Legislature(2009 - 2010)BELTZ 211
04/02/2009 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB157 | |
| SB126 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 157 | TELECONFERENCED | |
| = | SB 126 | ||
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
April 2, 2009
9:01 a.m.
MEMBERS PRESENT
Senator Linda Menard, Chair
Senator Kevin Meyer, Vice Chair
Senator Hollis French
Senator Albert Kookesh
Senator Joe Paskvan
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 157
"An Act directing the Alaska Permanent Fund Corporation to
transfer $22,700,000 from the principal of the mental health
trust fund to the Alaska Mental Health Trust Authority; relating
to the development of revenue-producing facilities on mental
health trust land and to the Alaska Mental Health Trust
Authority Subport Office Building; authorizing the issuance of
certificates of participation for construction of the building;
approving leases of all or part of the building by the
Department of Administration; and providing for an effective
date."
MOVED SB 157 OUT OF COMMITTEE
SENATE BILL NO. 126
"An Act amending the State Personnel Act to place in the exempt
service the chief economist and state comptroller in the
Department of Revenue and certain professional positions
concerning oil and gas within the Department of Natural
Resources; relating to reemployment of and benefits for or on
behalf of reemployed retired teachers and public employees by
providing for an effective date by amending the delayed
effective date for secs. 3, 5, 9, and 12, ch. 57, SLA 2001 and
sec. 19, ch. 50, SLA 2005; and providing for an effective date."
MOVED CSSB 126(STA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 157
SHORT TITLE: CERTIFICATES OF PARTICIPATION FOR SUBPORT
SPONSOR(S): SENATOR(S) OLSON
03/18/09 (S) READ THE FIRST TIME - REFERRALS
03/18/09 (S) STA, FIN
04/02/09 (S) STA AT 9:00 AM BELTZ 211
BILL: SB 126
SHORT TITLE: REEMPLOYMENT OF RETIREES; EXEMPT SERVICE
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/27/09 (S) READ THE FIRST TIME - REFERRALS
02/27/09 (S) STA, L&C, FIN
03/24/09 (S) STA AT 9:00 AM BELTZ 211
03/24/09 (S) Heard & Held
03/24/09 (S) MINUTE(STA)
03/26/09 (S) STA AT 9:00 AM BELTZ 211
03/26/09 (S) Heard & Held
03/26/09 (S) MINUTE(STA)
03/31/09 (S) STA AT 9:00 AM BELTZ 211
03/31/09 (S) <Above Item Removed from Agenda>
03/31/09 (S) MINUTE(STA)
04/02/09 (S) STA AT 9:00 AM BELTZ 211
WITNESS REGISTER
DENISE LICCIOLI, Staff
to Senator Donny Olson
Alaska State Legislature
Juneau AK
POSITION STATEMENT: Presented SB 157.
REPRESENTATIVE CATHY MUNOZ
Alaska State Legislature
Juneau AK
POSITION STATEMENT: Presented SB 157.
HARRY NOAH, Executive Director
Land Trust Office of the Mental Health Trust
Department of Natural Resources
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 157.
VERN JONES, Chief Procurement Officer
Alaska Department of Administration
Juneau AK
POSITION STATEMENT: Spoke in support of SB 157.
JEFF JESSE
Alaska Mental Health Trust Authority
Anchorage AK
POSITION STATEMENT: Spoke in support of SB 157.
JEFF BUSH, Deputy Mayor
City and Borough of Juneau
Juneau AK
POSITION STATEMENT: Spoke in support of SB 157.
WAYNE JENSEN, Architect
Juneau AK
POSITION STATEMENT: Answered questions regarding SB 157.
DEVEN MITCHELL, Investment Manager
Department of Revenue
Juneau AK
POSITION STATEMENT: Answered questions regarding SB 157.
DAN WAYNE, Attorney
Legislative Legal and Research Services Division
Alaska State Legislature
Juneau AK
POSITION STATEMENT: Explained the CS to SB 126.
AGNES MORAN, Parent
Ketchikan AK
POSITION STATEMENT: Spoke in support of the original SB 126.
