04/06/2013 03:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB90 | |
| HB186 | |
| HB59 | |
| HB113 | |
| HCR6 | |
| SB48 | |
| SB90 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 90 | TELECONFERENCED | |
| + | HB 59 | TELECONFERENCED | |
| + | HB 186 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 113 | ||
| = | HCR 6 | ||
| = | SB 48 | ||
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
April 6, 2013
4:19 p.m.
MEMBERS PRESENT
Senator Fred Dyson, Chair
Senator Cathy Giessel, Vice Chair
Senator John Coghill
Senator Bill Wielechowski
MEMBERS ABSENT
Senator Bert Stedman
COMMITTEE CALENDAR
SENATE BILL NO. 90
"An Act relating to group insurance coverage and self-insurance
coverage for school district employees; and providing for an
effective date."
- MOVED SB 90 OUT OF COMMITTEE
HOUSE BILL NO. 186
"An Act relating to police standards and amending the definition
of 'police officer.'"
- MOVED HB 186 OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 59(STA) AM
"An Act relating to missing vulnerable adult prompt response and
notification plans."
- MOVED SCS CSHB 59(STA) OUT OF COMMITTEE
HOUSE BILL NO. 113
"An Act relating to the membership of the Alaska Fire Standards
Council."
- MOVED HB 113 OUT OF COMMITTEE
CS FOR HOUSE CONCURRENT RESOLUTION NO. 6(EDT)
Recognizing the Alaska Center for Unmanned Aircraft Systems
Integration at the University of Alaska Fairbanks as a national
leader in unmanned aircraft research and development; and
relating to a Task Force on Unmanned Aircraft Systems.
- MOVED CSHCR 6(EDT) OUT OF COMMITTEE
SENATE BILL NO. 48
"An Act requiring each municipality with a population that
decreased by more than 25 percent between 2000 and 2010 that
participates in the defined benefit plan of the Public
Employees' Retirement System of Alaska to contribute to the
system an amount calculated by applying a rate of 22 percent of
the total of all base salaries paid by the municipality to
employees of the municipality who are active members of the
system during a payroll period; reducing the rate of interest
payable by a municipality with a population that decreased by
more than 25 percent between 2000 and 2010 that is delinquent in
transmitting employee and employer contributions to the defined
benefit plan of the Public Employees' Retirement System of
Alaska; giving retrospective effect to the substantive
provisions of the Act; and providing for an effective date."
- MOVED CSSB 48(STA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 90
SHORT TITLE: SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE
SPONSOR(s): SENATOR(s) DUNLEAVY
03/27/13 (S) READ THE FIRST TIME - REFERRALS
03/27/13 (S) STA, EDC, FIN
04/06/13 (S) STA AT 9:00 AM BUTROVICH 205
BILL: HB 186
SHORT TITLE: DEFINITION OF POLICE OFFICER
SPONSOR(s): REPRESENTATIVE(s) MILLETT
03/25/13 (H) READ THE FIRST TIME - REFERRALS
03/25/13 (H) STA
04/02/13 (H) STA RPT 6DP 1NR
04/02/13 (H) DP: KREISS-TOMKINS, GATTIS, ISAACSON,
MILLETT, HUGHES, LYNN
04/02/13 (H) NR: KELLER
04/02/13 (H) STA AT 8:00 AM CAPITOL 106
04/02/13 (H) Moved Out of Committee
04/02/13 (H) MINUTE(STA)
04/04/13 (H) TRANSMITTED TO (S)
04/04/13 (H) VERSION: HB 186
04/05/13 (S) READ THE FIRST TIME - REFERRALS
04/05/13 (S) STA
04/06/13 (S) STA AT 9:00 AM BUTROVICH 205
BILL: HB 59
SHORT TITLE: MISSING VULNERABLE ADULT RESPONSE PLAN
SPONSOR(s): REPRESENTATIVE(s) GRUENBERG
01/16/13 (H) PREFILE RELEASED 1/11/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) MLV, STA
02/28/13 (H) MLV AT 1:00 PM CAPITOL 120
02/28/13 (H) Heard & Held
02/28/13 (H) MINUTE(MLV)
03/12/13 (H) MLV AT 1:00 PM CAPITOL 120
03/12/13 (H) Moved CSHB 59(MLV) Out of Committee
03/12/13 (H) MINUTE(MLV)
03/13/13 (H) MLV RPT CS(MLV) 4DP 3NR
03/13/13 (H) DP: GRUENBERG, SADDLER, FOSTER, LEDOUX
03/13/13 (H) NR: HIGGINS, HUGHES, REINBOLD
03/21/13 (H) STA AT 8:00 AM CAPITOL 106
03/21/13 (H) Heard & Held
03/21/13 (H) MINUTE(STA)
03/28/13 (H) STA AT 8:00 AM CAPITOL 106
03/28/13 (H) Moved CSHB 59(STA) Out of Committee
03/28/13 (H) MINUTE(STA)
03/29/13 (H) STA RPT CS(STA) 6DP 1NR
03/29/13 (H) DP: KREISS-TOMKINS, GATTIS, ISAACSON,
MILLETT, HUGHES, LYNN
03/29/13 (H) NR: KELLER
04/03/13 (H) TRANSMITTED TO (S)
04/03/13 (H) VERSION: CSHB 59(STA) AM
