Legislature(2001 - 2002)

04/11/2002 03:40 PM Senate STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                    
                 SENATE STATE AFFAIRS COMMITTEE                                                                               
                         April 11, 2002                                                                                         
                            3:40 p.m.                                                                                           
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Gene Therriault, Chair                                                                                                  
Senator Randy Phillips, Vice Chair                                                                                              
Senator Rick Halford                                                                                                            
Senator Ben Stevens                                                                                                             
Senator Bettye Davis                                                                                                            
                                                                                                                              
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 374                                                                                                              
"An Act naming the David Douthit Veterans' Memorial Bridge."                                                                    
     MOVED HB 374 OUT OF COMMITTEE                                                                                              
                                                                                                                                
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 254(FIN)                                                                           
"An Act relating to the teachers'  retirement system, the judicial                                                              
retirement  system, and  the public  employees' retirement  system                                                              
and to  the tax qualification under  the Internal Revenue  Code of                                                              
those systems;  amending the definition of  'actuarial adjustment'                                                              
in  the teachers'  retirement  system  and the  public  employees'                                                              
retirement system;  repealing certain provisions of  the teachers'                                                              
retirement  system and  the public  employees' retirement  system;                                                              
amending the statutory  limitation on payment of  warrants to make                                                              
an  exception for  warrants  making  benefit payments  or  refunds                                                              
under  various   state  retirement   and  benefit  programs;   and                                                              
providing for an effective date."                                                                                               
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 15                                                                                                              
"An Act requiring  that the cost of contraceptives  be included in                                                              
certain health care insurance coverage."                                                                                        
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 355                                                                                                             
"An Act  establishing an  account in the  general fund  to receive                                                              
general gifts, donations, and bequests to the State of Alaska."                                                                 
     MOVED SB 355 OUT OF COMMITTEE                                                                                              
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
HB 374 - No previous action to record.                                                                                          
HB 254 - No previous action to record.                                                                                          
SB 15 - No previous action to record.                                                                                           
SB 355 - No previous action to record.                                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Representative Ken Lancaster                                                                                                    
Alaska State Capitol, Room 421                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor HB 374                                                                                            
                                                                                                                                
Barbara Cotting                                                                                                                 
Aide to Representative Jeannette James                                                                                          
Alaska State Capitol, Room 214                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Introduced HB 254                                                                                         
                                                                                                                                
Guy Bell                                                                                                                        
Department of Administration                                                                                                    
Division of Retirement & Benefits                                                                                               
PO Box 110200                                                                                                                   
Juneau, AK  99811-0200                                                                                                          
POSITION STATEMENT: Testified on HB 254 and SB 15                                                                             
                                                                                                                                
Chief Monegan                                                                                                                   
Anchorage Police Department                                                                                                     
POSITION STATEMENT:  Testified on HB 254                                                                                      
                                                                                                                                
Sergeant Rod Huen                                                                                                               
President, Anchorage Police Association                                                                                         
POSITION STATEMENT: Testified on HB 254                                                                                       
                                                                                                                                
Will Aitchison                                                                                                                  
Anchorage Police Department Employees Association                                                                               
POSITION STATEMENT:  Testified on HB 254                                                                                      
                                                                                                                                
Del Smith                                                                                                                       
Deputy Commissioner                                                                                                             
Department of Public Safety                                                                                                     
PO Box 111200                                                                                                                   
Juneau, AK  99811-1200                                                                                                          
POSITION STATEMENT:  Testified on HB 254                                                                                      
                                                                                                                                
Senator Johnny Ellis                                                                                                            
Alaska State Capitol, Room 9                                                                                                    
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor SB 15                                                                                            
                                                                                                                                
Ann Harrison                                                                                                                    
Fairbanks, AK 99701                                                                                                             
POSITION STATEMENT:  Testified in support of SB 15                                                                            
                                                                                                                                
Claire Noll                                                                                                                     
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Sherry Jaeger                                                                                                                   
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Deatrich Sitchler                                                                                                               
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Jennifer Rudinger                                                                                                               
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Cindy Norquest                                                                                                                  
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Pauline Utter                                                                                                                   
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Robin Smith                                                                                                                     
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Regina Montoufel                                                                                                                
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Jane Angvik                                                                                                                     
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Katherine Davey                                                                                                                 
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Bob Lohr                                                                                                                        
Haines, AK 99827                                                                                                                
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Sherry Goll                                                                                                                     
Haines, AK 99827                                                                                                                
POSITION STATEMENT:  Testified in  support of SB 15                                                                           
                                                                                                                                
Dr. Colleen Murphy                                                                                                              
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in support of SB 15                                                                            
                                                                                                                                
Deborah Williams                                                                                                                
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in support of SB 15                                                                            
                                                                                                                                
Karen Pearson                                                                                                                   
Director of Public Health                                                                                                       
Department of Health &                                                                                                          
  Social Services                                                                                                               
PO Box 110601                                                                                                                   
Juneau, AK  99801-0601                                                                                                          
                                                                                                                                