HANNAH RAMISKEY, Grandparent
Ketchikan AK
POSITION STATEMENT: Spoke in support of the original SB 126.
GINGER BLAISDELL, Director of Administrative Services
Department of Revenue
Juneau AK
POSITION STATEMENT: Spoke in support of the original SB 126.
ACTION NARRATIVE
9:01:57 AM
CHAIR LINDA MENARD called the Senate State Affairs Standing
Committee meeting to order at 9:01 a.m. Senators Kookesh,
Paskvan, Meyer, and Menard were present at the call to order.
SB 157-CERTIFICATES OF PARTICIPATION FOR SUBPORT
9:02:59 AM
CHAIR MENARD announced the consideration of SB 157.
DENISE LICCIOLI, Staff to Senator Donny Olson, Alaska State
Legislature, sponsor, said the Department of Labor needs new
office space in Juneau. The lease on the current space will be
up in June of 2012, and no other space in Juneau will hold the
300 employees who work in the department. Other space is needed,
and it will likely need to be built because of the lack of a
suitable building in Juneau. SB 157 will authorize the
certificates of participation "for one of the options that
exists for taking care of that need for space." Even if it
doesn't pass there will need to be an RFP [request for proposal]
issued for space, and that is a fairly long process. Given the
timing, it is important to move on this. There are two state-
owned office buildings that house three state departments that
are in bad need of significant renovation. The Department of
Administration approached the Mental Health Trust to look into a
joint project to satisfy some of those needs. It would be
mutually beneficial.
9:06:21 AM
MS. LICCIOLI said the core mission of the trust is to develop
and manage trust assets for mental health beneficiaries. The
trust owns this land, and it is in the top priority for
development. SB 157 will enable the trust to develop the much
needed office and retail space on land it owns. The offices that
are in need of better facilities would benefit. The proposed
building will use modern construction standards and energy
efficiency. This new facility will save the state money and
provide a steady revenue to the trust. SB 157 will enable the
trust to move forward with the construction.
CHAIR MENARD asked how old the buildings are.
MS. LICCIOLI said the Department of Public Safety building is
about 40 years old.
9:08:58 AM
REPRESENTATIVE CATHY MUNOZ, Alaska State Legislature, said the
public safety building was supposed to be temporary when it was
built in 1970. The state will have to invest considerable funds
to bring it up to standard or replace it. The other site is the
Department of Fish and Game building in Douglas that was built
in the 1950s. It needs major rehabilitation. Both facilities
would require about $8.5 million of renovation. The legislation
is to allow the Mental Health Trust to develop the land, and the
parcel in the bill has been a priority for development by the
trust for many years. The trust holds land throughout Alaska.
Its mission is to develop these lands to the maximum benefit of
its beneficiaries. The timing of the legislation is critical
because the old buildings are in dire need of repair. The lease
is soon to expire for the labor department building, and the
state doesn't want to remain in that space. There will be a
savings to the state of $13 million over the course of the
lease. The trust will receive revenue for the next 20 to 30
years. As the landowner, the trust provides the land and half of
the construction costs. The bill will allow the trust to access
$22.7 million in trust funds. The state will meet a critical
need for space. The bonds will be paid back with the revenues of
the leases. This is a win-win proposal.
9:13:24 AM
SENATOR KOOKESH asked what the revenue will be to the trust.
REPRESENTATIVE MUÑOZ said trust funds are managed by the Alaska
Permanent Fund. The rate of return will start out as being
similar to its current investments, but over time the revenue to
the trust will increase greatly.
SENATOR KOOKESH said the money earns interest now, and if it is
spent, there has to be some sort of income.
9:15:07 AM
SENATOR MEYER said a big concern is the loss of property tax
when a state entity builds a building.
REPRESENTATIVE MUÑOZ said the City of Juneau supports this.
SENATOR MEYER said it will raise property taxes for everybody
else [in Juneau]. It won't go on the private tax roles.
