Legislature(2011 - 2012)BUTROVICH 205

01/26/2012 09:00 AM STATE AFFAIRS


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 121 TEACHERS & PUB EMPLOYEE RETIREMENT PLANS TELECONFERENCED
Heard & Held
+= SB 136 INCOME TAX CREDIT FOR EMPLOYING A VETERAN TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
= SB 150 MILITARY TRAINING CREDIT
Moved CSSB 150(STA) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                        January 26, 2012                                                                                        
                           9:04 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Bill Wielechowski, Chair                                                                                                
Senator Joe Paskvan, Vice Chair                                                                                                 
Senator Kevin Meyer                                                                                                             
Senator Cathy Giessel                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Albert Kookesh                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 150                                                                                                             
"An Act  relating to applying  military education,  training, and                                                               
service   credit   to    occupational   licensing   and   certain                                                               
postsecondary  education  and employment  training  requirements;                                                               
and providing for a temporary  occupational license for qualified                                                               
military service members."                                                                                                      
                                                                                                                                
     - MOVED CSSB 150(STA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 121                                                                                                             
"An Act relating  to the public employees'  retirement system and                                                               
the teachers'  retirement system; and providing  for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 136                                                                                                             
"An Act  providing a tax  credit for employing an  Alaska veteran                                                               
that may be taken against a  liability for the tax on corporation                                                               
income; and providing for an effective date."                                                                                   
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 150                                                                                                                  
SHORT TITLE: MILITARY TRAINING CREDIT                                                                                           
SPONSOR(s): SENATOR(s) WIELECHOWSKI                                                                                             
                                                                                                                                
01/17/12       (S)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       STA, L&C                                                                                               
01/24/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
01/24/12       (S)       Heard & Held                                                                                           
01/24/12       (S)       MINUTE(STA)                                                                                            
01/26/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 121                                                                                                                  
SHORT TITLE: TEACHERS & PUB EMPLOYEE RETIREMENT PLANS                                                                           
SPONSOR(s): SENATOR(s) EGAN                                                                                                     
                                                                                                                                
04/07/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/07/11       (S)       STA, FIN                                                                                               
04/14/11       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
04/14/11       (S)       Heard & Held                                                                                           
04/14/11       (S)       MINUTE(STA)                                                                                            
09/15/11       (S)       STA AT 9:00 AM Anch LIO Rm 220                                                                         
09/15/11       (S)       Heard & Held                                                                                           
09/15/11       (S)       MINUTE(STA)                                                                                            
10/13/11       (S)       STA AT 12:00 AM Fairbanks                                                                              
10/13/11       (S)       Heard & Held                                                                                           
10/13/11       (S)       MINUTE(STA)                                                                                            
01/26/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 136                                                                                                                  
SHORT TITLE: INCOME TAX CREDIT FOR EMPLOYING A VETERAN                                                                          
SPONSOR(s): SENATOR(s) WIELECHOWSKI                                                                                             
                                                                                                                                
01/17/12       (S)       PREFILE RELEASED 1/6/12                                                                                
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       STA, FIN                                                                                               
01/24/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
01/24/12       (S)       Scheduled But Not Heard                                                                                
01/26/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KENDRA KLOSTER, Staff                                                                                                           
Senator Bill Wielechowski                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained changes to SB 150 and testified on                                                              
SB 136 on behalf of the sponsor.                                                                                                
                                                                                                                                
DON HABEGER, Director                                                                                                           
Division of Corporations, Business, and Professional Licensing                                                                  
Department of Commerce, Community and Economic Development                                                                      
(DCCED)                                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified on SB 150                                                                                       
                                                                                                                                
SENATOR DENNIS EGAN                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SB 121.                                                                                        
                                                                                                                                
JESSE KIEHL, Staff                                                                                                              
Senator Dennis Egan                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained the changes in the new CS for SB                                                                
121 on behalf of the sponsor.                                                                                                   
                                                                                                                                
MIKE BARNHILL, Deputy Commissioner                                                                                              
Department of Administration                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Described the changes in the fiscal note for                                                              
SB 150.                                                                                                                         
                                                                                                                                
ALICIA EGAN, Legislative Liaison                                                                                                
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions about SB 150.                                                                          
                                                                                                                                
ANGELA RODELL, Deputy Commissioner                                                                                              
Department of Revenue                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained the fiscal note for SB 150.                                                                     
                                                                                                                                
