05/03/2006 03:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB133 | |
| SB288 | |
| HJR25 | |
| HCR4 | |
| HB347 | |
| HB375 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 288 | TELECONFERENCED | |
| += | HB 347 | TELECONFERENCED | |
| += | HJR 25 | TELECONFERENCED | |
| + | HB 375 | TELECONFERENCED | |
| + | HCR 4 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 133 | ||
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
May 3, 2006
3:49 p.m.
MEMBERS PRESENT
Senator Gene Therriault, Chair
Senator Thomas Wagoner, Vice Chair
Senator Charlie Huggins
Senator Bettye Davis
Senator Kim Elton
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 288
"An Act declaring September Education Savings Month."
MOVED SB 288 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 347(JUD) am
"An Act relating to mandatory motor vehicle insurance, license
suspensions, mandatory impoundments of vehicles used in certain
offenses, notices relating to motor vehicles, and notices
relating to driver's licenses."
MOVED CSHB 347(JUD)am OUT OF COMMITTEE
CS FOR HOUSE JOINT RESOLUTION NO. 25(STA)
Urging the United States Congress to adopt Sec. 303 of the
United States House of Representatives version of the Tax Relief
Extension Reconciliation Act of 2005.
MOVED CSHJR 25(STA) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 375(FIN) am
"An Act establishing the teachers' retirement system past
service cost liability account in the Department of Revenue;
establishing the public employees' retirement system past
service cost liability account in the Department of Revenue; and
providing for an effective date."
MOVED CSHB 375(FIN) am OUT OF COMMITTEE
CS FOR HOUSE CONCURRENT RESOLUTION NO. 4(JUD)
Encouraging the establishment of a methamphetamine watch
program.
MOVED CSHCR 4(JUD) OUT OF COMMITTEE
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 133(JUD) am
"An Act relating to incorporation of boroughs, to annexation by
local action, and to regulations of the Local Boundary
Commission to provide standards and procedures for municipal
incorporation, reclassification, dissolution, and certain
municipal boundary changes; and providing for an effective
date."
MOVED CSSSHB 133(JUD) am OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 288
SHORT TITLE: SEPTEMBER AS EDUCATION SAVINGS MONTH
SPONSOR(s): SENATOR(s) ELLIS
02/13/06 (S) READ THE FIRST TIME - REFERRALS
02/13/06 (S) STA
04/27/06 (S) STA AT 3:30 PM BELTZ 211
04/27/06 (S) -- Meeting Canceled --
05/02/06 (S) STA AT 3:30 PM BUTROVICH 205
05/02/06 (S) Scheduled But Not Heard
05/03/06 (S) STA AT 3:30 PM BELTZ 211
BILL: HB 347
SHORT TITLE: MOTOR VEHICLE INSURANCE/LICENSE/ NOTICES
SPONSOR(s): REPRESENTATIVE(s) GARA, LYNN
01/09/06 (H) PREFILE RELEASED 1/6/06
01/09/06 (H) READ THE FIRST TIME - REFERRALS
01/09/06 (H) STA, JUD
01/31/06 (H) STA AT 8:00 AM CAPITOL 106
01/31/06 (H) Heard & Held
01/31/06 (H) MINUTE(STA)
02/14/06 (H) STA AT 8:00 AM CAPITOL 106
02/14/06 (H) Heard & Held
02/14/06 (H) MINUTE(STA)
02/16/06 (H) STA AT 8:00 AM CAPITOL 106
02/16/06 (H) Moved CSHB 347(STA) Out of Committee