POSITION STATEMENT:  Testified in support of SB 15                                                                            
                                                                                                                                
Caren Robinson                                                                                                                  
AK Woman's Lobby                                                                                                                
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Testified in support of SB 15                                                                            
                                                                                                                                
Lilo Ives                                                                                                                       
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Testified in support of SB 15                                                                            
                                                                                                                                
Senator Lyda Green                                                                                                              
Alaska State Capitol, Room 125                                                                                                  
Juneau, AK  99801-1182                                                                                                          
Anchorage, AK 99513                                                                                                             
POSITION STATEMENT:  Sponsor of SB 355                                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-20, SIDE A                                                                                                            
                                                                                                                                
CHAIRMAN  GENE   THERRIAULT  called   the  Senate  State   Affairs                                                            
Committee  meeting to  order at  3:40 p.m.  Present were  Senators                                                              
Davis,  Stevens  and Chairman  Therriault.  Senators  Halford  and                                                              
Phillips arrived shortly thereafter.                                                                                            
                                                                                                                                
         HB 374-NAMING DOUTHIT VETERANS' MEMORIAL BRIDGE                                                                    
                                                                                                                                
Representative  Ken Lancaster, bill  sponsor, explained  this bill                                                              
names the bridge that spans the Kenai  River in Soldotna the David                                                              
Douthit  Memorial Bridge.  While  serving in  the U.S.  Army as  a                                                              
staff sergeant  during the  Gulf War, he  died for his  country on                                                              
February 27, 1991.                                                                                                              
                                                                                                                                
The  community of  Soldotna  and the  local  veterans support  the                                                              
bill. The  city passed  a supporting resolution  and called  it to                                                              
his attention.  The Douthit's have  been close friends of  his for                                                              
many years and he was pleased to sponsor the bill.                                                                              
                                                                                                                                
There was no further testimony.                                                                                                 
                                                                                                                                
CHAIRMAN  THERRIAULT  said  he  had no  questions.  There  was  no                                                              
prepared  CS and  no amendments  were  offered. There  was a  zero                                                              
fiscal note attached to the bill.                                                                                               
                                                                                                                                
SENATOR DAVIS  made a motion  to move  HB 374 and attached  fiscal                                                              
note from committee with individual recommendations.                                                                            
                                                                                                                                
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
            HB 254-STATE RETIREMENT SYSTEMS/WARRANTS                                                                        
                                                                                                                                
BARBARA  COTTING,   staff  to   Representative  Jeannette   James,                                                              
introduced the legislation to keep  the State of Alaska retirement                                                              
system  in compliance  with Internal  Revenue  Service (IRS)  code                                                              
changes. It allows  buy-ins with pre-tax dollars.  The fiscal note                                                              
is zero. It is  a technical bill that is not intended  to and does                                                              
not enhance benefits in any way.                                                                                                
                                                                                                                                
CHAIRMAN THERRIAULT asked Mr. Bell  to comment on whether the bill                                                              
addressed this single issue.                                                                                                    
                                                                                                                                
GUY BELL,  Director of  the Division  of Retirement and  Benefits,                                                              
explained that everything else in  the legislation is confirmation                                                              
of current practice. The only substantial  change is the allowance                                                              
of pre-tax  payment of indebtedness  in the retirement  system for                                                              
public employees  and teachers. The  new language needs to  be put                                                              
into  state law  to  comply with  provisions  of the  IRS code  to                                                              
ensure continued tax qualification.                                                                                             
                                                                                                                                
CHAIRMAN THERRIAULT called for teleconferenced testimony.                                                                       
                                                                                                                                
CHIEF MONEGAN from the Anchorage  Police Department said he wanted                                                              
to speak to Senator Halford's proposed amendment.                                                                               
                                                                                                                                
CHAIRMAN THERRIAULT  made a motion  to adopt amendment #1  for the                                                              
purpose of discussion.                                                                                                          
                                                                                                                                
CHIEF MONEGAN  said the amendment  would provide local  option for                                                              
local governments to enhance or offer  a series of enhancements to                                                              
existing public employee retirement  systems (PERS). The Anchorage                                                              
Police  Department  is  experiencing   difficulty  recruiting  and                                                              
retaining  personnel  because  people are  looking  elsewhere  for                                                              
retirement and benefits packages.  Other departments are similarly                                                              
affected.  The  amendment  would  allow  local  municipalities  to                                                              
bargain individually and bear the  cost for their own enhancements                                                              
to the  basic state retirement package.  The fiscal impact  to the                                                              
state would be nominal.                                                                                                         
                                                                                                                                
CHAIRMAN THERRIAULT  questioned why this needs to  be incorporated                                                              
into the state system. Why couldn't  a municipality just as easily                                                              
offer  an  attractive  option  that  is  controlled  and  operated                                                              
entirely at the local governmental level?                                                                                       
                                                                                                                                
CHIEF MONEGAN replied they may end  up bargaining no increase, but                                                              
they need  this kind of  legislation before  they can even  get to                                                              
the  table.  They haven't  found  any  options  that would  be  as                                                              
attractive as this one.                                                                                                         
                                                                                                                                
