HB 238-PUBLIC EMPLOYEE/TEACHER RETIREMENT 8:09:28 AM CHAIR SEATON announced that the first order of business was HOUSE BILL NO. 238, "An Act relating to contribution rates for employers and members in the defined benefit plans of the teachers' retirement system and the public employees' retirement system and to the ad-hoc post-retirement pension adjustment in the teachers' retirement system; requiring insurance plans provided to members of the teachers' retirement system, the judicial retirement system, the public employees' retirement system, and the former elected public officials retirement system to provide a list of preferred drugs; relating to defined contribution plans for members of the teachers' retirement system and the public employees' retirement system; and providing for an effective date." [Before the committee was CSHB 238, Version 24-LS0761\R, Wayne, 1/31/06.] 8:10:43 AM CHAIR SEATON, after ascertaining that there was no one to testify, closed public testimony. 8:11:01 AM CHAIR SEATON moved Amendment 1, labeled, 24-LS0761\R.1, Wayne, 2/7/06, which read as follows: Page 2, line 5, following "to": Insert "the average salary of all employees of the employer multiplied by" 8:12:15 AM REPRESENTATIVE GARDNER objected for discussion purposes, and she asked Chair Seaton to clarify how the language of the bill would read with Amendment 1. 8:12:44 AM CHAIR SEATON explained that the language, beginning on [page 2], line 3, would read as follows: (1) applying the employer's past service cost rate, up to an amount equal to the blended employer past service cost rate, as calculated on the employer's entire wage base, to the average salary of all employees of the employer multiplied by the number of employees of that employer who are members of the public employees' defined contribution plan in AS 39.35.700-39.35.990; CHAIR SEATON said the language currently on [page 2, lines 3-6] sets out a calculation formula, but it is missing the language of Amendment 1. 8:13:14 AM REPRESENTATIVE GARDNER removed her objection. CHAIR SEATON asked if there was any further objection to Amendment 1. There being none, it was so ordered. 8:13:24 AM CHAIR SEATON moved Amendment 2, labeled, 24-LS0761\R.3, Wayne, 2/7/06, which read as follows: Page 2, lines 20 - 21: Delete all material: Insert "contribution plan established in AS 39.35.700 - 39.35.990 and the defined benefit plan established in AS 39.35.095 - 39.35.680;" 8:13:34 AM REPRESENTATIVE GARDNER objected for discussion purposes. 8:13:45 AM CHAIR SEATON explained that the identifying statutes on page 2, lines 20-21, are in the wrong order, and Amendment 2 corrects that mistake. 8:14:04 AM REPRESENTATIVE GARDNER removed her objection to Amendment 2. CHAIR SEATON asked if there was any further objection. There being none, Amendment 2 was adopted. 8:14:21 AM CHAIR SEATON moved Amendment 3, which read as follows [original punctuation provided]: Page 2, lines 7-14 Delete all material REPRESENTATIVE GARDNER objected for discussion purposes. 8:15:36 AM CHAIR SEATON stated his assumption that regarding employer contribution rates in municipalities with low-compensated elected officials, "the entire normal [medical] cost associated with that person is spread among the rest of the individuals of that employer and is calculated in that employer's rate." He said he would like confirmation that that is true. 8:15:51 AM TRACI CARPENTER, Project Manager, Central Office, Division of Retirement & Benefits, Department of Administration, confirmed that Chair Seaton's statement is true. She rephrased the concept as follows: "The way that calculation works by the actuary is they determine what the dollar cost amount is for medical benefits for all of the participating members for that year, and then, having arrived at the dollar amount, they divide that by the wage base to arrive at the contribution amount." 8:16:18 AM CHAIR SEATON asked if that is also the case in Tiers I, II, and III of the defined benefits program. 8:16:32 AM MS. CARPENTER answered yes. 8:16:38 AM CHAIR SEATON explained that Amendment 3 would remove language that is not necessary. 8:17:07 AM REPRESENTATIVE GARDNER removed her objection to Amendment 3. CHAIR SEATON asked if there was any further objection to Amendment 3. There being none, it was so ordered. 8:17:23 AM REPRESENTATIVE LYNN moved to report CSHB 238, Version 24- LS0761\R, Wayne, 1/31/06, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 238(STA) was reported out of the House State Affairs Standing Committee.