02/16/06 (H) MINUTE(STA)
02/17/06 (H) STA RPT CS(STA) NT 3DP 3NR
02/17/06 (H) DP: GARDNER, GATTO, SEATON;
02/17/06 (H) NR: GRUENBERG, ELKINS, RAMRAS
03/31/06 (H) JUD AT 1:00 PM CAPITOL 120
03/31/06 (H) Heard & Held
03/31/06 (H) MINUTE(JUD)
04/07/06 (H) JUD AT 1:00 PM CAPITOL 120
04/07/06 (H) Moved CSHB 347(JUD) Out of Committee
04/07/06 (H) MINUTE(JUD)
04/10/06 (H) JUD RPT CS(JUD) NT 5DP 1AM
04/10/06 (H) DP: GARA, WILSON, KOTT, GRUENBERG,
MCGUIRE;
04/10/06 (H) AM: ANDERSON
04/21/06 (H) BEFORE THE HOUSE
04/21/06 (H) TRANSMITTED TO (S)
04/21/06 (H) VERSION: CSHB 347(JUD) AM
04/22/06 (S) READ THE FIRST TIME - REFERRALS
04/22/06 (S) STA, JUD
04/27/06 (S) STA AT 3:30 PM BELTZ 211
04/27/06 (S) -- Meeting Canceled --
05/02/06 (S) STA AT 3:30 PM BUTROVICH 205
05/02/06 (S) Scheduled But Not Heard
05/03/06 (S) STA AT 3:30 PM BELTZ 211
BILL: HJR 25
SHORT TITLE: SUPPORTING VETERANS HOME OWNERSHIP ACT
SPONSOR(s): REPRESENTATIVE(s) KERTTULA
01/11/06 (H) READ THE FIRST TIME - REFERRALS
01/11/06 (H) MLV, STA
02/16/06 (H) MLV AT 1:00 PM CAPITOL 124
02/16/06 (H) Moved CSHJR 25(MLV) Out of Committee
02/16/06 (H) MINUTE(MLV)
02/17/06 (H) MLV RPT CS(MLV) NT 6DP
02/17/06 (H) DP: GRUENBERG, THOMAS, CISSNA, ELKINS,
DAHLSTROM, LYNN
03/02/06 (H) STA AT 8:00 AM CAPITOL 106
03/02/06 (H) Moved CSHJR 25(STA) Out of Committee
03/02/06 (H) MINUTE(STA)
03/03/06 (H) STA RPT CS(STA) NT 4DP
03/03/06 (H) DP: GARDNER, LYNN, GATTO, SEATON
04/12/06 (H) TRANSMITTED TO (S)
04/12/06 (H) VERSION: CSHJR 25(STA)
04/13/06 (S) READ THE FIRST TIME - REFERRALS
04/13/06 (S) STA
04/27/06 (S) STA AT 3:30 PM BELTZ 211
04/27/06 (S) -- Meeting Canceled --
05/02/06 (S) STA AT 3:30 PM BUTROVICH 205
05/02/06 (S) Scheduled But Not Heard
05/03/06 (S) STA AT 3:30 PM BELTZ 211
BILL: HB 375
SHORT TITLE: PAST SERVICE COST LIABILITY ACCOUNTS
SPONSOR(s): WAYS & MEANS
01/17/06 (H) READ THE FIRST TIME - REFERRALS
01/17/06 (H) W&M, STA, FIN
01/20/06 (H) W&M AT 9:00 AM CAPITOL 106
01/20/06 (H) Heard & Held
01/20/06 (H) MINUTE(W&M)
01/25/06 (H) W&M AT 9:00 AM CAPITOL 106
01/25/06 (H) Heard & Held
01/25/06 (H) MINUTE(W&M)
01/27/06 (H) W&M AT 9:00 AM CAPITOL 106
01/27/06 (H) Heard & Held
01/27/06 (H) MINUTE(W&M)
01/30/06 (H) W&M AT 9:30 AM CAPITOL 106
01/30/06 (H) Heard & Held
01/30/06 (H) MINUTE(W&M)
02/01/06 (H) W&M AT 9:00 AM CAPITOL 106
02/01/06 (H) <Bill Hearing Canceled>
02/03/06 (H) W&M AT 9:00 AM CAPITOL 106
02/03/06 (H) <Bill Hearing Canceled>
02/06/06 (H) W&M AT 9:00 AM CAPITOL 106
02/06/06 (H) Moved CSHB 375(W&M) Out of Committee
02/06/06 (H) MINUTE(W&M)
02/08/06 (H) W&M RPT CS(W&M) NT 3DP 1NR
02/08/06 (H) DP: WILSON, GRUENBERG, WEYHRAUCH;
02/08/06 (H) NR: SAMUELS
02/21/06 (H) STA RPT CS(W&M) NT 5NR 1AM
02/21/06 (H) NR: GARDNER, LYNN, GRUENBERG, RAMRAS,
SEATON;
02/21/06 (H) AM: GATTO
02/21/06 (H) STA AT 8:00 AM CAPITOL 106
02/21/06 (H) Moved Out of Committee
02/21/06 (H) MINUTE(STA)
04/24/06 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/24/06 (H) Heard & Held
04/24/06 (H) MINUTE(FIN)
04/26/06 (H) FIN AT 8:30 AM HOUSE FINANCE 519
04/26/06 (H) Heard & Held
04/26/06 (H) MINUTE(FIN)
