Legislature(1993 - 1994)
02/26/1993 09:03 AM Senate STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE STATE AFFAIRS COMMITTEE
February 26, 1993
9:03 a.m.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Mike Miller, Vice Chairman
Senator Robin Taylor
Senator Johnny Ellis
MEMBERS ABSENT
Senator Jim Duncan
COMMITTEE CALENDAR
SENATE BILL NO. 1
"An Act relating to retirement incentive programs for the
public employees' retirement system, the teachers'
retirement system, and certain persons under the judicial
retirement system; and providing for an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 1 - See State Affairs minutes dated 2/3/93.
WITNESS REGISTER
Frank Price, Regional Director
Inland Boatmen's Union of the Pacific,
Alaska Region
2225 N. Jordan
Juneau, AK 99801
POSITION STATEMENT: Testified in support of SB 1
Fred Gaffney
P.O. Box 240531
Douglas, AK 99824
POSITION STATEMENT: Supports SB 1
Dave Soulak, Manger
City of Palmer
231 W. Evergreen
Palmer, AK 99654
POSITION STATEMENT: Testified in support of SB 1
Bill Monroe
2950 Marianns
Port Ashton, AK 99654
POSITION STATEMENT: Supports SB 1
Carole Anderson
2320 2nd Ave.
Ketchikan, AK 99901
POSITION STATEMENT: Supports SB 1
Mike Salamanchuk
1733 S. Tongass Highway
Ketchikan, AK 99901
POSITION STATEMENT: Supports SB 1
Ron West
2360 Lord Baranof Drive
Anchorage, AK 99517
POSITION STATEMENT: Supports SB 1
Wayne Heimer
1098 Chena Pump Road
Fairbanks, AK 99709
POSITION STATEMENT: Supports SB 1
Vern Hirsch
P.O. Box 20597
Juneau, AK 99801
POSITION STATEMENT: Supports SB 1
Gerry S. Tullos
486 West Redoubt
Soldotna, AK 99669
POSITION STATEMENT: Supports SB 1
Lowell Purcell
816 O'Connor St.
Fairbanks, AK 99701
POSITION STATEMENT: Supports SB 1
Claudia Douglas
NEA-Alaska
114 Second St.
Juneau, AK 99801
POSITION STATEMENT: Supports SB 1
Bernard Johnson
2410 Foxhall
Anchorage, AK 99504
POSITION STATEMENT: Supports SB 1
Roxanne Stewart, Staff to Senator Jim Duncan
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Offered information on SB 1
Bob Watts
444 McKinley View Drive
Fairbanks, AK 99712
POSITION STATEMENT: Supports SB 1
John Vinette
Box 8711128
Wasilla, AK 99687
POSITION STATEMENT: Supports SB 1
Bob Collins
P.O. Box 505
Kotzebue, AK 99752
POSITION STATEMENT: Supports SB 1
Pam Conrad
Box 2776
Palmer, AK 99645
POSITION STATEMENT: Supports SB 1
John Cyr
Box 873663
Wasilla, AK 99687
POSITION STATEMENT: Supports SB 1
Kathleen Mangelsdorf
HC 33 Box 3180
Port Ashton, AK 99654
POSITION STATEMENT: Supports SB 1
Karin Holsen
HC 33 Box 3177K
Port Ashton, AK 99654
POSITION STATEMENT: Supports SB 1
ACTION NARRATIVE
TAPE 93-14, SIDE A
Number 001
Chairman Leman called the Senate State Affairs Committee
meeting to order at 9:03 a.m. He announced the following
teleconference sites would be participating in the public
hearing on SB 1 (RETIREMENT INCENTIVE PROGRAM): Valdez,
Barrow, Fairbanks, Ketchikan, Mat-Su, Kotzebue, Homer,
Soldotna and Anchorage.
Number 045
FRANK PRICE, Regional Director, Inland Boatmen's Union of
the Pacific, Alaska Region, testifying in Juneau, said that
in Alaska, they primarily represent the unlicensed members
of the Alaska Marine Highway System. He voiced their
union's support for SB 1, which he said will be a means for
the state to save money. He criticized the Office of
Management and Budget's position that they don't believe
they should support the bill because they don't believe that
it will save the state money. He pointed out that the
legislation provides that the organizational units that want
to implement the plan, if it is passed, basically have to
prove that agency's implementation of the plan will save the
state money.
Number 108
FRED GAFFNEY, a senior level staff member with the Alaska
Department of Fish & Game testifying in Juneau, stated he
was testifying on his own behalf in support of SB 1 and the
reinstituting of the RIP program.