CHAIRMAN  THERRIAULT questioned  the  statement  that there  would                                                              
only  be  minimal  administrative  costs  to  the  state.  If  the                                                              
municipality isn't able  to make it work separately,  it sounds as                                                              
though there  would be  reliance on the  overall state  system and                                                              
probably have associated costs.                                                                                                 
                                                                                                                                
CHIEF MONEGAN  said there was none  they could tell.  Their police                                                              
union  contacted  Mr.  Bell  and  they  thought  they  received  a                                                              
favorable response  from him initially.  When they were  in Juneau                                                              
the previous week  to explore this further, Mr.  Bell was somewhat                                                              
cool.   He  indicated   there   might   be  a   more   complicated                                                              
bookkeeping/administrative   situation    than   they   originally                                                              
thought.                                                                                                                        
                                                                                                                                
The Anchorage mayor was also supportive of the legislation.                                                                     
                                                                                                                                
SERGEANT ROD  HUEN, President of  the Anchorage Police  Department                                                              
Employees  Association,  said he  shares  the same  concerns  that                                                              
Chief Monegan  has regarding  recruitment and  retention. It  is a                                                              
statewide problem.                                                                                                              
                                                                                                                                
Amendment  1  addresses the  issue  of  the  legality of  when  an                                                              
officer is moved from an area with  an enhanced PERS program to an                                                              
area without an  enhanced PERS program by increasing  the employer                                                              
contribution.  The amendment  makes  it clear  there  would be  no                                                              
expectation  of any  enhanced benefits.  The goal  is to have  the                                                              
local government  bear the  burden of any  enhancement that  is on                                                              
top of the basic PERS program through  employer contribution. This                                                              
could  become a  piece to  a long-term  recruitment and  retention                                                              
program, which is the goal. They  want to work with the state, but                                                              
place the burden and control at the local level.                                                                                
                                                                                                                                
WILL  AITCHISON  said   the  difficulty  with  doing   this  as  a                                                              
supplemental program  at the local level  is that when going  to a                                                              
local  option some  governmental bodies  that might  want to  take                                                              
advantage  of this might  have existing  retirement systems  while                                                              
others might  not and would be  solely reliant of  PERS. Anchorage                                                              
falls into  a category  in which there  are retirement  systems in                                                              
place that are closed. The possibility  of doing this at the local                                                              
level is too  complicated with the variety of  retirement systems.                                                              
Even those with a retirement system  that could potentially handle                                                              
supplemental benefits  would find it difficult to  administer only                                                              
supplemental  benefits.  The  types  of benefits  range  from  the                                                              
calculation of basic retirement benefits  to the administration of                                                              
death benefits and occupational disability  benefits. Setting up a                                                              
system  like that  at the  local  level rather  than changing  the                                                              
benefit level  as an  optional plan  under PERS  would be  far too                                                              
expensive. When  put into PERS  it is a  matter of no  new benefit                                                              
being added  rather different  benefit levels  are being  offered.                                                              
Put  into  PERS,   the  additional  cost  would   be  the  minimal                                                              
administrative  costs   associated  with  keeping   track  of  the                                                              
optional benefits  and doing the  initial actuarial  assessment to                                                              
determine what the employer would pay.                                                                                          
                                                                                                                                
CHAIRMAN THERRIAULT  noted Senator Halford handed out  a copy of a                                                              
memo that suggested  additional language to the  amendment to deal                                                              
with the concern.                                                                                                               
                                                                                                                                
He  ran through  a brief  description  of the  current system  and                                                              
noted that adding  additional governmental bodies  could result in                                                              
a very  cumbersome system.  While  there may be  little impact  or                                                              
cost individually, collectively it could be burdensome.                                                                         
                                                                                                                                
MR. AITCHISON replied  it is not at all unusual  to see retirement                                                              
systems with a  variety of different options. One  of the purposes                                                              
of this legislation is to meet a  challenge that large city police                                                              
departments are  facing because of  the existence of such  a local                                                              
option  in California.  On a  jurisdiction-by-jurisdiction  basis,                                                              
the agencies in  California are able to elect a  3 percent benefit                                                              
and  50  years  of  age. This  sort  of  optional  benefit,  is  a                                                              
relatively  common  feature of  state  retirement  systems and  is                                                              
manageable within the context of  those retirement systems. He has                                                              
not heard  any complaints  about administration difficulties  from                                                              
PERS  type  administrators   that  have  gone  to   this  sort  of                                                              
supplemental retirement benefit.                                                                                                
                                                                                                                                
SENATOR STEVENS  asked how  many agencies  in Alaska employ  peace                                                              
officers that could be eligible for this option.                                                                                
                                                                                                                                
DELL  SMITH,  Deputy  Commissioner  of the  Department  of  Public                                                              
Safety,  replied  there are  probably  about 35  municipal  police                                                              
departments.                                                                                                                    
                                                                                                                                