REPRESENTATIVE MUÑOZ said the city recognizes the need for the
employees to be in a space that meets the requirements of a
state lease. Those requirements are not being met.
SENATOR MEYER said those same needs could be met by a private
developer without losing property taxes.
REPRESENTATIVE MUÑOZ said there are a lot of financial benefits
to working with the trust. The property tax situation could be
discussed by the city. The city sees this as positive.
9:16:56 AM
SENATOR MEYER asked what rent the state is currently paying.
REPRESENTATIVE MUÑOZ said the state is paying $2.33 per square
foot. Renovations are needed, so when the lease is up the rate
will likely change. The rent on the proposed facility has a
negotiated ceiling of $3.50 per square foot. That rate is in
line with Class B space around the state. The state often has to
invest funds beyond the square footage rate in order to meet
state standards with lighting and technology.
9:18:09 AM
SENATOR MEYER asked about adequate parking.
REPRESENTATIVE MUÑOZ said the site is 4.5 acres, and there is
sufficient land for parking.
HARRY NOAH, Executive Director, Land Trust Office, Mental Health
Trust, Department of Natural Resources, said the trust will
invest $22.7 million, and "we're asking 7.5 percent on that
money, which basically is on par with what we would get for that
money in the permanent fund under normal conditions. We're also
asking for 8 percent of the value of the land as per the lease
of the land." Ultimately the building will be paid for, and then
there will be a cash flow. There are still negotiations with the
state on what that number will be. This bill will set an upper
limit, but there will be some negotiating after the bill passes.
9:20:46 AM
VERN JONES, Chief Procurement Officer, Alaska Department of
Administration, said the state has been working with the trust
and he believes that the building will provide the state with
savings and solve several problems. The Department of Labor is
housed in a large building and the lease is ending. There is no
vacant space in Juneau, and a new building will be an
improvement. There have been issues with the current facility.
The bill solves other problems for his division, which manages
several state office buildings, including the Public Safety
building that was built in 1970 as a temporary structure. It
needs a lot of work. The Fish and Game building in Douglas has
numerous problems. Wind, rain, and snow comes through the gaps
in the walls and windows. The state is very reluctant to invest
millions into facilities that are well beyond their usable
lives. It would be throwing good money after bad. SB 157 will
get the state into energy efficient buildings that are suitable
for state employees. His division provided the analysis, and it
shows a substantial savings over the years. It is fairly
conservative because it only includes the current list of
deferred maintenance, and who knows how much more work will need
to be done. In fact, the buildings will probably need to be
replaced. Even though the state still has to negotiate the lease
rate, the bill is in the state's best interest.
9:24:44 AM
JEFF JESSE, Alaska Mental Health Trust Authority, said Mr. Noah
and Representative Muñoz explained the bill well. The DOA
approached the trust and the trust land office did a great job
of assessing options and potential returns. This will benefit
the trust.
JEFF BUSH, Deputy Mayor, City and Borough of Juneau, said the
assembly took up an ordinance to change the zoning to allow this
project to proceed. The city is fully supportive.
9:26:58 AM
WAYNE JENSEN, Architect, Juneau, said his company has been
working on this project and can answer questions.
SENATOR KOOKESH asked how much parking is required.
MR. JENSON said there are two requirements. The city has land-
use requirements, and the lease will have parking requirements.
Both will be an obligation of the trust. The requirements
generally depend on the size of the building. There is adequate
parking space.
9:29:25 AM
DEVEN MITCHELL, Investment Manager, Department of Revenue, said
the project is a convergence of a variety of missions for the
trust and the state of Alaska. The practice of using
certificates has been used a number of times throughout the
state. It is a means of borrowing money for specific facilities.
It was used recently for a virology lab at the university in
Fairbanks. It was used for the replacement of the "API" facility
in Anchorage, which was a similar partnership for something that
was badly needed. The certificates that he would sell would
receive ratings in the low double-a category. "The state sold
general obligation bonds today, which is a slightly better
credit than a subject-to-appropriation credit, but the 20-year
bonds - and these were approved in November of 2008 for
transportation projects throughout the state - the true interest
cost was 4.04 percent." The fiscal note assumes 5.5 percent,
which is obviously conservative in today's market. Today's rate
is indicative of what might be possible.