04/26/06 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/26/06 (H) Moved CSHB 375(FIN) Out of Committee
04/26/06 (H) MINUTE(FIN)
04/27/06 (H) FIN RPT CS(FIN) NT 4DP 2NR 2AM
04/27/06 (H) DP: WEYHRAUCH, HOLM, KELLY, FOSTER;
04/27/06 (H) NR: MOSES, CHENAULT;
04/27/06 (H) AM: HAWKER, JOULE
05/01/06 (H) BEFORE THE HOUSE
05/01/06 (H) TRANSMITTED TO (S)
05/01/06 (H) VERSION: CSHB 375(FIN) AM
05/02/06 (S) READ THE FIRST TIME - REFERRALS
05/02/06 (S) STA, FIN
05/03/06 (S) STA AT 3:30 PM BELTZ 211
BILL: HCR 4
SHORT TITLE: METH WATCH PROGRAM
SPONSOR(s): REPRESENTATIVE(s) RAMRAS
03/04/05 (H) READ THE FIRST TIME - REFERRALS
03/04/05 (H) STA, JUD
03/15/05 (H) STA AT 8:00 AM CAPITOL 106
03/15/05 (H) Moved Out of Committee
03/15/05 (H) MINUTE(STA)
03/16/05 (H) STA RPT 7DP
03/16/05 (H) DP: GARDNER, LYNN, GATTO, GRUENBERG,
RAMRAS, ELKINS, SEATON
04/19/06 (H) JUD AT 1:00 PM CAPITOL 120
04/19/06 (H) Moved CSHCR 4(JUD) Out of Committee
04/19/06 (H) MINUTE(JUD)
04/21/06 (H) JUD RPT CS(JUD) 6DP
04/21/06 (H) DP: GARA, COGHILL, WILSON, ANDERSON,
GRUENBERG, MCGUIRE
04/25/06 (H) TRANSMITTED TO (S)
04/25/06 (H) VERSION: CSHCR 4(JUD)
04/25/06 (S) READ THE FIRST TIME - REFERRALS
04/25/06 (S) L&C, STA
05/02/06 (S) L&C AT 1:30 PM BELTZ 211
05/02/06 (S) Moved CSHCR 4(JUD) Out of Committee
05/02/06 (S) MINUTE(L&C)
05/03/06 (S) STA AT 3:30 PM BELTZ 211
BILL: HB 133
SHORT TITLE: MUNICIPAL BOUNDARY CHANGES/ COMMISSION
SPONSOR(s): REPRESENTATIVE(s) COGHILL
02/09/05 (H) READ THE FIRST TIME - REFERRALS
02/09/05 (H) CRA, STA
02/16/05 (H) SPONSOR SUBSTITUTE INTRODUCED
02/16/05 (H) READ THE FIRST TIME - REFERRALS
02/16/05 (H) CRA, STA
02/24/05 (H) CRA AT 8:00 AM CAPITOL 124
02/24/05 (H) Heard & Held
02/24/05 (H) MINUTE(CRA)
03/03/05 (H) CRA AT 8:00 AM CAPITOL 124
03/03/05 (H) Moved CSSSHB 133(CRA) Out of Committee
03/03/05 (H) MINUTE(CRA)
03/04/05 (H) CRA RPT CS(CRA) 5DP 2NR
03/04/05 (H) DP: SALMON, NEUMAN, KOTT, THOMAS,
OLSON;
03/04/05 (H) NR: LEDOUX, CISSNA
04/02/05 (H) STA AT 10:00 AM CAPITOL 106
04/02/05 (H) Moved CSSSHB 133(STA) Out of Committee
04/02/05 (H) MINUTE(STA)
04/04/05 (H) STA RPT CS(STA) NT 3DP 2NR
04/04/05 (H) DP: LYNN, ELKINS, SEATON;
04/04/05 (H) NR: GARDNER, GRUENBERG
04/04/05 (H) JUD REFERRAL ADDED AFTER STA
04/13/05 (H) JUD AT 1:00 PM CAPITOL 120
04/13/05 (H) <Bill Hearing Postponed to 4/18>
04/18/05 (H) JUD AT 1:00 PM CAPITOL 120
04/18/05 (H) Moved CSSSHB 133(JUD) Out of Committee
04/18/05 (H) MINUTE(JUD)
04/19/05 (H) JUD RPT CS(JUD) NT 2DP 3NR
04/19/05 (H) DP: COGHILL, MCGUIRE;
04/19/05 (H) NR: GRUENBERG, DAHLSTROM, GARA
04/25/05 (H) TRANSMITTED TO (S)
04/25/05 (H) VERSION: CSSSHB 133(JUD) AM
04/26/05 (S) READ THE FIRST TIME - REFERRALS
04/26/05 (S) CRA, STA
05/02/05 (S) CRA AT 1:30 PM BELTZ 211
05/02/05 (S) Heard & Held
05/02/05 (S) MINUTE(CRA)
05/06/05 (S) CRA AT 1:30 PM BELTZ 211
05/06/05 (S) Heard & Held
05/06/05 (S) MINUTE(CRA)
05/01/06 (S) CRA AT 1:30 PM BELTZ 211
05/01/06 (S) Moved CSSSHB 133(JUD) am Out of
Committee
05/01/06 (S) MINUTE(CRA)
05/02/06 (S) CRA RPT 2NR 3DP
05/02/06 (S) NR: STEDMAN, ELLIS
05/02/06 (S) DP: WAGONER, STEVENS G, KOOKESH