04/04/13 (S) READ THE FIRST TIME - REFERRALS
04/04/13 (S) STA
04/06/13 (S) STA AT 9:00 AM BUTROVICH 205
BILL: HB 113
SHORT TITLE: ALASKA FIRE STANDARDS COUNCIL
SPONSOR(s): REPRESENTATIVE(s) FEIGE
02/13/13 (H) READ THE FIRST TIME - REFERRALS
02/13/13 (H) STA, FIN
03/05/13 (H) STA RPT 3DP 2NR
03/05/13 (H) DP: ISAACSON, KREISS-TOMKINS, LYNN
03/05/13 (H) NR: GATTIS, KELLER
03/05/13 (H) STA AT 8:00 AM CAPITOL 106
03/05/13 (H) Moved Out of Committee
03/05/13 (H) MINUTE(STA)
03/22/13 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/22/13 (H) Moved Out of Committee
03/22/13 (H) MINUTE(FIN)
03/25/13 (H) FIN RPT 7DP
03/25/13 (H) DP: GUTTENBERG, HOLMES, MUNOZ, EDGMON,
GARA, COSTELLO, AUSTERMAN
03/28/13 (H) TRANSMITTED TO (S)
03/28/13 (H) VERSION: HB 113
03/29/13 (S) READ THE FIRST TIME - REFERRALS
03/29/13 (S) STA
04/04/13 (S) STA AT 9:00 AM BUTROVICH 205
04/04/13 (S) Heard & Held
04/04/13 (S) MINUTE(STA)
04/06/13 (S) STA AT 9:00 AM BUTROVICH 205
BILL: HCR 6
SHORT TITLE: EST. LEG. TASK FORCE ON UNMANNED AIRCRAFT
SPONSOR(s): REPRESENTATIVE(s) HUGHES
03/15/13 (H) READ THE FIRST TIME - REFERRALS
03/15/13 (H) EDT
03/26/13 (H) EDT AT 11:15 AM BARNES 124
03/26/13 (H) Moved CSHCR 6(EDT) Out of Committee
03/26/13 (H) MINUTE(EDT)
03/27/13 (H) EDT RPT CS(EDT) 5DP 2NR
03/27/13 (H) DP: PRUITT, JOHNSON, GATTIS, DRUMMOND,
HUGHES
03/27/13 (H) NR: HIGGINS, HERRON
03/29/13 (H) TRANSMITTED TO (S)
03/29/13 (H) VERSION: CSHCR 6(EDT)
04/01/13 (S) READ THE FIRST TIME - REFERRALS
04/01/13 (S) STA
04/04/13 (S) STA AT 9:00 AM BUTROVICH 205
04/04/13 (S) Heard & Held
04/04/13 (S) MINUTE(STA)
04/06/13 (S) STA AT 9:00 AM BUTROVICH 205
BILL: SB 48
SHORT TITLE: PERS CONTRIBUTIONS BY MUNICIPALITIES
SPONSOR(s): SENATOR(s) OLSON
02/11/13 (S) READ THE FIRST TIME - REFERRALS
02/11/13 (S) STA, FIN
03/12/13 (S) STA AT 9:00 AM BUTROVICH 205
03/12/13 (S) Heard & Held
03/12/13 (S) MINUTE(STA)
04/02/13 (S) STA AT 9:00 AM BUTROVICH 205
04/02/13 (S) Heard & Held
04/02/13 (S) MINUTE(STA)
04/02/13 (S) FIN AT 1:30 PM SENATE FINANCE 532
04/02/13 (S) Scheduled but Not Heard
04/06/13 (S) STA AT 9:00 AM BUTROVICH 205
WITNESS REGISTER
SENATOR MIKE DUNLEAVY
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 90.
BECKY HULTBERG, Commissioner
Office of the Commissioner
Department of Administration
Juneau, Alaska
POSITION STATEMENT: Provided information on SB 90.
MIKE BARNHILL, Deputy Commissioner
Office of the Commissioner
Department of Administration
Juneau, Alaska
POSITION STATEMENT: Answered questions relating to SB 90 and SB
48.
CARL ROSE, Executive Director
Association of State School Boards (ASSB)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 90.
BRUCE JOHNSON, Executive Director
Alaska Council of School Administrators
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 90.
TOM BRICE, Business Representative
Alaska District Council of Laborers
Juneau, Alaska
POSITION STATEMENT: Testified on SB 90.
DENNIS MOEN, Business Manager
Public Employees Local 71
Anchorage, Alaska
POSITION STATEMENT: Spoke in opposition to SB 90.
DEBBIE HANSON, Trust Administrator
Public Employees Local 71
Anchorage, Alaska
POSITION STATEMENT: Spoke in opposition to SB 90.
STEVEN ATWATER, Superintendent
Kenai Peninsula School District
Kenai, Alaska
POSITION STATEMENT: Spoke in support of SB 90.
JACK WALSH, Superintendent
Bristol Bay School District
Bristol Bay, Alaska
POSITION STATEMENT: Spoke in support of SB 90.
ROB THOMASON, Superintendent
Petersburg School District
Petersburg, Alaska
POSITION STATEMENT: Spoke in support of SB 90.
DEENA PERAMO, Superintendent
Mat-Su School District
Palmer, Alaska,
POSITION STATEMENT: Spoke in support of SB 90.
WILLIE ANDERSON, Uniserve Director
NEA Alaska
Juneau, Alaska
POSITION STATEMENT: Testified on SB 90.
REPRESENTATIVE CHARISSE MILLET
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 113.
MARK MEW, Chief of Police
Anchorage Police Department
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 186.
SHELDON SCHMITT, Chair
Alaska Police Standards Council
Sitka, Alaska
POSITION STATEMENT: Spoke in support of HB 186.
AL BARRETTE, representing himself
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 186.
REPRESENTATIVE MAX GRUENBERG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Prime sponsor of HB 59.