SENATOR STEVENS  asked whether there  would be any that  would not                                                              
be eligible to participate.                                                                                                     
                                                                                                                                
MR. SMITH  replied this is an  option for municipalities  so state                                                              
troopers, fish and wildlife protection  officers, airport security                                                              
police and  village public safety  officers wouldn't  be eligible.                                                              
It appears  to be for municipal  firefighters and  police officers                                                              
only.                                                                                                                           
                                                                                                                                
CHAIRMAN  THERRIAULT  said  he  has   heard  that  the  state  has                                                              
retention problems and frequently  loses troopers to the Anchorage                                                              
Police Department.                                                                                                              
                                                                                                                                
MR. SMITH  said some have transferred  over but his  experience is                                                              
that there  are transfers both ways.  Within the last  six months,                                                              
three Alaska  State Trooper  transferred  to the Anchorage  Police                                                              
Department.                                                                                                                     
                                                                                                                                
SENATOR STEVENS  asked whether  there are individual  negotiations                                                              
for each employee's benefit package.                                                                                            
                                                                                                                                
CHIEF MONEGAN  said there  is one bargaining  unit and  they would                                                              
negotiate  for  the  enhanced  benefit  for  all  police  officers                                                              
covered under that contract.                                                                                                    
                                                                                                                                
SENATOR  STEVENS  asked whether  passage  would  make the  benefit                                                              
packages  for municipal  officers  and state  officers similar  or                                                              
would one be more enticing.                                                                                                     
                                                                                                                                
SERGEANT HUEN  said anyone in Anchorage  who was hired  after 1994                                                              
is in PERS Tier III. Anyone hired  before 1994 is in the local and                                                              
closed retirement plan.  Those in PERS Public Safety  Plan III who                                                              
were hired  in Anchorage  after 1994 reflect  the people  who have                                                              
been hired on to the troopers.                                                                                                  
                                                                                                                                
SENATOR STEVENS  said the  trooper plan  and municipal  plan after                                                              
1994 are the same.                                                                                                              
                                                                                                                                
SERGEANT  HUEN said  they are  as far  as the  retirement plan  is                                                              
concerned.                                                                                                                      
                                                                                                                                
SENATOR STEVENS asked if this would  allow municipalities to offer                                                              
incentives  and  make the  plan  more  attractive than  the  state                                                              
incentives.                                                                                                                     
                                                                                                                                
SERGEANT HUEN said  this language doesn't exclude,  it simply says                                                              
"employer"  so it  would be  up to the  state. The  intent was  to                                                              
localize the control of the work force.                                                                                         
                                                                                                                                
SENATOR  STEVENS  asked if  the  money  would  come from  a  local                                                              
revenue  source and  that is  why  it wouldn't  be a  cost to  the                                                              
state.                                                                                                                          
                                                                                                                                
SERGEANT HUEN said that's correct.  The retirement contribution by                                                              
the employer  would cover that cost  and that would vary  with the                                                              
employer. Employer  contributions range  from six percent  in Long                                                              
Beach,  California  to  12  or  13   percent  in  Eugene,  Oregon.                                                              
Anchorage is now at seven percent.                                                                                              
                                                                                                                                
SENATOR STEVENS asked if he would  object to the statement that if                                                              
the same option  were available to state law enforcement  it would                                                              
be an expense to the state.                                                                                                     
                                                                                                                                
SERGEANT HUEN  said if the  state chose to  do that for  their law                                                              
enforcement  personnel  it  would   incur  whatever  the  relative                                                              
employer contribution  would be to ensure those  enhancements were                                                              
funded.                                                                                                                         
                                                                                                                                
CHAIRMAN  THERRIAULT asked  Mr. Smith whether  the department  had                                                              
taken a position  on the concept. What would the  department do if                                                              
local systems became more enticing than the state system?                                                                       
                                                                                                                                
MR. SMITH said he  became aware of this very recently  but he does                                                              
have  concerns  and   believes  it  would  put  the   state  at  a                                                              
disadvantage. In fact, they are already  at a disadvantage to some                                                              
degree.                                                                                                                         
                                                                                                                                
CHIEF  MONEGAN said  they don't  currently  have the  Supplemental                                                              
Benefits  System (SBS)  so  the troopers  actually  have a  better                                                              
system than they  have. They believe this legislation  would bring                                                              
some parity.                                                                                                                    
                                                                                                                                
CHAIRMAN  THERRIAULT replied  SBS  is similar  to a  401K and  APD                                                              
could add that rather easily.                                                                                                   
                                                                                                                                
SENATOR  PHILLIPS noted  the state replaced  social security  with                                                              
SBS about 20 years ago.                                                                                                         
                                                                                                                                
CHAIRMAN  THERRIAULT asked  Chief Monegan  whether local  officers                                                              
got social security benefits.                                                                                                   
                                                                                                                                
CHIEF MONEGAN replied  some do; those that were in  the police and                                                              
fire departments were  told they were no longer  eligible, but the                                                              
new hires under  PERS Tier III do  pay in and will  receive social                                                              
security.                                                                                                                       
                                                                                                                                