SENATOR MEYER asked, "We've already got the money at 5 percent
secured?"
MR. MITCHELL said no, the fiscal note provided an estimate of
what might be possible. There has been a wide distribution of
available interest rates over the last six months because of the
dislocation seen in October, in particular. There were certain
days you couldn't sell bonds. "A credit like this is an
extremely strong credit that's recognized in the market. But,
still, if you have Merrill Lynch and Lehman Brothers ... being
purchased or going out of business, then that type of
dislocation is difficult to overcome." The Matanuska-Susitna
borough lease revenue bonds are supported by the state on a
subject-to-appropriation basis, "and that is the credit - the
borough pledges the lease payments that it receives from the
state, so it's called something different, but it's the same
credit." Those achieved an interest rate of just under 6
percent, versus 4.04 today. "The state's [general obligation
bonds] would have priced better than the lease revenue bonds
back on December 22, but maybe 50 basis points better, not 200."
9:33:54 AM
SENATOR MEYER said his concern is the state's overall debt load.
Are you comfortable that we can take on this additional debt and
still maintain a good credit rating?
MR. MITCHELL said that is one of Alaska's strengths. The state
has a relatively low debt burden, not necessarily in a ratio
perspective because of Alaska's small population, but relative
to the high oil revenue. "We're well within the parameters ...
we typically use 5 to 8 percent as a threshold of unrestricted
revenue as being an acceptable level of debt service." With the
updated revenue forecast, Alaska is in the 5-ish range,
including the Mat-Su bonds and the [general obligation bonds]
that were just issued.
9:35:19 AM
SENATOR MEYER said Alaska's revenue is based on one source,
which isn't doing well. Oil price and production are declining.
MR. MITCHELL said Alaska's reserve position is incredible
relative to other states. He mentioned the CBRF [constitutional
budget reserve fund], SBR [statutory budget reserve], and the
forward-funding of education. Those allow Alaska to retain a
high rating despite the volatility of the revenue stream. The
state has protected its position. It is a relatively small
obligation.
CHAIR MENARD asked if the note is for 30 years.
MR. MITCHELL said it is 20 years. There are two things. "There's
COPs, which are 20, and there's a lease for the facility."
9:36:42 AM
SENATOR MEYER said he is convinced that this is needed. He moved
to report SB 157 from committee with individual recommendations
and attached fiscal note(s). There being no objection, SB 157
moved out of committee.
9:37:49 AM
The committee took a brief at-ease.
SB 126-REEMPLOYMENT OF RETIREES; EXEMPT SERVICE
CHAIR MENARD announced the consideration of SB 126.
9:40:24 AM
SENATOR PASKVAN moved to adopt the proposed committee substitute
(CS) to SB 126, labeled 26-GS1035\S, as a working document.
There being no objection, Version S was before the committee.
DAN WAYNE, Attorney, Legislative Legal and Research Services
Division, Alaska State Legislature, said the CS creates a six-
month waiting period between the time a person can retire and be
rehired. On page 3, line 4, the bill deletes the language "in
the executive branch of state government". This is significant
because "we've taken out the words on line 27 similar to the
procedure." This makes all employers subject to the procedure.
CHAIR MENARD surmised that it deletes "executive branch" and
will apply to any employer.
9:43:08 AM
MR. WAYNE said that is correct. A memo in the committee packet
explains a technical change on page 3. There was a bill in 2005
that called for a repeal in 2009 of certain statutes. Two of
those statutes were moved to other places. So the bill was
amended to target that language more accurately. After the
repeal in 2010, there won't be language left in statute that
refers to rehired retirees.
CHAIR MENARD said the sunset date will be 2010 instead of 2013.
MR. WAYNE said yes, and the title was changed because Section 1
was deleted. He believes that Section 1 would have put some
employees into exempt service.