WILLIAM (FLICK) FORNIA, Consulting Actuary                                                                                      
Alaska Public Pension Coalition                                                                                                 
Centennial, Colorado                                                                                                            
POSITION STATEMENT: Discussed the costs of SB 121.                                                                            
                                                                                                                                
VINCE BELTRAMI, President                                                                                                       
Alaska AFL-CIO                                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 121.                                                                           
                                                                                                                                
JOHN ALCANTRA, NEA Alaska                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Spoke in favor of SB 121.                                                                                 
                                                                                                                                
TED MONINSKI                                                                                                                    
Retired Public Employees of Alaska                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 121.                                                                           
                                                                                                                                
VALERIE KENNY, President                                                                                                        
Alaska State Employees Association (ASEA), Local 52                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in favor of SB 121.                                                                             
                                                                                                                                
LADAWN DRUCE, President                                                                                                         
Kenai Peninsula Education Association                                                                                           
Soldotna, Alaska                                                                                                                
POSITION STATEMENT: Testified in favor of SB 121.                                                                             
                                                                                                                                
GARY MILLER, Southeast Chair                                                                                                    
Retired Employees of Alaska                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 121.                                                                           
                                                                                                                                
JAKE METCALF, Executive Director                                                                                                
Alaska Public Employees Association (APEA) 103                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 121.                                                                           
                                                                                                                                
BARBARA HUFF-TUCKNESS, Director of Legislative and Governmental                                                                 
Affairs                                                                                                                         
Teamsters Local 109                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Urged support of SB 121.                                                                                  
                                                                                                                                
RIC DAVIDGE, President                                                                                                          
Vietnam Veterans of America, Chapter 904                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 136.                                                                           
                                                                                                                                
JOHANNA BALES, Deputy Director                                                                                                  
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions about SB 136.                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:04:49 AM                                                                                                                    
CHAIR BILL WIELECHOWSKI called the  Senate State Affairs Standing                                                             
Committee meeting  to order at 9:04  a.m. Present at the  call to                                                               
order were Senators Giessel, Paskvan, and Chair Wielechowski.                                                                   
                                                                                                                                
                SB 150-MILITARY TRAINING CREDIT                                                                             
                                                                                                                                
9:05:54 AM                                                                                                                    
CHAIR  WIELECHOWSKI announced  that the  first order  of business                                                               
would  be SB  150.  At  the previous  meeting  the University  of                                                               
Alaska  testified about  progress in  providing retired  military                                                               
service  members  with  credit  for military  training  and  work                                                               
experience.   Diane  Barrens   of   the   Alaska  Commission   of                                                               
Postsecondary   Education,  Department   of  Education,   had  no                                                               
problems with the  bill. Don Habeger and Sarah  Chambers from the                                                               
Division of  Corporations, Business, and  Professional Licensing,                                                               
Department of  Commerce and Economic Development  (DCCED), raised                                                               
questions about some  of the wording in the bill.  As a result of                                                               
those discussions,  a new committee  substitute (CS),  version X,                                                               
is before the committee.                                                                                                        
                                                                                                                                
9:06:38 AM                                                                                                                    
SENATOR PASKVAN moved  to adopt CSSB 150,  labeled 27-LS117\X, as                                                               
the working document before the committee.                                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI objected for discussion purposes.                                                                          
                                                                                                                                
KENDRA  KLOSTER, staff  to  Senator  Bill Wielechowski,  sponsor,                                                               
explained  that changes  to version  X were  made in  conjunction                                                               
with DCCED.  The first  change is  on page 2,  line 16;  the word                                                               
"temporary" was  added before "license"  to clarify  that section                                                               
(c) was referring  that the boards may issue  a temporary license                                                               
extension of 180 days.                                                                                                          
                                                                                                                                
She noted  several changes on  page 5. On  line 15, Section  5 is                                                               
added  to  include  transitional   language  allowing  DCCED  and                                                               
applicable boards  to immediately begin  implementing regulations                                                               
to accept military education, training,  and service. On line 22,                                                               
Section  6 adds  an effective  date of  December 31,  2013, which                                                               
will  allow  the  department  and boards  enough  time  to  adopt                                                               
regulations   for   accepting  equivalent   military   education,                                                               
training, and  service. On line 23,  Section 7 is added  to allow                                                               
section 5 to take effect immediately.                                                                                           
                                                                                                                                