SENATOR DAVIS  thought the federal  government determined  SBS was                                                              
no longer an  option and everyone was going to  eventually have to                                                              
return  to the  Social Security  System.  She asked  if there  was                                                              
anyone  present  that could  tell  her  whether  or not  that  was                                                              
correct.                                                                                                                        
                                                                                                                                
GUY BELL,  Director of  the Division  of Retirement and  Benefits,                                                              
explained  that SBS  is closed  to  other options,  but there  are                                                              
other options  such as  401K available  to local governments.  The                                                              
federal  government is  making more pension  options available  to                                                              
government than  in the past  through reform legislation  that was                                                              
recently enacted. Although he isn't  an expert on all the options,                                                              
he  can  provide  information  on  other  options  that  might  be                                                              
available other than social security and SBS.                                                                                   
                                                                                                                                
He  noted the  state contributes  6.13  percent to  SBS while  the                                                              
social security contribution  is 6.2 percent so the  state saves a                                                              
bit through SBS.                                                                                                                
                                                                                                                                
CHAIRMAN THERRIAULT  asked whether it  would be available  for the                                                              
state to take advantage of since the bill says "employer."                                                                      
                                                                                                                                
GUY BELL  said it is  placed in AS  39.35.655, which is  under the                                                              
political subdivision and public  organization portion of statute.                                                              
It is  Article 7 of  the PERS statute,  which doesn't  include the                                                              
State  of Alaska.  This could  be  changed but,  as written,  they                                                              
interpret it to exclude the state.                                                                                              
                                                                                                                                
CHAIRMAN  THERRIAULT asked  whether he  had seen  the memo  to Mr.                                                              
Bravo (ph).                                                                                                                     
                                                                                                                                
MR. BELL had not seen the memo and was given a copy to read.                                                                    
                                                                                                                                
SENATOR  PHILLIPS  asked  whether  he  had  an  opinion  from  the                                                              
Attorney General's office.                                                                                                      
                                                                                                                                
GUY BELL  replied it would probably  help clarify that  one issue.                                                              
The question  is if you're in a  higher tier area and  are with an                                                              
employer that opted for higher tier  benefits then move to a lower                                                              
tier employer, are  you entitled to the higher  tier benefits with                                                              
that new employer?  The language says you cannot  take that higher                                                              
level  of  benefits  with  you. However,  this  is  just  a  legal                                                              
opinion, it has  not been litigated. "In  the benefits/entitlement                                                              
world  we  do  have  a  constitutional   prohibition  against  the                                                              
diminution of retirement benefits  and that's being tested all the                                                              
time." Currently  there  are three separate  lawsuits relating  to                                                              
retirement and benefits  and he couldn't be sure  this wouldn't be                                                              
tested at some  time in the future.  This is a cafeteria  plan for                                                              
retirement  benefits that  can shift between  employers and  under                                                              
(c)  of the  amendment  the optional  benefits  could change  each                                                              
year. That might  mean that newly hired employees  may be entitled                                                              
to less  after a  certain point  in the  year than employees  that                                                              
were hired in the previous year.  An employer would have different                                                              
benefits for employees  depending on their year of  hire. There is                                                              
a great deal  of variety and complexity as currently  drafted. The                                                              
three-tier system  is difficult to  administer now and  this would                                                              
more than  double the  number of  tiers because  of the  number of                                                              
choices an employer could make.                                                                                                 
                                                                                                                                
There was no further testimony.                                                                                                 
                                                                                                                                
CHAIRMAN THERRIAULT  announced he would  hold HB 254  in committee                                                              
while they reviewed the wording of the amendment.                                                                               
                                                                                                                                
4:20 p.m.                                                                                                                       
                                                                                                                                
                                                                                                                                
           SB 15-INSURANCE COVERAGE FOR CONTRACEPTIVES                                                                      
                                                                                                                                
SENATOR  JOHNNY ELLIS,  bill sponsor,  described the  bill as  the                                                              
Prescription  Fairness  Act  of  2002.  It  would  require  health                                                              
insurers  in  Alaska  that cover  prescription  drugs  to  include                                                              
coverage for  all FDA approved prescription  contraceptives. There                                                              
is a companion bill in the House  sponsored by a bi-partisan group                                                              
of women legislators. To date, 24  states have a similar provision                                                              
in  law  and pending  legislation  for  the  measure in  17  other                                                              
states.                                                                                                                         
                                                                                                                                
A  large impressive  coalition  of individuals  and  organizations                                                              
from  across the  state  support  the bill.  There  are many  good                                                              
reasons to  support this  legislation and  without this  change in                                                              
law it is clear that:                                                                                                           
   · Women will continue to pay more and get less in health                                                                     
     insurance in Alaska                                                                                                        
   · Women will not receive equal health care treatment that they                                                               
     need and deserve                                                                                                           
   · Alaskan law should be modified to avoid an expensive legal                                                                 
     challenge that it would surely lose                                                                                        
   · Unintended pregnancies have enormous financial, personal and                                                               
     social costs and this legislation provides the opportunity                                                                 
     to positively affect the numbers of unwanted births,                                                                       
     abortions and child abuse cases in this state                                                                              
   · Facts show that contraceptive coverage pays for itself                                                                     
                                                                                                                                