05/02/06 (S) STA AT 3:30 PM BUTROVICH 205
05/02/06 (S) Moved SCS CSSSHB 133(STA) Out of
Committee
05/02/06 (S) MINUTE(STA)
WITNESS REGISTER
Representative John Coghill
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 133 asked members to rescind
action from 5/2/06 and move bill without Amendment 1
Christian Gou-Lendhardt, Staff
Senator Ellis
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 288 for the sponsor
Hannah McCarty, Staff
Representative Beth Kerttula
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HJR 25 for the sponsor
Emily Stancliff, Staff
Representative Jay Ramras
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HCR 4 for the sponsor
Representative Jay Ramras
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HCR 4
Representative Les Gara
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 347
Duane Bannock, Director
Division of Motor Vehicles (DMV)
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Supported HB 347
Jacqueline Tupou, Staff
Representative Bruce Weyhrauch
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 375 for the sponsor
ACTION NARRATIVE
CHAIR GENE THERRIAULT called the Senate State Affairs Standing
Committee meeting to order at 3:49:35 PM. Present were Senators
Bettye Davis, Thomas Wagoner, Kim Elton and Chair Gene
Therriault. Senator Charlie Huggins arrived during the course of
the meeting.
CSSSHB 133(JUD) am -MUNICIPAL BOUNDARY CHANGES/ COMMISSION
CHAIR GENE THERRIAULT announced HB 133 to be the first order of
business. He noted that the action taken the previous day had
unintended consequences.
REPRESENTATIVE JOHN COGHILL, sponsor of HB 133, explained that
Mr. Hargraves suggested a review of the language that was
amended into the bill yesterday. As a result he respectfully
asked the committee to rescind its action on including
detachment language. Including the detachment language might
well go against the local self-governance principle that he
strongly supports and removing the language will protect the
rights of a minority group.
3:52:32 PM
CHAIR THERRIAULT remarked, "If we had only listened to Senator
Elton yesterday."
SENATOR WAGONER motioned to rescind the action on passing SCS
CSSSHB 133(STA) from committee.
CHAIR THERRIAULT announced that without objection SCS CSSSHB
133(STA) was before the committee.
SENATOR WAGONER motioned to rescind action adopting Amendment 1.
CHAIR THERRIAULT announced that without objection the original
bill was before the committee.
SENATOR WAGONER motioned to report CSSSHB 133(JUD) am from
committee with individual recommendations. There being no
objection, it was so ordered.
SB 288-SEPTEMBER AS EDUCATION SAVINGS MONTH
3:53:54 PM
CHAIR GENE THERRIAULT announced SB 288 to be up for
consideration.
CHRISTIAN GOU-LENDHARDT, Staff to Senator Ellis, introduced SB
288 for the sponsor and discussed the information he had
distributed. First was a recent US New & World Report article
about college affordability and the second was the page on the
National Report Card evaluation giving Alaska an F in
affordability for 2004.
