returns to work collects
their earned retirement income in addition to the salary paid
for the teaching position. New retirement benefits do not
accrue for these employees.
Representative Kott qualified that teachers who retired under the
Retirement Incentive Plan (RIP) are not eligible for re-hire under
the provisions of this legislation.
Sections 3, 5, 12 & 16 - repeals the "TRS Return Initiative"
provided in this legislation effective in the year 2005.
Section 6 - addresses the TRS Tier II medical benefits
enhancement. Teachers, who continue to work in TRS an
additional five years beyond the normal retirement eligibility
of 20 years, qualify for full-system paid medical coverage at
age 60.
Representative Kott noted this enhancement is an attempt to attract
new teachers and to retain existing teachers who are currently
members of TRS in the Tier II retirement program. He stated that
currently these employees are not eligible to receive system-
provided medical coverage until the age of 60, at which time the
retirement system pays half and the retiree is responsible for the
remaining half of expenses. This, he pointed out, is regardless of
the number of years the employee worked in TRS.
Representative Kott surmised these additional benefits should
ensure there are quality teachers in Alaska's schools.
Sections 7 & 8 - provides the same incentives to PERS
retirees, although the state is not required to determine a
shortage.
Section 10 - gives incentives for public employees to remain
in TRS or PERS for 30 years.
Representative Kott pointed out that, as with TRS members, Tier II
PERS employees are current not eligible for system-provided medical
coverage until the age of 60 at which time half of the premiums are
paid by the retirement system. Under the provisions of this
Section, he informed, full benefits are paid for PERS members who
worked at least 30 years.
Representative Kott asserted, "there is very little impact,
financially on the state." He referenced the fiscal note to
demonstrate.
Section 11 - simplifies the geographical pay differential
method
Representative Kott stated this provision would allow employees
working in remote locations to know the exact amount of increased
retirement benefits.
Representative Kott indicated the changes in the committee
substitute primarily pertain to the TRS benefits. He stated the
committee substitute also changes the repeal date of this
legislation from five, to four years. He explained this change was
made based upon projections showing the effectiveness of the
program in five years.
Co-Chair Donley offered a motion to move SCS CS HB 242, 22-LS0885\L
from Committee with $91,000 fiscal note from the Department of
Administration, Division of Retirement and Benefits.
There was no objection and the bill MOVED from Committee.
HOUSE BILL NO. 204
"An Act relating to the Alaska Commission on Postsecondary
Education and the Alaska Student Loan Corporation; relating to
student financial aid programs and the financing of those
programs; establishing the Alaska Advantage Loan Program and
the Alaska Supplemental Education Loan Program; increasing the
bonding authorization of the Alaska Student Loan Corporation;
providing for liens resulting from a default under AS 14.43 or
AS 14.44; relating to the duties of the recorder regarding
those liens; relating to defaults under the Western Regional
Higher Education Compact; relating to the prohibition on
discrimination regarding programs under AS 14.43; relating to
fees for the review of certain postsecondary institutions;
making conforming amendments; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
DIANE BARRANS, Executive Director, Alaska Commission on
Postsecondary Education, Department of Education and Early
Development, testified in Juneau that the bill creates the Alaska
Advantage Student Loan Model. She explained this loan program would
provide benefits to borrowers, institutions and the Alaska Student
Loan Corporation by combining federally guaranteed student loans
with state loans, which would be supplemental to the guaranteed
loans.
Ms. Barrans stated the objective of this model is to allow the
Corporation to finance the loans and the Commission to service
them. Because the federal portion of the Commission's portfolio
would be subsidized and guaranteed by the federal government, she
remarked that the loans could be offered a substantially lower
interest rates then loans traditionally financed by the
Corporation. She elaborated that by authorizing the Commission to
package the loans, borrowers could be offered the "lowest possible
borrowing rates" and the borrowers could receive funding from one
source rather than multiple lenders. She added that borrowers would
also become eligible for consideration for federal grant funds for
the application process.
Ms. Barrans continued noting program changes generated by following
the federal student loan model would expand the repayment and
deferment options available to borrowers. She added this would also
allow borrowers to consolidate all educational debt with a single
Alaskan lender.