Mr. Gaffney related that two divisions within the Department
of Fish & Game, the Division of Commercial Fisheries and the
FRED Division, are in the process of being merged. He
stated his concern with proceeding with this type of merger
as a cost savings device, while, at the same time, not being
able to take advantage of a program and planned reduction
amongst the staff. His principal concern is for the
biologists who are among the longest employees within the
state government. Should these people be laid off, they
have no other opportunity for employment. He said a lot of
problems can be avoided by providing a planned reduction and
taking advantage of savings, which have been documented
through the RIP programs in the past.
Number 150
SENATOR TAYLOR asked how many positions would be lost by the
consolidation. FRED GAFFNEY responded that he didn't have
the specific numbers, but he knows that the principal reason
for merging the divisions is to reduce upper level
management.
Number 160
SENATOR LEMAN said there is some difference of opinion about
the impact of retirement incentive programs. He asked Mr.
Gaffney what he thought the true savings to the state were
the last two times such a program was offered. FRED GAFFNEY
answered that he couldn't speak for the department, but he
is aware that there have been savings which have been
documented. He knows many people that did take advantage of
the RIP, which provided them an opportunity to retire early.
He noted that many of the these people are still in Juneau
and in other areas of the state.
Number 195
DAVE SOULAK, City Manager, City of Palmer, stated support
for SB 1, which will allow his city to humanely downsize
without disrupting the lives of their younger employees. He
pointed out that the City of Palmer participated in the two
previous retirement incentive programs at a considerable
savings to their fiscal year budget.
Number 207
SENATOR LEMAN asked how much money the City of Palmer
actually saved during the last two RIP programs. DAVE
SOULAK responded that during the three-year window, the City
of Palmer's savings amounted to approximately $120,000.
Number 215
BILL MONROE, testifying from the Mat-Su LIO, said he was
representing approximately 450 employees of the classified
employee's association, and he related that in the Mat-Su
school district as much as five percent of their overall
staff may lose their jobs. The passage of SB 1 will help
prevent this.
Number 224
SENATOR TAYLOR asked why they would be losing five percent
of their teaching staff. BILL MONROE answered that they are
facing fairly stiff budget constraints locally, and with
funding set at the state level at $61,000 per instructional
unit, these are very real cuts they are facing.
Number 235
CAROLE ANDERSON, testifying from Ketchikan, said her husband
has taught in the Ketchikan School District for 18 years.
She stated their support for SB 1, because they believe that
it is financially a sound plan to save the State of Alaska
money, and that it is a creative, effective alternative to
layoffs.
Number 250
MIKE SALAMANCHUK, a 45-year resident of Alaska, testifying
from Ketchikan, questioned why retirement programs work in
other states and why the program worked in Alaska in its
early inception.
Number 270
RON WEST, testifying from Anchorage, stated the Anchorage
School District currently faces a $10 million deficit this
year, so Anchorage is going to face real bugetary problems,
which will mean layoffs and absolute reductions in
personnel. He said the objections of the Administration
with regards to the early retirement bill don't seem to be
honest objections, because even if the bill passes, it is
still voluntary as to which agencies of the state will
decide whether or not to participate. He suggested that if
there is not support for a retirement incentive program for
state employees, that as an alternative, it be offered to
teachers and local governments only.
Number 330
WAYNE HEIMER, a Department of Fish & Game employee
testifying from Fairbanks, said he and his co-workers
support public employee inclusion in SB 1. They believe the
money savings would be good for the state and for
themselves. He urged passage of SB 1 so that long-time
employees, like himself, who aren't so well adapted to work
there anymore, may leave and lead to a more productive
youth-oriented assemblage of employees that are better
adapted to work in today's system.
Number 352
VERN HIRSCH, Secretary-Treasurer of the Alaska Public
Employee's Association, Alaska Federation of Teachers,
testifying from Juneau, stated their support for SB 1 as a
sensible, cost effective and humane tool to deal with the
conflict between the need to perform public services and
dwindling revenues to support these services. The program
is discretionary and employers have the latitude to deny
participation to employees who possess unique or specialized
knowledge in their field which cause a "brain drain."
Mr. Hirsch said the savings to employers in earlier
retirement incentive programs is well documents in past
audits. However, what hasn't been documented is the
positive effect that the prior two programs have had on
Alaska's economy.
Number 400
SENATOR LEMAN noted that in the previous RIP, it appears
that in the first year of that offering there is actually a
higher cost to the state, and he wondered if the program can
be designed so that there will actually be a savings to the
state even in that first year.
Number 415
GERRY TULLOS, testifying from Soldotna, said he has
discussed
SB 1 with the superintendent at the school where he teaches,
who has indicated the minimum savings in their district
alone
would be from $600,000 to $700,000. He said passage of the
bill would definitely impact their area to an advantage.
Number 400
LOWELL PURCELL, Deputy Mayor of Fairbanks, said their city
has suffered a great deal over the last five to six years,
basically at the hands of municipal assistance, revenue and
being unable to pass any taxes at the referendum level. He
said the City of Fairbanks doesn't know how it is going to
fund its city fire department for the last six months of
1993, so anything they can do to save money or help
eliminate some of these problems is going to assist the
city. He noted that the Fairbanks City Council passed a
resolution on February 8 urging enactment of the RIP bill.