CHAIR MENARD said on page 2, line 7, "we took out the word
'similar' to clarify that it applies to all employers." The bill
was also changed from 5 to 3 applicants. Section 1 was removed
so that DNR employees are left as they are now with the thought
that they would be addressed in separate legislation.
MR. WAYNE said it was taken out, but he doesn't know why.
CHAIR MENARD said, "On 3, we removed the chief economist and
left in the comptroller."
MR. WAYNE said yes, and the title was changed to reflect that.
9:47:33 AM
CHAIR MENARD apologized that citizens from Ketchikan were not
allowed to speak at the last meeting. She spoke to them
personally, and she believes in an open process. They are on
line today.
AGNES MORAN, Parent, Ketchikan, said she has two children. She
doesn't have access to the CS, but she supports the original SB
126. It allows rural schools access to experienced educators and
administrators who have made a commitment to remain in Alaska.
The number of participants in the retiree/rehire program may
appear small but their impact on a community is large. Many are
certified in various special education fields. The reading
specialist at her children's school is one such individual. The
specialist has close ties to the Native community and is a
positive role model. At the charter school, 86 percent of the
Alaska Native students scored proficient in language arts and
math. That is higher than any other group in the school. Access
to educators with experience in special needs is important. Her
child spent six years in the special needs program. These
teachers are resources for the children and other educators. Her
son's first-grade teacher was fresh out of college and
overwhelmed by the needs of her diverse group of students.
Fortunately she had access to experienced educators to help
guide her. Schools with rehired retirees have current openings.
Instead of viewing them as barriers, they should be seen as
bridges. Students, families, and communities benefit from the
experience of these rehires. She urged the passage of SB 126.
9:51:14 AM
HANNAH RAMISKEY, Ketchikan, said she is a grandparent of a child
who has struggled and gets a lot of additional help. Ms.
Ramiskey has sent several letters, and she has explained why
there was a custodian on the Ketchikan rehire list. That person
has left. She is concerned about the amendments. A charter
school without an experienced principal will need to do without
one for six months or hire someone who is not qualified. "Do you
do without a reading specialist in Ketchikan because there
aren't any that are certified in the curriculum that you have?"
She spoke of the impact of waiting six months. She questioned
the public process in the creation of the CS. She has been at
every hearing and didn't know when the bill was changed. During
House hearings she was impressed when a member asked a union
representative if it would be OK if a retiree from another state
could double dip. The union man said "Well yea, that's OK." So a
committed person in Alaska won't be able to do what someone from
any other state can do. Ketchikan has 15 feet of rain in some
years, so new people often don't last. The lack of a Nordstrom
store seems to be an issue for wives. She asked the committee to
look at the impact on children. "Do we just take what we can get
even if it's not right?"
9:54:54 AM
GINGER BLAISDELL, Director, Administrative Services, Department
of Revenue, said she looked at the CS last night. She noted that
Chair Menard kept saying "all employers" instead of "similar",
and she presumed the chair was referring to all employers who
participate in PERS.
CHAIR MENARD said yes.
MS. BLAISDELL clarified that the bill will not impact the
private sector. Changing the 30-day to 180-day provision will
eliminate individuals from being considered for nearly the life
of the program since it's now slated to sunset in one year. It
eliminates the younger spectrum of the retirement community.
Changing from five applicants to three is fine. Typically, if a
retiree is rehired, he or she is the only qualified applicant.
The one-year extension doesn't address the issue of unqualified
or unwilling applicants for hard-to-fill positions. "Eliminating
the chief economist leaves the state with a critical vacancy in
a position that would be guiding the state in its critical
global economic strategy. Eliminating the oil and gas positions
puts the state at risk for high turnover in critical positions
in oil and gas development." This bill doesn't accomplish what
was intended: providing a hiring pool to keep Alaskans employed
in Alaskan jobs regardless of their retirement status and to
provide options for hiring critical positions for the
departments of revenue and natural resources.
9:57:53 AM
SENATOR KOOKESH said he doesn't like the change of 30 days to
180 days and won't support the bill with that in it.