MIKE PASCHALL, Staff
Representative Eric Feige
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 113 on behalf of the sponsor.
REPRESENTATIVE SHELLEY HUGHES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HCR 6
DAVID SCOTT, Staff
Senator Donny Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on SB 48 on behalf of
the sponsor.
GREG MOYER, City Manager
Galena, Alaska
POSITION STATEMENT: Testified in support of SB 48.
ACTION NARRATIVE
4:19:17 PM
CHAIR FRED DYSON called the Senate State Affairs Standing
Committee meeting to order at 4:19 p.m. Present at the call to
order were Senators Giessel, Stedman, Chair Dyson.
SB 90-SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE
4:20:25 PM
CHAIR DYSON announced that the first order of business would be
SB 90.
SENATOR MIKE DUNLEAVY, sponsor of SB 90, read from the following
sponsor statement:
The cost of health care insurance for all employees
has escalated far greater than the rate of inflation
and Alaska's 53 school districts have felt the
financial pinch. Under Senate Bill 90, all Alaska
public school districts employees will be covered by a
state-managed group health insurance program.
Approximately 19,000 school district employees and
their families, an estimated total of 47,000
individuals, would be added to the State of Alaska's
Employee Health Plan.
This larger insurance pool places the State of Alaska
in a position to negotiate a more favorable employee
health care insurance plan. By moving school districts
into an integrated state plan, the state and school
districts benefit from the economies of scale.
Currently each school district must obtain its own
insurance coverage; consequently, the level of
coverage and the cost of premiums vary widely
throughout the state.
In addition to the potential savings with lower
insurance premiums, two other advantages are afforded
school districts and the state through this
legislation. Senate Bill 90 will provide standardized
health care coverage statewide for all school district
employees. A person who may elect to move between
school districts will know the basic insurance
coverage offered before the transfer.
Secondly, the need for administrative time and effort
by each school district to secure and negotiate a
health insurance plan for its employees is eliminated.
This responsibility shifts to the Department of
Administration, a department that routinely manages
insurance policies for all state employees, and allows
school districts to focus on educational policy
issues.
Starting July 1, 2014, school districts will
transition to the new state health care insurance plan
as each school district's existing employee contracts
expire. All school districts are expected to
changeover to the State of Alaska plan within three to
five years.
4:22:43 PM
SENATOR DUNLEAVY concluded that 53 school districts must
negotiate their own insurance plans. Some of those districts are
as small as 10 students. Alaska has a single retirement system
for its teachers and the cost of insurance is rising. This is an
opportunity to pool employees of school districts to negotiate a
more favorable rate and allow school districts to focus on
policy and educating children.
4:24:03 PM
SENATOR COGHILL joined committee.
CHAIR DYSON asked who opposes this legislation.
SENATOR DUNLEAVY said there may be some school districts that do
not understand how they would benefit by this legislation and
are opposed to it. NEA might be opposed to it.
CHAIR DYSON asked if SB 90 is optional.
SENATOR DUNLEAVY explained it would be similar to the retirement
system where all school districts would become part of this
pool. The goal is to have a standardized insurance plan in order
to control costs.
CHAIR DYSON asked if he said it's mandatory.
SENATOR DUNLEAVY said yes.
CHAIR DYSON asked over what period of time.
SENATOR DUNLEAVY explained that districts will transition into
the plan starting July 1, 2014 as their existing plans expire.
4:25:36 PM
BECKY HULTBERG, Commissioner, Department of Administration,
provided information on SB 90. She reported that health care
costs are high and one of the most significant issues for the
United States and for Alaska. The rate at which costs keep
growing is a significant concern. Managing expenses becomes even
more important with dwindling resources. The bill offers the
opportunity to talk about the management of school district
insurance costs.
SENATOR WIELECHOWSKI joined the committee.
COMMISSIONER HULTBERG related that the state currently manages
health insurance plans for 6,400 active, and 60,000 retired,
employees, the balance of which are covered by four union health
trusts. The combined annual cost of the plans is about $600
million. Both plans are self-insured and claims are administered
by a third-party administrator who processes the claims,
negotiates discounts, and receives a payment each month.
4:28:30 PM
COMMISSIONER HULTBERG listed some of the cost drivers in a
health plan: network discounts and how broad the network is,
administrative costs, how many high cost claimants there are in
one year, medical inflation, and utilization impacted by how the
plan is designed.
She related that, currently, the AlaskaCare employee plan has
16,400 members (employees and dependents). This bill would add
an estimated 47,000 members to that plan. Theoretically, more
members covered by a plan can be advantageous in several ways.
Larger numbers can be used to achieve deeper discounts. They can
impact administrative costs for the better. They can reduce risk
and have a positive impact on per unit cost for services.
She stressed the importance of considering that the state is
inheriting these employees into the retiree plan. The state has
a vested interest in lowering costs in two ways. Because the
state provides funding for education, it has a direct interest
in lowering costs now, as well as long term when the members
become retirees and enter the retiree plan.
4:32:06 PM
COMMISSIONER HULTBERG addressed a key philosophical question -
what is the best approach to managing these costs. Right now
there is a fragmented approach to health care management within
school districts. She noted that the Juneau School District has
four different health plans. She suggested a more coordinated,
integrated approach is needed.
SENATOR WIELECHOWSKI asked how much more or less a teacher would
have to pay if the bill passes.
COMMISSIONER HULTBERG said it was a difficult question to answer
because it depends on the district and the plan. She cautioned
that looking at out-of-pocket costs is not the best way to
evaluate a plan. Sometimes coverage is different between plans.
It is important to look at the actuarial value of a plan.