9:08:03 AM                                                                                                                    
SENATOR  WIELECHOWSKI  stated  that   he  and  Legislative  Legal                                                               
Affairs intend  that Section  1, part  B, of  SB 150  directs the                                                               
issuance of  temporary licenses  for only  those boards  that are                                                               
currently authorized  to issue a  temporary license and  any that                                                               
might be  authorized in the future.  The bill does not  direct or                                                               
require  boards  or  DCCED  to   issue  temporary  licenses.  The                                                               
issuance of temporary  licenses remains at the  discretion of the                                                               
department and boards.                                                                                                          
                                                                                                                                
DON   HABEGER,   Division    of   Corporations,   Business,   and                                                               
Professional  Licensing, Department  of  Commerce, Community  and                                                               
Economic   Development  (DCCED)   voiced  appreciation   for  the                                                               
committee's work on SB 150.  He said he appreciates that Sections                                                               
5  -  7  give  the   department  and  boards  time  to  implement                                                               
regulations. Some boards  meet only twice a year,  so this change                                                               
gives  them  ample  time.  He  said  he  also  appreciates  Chair                                                               
Wielechowski's clarification of intent.                                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI  said  he  understood  that  with  the  new                                                               
language there  is a  zero fiscal  note forthcoming.  Mr. Habeger                                                               
said there was.                                                                                                                 
                                                                                                                                
9:11:16 AM                                                                                                                    
SENATOR  WIELECHOWSKI  noted  that Senator  Giessel  suggested  a                                                               
change; on  page 2, line  12, add  the word "degree,"  before the                                                               
word "diploma".  He requested a comment on the proposed change.                                                                 
                                                                                                                                
MR. HABEGER said that was acceptable.                                                                                           
                                                                                                                                
SENATOR WIELECHOWSKI  withdrew his objection to  adopting version                                                               
X.                                                                                                                              
                                                                                                                                
CHAIR WIELECHOWSKI  announced that  without objection,  version X                                                               
was adopted.                                                                                                                    
                                                                                                                                
SENATOR WIELECHOWSKI moved  to add "degree," on page  2, line 12,                                                               
after "was awarded a".   He announced that without objection, the                                                               
motion was adopted.                                                                                                             
                                                                                                                                
9:13:00 AM                                                                                                                    
SENATOR WIELECHOWSKI requested a motion  to move version X out of                                                               
committee,  as  amended,   with  individual  recommendations  and                                                               
attached two zero  fiscal notes from the Department  of Labor and                                                               
Workforce Development  and the University  of Alaska, and  with a                                                               
forthcoming  fiscal   note  from  the  Department   of  Commerce,                                                               
Community, and Economic Development.                                                                                            
                                                                                                                                
SENATOR PASKVAN  moved [to report the  CS for SB 150,  version X,                                                               
as amended,  from committee  with individual  recommendations and                                                               
attached two  zero fiscal notes.]  There being no  objection, the                                                               
motion carried.                                                                                                                 
                                                                                                                                
        SB 121-TEACHERS & PUB EMPLOYEE RETIREMENT PLANS                                                                     
                                                                                                                                
SENATOR  WIELECHOWSKI announced  that  the next  bill before  the                                                               
committee was SB 121, a bill  that would give public employees in                                                               
Alaska a choice  between participating in a  defined benefit (DB)                                                               
or defined contribution  (DC) retirement system. He  noted it was                                                               
the third hearing on the  bill. The bill has evolved considerably                                                               
since the sponsor  sought to design a system that  would cost the                                                               
State of  Alaska, municipalities, and school  districts less than                                                               
the current Tier III Defined Benefit (DB) system costs.                                                                         
                                                                                                                                
SENATOR PASKVAN moved to adopt  CSSB 121, labeled 27-LS0281\R, as                                                               
the working document before the committee.                                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI objected in order  to hear comments from the                                                               
sponsor.                                                                                                                        
                                                                                                                                
9:14:30 AM                                                                                                                    
SENATOR DENNIS EGAN,  sponsor of SB 121,  voiced appreciation for                                                               
the work  the committee and  his staff did  on the bill.  He read                                                               
from the sponsor statement:                                                                                                     
                                                                                                                                
     SB 121 lets teachers,  troopers, firefighters and other                                                                    
     public  employees choose  one of  two state  retirement                                                                    
     systems: an individual  defined contribution retirement                                                                    
     account, or earning a defined benefit pension.                                                                             
                                                                                                                                
     A  defined  benefit pension  takes  time  to earn,  but                                                                    
     rewards  a  record  of  public   service  by  paying  a                                                                    
     guaranteed   monthly   benefit   and,   for   long-term                                                                    
     employees,  health  insurance.  An  individual  defined                                                                    
     contribution account  is portable from one  employer to                                                                    
     another and flexible  in how it can be  used, but makes                                                                    
     no  guarantees.  SB 121  will  let  newly hired  public                                                                    
     servants in Alaska choose the one that fits best.                                                                          
                                                                                                                                