He explained that SB 288 identifies September as education
savings month and establishes a framework for schools,
communities and interested groups to hold activities to increase
awareness of financing for college education.
3:56:18 PM
CHAIR THERRIAULT noted the zero fiscal note and asked the will
of the committee.
SENATOR WAGONER took exception to the report saying he didn't
know of a state that does more than Alaska when it comes to
helping postsecondary students.
CHAIR THERRIAULT asked who compiles the report card information.
MR. GOU-LENDHARDT replied the National Council of State
Legislatures set up the group that compiles the report card.
SENATOR CHARLIE HUGGINS commented that October might be a more
appropriate month since that's the month that the Permanent Fund
Dividend comes out.
CHAIR THERRIAULT noted that other Alaska governors have used
September.
SENATOR ELTON motioned to report SB 288 and attached fiscal
note(s) from committee with individual recommendations. There
being no objection, it was so ordered.
CSHJR 25(STA)-SUPPORTING VETERANS HOME OWNERSHIP ACT
4:01:31 PM
CHAIR THERRIAULT announced HJR 25 to be up for consideration.
HANNAH McCARTY, Staff to Representative Beth Kerttula,
introduced HJR 25 with the explanation that Alaska is one of
five states that participates in the Veterans' Home Ownership
Program, which allows the state to issue tax exempt bonds and
use the proceeds to make low interest home loans to veterans who
served before 1977 and apply within 30 years of leaving active
duty.
MS. McCARTY explained that without congressional action, fewer
veterans would qualify. She related that about 11,700 Alaska
veterans have benefited from the program since 1983 but just 57
veterans qualified in the last fiscal year. Repeal of the
qualifying date was inserted into the tax reconciliation bill
last year, but the U.S. Senate version of the bill doesn't have
the language. The bill is currently in conference committee and
HJR 25 urges passage.
SENATOR KIM ELTON stated that this program allowed him to buy a
home several years earlier than would have been possible without
such a program.
SENATOR THOMAS WAGONER urged support for the program.
SENATOR CHARLIE HUGGINS expressed support for veterans.
4:05:17 PM
SENATOR WAGONER motioned to report CSHJR 25(STA) and attached
fiscal note(s) from committee with individual recommendations.
There being no objection, it was so ordered.
CSHCR 4(JUD) -METH WATCH PROGRAM
CHAIR THERRIAULT announced HCR 4 to be up for consideration.
4:06:17 PM
EMILY STANCLIFF, Staff to Representative Jay Ramras, explained
that HCR 4 is the first national effort to curb the spread of
methamphetamine use across the state through increased awareness
of the dangers associated with its use.
The goal of the program is to engage retailers, law enforcement
and other partners to reduce precursor products for illicit
manufacture of methamphetamine, to increase community awareness,
and to assist local communities in addressing problems.
CHAIR THERRIAULT noted that the Division of Behavioral Health
has indicated the it has sufficient funding for the program so
the resolution is actually asking for coordination of existing
activities under the umbrella of the Meth Watch Program.
4:09:26 PM
REPRESENTATIVE JAY RAMRAS, sponsor of HCR 4, advised that the
tri-group of mayors from Anchorage, MatSu, and Kenai have raised
about $200,000 for a Meth Watch Program and the Fairbanks mayor
has committed $20,000. Currently he is personally working to
secure $100,000 from the House Finance Committee and Senator
Murkowski is working in Washington D.C. to secure some of the $5
million to $12 million that is earmarked for methamphetamine
education programs.
The program is two pronged. The first is to educate children and
the second is to educate retailers. Although law enforcement is
a wonderful dynamic, educating kids to move away from the drug
is the first step.
CHAIR THERRIAULT noted that the Montana program is hard hitting
and drives the point home.
SENATOR WAGONER remarked there is no distribution list.
REPRESENTATIVE RAMRAS said Anchorage has identified the man who
will run the program and the hope is that the program will be
fairly distributed across the state. He noted that he had
attended a mock meth lab project last fall and it was a very
positive dynamic and he hopes the process will proliferate
through both rural and urban Alaska.
SENATOR WAGONER motioned to report CSHCR 4(JUD) and attached
fiscal note(s) from committee with individual recommendations.
There being no objection, it was so ordered.