SENATOR WIELECHOWSKI stated that he has a letter from Local 71
that ran the numbers and estimates that the Anchorage School
District will pay an additional $400,000 and each employee that
needed the full family plan would pay an additional $1,000 a
year. He asked if that meshed with Commissioner Hultberg's
understanding.
COMMISSIONER HULTBERG replied that she saw the letter, but
without comparing actuarial evaluations, it's difficult to make
an assessment about the better value. She gave an example of
plan differences.
SENATOR WIELECHOWSKI said, as someone who represents Anchorage,
he would have a difficult time explaining how he voted for a
bill that will cost the school district and families more when
he has not heard complaints from anyone about the current trust.
COMMISSIONER HULTBERG pointed out that in order to evaluate the
impact on Anchorage, it would be important to look at other
plans in the whole district. In some cases a district may pay
more, but some may pay less. She suggested looking at the total
impact of the bill.
CHAIR DYSON asked if other jurisdictions had done similar
things.
4:38:15 PM
MIKE BARNHILL, Deputy Commissioner, Office of the Commissioner,
Department of Administration, answered questions relating to SB
90. He related that Indiana did implement such a plan, but he
did not have any information about it yet.
SENATOR WIELECHOWSKI asked if vendors would have to compete
through the state procurement process.
COMMISSIONER HULTBERG said yes, but it is a difficult process to
manage. The current RFP for a third party administrator has been
very difficult to manage under the state procurement code.
SENATOR COGHILL inquired if the third party administrator
agreement would fit into this bill's plan.
COMMISSIONER HULTBERG said the RFP process has yet to be
completed. If SB 90 passes, the administration would likely go
back into the process with additional information about the new
pool. The idea has been discussed, but no decision has been
made.
CHAIR DYSON asked if SB 90 originated from the administration or
with Senator Dunleavy.
4:40:07 PM
COMMISSIONER HULTBERG replied that the concept was brought to
the administration. The administration is not taking an official
position on the bill, but supports the concept of insurance
pooling.
CHAIR DYSON asked if there is a time factor. He wondered if this
is the right trail to go down and if there is an advantage to
doing it now.
MR. BARNHILL said the bill contemplates a phasing-in procedure.
The first school districts would join July 1, 2014, and the rest
would enter over a two-year period. It gives the administration
a year to get ready.
CHAIR DYSON asked if "sooner was better than later." He
summarized that the intent of the bill would be for better
protection at the most effective cost.
MR. BARNHILL stated that the timeframe set forth in the bill is
workable. The administration could not do it any sooner.
4:41:49 PM
SENATOR WIELECHOWSKI said he was baffled by the idea that they
are supporting a massive state takeover of the insurance
industry when the private sector is doing it now.
COMMISSIONER HULTBERG didn't agree with the characterization.
SENATOR COGHILL pointed out that the state picks up the cost
anyway. It sounds like this approach has an economy of scale and
pooling as an advantage to those in state employment.
COMMISSIONER HULTBERG agreed. The state is paying the majority
of the costs. She stressed the importance of providing health
insurance in a coordinated and integrated manner. She opined
that the economy of scale and the negotiating power of adding
more members could help lower costs.
SENATOR COGHILL inquired if the state is taking the economies of
scale away from local areas such as Anchorage, Juneau, the
Kenai, and Mat-Su.
COMMISSIONER HULTBERG suggested that the districts should answer
that question. She emphasized that there is such fragmentation
among the plans right now that it could be true in some
districts.
CHAIR DYSON requested clarification about how the state is
currently responsible and how much the state is subsidizing, if
any.
COMMISSIONER HULTBERG explained that the state is a significant
contributor of education funding, so it has an interest in how
those costs are managed. Also, the state will inherit retirees
when they are most expensive, but will have no impact on their
insurance plan. The state wants some input into their health
status while they are active employees. Before the bill was
proposed, the department was involved in discussions as to how
to better coordinate with districts and municipalities.
4:46:45 PM
SENATOR WIELECHOWSKI noted that he is hearing a lot of
statements that this bill will save money, but he has not seen
any analysis supporting that idea. He said he does have an
analysis from Local 71 regarding his school district. He
emphasized that he has not seen any support for SB 90.
COMMISSIONER HULTBERG noted that the health care that is
currently being provided by the school districts is part of
state government. It's an issue of which government entity is
responsible for providing the care, rather than a shift of the
provision of care from the private sector to the government. The
definitive way to determine if the state would save money is if
each of the entities provided claims data. She pointed out that
that won't happen. The department has looked at the pool of
employees and the demographics of that pool and the actuaries
have done the best job that they can with the information they
have. She thought some districts would save money under SB 90.
She concluded that the issue of managing costs must be looked at
as a group.
4:50:08 PM
MR. BARNHILL discussed the fiscal notes. He began with the
fiscal note by the Health Plans Administration in the Department
of Administration that has $100 million in the FY 2014 column.
He reviewed the mechanics of the bill as a starting place to
understanding the fiscal notes. He related that the bill
contemplates about 47,000 covered lives coming into the existing
active plan, quadrupling the pool. When pooling health
insurance, it is good to have a claim reserve of three or four
months' worth of claims costs.
He referred to a document that shows FY 2012 aggregate costs of
school district health insurance at about $282 million. Since
this bill takes effect in FY 2015, the amount is rounded up to
$300 million, with the likelihood that it will be more. The $100
million is what would be needed to establish a three or four
month claims reserve for the inbound employees.
SENATOR DYSON asked if that amount is needed every year.