SB 15 is fair,  cost effective, respects the religious  beliefs of                                                              
employers,  protects  the state  from  legal  action and  is  long                                                              
overdue.                                                                                                                        
                                                                                                                                
ANN HARRISON  from Fairbanks  testified in support  of SB  15. She                                                              
was representing herself  as a retired nurse practitioner  with 30                                                              
years service in women's health care.                                                                                           
                                                                                                                                
CLAIRE NOLL  testified from  Anchorage in support  of SB  15. Many                                                              
women need contraceptives  for reasons other than  to protect from                                                              
pregnancy. They should be available and affordable to all women.                                                                
                                                                                                                                
SIDE B 4:30 p.m.                                                                                                                
                                                                                                                                
SHERRY JAEGER  testified from Anchorage  as a representative  from                                                              
the Young  Women's Christian Association  (YWCA) in support  of SB
15. The  bill addresses the  current inequities in  women's health                                                              
care plans  and would  require equity in  the workplace.  It would                                                              
affect 140,000 women  of childbearing age in Alaska  and would not                                                              
burden insurance providers.                                                                                                     
                                                                                                                                
DEATRICH SITCHLER  testified from Anchorage  in support of  SB 15.                                                              
Although  all  women deserve  this  coverage,  she has  a  medical                                                              
condition  that makes  it necessary  for her  to avoid  pregnancy.                                                              
Because  it  would  be  medically  dangerous  for  her  to  become                                                              
pregnant,  she must  take birth  control  pills whether  insurance                                                              
covers the cost or not.                                                                                                         
                                                                                                                                
She then read a statement from Jennifer  Rudinger in support of SB
15. Although  most insurance plans  cover prescription  drugs they                                                              
typically  exclude  prescription   contraceptives  and  outpatient                                                              
contraceptive   services.    This   gap   in   coverage    has   a                                                              
disproportionate impact on women.                                                                                               
                                                                                                                                
CINDY NORQUEST testified  from Anchorage in support of  SB 15. She                                                              
said she  was a concerned  citizen representing the  average woman                                                              
in  Alaska  who  is  tired  of  being   treated  unfairly.  Gender                                                              
discrimination is  the only explanation  for this  legislation not                                                              
having already been passed. It is  in both the public interest and                                                              
the business interest to pass the legislation.                                                                                  
                                                                                                                                
PAULINE UTTER  testified from Anchorage  in support of SB  15. She                                                              
presented a petition that was signed  by 1,008 women that attended                                                              
the last Woman's Political Caucus  and stated women want equality.                                                              
If  prescription   drugs   such  as  Viagra   are  covered,   then                                                              
prescription contraceptives should be covered as well.                                                                          
                                                                                                                                
ROBIN SMITH  testified  from Anchorage  in support  of SB 15.  She                                                              
said  there  might  be  religious  beliefs  that  run  counter  to                                                              
covering  contraception.  Although  some religions  don't  believe                                                              
that  humans should  receive blood  products,  it is  unimaginable                                                              
that  insurance  companies  wouldn't  cover  that  treatment.  The                                                              
Catholic  Church   doesn't  believe   in  vasectomies   and  tubal                                                              
ligations,   but  insurance  companies   cover  them.   Providence                                                              
Hospital covers  birth control pills  for their employees  yet the                                                              
Catholic  Church prohibits  contraception. This  is an issue  that                                                              
needs to  be addressed because  it is  a health care  issue. Women                                                              
can  become  pregnant  for  30  to 40  years  of  their  lives  so                                                              
something  must be  done to  prevent  unintended pregnancies.  She                                                              
urged members to move SB 15 forward.                                                                                            
                                                                                                                                
REGINA MONTOUFEL  testified from  Anchorage in  support of  SB 15.                                                              
She  owns  and  operates  a  rooming  house  and  has  found  fair                                                              
insurance coverage  for women  and small business  owners to  be a                                                              
huge problem.  She works with  many minimum wage  individuals that                                                              
have policies  with huge deductibles  and minimal coverage.  To be                                                              
treated unequally  on prescription  drug coverage is  an injustice                                                              
that low-income women shouldn't have to endure.                                                                                 
                                                                                                                                
JANE ANGVIK testified from Anchorage  in support of SB 15. She was                                                              
representing  herself.  The  cost  of  unintended  pregnancies  is                                                              
enormous. She  said, "As  the Legislature  faces the challenge  of                                                              
dealing with the fiscal crisis, don't  ignore the fact that one of                                                              
the  biggest challenges  comes  from assisting  individuals  whose                                                              
births were unintended and or not  wanted." There is a public cost                                                              
and a personal  cost to everyone  and it is an issue  that belongs                                                              
to  both  men and  women  and  impacts  communities  tremendously.                                                              
Additionally, there  is a basic  civil rights question  that deals                                                              
with  equity  in  providing  equal  access to  men  and  women  in                                                              
prescription healthcare.                                                                                                        
                                                                                                                                