SENATOR MEYER asked about a compromise of 3 months.
SENATOR KOOKESH said he doesn't like 180 days. He could probably
support 90 days. "I just don't want to have to wait that long,
because I come from a rural district too and sometimes you need
somebody right away." The time constraint doesn't work. The
intent of the bill was to have a pool [of applicants]. "We might
as well just not pass this bill if we're going to put those
kinds of restrictions on."
SENATOR MEYER said he agrees. Sometimes a person gets a little
rusty after six months, "and if you indeed need to have this
person, you want him [or her] to come in and hit the ground
running." Perhaps 90 days would be better.
10:00:33 AM
SENATOR KOOKESH said he can live with that, but he wouldn't be
happy about it.
SENATOR PASKVAN asked about a teacher retiring out of one TRS
school district, and if that means he or she couldn't go to a
rural district to teach. He asked if Senator Kookesh is worried
about that situation.
SENATOR KOOKESH said yes, there has to be a pool of applicants.
Often teachers in rural Alaska have to leave midyear. A teacher
in Angoon got cancer, and her teacher husband had to leave with
her for seven months. If a school has to wait for six months to
hire somebody, "you're teaching the kids in that school with
substitute teachers who have never gone to college."
CHAIR MENARD said that is a reasonable concern.
SENATOR MEYER moved to adopt conceptual Amendment 1 to change
the waiting period from 120 days to 90 days.
SENATOR PASKVAN objected in order to discuss the amendment. His
concern is a retiree staying in the same job. That is different
from the situation that Senator Kookesh is talking about. He
absolutely agrees in accommodating those situations and making
sure there is a big enough pool. But someone retiring and
keeping the job is the concern.
10:03:53 AM
SENATOR KOOKESH said 90 days will give a gap for looking for a
different employee. "The school is going to have to find
somebody, and they could find somebody who's not a retiree."
SENATOR FRENCH said that is a good point with regard to school
districts. The school district issue is in Section 1, and
Section 4 relates to PERS employees. "If we want to deal with
teachers, Section 1 should be 90 days and we could leave the
other 180-day number alone, and still fix the concern you have."
SENATOR KOOKESH said he is concerned about teachers and hasn't
thought about other employees.
SENATOR MEYER said he is not sure if a similar situation could
happen with a PERS employee.
SENATOR KOOKESH asked who wrote the CS.
CHAIR MENARD said she did and has no problem with changing the
number of days for both. She is trying get something better than
the original bill because there has not been the attention paid
to this that there should be. Some people get hired the day
after retiring.
SENATOR KOOKESH surmised that she wants a separation, but 180
days is too much. He supports 90 days for both TRS and PERS
employees.
10:06:32 AM
SENATOR MEYER said there are critical positions in the courts.
He doesn't know how 90 days or 120 days will impact them.
SENATOR PASKVAN said he has no problem if someone retires from
the Fairbanks school district and wants to teach in Angoon.
"They stop teaching in May in Fairbanks and they start teaching
in August/September in Angoon." His problem is a person who
retires from a chair in an office on one day, and the next day
he or she has the same chair.
SENATOR KOOKESH said if that position is critical, no one will
wait 90 days for that person.
CHAIR MENARD said by putting the department on notice it will
actively try to recruit. If there are stellar employees, it is
human nature to slide them into the same slot when they retire.
It is tempting to keep those good people. But it is arrogant for
any of us to think we can't be replaced.
SENATOR PASKVAN said he supports a 90-day change, especially
with the repeal set for July of 2010. Next year will be the
opportunity to look at how many people have participated and how
many stayed in the same job or moved to another district.
10:09:34 AM
SENATOR PASKVAN removed his objection, there being no further
objections, conceptual Amendment 1 was adopted.
SENATOR MEYER moved to report the CS to SB 126, labeled 26-
GS1035\S, from committee, as amended, with individual
recommendations and attached fiscal note(s). There being no
objection, CSSB 126(STA) moved out of committee.
10:10:44 AM
The meeting was adjourned at 10:10 a.m.
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