MR. BARNHILL said no; the bill allows the department to draw up
to $100,000 over ten years from the Public Education Fund. The
draw is shown on the fiscal note as taking place in one year,
but it is more likely to be drawn over two or three years. After
10 years, the department must pay $100 million back into the
fund. The department will send a bill to each school district
for their first four months of claims.
MR. BARNHILL explained that the second fiscal note is from the
Health Plans Administration in the Department of Administration
for $237,700 in FY 2014. It pays for upfront staffing costs,
communications, and reprogramming of computers. He related that
the services expenditures from FY 2015 to FY 2019 are fees paid
to contractors, such as third party administrator and pharmacy
benefit manager. The upward trend reflects the actuarial
expectation of increased population of school district
employees. The payment of fees will come out of Group Health and
Life Benefits Fund established in AS 36.30.095.
4:55:14 PM
MR. BARNHILL explained the miscellaneous operating expenditure
of $315 million, which is composed of two parts. The largest
part is the $305 million portion that consists of the benefit
credit that the state will bill to each school district for each
employee. He noted that $1,389 per month per employee is the
present estimate of what the benefit credit will be in the
AlaskaCare active plan in FY 2015. That amount is for the
economy plan, including the preventative dental plan. Currently,
in FY 2013, that cost is currently $1,330. He explained that
$305 million is attained by multiplying $1,389 per month per
employees, times 12 months, times 18,300 employees. The
department hopes that, through the increased benefit of scale,
it will be able to better manage health insurance costs for the
short term.
4:57:00 PM
SENATOR WIELECHOWSKI asked Mr. Barnhill if he had any proof that
the state does a better job of maintaining costs and securing
preferred contracts than most school districts/trust funds
already do.
MR. BARNHILL replied that union and school district plans
probably all do equally well at managing costs. The fundamental
issue is that school districts are approaching $300 million a
year on health care and the state is approaching $300 million a
year on health care for its active population and the retiree
plan is in access of that amount. He stressed that the state
must get these costs under control and scale is one way that can
be done.
SENATOR WIELECHOWSKI asked if a health care exchange would help
get costs under control.
MR. BARNHILL said he did not know.
SENATOR WIELECHOWSKI suggested that a health care exchange would
do exactly what SB 90 is proposing.
MR. BARNHILL said that the issue of health care exchanges has
been extensively investigated and there is debate as to whether
it decreases costs.
SENATOR WIELECHOWSKI reiterated his last question.
MR. BARNHILL replied that there is an element of pooling in
health care exchanges. He noted that the difference in SB 90 is
that there would only be one plan, as opposed to bringing
together a variety of different insurers.
SENATOR WIELECHOWSKI inquired if the administration would
support a health care exchange.
COMMISSIONER HULTBERG said she would be happy to take that
suggestion and explore it further.
SENATOR WIELECHOWSKI said he would like that.
MR. BARNHILL discussed the final fiscal note prepared by the
Division of Retirement and Benefits. It would add 12 additional
positions in order to accommodate the administrative burden
imposed by an additional 47,000 members, for the amount of
$964,000.
5:00:43 PM
CARL ROSE, Executive Director, Association of State School
Boards (ASSB), testified in support of SB 90. He related that
ASSB has recently passed a resolution relating to health care
costs and medical insurance. He pointed out that the effects of
the recently-passed Affordable Health Care Act haven't been
realized yet. He said that ASSB is asking the Governor, the
legislature, and Congress to carefully review the legislation
and identify areas of unintended consequences and how the state
might be able to control some of the costs.
MR. ROSE noted that there is current data about health care
costs. There are projections about future costs escalating. He
opined that SB 90 is an opportunity to address those costs. He
pointed out that ASSB has had experience with pooling; in 1986
ASSB started a pool for liability insurance for rural schools.
He said the rate at that time was $1.25 per $100 in value. After
all these years of pooling, the rate has dropped to $.17 per
$100. He concluded that taking a bigger pool to market allows an
organization to negotiate better terms and now is the time to do
it because the fragmented approach might lead to losing local
control.
5:07:43 PM
BRUCE JOHNSON, Executive Director, Alaska Council of School
Administrators, testified in support of SB 90. He said that a
group of superintendents proposed this idea because escalating
health costs prevent them from putting money in the classroom.
He voiced concern about the health needs of employees. The
addition of 47,000 members to the insurance pool is significant
and will have the effect of reducing costs. He stressed the
difficulty small districts are having with very high insurance
costs.
SENATOR WIELECHOWSKI asked if something legally prevents schools
from pooling now.
MR. JOHNSON said no. There are many partnerships, but negotiated
agreements make pooling difficult. Most districts have
investigated all options.
SENATOR DYSON asked if it is a problem for a school district to
have a variety of insurance plans.
MR. JOHNSON said he didn't know; however, most districts are
small and have only one choice for insurance. He said some
superintendents talk about the value of having a quality
insurance plan in order to attract teachers to districts that
have a hard time finding employees. He opined that those
districts could still accomplish that by providing a premium
plan.
5:11:30 PM
TOM BRICE, Business Representative, Alaska District Council of
Laborers, testified on SB 90. He deferred to Local 71
representatives from Anchorage to speak.
DENNIS MOEN, Business Manager, Public Employees Local 71, spoke
in opposition to SB 90. He related that Local 71 has its own
medical trust fund, which covers about 350 Anchorage School
District employees at a savings, compared to the state plan. He
said he was not opposed to the idea of pooling. Local 71 belongs
to the Health Care Management Corporation made up of about
50,000 members in Alaska and 33,000 outside the state. He
described the high level of care their health care plan
provides. He said he was opposed to pulling Anchorage school
employees out of Local 71's plan and putting them in a larger
pool.