KATHERINE DAVEY  said she  is a lifelong  Alaskan and  is speaking                                                              
for herself. She  testified from Anchorage and was  pleased to add                                                              
her  voice in  support of  SB 15.  This  is an  equity issue  that                                                              
should be addressed.  The ability to plan pregnancies  is basic to                                                              
health care  and should not be  overlooked any longer.  She echoed                                                              
Ms.  Angvik's  testimony  regarding  the cost  of  unintended  and                                                              
unwanted pregnancies.  Forty two percent  of births in  Alaska are                                                              
unwanted or untimed.                                                                                                            
                                                                                                                                
4:45 p.m.                                                                                                                       
                                                                                                                                
BOB LOHR testified that the Alaska  Division of Insurance supports                                                              
SB 15.  It is a  different stance than  the division has  taken in                                                              
the  past,  but  in  December  2000   the  U.S.  Equal  Employment                                                              
Opportunity Commission  made a key ruling reinforced  by a federal                                                              
district court  decision in the  state of Washington.  That ruling                                                              
told employers  they  need to offer  this coverage  if they  offer                                                              
prescription  coverage or  they  would be  in  violation of  anti-                                                              
discrimination statutes.                                                                                                        
                                                                                                                                
The division  recommended the following technical  amendment: Page                                                              
3, lines 7 -  13 should be deleted. That reference  is unnecessary                                                              
because health  care insurance plans  already exclude  these types                                                              
of products as  defined in AS 21.54. Deletion  wouldn't change the                                                              
meaning of the bill.                                                                                                            
                                                                                                                                
Traditionally   the  division  expresses   concern  about   health                                                              
insurance  mandates  because  they   may  have  the  potential  to                                                              
increase the  cost of  health insurance. However,  in the  case of                                                              
this type  of mandate,  the overall benefits  to society  are such                                                              
that  they are so  far in  excess of  the additional  cost on  the                                                              
policy that the change makes good  policy sense. Other states have                                                              
successfully included  coverage and it has not  been disruptive to                                                              
the insurance plan involved.                                                                                                    
                                                                                                                                
SHERRY GOLL testified  from Haines as an Alaskan  woman in support                                                              
of SB  15. The legislation  offers the Legislature  an opportunity                                                              
to  do  something  important  to   end  gender  discrimination  by                                                              
reforming the state's insurance laws.                                                                                           
                                                                                                                                
DR.   COLLEEN  MURPHY,   a   board  certified   obstetrician   and                                                              
gynecologist  practicing  in  Alaska   since  1987,  testified  in                                                              
support of SB 15.  During her career in Alaska, she  has worked in                                                              
the tribal  health care system, in  a large practice group  and is                                                              
now in private  practice. Each exposed her to  different insurance                                                              
realities.                                                                                                                      
                                                                                                                                
The  average American  family  now has  2.1  children and  America                                                              
women are of  reproductive age for approximately  39 years. Having                                                              
two  children  during  that  39  year  period  requires  women  to                                                              
contracept for 37 of those years  so the need for contraception is                                                              
enormous during the majority of a woman's life.                                                                                 
                                                                                                                                
Current  national  statistics  indicate  that 50  percent  of  all                                                              
pregnancies in the United States  are unintended. Half will result                                                              
in a termination of the pregnancy  and many of the other half will                                                              
become live born. These pregnancies  are quite high risk with poor                                                              
social and family  outcomes. Alaska statistics are  similar to the                                                              
national average.                                                                                                               
                                                                                                                                
When she talks to her patients about  the most effective method of                                                              
family planning, she  must warn them that their  insurance company                                                              
may not cover  the cost. The reaction to this  news is consistent;                                                              
the women are  incredulous and they overwhelmingly  say, "You mean                                                              
they'll  pay for  a normal  pregnancy but  they won't  pay for  my                                                              
birth control?" Unfortunately,  the answer is yes;  they won't pay                                                              
for birth control.                                                                                                              
                                                                                                                                
She urged the committee to look closely  at the medical and social                                                              
affects of  unintended pregnancy in  Alaska and the real  costs to                                                              
the individual and society.                                                                                                     
                                                                                                                                
DEBRA  WILLIAMS testified  from  Anchorage in  support  of SB  15.                                                              
Alaska  has  a  proud history  of  being  progressive  on  women's                                                              
issues. Unfortunately, the failure  to address prescription equity                                                              
is not  in keeping with this  proud heritage. There  are thousands                                                              
of  compelling  stories  by  women who  need  this  basic  medical                                                              
prescription coverage. On behalf  of all those women she urged the                                                              
Legislature to pass SB 15.                                                                                                      
                                                                                                                                