9:16:21 AM                                                                                                                    
JESSE KIEHL, staff to Senator  Egan, explained the changes in the                                                               
new CS for SB 121, version  R. The substantive changes in version                                                               
R  were  made in  order  to  address  the  fiscal note  from  the                                                               
Department  of  Administration.  The  biggest change  is  in  the                                                               
provisions that  cover those employees  currently in the  DC plan                                                               
who choose  to convert  into the  new tiers of  DB that  the bill                                                               
creates. As  shown in  the previous  fiscal note,  the individual                                                               
accounts  do  not  have  enough  money in  them  to  prefund  the                                                               
benefits for the  actual time the employees have  worked to date.                                                               
The amount in  the previous fiscal note was  around $120 million.                                                               
The new CS  should erase that number. Those  employees who choose                                                               
to convert to the new DB  plan will have their accounts deposited                                                               
into one  of the  DB pension trusts.  The actuary  will calculate                                                               
the time value of that money.  When that amount is less than that                                                               
employees actual time worked, the  employee will have a choice to                                                               
create  an indebtedness  and  "buy the  difference"  up to  their                                                               
actual service  time, or  they may choose  to start  with however                                                               
much time the DC account buys and earn going forward.                                                                           
                                                                                                                                
MR.  KIEHL  explained  that  the  second  substantive  change  in                                                               
version  R addresses  the difficulty  of  prefunding the  retiree                                                               
health care  benefit. It mirrors,  in part, the structure  in the                                                               
DC plan for retirees who do  qualify for the retirement system to                                                               
pay a portion of their  retiree medical benefit. An employee must                                                               
work ten  years before  the system  will pay  any of  the retiree                                                               
medical premium.  If an employee  works 10 years they  would have                                                               
to be  Medicare eligible before  the system will pay,  except for                                                               
teachers,  police  officers, and  firefighters  who  must work  a                                                               
total of 25 years to  qualify for retiree medical payments. Other                                                               
employees must work 30 years.                                                                                                   
                                                                                                                                
9:20:04 AM                                                                                                                    
MR. KIEHL pointed  out that the new schedule matches  what is set                                                               
up  in current  DC  statutes.  He gave  several  examples of  how                                                               
premiums are paid.                                                                                                              
                                                                                                                                
MR. KIEHL  said that version  R also makes several  technical and                                                               
mechanical changes,  which are described  in a handout.  He spoke                                                               
of one  additional change that  was omitted. The  earlier version                                                               
of the bill was not clear  in how it treated public organizations                                                               
that  participate  in  PERS,  such  as  housing  authorities  and                                                               
development  organizations. Version  R  clarifies  that they  are                                                               
also subject to all sections of the bill.                                                                                       
                                                                                                                                
MR. KIEHL noted that the effective date  had been changed to July                                                               
1, 2013.                                                                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI recalled work done  in a previous meeting in                                                               
Fairbanks  by  the  administration's  actuary  services  to  help                                                               
assess the fiscal  implications of proposed changes  to the bill.                                                               
He said the committee and  sponsor greatly appreciate that offer.                                                               
He added  that he was  expecting new fiscal projections  now that                                                               
version R was adopted.                                                                                                          
                                                                                                                                
9:22:28 AM                                                                                                                    
MIKE    BARNHILL,    Deputy     Commissioner,    Department    of                                                               
Administration,  explained  that   the  department  has  received                                                               
version R and it has been  transmitted to the actuary. He said he                                                               
believed the  department was  very close to  having a  new fiscal                                                               
note,  particularly  with  respect  to  the  elimination  of  the                                                               
"general  fund subsidy  of the  one-for-one service  credit", and                                                               
creating indebtedness on the employee  as opposed to being on the                                                               
general  fund.  That part  of  the  fiscal  note will  be  easily                                                               
eliminated;  however,  there  are more  complicated  issues  that                                                               
still  need to  be  reviewed.  In particular,  in  PERS the  bill                                                               
increases  the  assumed  employee contribution  rate.  Currently,                                                               
employees  pay 6.75  percent  in  the DB  plan;  7.5 percent  for                                                               
police and firefighters.  In version R, that  amount is increased                                                               
to 8 percent, which is a  positive fiscal impact and reduces cost                                                               
to  employers.  Currently,  in  the TRS  DB  plan,  the  employee                                                               
contribution rate is 8.65 percent and  it is reduced in version R                                                               
to 8 percent,  a negative impact which will  cost employers more.                                                               
He said  he understood that the  sponsor's intent is to  create a                                                               
neutral fiscal impact.  He said he thought the  actuaries were on                                                               
the  right  track. He  pointed  out  that  there are  still  some                                                               
technical problems with the bill.                                                                                               
                                                                                                                                