CHAIR DYSON asked if it is fair to assume that Mr. Moen is
opposed to SB 90.
MR. MOEN said yes.
5:18:09 PM
DEBBIE HANSON, Trust Administrator, Public Employees Local 71,
spoke in opposition to SB 90. She said she understands the
benefits of pooling for small schools, but she suggested there
were other resources available to those areas, such as the
Health Care Cost Coalition. She voiced concern about Local 71
members losing the personal level of service they currently
experience.
STEVEN ATWATER, Superintendent, Kenai Peninsula School District,
spoke in support of SB 90. He reported that his district has not
been able to slow rising health care costs for employees. He
said there are 3,400 total members in their health care plan and
in 2008, the members generated close to $12 million in claims.
Last year, the total was more than $21 million, a 62 percent
increase in four years. He opined that a statewide health care
plan would lead to savings in health care costs to the district.
Any savings could be used to support instruction for students.
5:21:28 PM
JACK WALSH, Bristol Bay School District, spoke in support of SB
90. He said he has a small school district which currently pays
$1,700 per employee per month and that cost has increased about
10 percent per year over the last six years. He recognized the
benefits from being in a bigger pool and keeping costs down.
5:25:05 PM
ROB THOMASON, Superintendent, Petersburg School District, spoke
in support of SB 90. He related that health care is essential,
but it should not drain the district's resources from its
critical function of educating kids. He spoke of high costs
under Aetna and changing to NEA Health Trust where they saw a
savings of $200,000. He said that Petersburg has a high employee
contribution rate of 20 percent so rate increases negatively
affect the district and the employee. The cost per employee is
about $1,650 with the district paying 80 percent. There are 68
covered employees and their families. He said it is difficult to
fund insurance increases without considering cutting staff.
5:28:39 PM
DEENA PERAMO, Superintendent, Mat-Su School District, spoke in
support of SB 90. She related that the Mat-Su District spends
$30 million each year on health care out of its general
operating fund. The average cost is increasing by 12 annually.
This year health care cost $1,702 per employee. She concluded
that the district must lower the growth rate of health care
expense because the current path is unsustainable. She discussed
the advantages of having a large statewide pool.
5:32:31 PM
WILLIE ANDERSON, Uniserve Director, NEA Alaska, testified on SB
90. He requested that the committee hold SB 90 until Monday so
the Trust can testify. The Trust represents 12 school districts
around the state.
SENATOR DYSON stated that he would move SB 90 on to Senate
Finance where it would get another public hearing.
MR. ANDERSON referred to written testimony NEA has provided.
CHAIR DYSON set SB 90 aside until later in the meeting.
HB 186-DEFINITION OF POLICE OFFICER
5:34:29 PM
CHAIR DYSON announced that the next order of business would be
HB 186.
REPRESENTATIVE CHARISSE MILLET, sponsor of HB 186, introduced
the bill. She said the bill defines a police officer so all
police officers are covered under the Alaska Police Standards
Council (APSC) and would receive minimal training approved by
the APSC. There are a lot of seasonal and part-time employees
who don't have to be trained under APSC and are coming into the
police force. This provides difficulties for communities that
hire the wrong person. The bill requires all officers receive a
minimum level of training.
5:36:15 PM
SENATOR WIELECHOWSKI asked if there has been any opposition to
the bill.
REPRESENTATIVE MILLETT said there is no opposition; all police
departments and APSC are very supportive. The Sitka Police
Department reported that it has had this problem and suggested
the change. The Anchorage Police Department fully supports it.
SENATOR WIELECHOWSKI asked if the bill has a zero fiscal note
even though more training is required.
REPRESENTATIVE MILLETT said yes; the Alaska Police Standards
Council covers those costs.
SENATOR DYSON asked Senator Wielechowski if he could support the
bill.
SENATOR WIELECHOWSKI said yes, barring negative public
testimony.
5:38:13 PM
MARK MEW, Chief of Police, Anchorage Police Department,
testified in support of HB 186.
SHELDON SCHMITT, Chair, Alaska Police Standards Council, spoke
in support of HB 186.
AL BARRETTE, representing himself, testified during the
discussion of HB 186. He suggested a friendly amendment to
include the Department of Fish and Game officers in the bill and
change "a police officer in the state" to "a police officer of
the state."
REPRESENTATIVE MILLETT explained that Fish and Game officers are
covered in the bill.
MR. BARRETTE wished to prevent federal agencies from usurping
their authority over state officers.
REPRESENTATIVE MILLETT thought Mr. Barrette was trying to give
authority to Fish and Game officers. She opined that this bill
was not the place for that issue.
SENATOR DYSON explained that Fish and Game officers are a part
of the state troopers and would be covered under HB 186. He
noted that the sponsor will look at the federal issue.
5:43:06 PM
SENATOR COGHILL moved to report HB 186 from committee with
individual recommendations and attached zero fiscal note. There
being no objection, it was so ordered.
5:43:19 PM
At ease
HB 59-MISSING VULNERABLE ADULT RESPONSE PLAN
5:43:56 PM
CHAIR DYSON announced that the next order of business would be
HB 59. [CSHB 59(STA)am was before the committee].
5:44:21 PM
REPRESENTATIVE MAX GRUENBERG, sponsor of HB 59, noted that he
had an amendment to offer. He said the bill is very similar to
its companion bill, SB 36, except that it adds tort immunity for
law enforcement agencies on page 2, lines 22 through 29.
SENATOR COGHILL moved to adopt Amendment 1.