Number 445
CLAUDIA DOUGLAS, President of NEA-Alaska, testifying from
Juneau, stated their support for the utilization of a
retirement incentive program as a cost effective means to
reduce school district personnel costs, thus reducing the
cost of school district operation during a time when the
student population is increasing, but additional funding is
difficult. She also said that if it is the intent of the
legislature and the Administration to reduce the cost of
state government, this is an excellent opportunity to
achieve that goal without harming any employees at the upper
or lower end of the salary schedule.
Number 495
BERNARD JOHNSON, testifying from Anchorage, asked if someone
could summarize the differences between the current
legislation and the legislation vetoed by the Governor last
year.
ROXANNE STEWART, staff to Senator Jim Duncan, explained that
last year's legislation, SB 337, had one major difference,
which was an amendment that was added in the House. It
would have put the program in permanent law and it could
have been implemented by the Commissioner of Administration
when economic conditions warranted. Governor Hickel stated
that provision was the reason he vetoed SB 337, and that
provision is not contained in SB 1.
In response to Senator Taylor's question earlier in the
meeting on the number of employees that would be affected by
the merger of the two divisions in the Department of Fish
and Game, Ms. Stewart said there will be 35 permanent full-
time positions eliminated and 50 seasonal positions
eliminated in the FRED division alone.
Number 540
BOB WATTS, testifying from Fairbanks, said the "brain drain"
argument is not legitimate because the program is
discretionary. It is going to impact every citizen if the
program is not passed. With an adequate incentive,
employees will retire, and if they retire in the State of
Alaska, they are going to spend their money in the State of
Alaska. In addition, the position will be filled by another
person which will put more funds into the local economy.
The true beneficiaries will be the citizens of the state.
Number 575
JOHN VINETTE, from the Mat-Su School District, testifying
from the Mat-Su LIO, said their school district is facing
some drastic monetary cuts for the next fiscal year.
According to their school board, they will be eliminating
approximately 30 teaching positions, and fiscal year 1993
looks even gloomier. Their school district views the early
retirement incentive bill as a mens of avoiding job layoffs.
During the 1989-90 retirement incentive program the Mat-Su
School District had 22 teachers retire and, in every case,
they saved money over the course of three years. The
minimum amount saved was $3,128 and the maximum amount saved
was $36,643, which worked out to an average of $21,276, and
the approximate grand total that they saved over three years
was a half million dollars. He stated their support for SB
1.
TAPE 93-14, SIDE B
Number 012
BOB COLLINS, a state employee testifying from Kotzebue,
stated he was interested in passage of SB 1 for himself. He
said it would save the state a lot money because he works at
a Range 18 L and someone could take his place at a Range 18
A or B and save at least $30,000 a year on his position
alone. He said with the declining oil revenues, it is more
fair to let people retire early instead of laying people
off, as long as it saves the state money, and he can't
understand the Administration's failure to support the
legislation.
Number 555
CAROLE ANDERSON from Ketchikan asked what has been the
effect of the Administration's opposition to the bill.
SENATOR LEMAN answered that his office is working with the
Administration and members of the committee to formulate an
approach that may be acceptable to the parties involved.
Number 055
PAM CONRAD, President of the Mat-Su Education Association,
testifying from the Mat-Su LIO, spoke to the cuts their
school district is facing, and she said the implementation
of SB 1 will ensure that current employees will not be laid
off, thereby crushing their ability to provide services to
children even further. She stated the Association's
support for passage of the legislation.
Number 070
JOHN CYR, a teacher at Wasilla High School testifying from
the Mat-Su LIO, spoke to the effect layoffs have had on
employees in the past. He said it is a sad situation when
school districts all over the state are forced to lay off
employees when SB 1 would alleviate the problem. He urged
the committee's favorable consideration of the legislation.
Number 080
KATHLEEN MANGELSDORF, a teacher in the Mat-Su School
District testifying from the Mat-Su School District stated
her support for SB 1. She believes the advantages of the
legislation outweight the disadvantages of the legislation.
Number 112
KARIN HOLSEN, testifying from the Mat-Su LIO, said she was
just a concerned citizen and passage of SB 1 would not
affect her insofar as retirement is concerned, but it does
affect her as a citizen because of the money it could save
the state. She said the bill makes sense, and she urged its
passage.
There being no other witnesses wishing to testify on SB 1,
SENATOR LEMAN closed the public hearing and announced that
work would be done on a potentional committee substitute and
that the bill would be back before the committee on March
12.
SENATOR LEMAN adjourned the meeting of the State Affairs
Committee at 10:03 a.m.
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