SENATOR WIELECHOWSKI inquired  when the new fiscal  note would be                                                               
ready.                                                                                                                          
                                                                                                                                
MR. BARNHILL thought it would be soon.                                                                                          
                                                                                                                                
SENATOR  WIELECHOWSKI  asked  if  the technical  issues  will  be                                                               
addressed with the bill sponsor.                                                                                                
                                                                                                                                
MR. BARNHILL replied that they would.                                                                                           
                                                                                                                                
9:25:47 AM                                                                                                                    
ALICIA  EGAN, Legislative  Liaison, Department  of Revenue,  said                                                               
she was available to answer questions about SB 150.                                                                             
                                                                                                                                
Chair  Wielechowski requested  an explanation  of the  new fiscal                                                               
note.                                                                                                                           
                                                                                                                                
MS. EGAN deferred to Ms. Rodell to answer.                                                                                      
                                                                                                                                
ANGELA  RODELL,  Deputy   Commissioner,  Department  of  Revenue,                                                               
explained that the fiscal note  reflects management fees required                                                               
to be  paid in the  Defined Benefit  (DB) program. The  source of                                                               
those fees is different than  under the Defined Contribution (DC)                                                               
program. If there  is significant movement of members  from DC to                                                               
DB, there would be higher management fees.                                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI  summarized that if  more people move  to DC                                                               
from DB, there would be a need for more management fees.                                                                        
                                                                                                                                
MS. RODELL  said that was  correct. She added that  DB management                                                               
fees are incorporated  into the amounts on  deposit, whereas, the                                                               
DC fees come out of the employee.                                                                                               
                                                                                                                                
SENATOR  PASKVAN asked  what calculation  was used  to arrive  at                                                               
that amount.                                                                                                                    
                                                                                                                                
MS.  RODELL referred  Senator Paskvan  to  page 2  of the  fiscal                                                               
note. The  Department of Revenue  is assuming that, based  on the                                                               
Department  of Administration's  fiscal note,  60 percent  of the                                                               
current  DC plan  will  convert to  the DB  plan,  80 percent  of                                                               
future members will elect to be  in the DB plan, and a management                                                               
load of 35 basis points will transfer to the state.                                                                             
                                                                                                                                
SENATOR PASKVAN asked for the current load of the DC plan.                                                                      
                                                                                                                                
MS. RODELL offered to supply that information.                                                                                  
                                                                                                                                
SENATOR  WIELECHOWSKI agreed  that  it was  a  good question  and                                                               
requested further information.                                                                                                  
                                                                                                                                
9:30:07 AM                                                                                                                    
SENATOR  PASKVAN shared  his understanding  that the  greater the                                                               
sum of  money, the lower  load on the  fund itself. He  wanted to                                                               
understand the department's parameters.                                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI asked  for  the timeline  on obtaining  the                                                               
information.                                                                                                                    
                                                                                                                                
MS. RODELL said she could provide that information later today.                                                                 
                                                                                                                                
SENATOR WIELECHOWSKI opened public testimony.                                                                                   
                                                                                                                                
WILLIAM  (FLICK)   FORNIA,  Consulting  Actuary,   Alaska  Public                                                               
Pension Coalition,  Centennial, Colorado, discussed the  costs of                                                               
SB 121. He said he has  been working together with the sponsor to                                                               
arrive at a close to cost  neutral amount. He was optimistic that                                                               
it would result in savings to the state.                                                                                        
                                                                                                                                
SENATOR  WIELECHOWSKI  described the  new  fiscal  note from  the                                                               
Department of  Revenue: it is  $593,000 the first  year, $690,000                                                               
the second  year, and over $1  million by 2017. He  requested Mr.                                                               
Fornia's opinion of the fiscal note.                                                                                            
                                                                                                                                
MR.  FORNIA said  he now  understands the  management fee  impact                                                               
better. He said he would review all numbers in more detail.                                                                     
                                                                                                                                