Ms. Barrans pointed out benefits to the institutions participating
in the model by providing a retention and recruitment tool through
the improved interest rates, which would ease administration
efforts by streamlining financial aid delivery. She noted these
loans would have comparable terms that would allow financial aid
counselors working with potential borrowers, the ability to compare
loan products. She stated this would also provide "targeted
financial rewards" to borrowers who remain in, or return to,
Alaska. She told of the additional support for institutions to
manage the default rate of these loans.
Ms. Barrans asserted that besides providing these benefits to both
institutions and borrowers, there would also be "clear financial
benefits" to the Corporation. She detailed there would be new
income streams to the Corporation through the interest subsidies on
a certain portion of the federal loans made under this model. She
also told of the special allowance the federal government pays to
lenders in its programs to protect against fluctuations in interest
rates. She continued this would eliminate 98 percent of the losses
due to default, death, disability and bankruptcy on those loans
that were federally guaranteed.
Ms. Barrans remarked that the combination of the financial benefits
would allow the Corporation to enhance its underlying credit rating
from AA to AAA.
Ms. Barrans spoke of secondary objectives of the legislation,
including identification in the findings section of the bill,
relating to the mission of the Commission and the Corporation as a
student-focused delivery system. She noted the Commission's
functions are updated in this legislation as well; by eliminating
provisions no longer applicable because the federal programs have
been discontinued or modified. She continued explaining the
Commission's collection authority would be clarified to provide the
same collection authority for all the financial aid programs it
administers in the event of default. She stated this legislation
also allows the Commission to issue administrative liens in
addition to administrative wage garnishment authority previously
granted.
Ms. Barrans noted this legislation would allow the Corporation to
offer extended maturities on the bonds issued in the event it is
financially advantageous to the Corporation. She said it would
allow the Corporation to increase the amount of bonds issued in a
two-year period of time.
Ms. Barrans concluded that the bill provides that the current
student loan program remains in place for the next year while the
model is prepared for implementation in the fall of 2002.
Co-Chair Donley pointed out the type of funds are not specified in
the fiscal note.
Ms. Barrans indicated a new fiscal note would be prepared
correcting this error and showing the fund source as Alaska Student
Loan Corporation Receipts.
Senator Wilken offered a motion to move HB 204 from Committee with
a forthcoming fiscal note from the Department of Education and
Early Development.
The bill MOVED from Committee without objection.
AT EASE 7:34 PM / 7:46 PM
SENATE BILL NO. 186
"An Act establishing a limit on the general obligation debt
that may be authorized and issued by home rule and general law
municipalities; and providing for an effective date."
This was the second hearing for this bill in the Senate Finance
Committee. [It was indicated on record that this was the third
hearing; however it was scheduled but not actually heard at an
earlier meeting.]
Co-Chair Donley stated that the proposed committee substitute is
intended to address concerns raised at the previous hearing.
Co-Chair Donley moved to adopt CS SB 186, 22-LS0851\F, as a working
draft.
Without objection the committee substitute was ADOPTED.
Co-Chair Donley detailed three changes in the committee substitute.
The first change, he said, begins with Section 2 and provides for a
"slow phasing in" of the ten-year cap restricting the North Slope
Borough from issuing bonds imposed on the local share of oil and
gas property tax. He explained this stipulation reduces the amount
of bonding authority to one mil per year for ten years.
Co-Chair Donley detailed the second change, which occurs in Section
15 (b) and allows additional debt to be incurred by a municipality
that would otherwise be restrained under the provisions in the
bill. He asserted this is an "extraordinarily generous" yearly
allocation of debt since the statewide average is lower than the
amount allowed in these provisions.
Co-Chair Donley then told of the final change to allow existing
bonds to be refinanced so long as the debt does not extend the
length of the original loan. He explained this enables the borough
to realize savings when lower interest rates are available. This
language is contained in Section 16 of the committee substitute.
Senator Ward inquired about the North Slope Borough's permanent
fund and its relationship to the bonding limits.
Co-Chair Donley suggested that the phasing down of the 20-mil oil
and gas property tax availability would have a limiting effect upon
issuance of new debt also.