Amendment 1
Page 2, line 22: after "agency,"
Insert "a person, or a group"
There being no objection, Amendment 1 was adopted.
SENATOR COGHILL moved to report CSHB 59(STA)am, as amended, from
committee with individual recommendations and the attached zero
fiscal notes. There being no objection, SCS CSHB 59(STA) moved
from committee.
5:47:31 PM
At ease from 5:47 p.m. to 5:49 p.m.
HB 113-ALASKA FIRE STANDARDS COUNCIL
5:49:19 PM
CHAIR DYSON announced that the next order of business would be
HB 113.
MIKE PASCHALL, Staff, Representative Eric Feige, sponsor of HB
113, introduced the bill. He explained that this bill adds one
member to the Alaska Fire Standards Council by having one member
from each of the statewide fire organizations, bringing the
number of members up to 12. The bill was drafted at the request
of council and is supported by all three organizations.
He noted there was a question about the fiscal note at the last
hearing, which has been answered. He said he has spoken with the
administrator from the Department of Public Safety and with the
Fire Standards Council, whose programs receive $250,000 in
general funds appropriations and an additional $250,000 in fund
receipts for providing the programs. It is the department's
opinion that there are sufficient funds to absorb the costs of
one more member on the council. That concurs with the House
Finance Committee's zeroing of the fiscal note.
5:50:55 PM
SENATOR COGHILL moved to report HB 113 from committee to the
next committee of referral with individual recommendations and
the attached zero fiscal note. There being no objection, it was
so ordered.
HCR 6-EST. LEG. TASK FORCE ON UNMANNED AIRCRAFT
5:52:32 PM
CHAIR DYSON announced that the next order of business would be
HCR 6, which was previously heard by the committee. [CSHCR
6(EDT) was before the committee].
REPRESENTATIVE SHELLEY HUGHES, sponsor of HCR 6, noted that the
updated fiscal note is now indeterminate in order to cover the
expense for one meeting a year for two years. That expense would
be absorbed by the various departments of the commissioners that
serve on the task force. The private industry members have
indicated that they would absorb costs, as well. The task force
meeting will be held in Anchorage.
CHAIR DYSON asked if the bill has a referral to Senate Finance.
REPRESENTATIVE HUGHES said it didn't need one when the fiscal
note was zero, but it may need a finance referral now.
SENATOR COGHILL opined that it should go to Senate Finance.
SENATOR COGHILL moved to report CSHCR [6](EDT) from committee to
the next committee of referral with individual recommendations
and attached indeterminate fiscal note. There being no
objection, CSHCR 6(EDT) was reported from the Senate State
Affairs Standing Committee.
5:54:11 PM
At ease
SB 48-PERS CONTRIBUTIONS BY MUNICIPALITIES
5:54:46 PM
CHAIR DYSON announced that the next order of business would be
SB 48. He reported that he has had extensive conversations with
Mr. Barnhill and agrees with his analysis of the bill. He stated
that the proposed committee substitute (CS) mirrors the language
of the House bill.
SENATOR COGHILL moved to adopt the work draft CS for SB 48,
version 28-LS0444\U, as the working document. There being no
objection, version U was before the committee.
5:56:11 PM
DAVID SCOTT, Staff, Senator Donny Olson, sponsor, provided
information on SB 48. He explained that the 2008 PERS
contribution floor does not apply to those communities who have
lost 25 percent of their population.
SENATOR DYSON asked if that mirrors the language in the
companion House bill.
MR. SCOTT said that is his understanding.
SENATOR WIELECHOWSKI asked how many municipalities this applies
to.
MR. SCOTT said it applies to three. There are more than three
communities that have lost 25 percent of their population, but
they do not have any PERS employees.
SENATOR WIELECHOWSKI asked if SB 48 has the impact of waiving
fees and expenses.
MR. SCOTT said no. He said it was his understanding that the
municipalities still must pay their bill to the PERS system.
5:57:44 PM
MIKE BARNHILL, Deputy Commissioner, Department of
Administration, answered questions related to SB 48. He
explained that there is a retroactive date in the bill and a
reduction in the rate of interest to the federal reserve rate,
plus 3 percent.
SENATOR WIELECHOWSKI inquired which three communities are
affected by the bill.
MR. BARNHILL said Galena, Pelican, and Atka.
SENATOR WIELECHOWSKI asked how much they owe.
MR. SCOTT answered that Galena owes about $500,000, and he
didn't know about the other two.
SENATOR WIELECHOWSKI asked how much debt was rolled back.
MR. BARNHILL said he hadn't run the numbers, but it might get
rid of it entirely.
SENATOR COGHILL said it sounds like these communities are under
duress.
5:59:27 PM
GREG MOYER, Galena City Manager, testified in support of SB 48.
SENATOR DYSON inquired how much it would save Galena.
MR. MOYER answered said if it is retroactive it may take it out
completely.
SENATOR DYSON asked for a report, after the first of the year,
on how it worked out.
6:01:05 PM
SENATOR COGHILL moved to report SB 48, version U, from committee
with individual recommendations and attached fiscal note. There
being no objection, CSSB 48(STA) was reported from the Senate
State Affairs Standing Committee.
6:01:45 PM
At ease
SB 90-SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE
6:15:22 PM
SENATOR DYSON brought SB 90 back before the committee and
summarized earlier testimony.
6:19:24 PM
SENATOR MIKE DUNLEAVY, sponsor, SB 90 summarized that health
care is not something school officials look forward to dealing
with at the local level. He related that the 53 school districts
are an extension of the State of Alaska and depend on state
money. He concluded that if SB 90 passes, it will be less
expensive for the state and better for school districts.