CSHB 347(JUD) am -MOTOR VEHICLE INSURANCE/LICENSE/ NOTICES
CHAIR THERRIAULT announced HB 347 to be up for consideration.
REPRESENTATIVE LES GARA, Sponsor of HB 347 explained that the
bill closes a loophole in the DMV law and criminal statutes in
which people are charged with not having insurance when, in
fact, they do.
In the event of a car accident, the driver must show the officer
proof of insurance. Subsequent to that, the driver must fill out
paperwork and send it to the Department of Motor Vehicles (DMV).
If for some reason the paperwork doesn't get to DMV then a
reminder notice is sent to the driver at the address on the
driver's license. It is not sent to the address on the police
report even though that is a more recent and probably a more
accurate address. Because the paperwork isn't complete, the
driver is technically driving without a license, which is a
crime. If the driver happens to get pulled over, he or she will
be charged with driving without a license. Although the problem
will likely be straightened out by the time the case comes to
trial, it's still hanging over the driver's head.
HB 347 will do several things: it tells the driver that he or
she doesn't have to worry about the criminal charge; it tells
DMV that it can send paperwork to the correct address; and it
establishes a minimum fine of $500 for driving without
insurance.
The House State Affairs Committee added a provision so that law
enforcement can impound a driver's car if a number of driving
crimes have been committed.
4:18:00 PM
DUANE BANNOCK, Director, Division of Motor Vehicles (DMV),
Department of Administration, stated strong support for HB 347
and Section 4 in particular. It clarifies that DMV may use the
address on the police report rather than an old address from the
license.
CHAIR THERRIAULT asked if this addresses drivers who had
insurance the whole time.
REPRESENTATIVE GARA assured members that this is only a defense
for drivers who had insurance.
MR. BANNOCK recapped saying the system begins to fall apart when
DMV looks in its "tickler file" for the purpose of contacting
the customer by certified mail and the address in the file is
bad.
SENATOR KIM ELTON motioned to report CSHB 347(JUD) am and
attached fiscal note(s) from committee with individual
recommendations. There being no objection, it was so ordered.
CSHB 375(FIN) am -PAST SERVICE COST LIABILITY ACCOUNTS
4:22:54 PM
CHAIR THERRIAULT announced HB 375 to be up for consideration.
JACQUELINE TUPOU, Staff to Representative Bruce Weyhrauch,
advised that HB 375 relates to Alaska's $6.9 billion unfunded
liability. The Alaska Retirement Management (ARM) Board recently
submitted its findings and priority recommendations and the most
important are encapsulated in HB 375.
The bill would 1) establish past service retirement liability
accounts for PERS and for TRS within the Department of Revenue;
2) establish a formula for calculating how payments will be
made; and 3) provide incentives for employers to pay down the
debt.
Finally, she said, this works in much the same way as the school
debt reimbursement program.
4:25:28 PM
GARY BADER, Chief Investment Officer, ARM Board, recapped the
history of the board and that it is charged with developing a
strategy of addressing the unfunded liability of the PERS and
TRS systems. Clearly, he said, the liability will have to be
paid incrementally.
Referencing page 2 of a handout he advised that the liability
for TRS increased $376 million last year while the assets
increased $114 million. The reason is that there isn't enough
money in the fund for the earnings to be much better.
Addressing the concept of "normal cost" he explained that this
is what the actuaries are using to describe what it would cost
each year to pay for the people in the system if there was no
debt and all assumptions were met. In a defined benefit system
the idea is to put aside enough money during the working life of
the employee to pay for the liability during retirement years.
The chart on page 3 indicates what happened in 2003 when the TRS
system went from 95 percent funded to 68 percent funded. This is
the result of changes in actuarial assumptions, recognition of
the changes in the cost of health liability, and poor
performance in the financial markets.
MR. BADER noted that incremental changes in the contribution
rates from employers have addressed past funding shortfalls and
HB 375 creates a mechanism for the ARM Board to ask employers to
pay the full actuarial rate with state assistance.
The chart on page 4 demonstrates the same idea except that the
actuarial liability increased $1.4 billion between 2004 and
2005.
Page 5 shows the funding ratio history for PERS.
4:30:10 PM
CHAIR THERRIAULT asked what steps were taken back in 1979 to get
back to 100 percent funding.