9:34:14 AM                                                                                                                    
VINCE WELTRAMI,  President, Alaska AFL-CIO, testified  in support                                                               
of SB 121.  He related that half of the  60,000 members in Alaska                                                               
AFL-CIO  are public  employees in  PERS. He  maintained that  the                                                               
bill makes  Alaska competitive when  it comes to  recruitment and                                                               
retention.  It also  is about  restoring  dignity and  expressing                                                               
appreciation of  the value of  Alaska's employees and  doing that                                                               
in a fiscally  responsible way. Many of the  current employees do                                                               
not have  the option  of a  defined benefit, nor  the right  to a                                                               
pension from Social Security. The  bill provides employees with a                                                               
dignified retirement.  He recognized that  having an option  of a                                                               
DB plan  or a DC plan  has benefits. The bill  strikes a balance.                                                               
He encouraged passage of SB 121.                                                                                                
                                                                                                                                
9:37:16 AM                                                                                                                    
JOHN ALCANTRA, NEA Alaska, spoke in  favor of SB 121 on behalf of                                                               
the  13,000  members he  represents.  This  legislation has  been                                                               
NEA's number  one priority  for the last  five years.  He thanked                                                               
the sponsors  and co-signers for  working on the  legislation. He                                                               
gave an example of a math  teacher who left Alaska because of the                                                               
current  DC   retirement  plan.  He  shared   statistics  of  NEA                                                               
employees  and said  returning to  retirement  security is  their                                                               
priority  issue. He  spoke  highly of  the DB  plan  or a  choice                                                               
between the two plans.                                                                                                          
                                                                                                                                
9:39:37 AM                                                                                                                    
TED MONINSKI,  Retired Public Employees  of Alaska,  testified in                                                               
support of SB  121 on behalf of the 2,000  members he represents.                                                               
He agreed with the previous testifiers.  He spoke of the value of                                                               
SB 121  to Alaska. Having a  monthly pension enhanced by  a cost-                                                               
of-living allowance  helps prevent  retired teachers  from moving                                                               
out of state and provides a  direct economic impact to the state.                                                               
Two-thirds  of  retired  employees  now remain  in  Alaska  after                                                               
retirement  which provides  a direct  economic  impact and  helps                                                               
stabilize the economy.                                                                                                          
                                                                                                                                
MR. MONINSKI described how social  security benefits do not apply                                                               
to Alaskan employees. In the  absence of both social security and                                                               
a reliable state  pension, public employees who  were hired after                                                               
2006  must rely  on savings,  including their  DC plan.  National                                                               
studies show  that more than  two-thirds of DC  plan participants                                                               
cash  out their  assets when  terminating employment  rather than                                                               
rolling them  over into another  retirement plan. There  are many                                                               
negative  consequences  from  this.  He  spoke  of  the  indirect                                                               
benefits  retirees  provide for  the  state.  He urged  favorable                                                               
consideration of SB 121.                                                                                                        
                                                                                                                                
CHAIR WIELECHOWSKI  announced that  Senator Meyer had  joined the                                                               
meeting.                                                                                                                        
                                                                                                                                
9:43:37 AM                                                                                                                    
VALERIE  KENNY,  President,  Alaska State  Employees  Association                                                               
(ASEA), Local 52, testified in favor  of SB 121 on behalf of over                                                               
8,000  public employees.  She noted  that passage  of SB  121 was                                                               
ASEA's primary goal. She described  the benefits of Tier V, which                                                               
are less  than in Tier  III. In  Tier V, employers  and employees                                                               
will share  risks and  benefits. It is  ASEA's goal  to reinstate                                                               
the DB option without additional  cost to employers and provide a                                                               
choice to members. She maintained that  SB 121 is not a repeal of                                                               
SB 141, which  will continue as an option for  employees who wish                                                               
to remain on a DC plan.                                                                                                         
                                                                                                                                
LADAWN  DRUCE, President  Kenai Peninsula  Education Association,                                                               
testified  in favor  of  SB 121  on behalf  of  650 teachers  and                                                               
staff.  She  pointed out  that  the  Kenai  area has  no  problem                                                               
recruiting  teachers, but  does have  difficulty retaining  them.                                                               
She shared that  about a third of the teachers  in the Kenai area                                                               
are in  the Tier III DC  plan. The DC system,  when combined with                                                               
no Social Security,  puts Alaska teachers last of  all states for                                                               
retirement benefits. She urged passage of the bill.                                                                             
                                                                                                                                