SENATOR COGHILL commented that the input from local districts on
their unique challenges and service capacity are very different
across the state. He expressed hope that Senator Dunleavy would
look for ways to mechanize that.
CHAIR DYSON requested that Senator Wielechowski summarize his
ideas about SB 90.
SENATOR WIELECHOWSKI moved to adopt Conceptual Amendment 1.
SENATOR COGHILL objected for discussion purposes.
SENATOR WIELECHOWSKI explained that the conceptual amendment,
which may require some technical drafting changes, creates a
health care exchange for the state of Alaska. It will go a long
way toward doing what SB 90 proposes. It will give consumers, as
well as small businesses and trust funds, the ability to pool
resources and lower the price of insurance.
6:23:53 PM
SENATOR COGHILL countered that the health care exchange has been
debated. He opined that the purpose of the amendment is to
fragment the population and then re-congregate them under a new
system. He said that SB 90 says the state already has a
fragmented system and the competition is the ability to compete
in larger areas. He said he understands the benefit of a health
care exchange, but maintained that it does not fit well in
Alaska, generally, and does not fit well in SB 90.
SENATOR GIESSEL said she is also against the amendment. She
stated that the Alaska Health Care Commission and the
commissioner of health evaluated the health care exchange and
found it to be cost prohibitive and not beneficial for Alaska.
SENATOR COGHILL credited Senator Wielechowski for bringing the
idea to the debate. He maintained his objection.
A roll call vote was taken. Senator Wielechowski voted in favor
of Conceptual Amendment 1 and Senators Giessel, Coghill, and
Chair Dyson voted against it. Therefore, the Conceptual
Amendment 1 failed by a 1:3 vote.
SENATOR DYSON related that the administration said that if SB 90
does not pass, the department would start to staff up, and will
have only spent a couple hundred thousand dollars by next
session.
SENATOR WIELECHOWSKI said he would object to moving SB 90.
SENATOR COGHILL moved to report SB 90 from committee with
individual recommendations and attached fiscal notes.
SENATOR WIELECHOWSKI objected.
He stated that he was sympathetic to the issue of high insurance
costs in Alaska. He said he was also sympathetic to the idea
that there is a legislative process that looks deeply into these
issues. He maintained that SB 90 is one of the largest bills he
has had an opportunity to vote on. He noted there has only been
less than one hour of testimony and the fiscal note is for $1.5
billion. He said it is an enormous change in public policy for
Alaska; it will affect the lives of 40,000 Alaskans. It takes
away local control and forces one insurance company on every
community in the state.
He related that he asked the Department of Administration if
there was any evidence that the state can do this better than
the current system and he was not provided with a positive
answer. He said there is no evidence that the state can do this
cheaper. The only evidence that was presented was by Local 71
who said that SB 90 would increase the cost for the Anchorage
School District by over $400,000 a year.
He maintained that the bill creates a dozen new state positions
and affect tens of thousands of Alaskans. He emphasized that
government is not supposed to work this way and he said he can't
support SB 90, a radical policy shift and a massive state
government takeover of private insurance programs.
CHAIR DYSON said he was sympathetic to several issues Senator
Wielechowski raised.
SENATOR DUNLEAVY responded that insurance is a burden for the
local school districts to administer. The school district's
primary purpose is to educate kids, not administer insurance
plans.
6:31:31 PM
SENATOR WIELECHOWSKI stated that empirical evidence shows that
the cheapest way to do insurance is single payer. If the
Department of Administration would conduct an analysis of the
single payer system that was run by the state and it showed that
it was substantially cheaper, he asked Senator Dunleavy if he
would support legislation to that effect.
SENATOR DUNLEAVY said that was a hypothetical situation and he
could not answer. He said as an administrator, school board
president, and a senator, he still believes it is wrong to deal
with insurance at the local level; instead, the focus should be
on kids.
A roll call vote was taken. Senators Coghill, Giessel, and Chair
Dyson voted in favor of reporting SB 90 from committee and
Senator Wielechowski voted against it. Therefore, SB 90 was
reported from the Senate State Affairs Standing Committee with a
3:1 vote.
6:33:22 PM
There being no further business to come before the committee,
Chair Dyson adjourned the State Affairs Standing Committee at
6:33 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 90 - Sponsor Statement.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - Version A.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - Sectional Analysis.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - Alaska Employee Health Plan.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - AASB Teacher Survey.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - AASB Classified Employee Survey.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - AASB Administrator Survey.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - FY12 Health Costs Data by ALASBO.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - PE71 Letter.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| HB 186 Sponsor Statement.pdf |
SSTA 4/6/2013 3:30:00 PM |
HB 186 |
| HB0186A.PDF |
SSTA 4/6/2013 3:30:00 PM |
HB 186 |
| HB186-DPS-APSC-03-29-13.pdf |
SSTA 4/6/2013 3:30:00 PM |
HB 186 |
| SB 90 - Fiscal Note DOA-DRB-4-05-13.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - Fiscal Note DOA-HPA-4-05-13 (1).pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - Fiscal Note DOA-HPA-4-05-13.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - Fiscal Note EED-K12-4-5-13.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - Kenai Support Letter.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - Mat-Su Support Letter.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 48 - CS SB 48 STA Version U.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 48 |
| SB 90 Copper River Letter of Support.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - NEA-Alaska Health Plan Opposition.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| SB 90 - NEA-Alaska Opposiiton.pdf |
SSTA 4/6/2013 3:30:00 PM |
SB 90 |
| HB 59 - Support Letter.pdf |
SSTA 4/6/2013 3:30:00 PM |
HB 59 |