GUY BELL,  Director of  the Division  of Retirement and  Benefits,                                                              
said  they administer  the select  benefits plan  for about  4,700                                                              
state employees  in the  retirement and  benefit plan.  The select                                                              
benefit   plan    does   include    coverage   for    prescription                                                              
contraceptives so the bill would  have no cost impact to the state                                                              
health  plan  if  enacted.  The  retiree  plan  does  not  include                                                              
prescription contraceptives  at this time, but that  fiscal impact                                                              
would be modest.                                                                                                                
                                                                                                                                
CHAIRMAN THERRIAULT asked whether  the decision to add coverage in                                                              
the  state  plan  was  a policy  call  or  was  driven  by  recent                                                              
litigation.                                                                                                                     
                                                                                                                                
GUY BELL replied  it was a policy call but they  were aware of the                                                              
litigation.                                                                                                                     
                                                                                                                                
KAREN PEARSON, Director of Public  Health, described SB 15 as good                                                              
public health  policy. Approximately one  half of the  live births                                                              
in Alaska are  unintended each year and about half  of those women                                                              
were  not using  a contraceptive  at  the time  of conception  for                                                              
reasons such as  lack of access or expense. Every  child should be                                                              
wanted and  children should  be planned.  The inability  to access                                                              
contraceptives  through  health  coverage  puts  choice  in  grave                                                              
danger.  It costs  about $1.43  per month  to offer  contraceptive                                                              
services, which  is a very small  cost for insurance  companies to                                                              
make the kind of  contribution they can to the quality  of life of                                                              
the women they serve.                                                                                                           
                                                                                                                                
Caren  Robinson, Representative  from  the  Alaska Women's  Lobby,                                                              
said they want  to go on record  in strong support of  SB 15. They                                                              
believe  that  the  decision to  exclude  contraception  from  the                                                              
prescription drug  coverage imposes  an undue financial  burden on                                                              
women.                                                                                                                          
                                                                                                                                
On December 20,  2001 the Equal Employment  Opportunity Commission                                                              
ruled and June  2001 the federal district court  decision declared                                                              
the exclusion of contraception to be discriminatory.                                                                            
                                                                                                                                
5:10 p.m.                                                                                                                       
                                                                                                                                
LILO IVES testified  from Anchorage in  support of SB 15.  It is a                                                              
matter of common  sense to include prescription  contraceptives in                                                              
health care coverage.                                                                                                           
                                                                                                                                
CHAIRMAN  THERRIAULT   closed  public  testimony  on   SB  15  and                                                              
announced the  bill would  be held in  committee. He  told Senator                                                              
Ellis  he would  like  to  discuss  the advisability  of  dropping                                                              
paragraph (1),  subsection (e), Section  3 on page 3 and  he would                                                              
like review the recent Washington court case.                                                                                   
                                                                                                                                
                   SB 355-LET ME HELP ACCOUNT                                                                               
                                                                                                                                
SENATOR LYDA GREEN, bill sponsor,  explained she has received many                                                              
letters from citizens that are urging  the Legislature to pass tax                                                              
legislation. Since there  is so much interest in  this issue, this                                                              
legislation would allow individuals  to provide greater support to                                                              
government  voluntarily. Individuals  could decide  how much  they                                                              
want  to pay  then make  that payment  to  government. The  amount                                                              
contributed would be deductible from  federal income tax and it is                                                              
her understanding that there are  established state accounts where                                                              
this money could be placed.                                                                                                     
                                                                                                                                
CHAIRMAN   THERRIAULT  asked   how  the   contribution  would   be                                                              
deductible on federal tax forms.                                                                                                
                                                                                                                                
SENATOR GREEN  replied she  wasn't sure, but  thought it  would be                                                              
some sort of donation.                                                                                                          
                                                                                                                                
SENATOR DAVIS  asked whether  there was anyone  from the  state to                                                              
speak to the bill.                                                                                                              
                                                                                                                                
SENATOR GREEN replied there was no one available.                                                                               
                                                                                                                                
TAPE 02-21                                                                                                                      
5:12 p.m.                                                                                                                       
                                                                                                                                
SENATOR DAVIS  said it would be  helpful to hear from  someone who                                                              
could provide support of the explanation for the legislation.                                                                   
                                                                                                                                
CHAIRMAN THERRIAULT said it would  be beneficial for Senator Green                                                              
to provide information  on the tax mechanism by  which individuals                                                              
could get a  tax benefit before the  bill was heard in  the Senate                                                              
Finance Committee.                                                                                                              
                                                                                                                                
SENATOR GREEN agreed to provide the information.                                                                                
                                                                                                                                
CHAIRMAN THERRIAULT  noted he had not prepared a  CS and committee                                                              
members didn't offer  any amendments. He referenced  a zero fiscal                                                              
note  from the  Department of  Administration then  asked for  the                                                              
will of the committee.                                                                                                          
                                                                                                                                
SENATOR PHILLIPS made a motion to  move SB 355 and attached fiscal                                                              
note from committee with individual recommendations.                                                                            
                                                                                                                                
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
There being no  further business before the committee,  the Senate                                                              
State Affairs Committee meeting was adjourned at 5:17 p.m.                                                                      
                                                                                                                                
                                                                                                                                

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