Co-Chair Kelly requested further explanation about the change to
Section 15.
Co-Chair Donley reminded of concerns expressed at the previous
hearing from former Attorney General Avrum Gross that the bill had
no provision for additional debt or flexibility for existing debt.
Co-Chair Donley stated the committee substitute provides "a limited
amount" of additional debt on an annual basis that would not exceed
$1000 per capita.
Co-Chair Kelly commented this would be "a tremendous amount".
Co-Chair Donley agreed citing that the average community in Alaska
has less then $3000 total debt per capita incurred over several
years. He reiterated this is a "very generous allocation" for
additional debt. He noted that there would be a "buy-down" of
existing debt over a period of time.
Senator Olson acquiesced this committee substitute "offers an
approach to try to fix some of the difficulties that were so
glaring." However, he stressed, "We're dealing with a very serious
bill here," and asserted that this legislation is not the proper
method to address such an important issue. He criticized the lack
of public notice allowing for input, referring to the time between
placement of the bill on the agenda, and the actual hearings within
24 hours of each other. He suggested that any legislation affecting
the bonding authority for many other Alaskan communities, such as
Anchorage, Fairbanks and the Mat-Su Borough, there would be an
opportunity for "weeks and weeks" of public hearings on the issue.
He emphasized there is no authority to provide for emergency
situations such as the loss of a school building or health clinic
to fire. He asserted the expedition of this bill demonstrated
"extreme short-sidedness for us to try to pass legislation out of a
distinguished committee such as this."
Senator Olson requested 24 hours to review the legislation.
Co-Chair Kelly responded that the committee substitute addresses
the concerns raised by Senator Olson in that it allows the North
Slope Borough to bond up to $1000 per capita per year, which would
accommodate emergencies.
Senator Olson calculated 8,000 residents in the Borough at $1000
per resident and stressed, "I've got to build two schools."
Co-Chair Donley stated this provision allows bonding of $8 million
per year, which he remarked is a "very very significant amount"
Senator Olson repeated his request for additional time to review
the legislation.
Co-Chair Kelly stated he would accommodate the request and ordered
the bill HELD in Committee.
AT EASE 7:55 PM / 8:15 PM
[Note: Audio recorder continued recording during this time,
although receiving equipment was turned off, resulting in a section
of tape with no sound. No portion of the meeting was omitted.]
SENATE CS FOR CS FOR HOUSE BILL NO. 193(JUD)
"An Act relating to the primary election and to the nomination
of candidates for the general election; and providing for an
effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Amendment #1: This amendment inserts a new bill section on page 1,
following line 3, to read as follows.
Section 1. AS 15.13.110(f)(2) is amended to read:
(2) a person who has filed a nominating
petition under AS 15.25.140 - 15.25.200 to become a
candidate at the general [PRIMARY] election for elective
state executive or legislative office;
Senator Hoffman moved for adoption.
Co-Chair Kelly objected for discussion.
GAIL FENUMIAI, Election Program Specialist, Division of Elections,
Office of the Lieutenant Governor, testified the legislation makes
changes related to the filing of reports and the nomination of
candidates. She explained the amendment replaces language in the
statutes governing the Alaskan Public Offices Commission (APOC) to
conform to the legislation.
SFC 01 # 96, Side B 08:17 PM
Co-Chair Donley asked if a similar amendment would be required to
align APOC statutes with the House Finance Committee version of the
bill, should the Senate Finance Committee adopt this version.
Ms. Fenumiai responded the issue was not brought to the Division's
attention until after the bill passed the Senate Judiciary
Committee. Therefore, she said such an amendment would be
necessary.
AT EASE 8:17 PM / 8:18 PM
Senator Hoffman WITHDREW his motion to adopt the amendment without
objection.
Co-Chair Donley moved to adopt CS HB 193 (FIN) as a working draft.
There was no objection and the committee substitute was ADOPTED.
Senator Hoffman re-offered his motion to adopt Amendment #1.
The amendment was ADOPTED without objection.
