ALASKA STATE LEGISLATURE  SENATE EDUCATION STANDING COMMITTEE  March 7, 2018 8:00 a.m. MEMBERS PRESENT Senator Gary Stevens, Chair Senator Cathy Giessel Senator John Coghill Senator Tom Begich Senator Shelley Hughes MEMBERS ABSENT  All members present COMMITTEE CALENDAR  SENATE BILL NO. 185 "An Act relating to reemployment of persons who retire under the teachers' retirement system." - HEARD & HELD PREVIOUS COMMITTEE ACTION  BILL: SB 185 SHORT TITLE: REEMPLOYMENT OF RETIRED TEACHERS & ADMIN SPONSOR(s): SENATOR(s) MICCICHE 02/16/18 (S) READ THE FIRST TIME - REFERRALS 02/16/18 (S) EDC, FIN 02/26/18 (S) EDC AT 8:00 AM BUTROVICH 205 02/26/18 (S) Heard & Held 02/26/18 (S) MINUTE(EDC) 03/07/18 (S) EDC AT 8:00 AM BUTROVICH 205 WITNESS REGISTER KATHY LEA, Deputy Director/Chief Pension Officer Division of Retirement and Benefits Department of Administration (DOA) Juneau, Alaska POSITION STATEMENT: Answered questions on SB 185. SENATOR MICCICHE Alaska State Legislature Juneau Alaska POSITION STATEMENT: Sponsor of SB 185. LISA SKILES PARADY, Ph.D., Executive Director Alaska Council of School Administrators Juneau, Alaska POSITION STATEMENT: Answered questions on SB 185. DAN WAYNE, Attorney Legislative Legal Services Legislative Affairs Agency Alaska State Legislature POSITION STATEMENT: Answered questions about SB 185. MARK MILLER, Ph.D., Superintendent Juneau School District Juneau, Alaska POSITION STATEMENT: Supported SB 185. JOSHUA GILL, Director of Personnel Lower Kuskokwim School District Bethel, Alaska POSITION STATEMENT: Supported SB 185. DR. MARY WEGNER, Ph.D., Superintendent Sitka School District Sitka, Alaska POSITION STATEMENT: Supported SB 185. TAM AGOSTI-GISLER, President Anchorage School Board Anchorage School District Anchorage, Alaska POSITION STATEMENT: Supported SB 185. SCOTT MACMANUS, Superintendent Alaska Gateway School District Tok, Alaska POSITION STATEMENT: Supported SB 185. JOHN SEDOR, Representing Self, Attorney Special Projects Director Alaska Council of School Administrators Anchorage, Alaska POSITION STATEMENT: Supported SB 185. JACK WALSH, Superintendent Craig School District Craig, Alaska POSITION STATEMENT: Supported SB 185. DAYNA DEFEO, Ph.D., Director Center for Alaska Education Policy Research Institute of Social and Economic Research (ISER) University of Alaska Anchorage Anchorage, Alaska POSITION STATEMENT: Supported SB 185. ERIC GEBHART, Superintendent Nenana School District Nenana, Alaska POSITION STATEMENT: Supported SB 185. ACTION NARRATIVE 8:00:01 AM CHAIR GARY STEVENS called the Senate Education Standing Committee meeting to order at 8:00 a.m. Present at the call to order were Senators Giessel, Coghill, Begich, Hughes, and Chair Stevens. 8:00:20 AM SB 185-REEMPLOYMENT OF RETIRED TEACHERS & ADMIN  CHAIR STEVENS announced the consideration of SB 185. He said the fiscal note will be available next week. 8:02:08 AM KATHY LEA, Deputy Director/Chief Pension Officer, Division of Retirement and Benefits, Department of Administration (DOA), answered questions on SB 185. 8:02:34 AM CHAIR STEVENS asked about potential abuse of the system in the past with the retiree rehire provision. He asked if any information is available about 49 percent contracts. 8:02:56 AM MS. LEA said the 49 percent was not part of the retiree rehire plan. The division does not use the term because it is not a defined term. To be in TRS [Teacher Retirement System], someone must work at least 50 percent of the normal work. Districts do hire at 49 percent, so the person is not eligible for TRS. If retirees are in an ineligible position, it does not affect their retirement. 8:03:36 AM CHAIR STEVENS asked if that is just for TRS. 8:03:41 AM MS. LEA said the same concept exists in PERS [Public Employee Retirement System] except there are no contracts. If someone is hired in a nonpermanent position or for less than 15 hours a week, that person is not eligible for PERS. 8:04:08 AM SENATOR BEGICH asked whether districts can hire at 49 percent now, without the bill. 8:04:29 AM MS. LEA said many districts do hire teachers at less than 50 percent. SENATOR BEGICH said that is the reason for the bill, that a district can hire someone full-time instead of part-time. 8:05:00 AM MS. LEA said her understanding of the bill is that a retired teacher can be rehired into a full-time position. 8:05:12 AM SENATOR BEGICH said if gaming of the system occurs now by hiring someone at 49 percent, the bill counteracts some of the gaming. 8:05:34 AM MS. LEA said she is not comfortable characterizing that as gaming. Districts have had legitimate needs [to hire at less than 50 percent]. 8:05:54 AM SENATOR HUGHES asked whether a district contributes to TRS and provides a health care plan for someone hired for less than 50 percent. 8:06:33 AM MS. LEA said a person ineligible for TRS is not reported to them because no TRS contributions are made by the employee or employer. She cannot speak to the health insurance question because no information is reported to them for those individuals. 