9:49:44 AM                                                                                                                    
GARY  MILLER,  Southeast  Chair,  Retired  Employees  of  Alaska,                                                               
testified in  support of SB  121. He shared his  personal working                                                               
history in  Alaska and  emphasized that neither  he nor  his wife                                                               
would work today in Alaska under  the DC plan because it does not                                                               
offer the  security of  retirement. He  requested passage  of the                                                               
bill so that his grandchildren would  have an option for a secure                                                               
retirement.                                                                                                                     
                                                                                                                                
9:51:35 AM                                                                                                                    
JAKE  METCALF,   Executive  Director,  Alaska   Public  Employees                                                               
Association (APEA) 103, testified in  support of SB 121 on behalf                                                               
of the law enforcement officers,  court service officers, airport                                                               
police, firefighters, and city  police departments throughout the                                                               
state.  He pointed  out that  retention of  employees is  a major                                                               
issue in APEA.  His said APEA members make a  career out of their                                                               
jobs and  would like to  remain in  Alaska. They receive  a large                                                               
amount  of  training at  a  cost  to  Alaska  and many  of  those                                                               
employees are  taking their training  to another state.  He urged                                                               
passage of the bill.                                                                                                            
                                                                                                                                
9:54:27 AM                                                                                                                    
BARBARA HUFF-TUCKNESS,  Director of Legislative  and Governmental                                                               
Affairs, Teamsters Local  109, urged support of SB  121 on behalf                                                               
of 800  public employee union  members. She said changes  made to                                                               
SB 121 are  pro-active and will encourage employees  to remain in                                                               
the state.                                                                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI closed public testimony.                                                                                   
                                                                                                                                
SENATOR WIELECHOWSKI  stated that SB  121 would be set  aside. He                                                               
stressed the goal  of getting the fiscal  note as revenue-neutral                                                               
as possible.                                                                                                                    
                                                                                                                                
        SB 136-INCOME TAX CREDIT FOR EMPLOYING A VETERAN                                                                    
                                                                                                                                
9:57:12 AM                                                                                                                    
                                                                                                                                
SENATOR  WIELECHOWSKI  announced  the consideration  of  SB  136,                                                               
which would provide a tax credit  to Alaskan employers who hire a                                                               
veteran.                                                                                                                        
                                                                                                                                
KENDRA KLOSTER, staff to Senator  Bill Wielechowski, explained SB                                                               
136 is an income tax credit  for employing a veteran. She related                                                               
that  veterans  are  some  of the  most  highly  trained,  highly                                                               
educated, and highly skilled workers.  In June 2011, according to                                                               
the U.S.  Bureau of Labor  Statistics, one million  U.S. veterans                                                               
were unemployed  and the jobless  rate for post-911  veterans was                                                               
13.3  percent.  The  picture  was  even  worse  for  young,  male                                                               
veterans  who  saw an  unemployment  rate  of 21.9  percent.  The                                                               
intention of the  bill is a win-win situation;  for businesses to                                                               
receive a $2,000 tax credit  for hiring veterans and for veterans                                                               
to get employment.                                                                                                              
                                                                                                                                
MS.  KLOSTER explained  that the  $2,000 tax  credit is  for each                                                               
veteran hired  who works at  least 1,560 hours within  a 12-month                                                               
period, or approximately  30 hours a week. The tax  credit can be                                                               
applied in the first year after 12-months of employment.                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI moved to adopt Amendment 1:                                                                                
                                                                                                                                
                                               27-LS0983\I.1                                                                    
                                                     Bullock                                                                    
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE              BY SENATOR WIELECHOWSKI                                                                 
     TO: SB 136                                                                                                                 
                                                                                                                                
     Page 1, line 1:                                                                                                            
          Delete "an Alaska"                                                                                                  
          Insert "a"                                                                                                          
                                                                                                                                
     Page 1, lines 6 - 7:                                                                                                       
          Delete "an Alaska veteran and employs the                                                                             
     veteran"                                                                                                                   
          Insert "a veteran and employs the veteran in the                                                                      
     state"                                                                                                                     
                                                                                                                                
     Page 1, line 8:                                                                                                            
          Delete "Alaska"                                                                                                       
                                                                                                                                
     Page 2, line 4:                                                                                                            
          Delete "Alaska"                                                                                                       
                                                                                                                                
     Page 2, line 6:                                                                                                            
          Delete "an Alaska veteran, and the Alaska"                                                                            
          Insert "a veteran, and the veteran"                                                                                   
                                                                                                                                
     Page 2, line 9:                                                                                                            
          Delete "an Alaska"                                                                                                    
          Insert "a"                                                                                                            
                                                                                                                                