Ms. Fenumiai brought to the Committee's attention a difference
between the Senate Judiciary committee substitute and the House
Finance committee substitute that the Senate Finance Committee may
wish to address. She identified this as the language governing "no-
party" candidates in Section 5 and 6 on page 3, line 17 through
page 5, line 2, of the Senate Judiciary committee substitute. She
relayed that the House Judiciary Committee determined that these
candidates do not need to appear on the primary election ballots
since they do not represent a political party. She stated that the
Senate Judiciary Committee had concerns that these candidates do
not have to file any paperwork until the date of the primary
election. As a result, she explained, the Senate Judiciary
Committee changed the legislation to provide that no-party
candidates must file a declaration of candidacy on June 1 but that
they did not have to submit the necessary petition signatures until
the primary election day.
Co-Chair Donley asked if the Senate Judiciary Committee also
addressed language on page 4, line 31 of that committee's committee
substitute.
Ms. Fenumiai replied these changes were made in the House Finance
Committee.
Ms. Fenumiai elaborated on Sections 5 and 6 of the Senate Judiciary
committee substitute. She relayed that the House Judiciary
Committee had amended the bill to change the filing deadline of no-
party candidates from the date of the primary election to June 1.
However, she informed, court decisions found that a filing deadline
of June 1 for a candidate that does not appear on a ballot until
the general election, was too long of a time frame. She told of the
concerns of the Senate Judiciary Committee that no-party candidates
are not required to submit APOC disclosures until the primary
election, which resulted in an unequal "playing field". In
response, she reiterated, that Committee decided to adopt the June
1 filing deadline and set the deadline for the submission of
signatures at the date of the primary election. Under this method,
she explained, the no-party candidates would be required to follow
the APOC guidelines in the same manner as candidates of a political
party.
Senator Ward asked if statutes precluded a no-party candidate from
filing for one public office on June 1 then changing that filing to
a different public office.
Ms. Fenumiai answered that statutes stipulate a candidate could not
run for more than one office simultaneously.
Senator Ward asked if "filing for office" is considered the same as
"running for office".
Ms. Fenumiai responded that declaration of candidacy forms contain
an oath stipulating that the candidate has not filed for that
office under any other petition or declaration of candidacy, nor
has that candidate filed for any other office in the election for
which they seek an office. These forms, she explained, state the
candidates intent to run for a specific public office. She added
that this provision is in current statute.
Senator Ward asked if a petition of candidacy precludes a candidate
from running for any other public office.
Ms. Fenumiai affirmed.
Amendment #2: This amendment replaces Section 5 of CS HB 193 (FIN)
with the language of Section 5 of SCS CS HB 193 (JUD). The language
reads as follows.
Sec. 15.25.150. Date of filing petition. A candidate
seeking nomination by petition shall submit the information
required under AS 15.25.180 (a)(1)-(8) and (11)-(17) to the
director in the time and manner specified in AS 15.25.040. The
full petition with voter signatures shall be [THE PETITION IS]
filed with the director by actual physical delivery in person
at or before 5:00 p.m., prevailing time, on the day of the
primary election [JUNE 1] in the year in which a general
election is held for the office, or by actual physical
delivery to the director by registered or certified mail
return receipts requested which is postmarked at or before
5:00 p.m., prevailing time, on the day of the primary election
[JUNE 1] in the year in which a general election is held for
the office, and received not more than 15 days after that
time. If the postmark is illegible, a dated receipts from the
post office where dispatched shall be acceptable as evidence
of mailing. [IF JUNE 1 IS A SUNDAY OF HOLIDAY, THE DEADLINES
FOR POSTMARKING AND RECEIPT OF THE PETITION SHALL BE EXTENDED
24 HOURS IN EACH INSTANCE.]
New Text Underlined [DELETED TEXT BRACKETED]
Co-Chair Donley moved for adoption.
Without objection, the amendment was ADOPTED.
Co-Chair Donley inquired about the fiscal note.
Ms. Fenumiai informed that the amount indicated on the current
fiscal note would not change.
Co-Chair Donley offered a motion to move CS SB 193 (FIN), as
amended, from Committee with $5,200 fiscal note from the Division
of Elections, Office of the Lieutenant Governor.
The bill MOVED from Committee without objection.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 08:30 PM
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