MR. BADER replied his understanding is that the employer
required contribution rates were increased, which is what he
believes the ARM Board will suggest for 2008. In the past two
years the incremental increase has been 5 percent for PERS but
the contribution rate lost 4 percent last year due to unfunding.
This indicates that the contribution rate will have to be
increased to more than 5 percent increments in a year. He
stressed that delay costs money.
Continuing with the handout, he said that page 6 is the
actuary's conclusion, which states that for PERS the actuarially
computed contribution rate increased 4 percent between 2004 and
2005 while TRS increased slightly. The funded ratios declined
for each.
The chart on page 7 demonstrates outcomes if the contribution
rate is set at a particular percent with the assumption that
payoff would occur in a certain number of years. For example, if
the TRS contribution rate for the employer is set at 21 percent
and payoff is projected in 30 years the actuaries calculate that
the increased contribution would amount to $100 million per
year.
The chart on page 8 uses the same examples to demonstrate the
outcome for PERS.
4:32:54 PM
Page 9 shows calculations for determining the past service cost
rate. If there is a loss, it is amortized over 25 years and the
sum of all the gains and losses becomes the past service cost
which is then calculated as a percent of the payroll.
Page 10 explains the allocation for TRS employers all of which
are pooled and treated the same regardless of district. The
payments to those employees are based on 85 percent of the past
service cost rate for the three prior years.
This is similar to the school debt reimbursement plan in that it
provides money to communities to pay off 85 percent its debt for
school districts. Describing it as somewhat circular, he said
this provides money to school district and requires that it be
sent back to the state to fund the retirement system.
MS. TUPOU stressed the importance of this point because federal
dollars aren't lost under this system.
MR. BADER continued with page 11 saying it's the same general
concept, but it recognizes that each political subdivision in
the state has its own past service liability rate so the
employer rate is used rather than the system rate. The 85
percent reimbursement and three year look back works the same,
but it also provides an incentive fee for PERS employers that
either contribute more to the system than is required or an
employer that may have contributed more this year. He noted that
last year the Legislature provided some municipalities with a 5
percent payment and some used it to pay down their liability.
4:38:51 PM
SENATOR ELTON said he's heard that Anderson has just one public
employee and it had a $200,000 surplus. With that anomaly in
mind, he questioned the reliability of the data.
MR. BADER replied he's heard of the anomaly and he believes it's
under investigation. The data comes from the Division of
Retirement and Benefits and the legislation is working from the
best information that's available. Even so, he said, the
existence of an anomaly wouldn't affect how this works.
SENATOR ELTON recapped it's under review so those that shouldn't
be rewarded won't be rewarded.
MR. BADER replied that's fair, but he doesn't want to go quite
that far since he's only heard of the one case.
SENATOR ELTON conceded he'd heard of just the one case.
SENATOR WAGONER asked if different scenarios had been run for
faster pay down.
MR. BADER referenced page 8, which has amortization periods
ranging from 25 to 40 years and said the actuaries could
calculate different periods.
SENATOR WAGONER reiterated he'd like to look at scenarios for
paying down the principle faster. For instance, he'd like to see
the result of doubling the effort in a year.
MS. TUPOU chimed in that this isn't a panacea; it's a starting
point.
MR. BADER said he could have other timeframes calculated and
send the report to legislatures.
SENATOR WAGONER commented this is a heavy debt for the entire
state and it ought to be paid down as fast as possible.
MR. BADER reiterated there is an incentive for paying the debt
down faster and the ARM Board will probably be back next year
with additional suggestions.
SENATOR WAGONER said he didn't want to reward bad behavior.
MS. TUPOU mentioned the incentives and said the idea is that
some communities would take advantage of those.
CHAIR THERRIAULT said he and Senator Wagoner had to leave for
caucus so the committee could hold the bill or move it on to the
Finance Committee.
SENATOR WAGONER expressed the desire to move the bill.
SENATOR ELTON said he didn't object but he questioned why there
is need for an account for money that would be spent in the same
fiscal year. "If we're going to appropriate money to the account
to be distributed why can't we just appropriate money to be
distributed?" He asked Ms. Tupou to get back to him with an
answer.
SENATOR WAGONER moved CSHB 375(FIN) am and attached fiscal notes
from committee with individual recommendations. There being no
objection, it was so ordered.
There being no further business to come before the committee,
Chair Therriault adjourned the meeting at 4:47:14 PM.
| Document Name | Date/Time | Subjects |
|---|