     Page 2, line 10:                                                                                                           
          Delete ""Alaska veteran" has the meaning given in                                                                     
     AS 36.30.175"                                                                                                              
          Insert ""veteran" means an individual who served                                                                      
     in the                                                                                                                     
               (1)  armed forces of the United States,                                                                          
      including a reserve unit of the United States armed                                                                       
     forces; or                                                                                                                 
               (2)  Alaska Territorial Guard, the Alaska                                                                        
     Army National Guard, the Alaska Air National Guard, or                                                                     
     the Alaska Naval Militia"                                                                                                  
                                                                                                                                
CHAIR WIELECHOWSKI objected for discussion purposes.                                                                            
                                                                                                                                
MS.  KLOSTER  explained  that  Amendment  1  came  about  through                                                               
conversations with the Tax Division  in the Department of Revenue                                                               
regarding  the wording,  "an Alaska  veteran". The  Department of                                                               
Law also raised  questions about that wording. A  change was made                                                               
to say "a veteran" instead.                                                                                                     
                                                                                                                                
SENATOR   WIELECHOWSKI   withdrew   his  objection.   Seeing   no                                                               
objection, Amendment 1 was adopted.                                                                                             
                                                                                                                                
10:00:42 AM                                                                                                                   
RIC  DAVIDGE,   President,  Chapter  904,  Vietnam   Veterans  of                                                               
America,  testified in  support of  SB  136. He  reported on  the                                                               
recent success  of the Vietnam  Veterans of America in  getting a                                                               
veterans' jobs  bill passed by  Congress. The idea is  to provide                                                               
businesses  and  corporations  with   a  tax  credit  for  hiring                                                               
veterans. The  federal bill sets  up a  start point for  a $2,400                                                               
tax credit. Currently,  48 states are considering  the program or                                                               
are doing it.  He recommended a matching tax credit  in Alaska of                                                               
$2,600,  which  would provide  a  corporate  tax credit  totaling                                                               
$5,000. He described the advantages  of providing a tax credit to                                                               
businesses.  He  said that  Alaska  has  the highest  per  capita                                                               
number  of veterans  in  the U.S.  with  about 1,300-1,400  newly                                                               
retired military  annually. He  urged the  committee to  pass the                                                               
legislation with an increase to $2,600.                                                                                         
                                                                                                                                
10:03:31 AM                                                                                                                   
JOHANNA  BALES,  Deputy  Director, Tax  Division,  Department  of                                                               
Revenue, offered to answer questions about SB 136.                                                                              
                                                                                                                                
SENATOR   WIELECHOWSKI  asked   if   the  fiscal   note  was   an                                                               
indeterminate or zero note.                                                                                                     
                                                                                                                                
MS. BALES explained  that it was indeterminate for  the effect on                                                               
income tax revenues. As the bill  is written, for every $2,000 in                                                               
credit, corporate income  tax would decrease by  that amount. The                                                               
department  is unable  to determine  how many  veterans would  be                                                               
hired  and how  many  corporations would  take  advantage of  the                                                               
credit. She  noted that the  Department of Revenue would  be able                                                               
to absorb any costs of this program with existing resources.                                                                    
                                                                                                                                
SENATOR WIELECHOWSKI closed public testimony.                                                                                   
                                                                                                                                
SENATOR WIELECHOWSKI set SB 136 aside.                                                                                          
                                                                                                                                
SENATOR WIELECHOWSKI  commented that veteran tax  credit programs                                                               
in  other   states  are  done   in  various  ways.   He  welcomed                                                               
suggestions.                                                                                                                    
                                                                                                                                
10:05:54 AM                                                                                                                   
There being no further business to come before the committee,                                                                   
Chair Wielechowski adjourned the Senate State Affairs Standing                                                                  
Committee at 10:05 a.m.                                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
SB150-UA-Sysbra-01-24-12.pdf SSTA 1/26/2012 9:00:00 AM
SB 150
SB150-DCCED-CBPL-01-20-12.pdf SSTA 1/26/2012 9:00:00 AM
SB 150
SB150-UA-Fiscal Note.pdf SSTA 1/26/2012 9:00:00 AM
SB 150
SB150.Vietnam Veterans of America Support Letter.pdf SSTA 1/24/2012 9:00:00 AM
SSTA 1/26/2012 9:00:00 AM
SB 150
SB 150 Letter of Support.UAF Veteran Advocate.pdf SSTA 1/26/2012 9:00:00 AM
SB 150
CS SB150 (STA).pdf SSTA 1/26/2012 9:00:00 AM
SB 150