8:07:08 AM SENATOR HUGHES asked whether it will be a disincentive if a district hires someone for more than 49 percent and then has to make a 12.56 percent contribution TRS. 8:07:34 AM MS. LEA said it is an added cost. She cannot speak to whether that is a disincentive for a district. SENATOR HUGHES said she wants to know if retired teachers are getting active health care if hired for less than full time because it is quite a difference in cost to make the 12.56 TRS contribution and to pay the health care premium. 8:08:35 AM CHAIR STEVENS said a retired teacher has health benefits and does not need health benefits if returning to work. He asked if districts can offer more health insurance. 8:09:04 AM MS. LEA said she is not aware of what health insurance districts provide at different levels, but retirees do have health insurance. An Affordable Care Act provision prohibits employees from participating in the retiree health plan. That is why they requested a provision in this bill that requires the employer to offer health insurance. 8:09:45 AM SENATOR GIESSEL said she is confused by section four. Last time she thought Ms. Lea said an employee cannot receive a salary and receive retirement benefits, but section 4, line 12, says they can. They are getting health benefits and the pension. 8:10:51 AM MS. LEA said under current law if retirees go back to work in a full-time or part-time permanent position, their benefits are stopped while they are working. While working, they contribute to the retirement system and earn an additional pension amount. That section of the bill is the new language that will allow them to come back into employment without stopping their retirement benefits. They will continue to receive their retirement benefits, but they do not contribute to the retirement system and will not earn additional retirement benefits. 8:11:57 AM SENATOR GIESSEL said section 4 (g), line 18, states that a member who is retired and reemployed is eligible to receive group health plan coverage provided to active members employed by that school district. They continue to get their health benefits even after they are rehired. 8:12:51 AM MS. LEA said they will still receive retiree health benefits, but to comply with the Affordable Care Act, the employer must provide active health insurance. There is a requirement that they cannot have an active employee participating in the retiree health care plan. An employer can allow an employee to waive coverage, but the requirement is that active health coverage must be offered. If the retiree chooses or must elect active insurance, the retiree insurance will be secondary. 8:13:57 AM SENATOR MICCICHE, Alaska State Legislature, sponsor of SB 185 said there is a reason why unions support the bill. It is because there are no savings to districts. The desire is to hire full-time, new teachers ready to work of years to come. The bill does not cost districts additional money; costs are the same. They must cover the 12.56 [for the unfunded pension liability], and they have to offer active member group health coverage. The rehired retiree cannot receive additional credited service. The only reason for the bill is when districts cannot fill a slot, they can hire an experienced teacher. 8:15:57 AM CHAIR STEVENS asked whether a sunset provision should be considered. 8:16:22 AM SENATOR MICCICHE said Alaska continuously has problems filling positions in remote areas. Adding a sunset provision means another bill in the future. The bill is supported by NEA [National Education Association] and all the districts. If they had another choice they would not bring back retired teachers. They don't know how long the retired teacher will be interested in continuing to teach. They are not as reliable as bringing in a new employee to begin a career. He does not foresee unintended consequences with the bill; they can change the law if it becomes problematic. 8:17:46 AM CHAIR STEVENS asked Ms. Lea to reflect on a sunset provision. 8:18:14 AM MS. LEA said sunset provisions were in the two prior retiree rehire bills with requirements that the division give an annual report to the legislature on how many TRS members were hired, what type of positions were hired, and which districts used the provision. 8:19:26 AM CHAIR STEVENS said he would like feedback from the committee about a sunset provision. 8:19:36 AM SENATOR GIESSEL said the report on the past rehire program shows a variety of people participated in the rehire program: 73 in miscellaneous, 11 site administrators, a psychologist, a librarian, a director. These are not teachers. It changes her view of what the word "member" means in the bill. It is much broader than classroom teacher. 8:20:36 AM CHAIR STEVENS asked if many of these people would be in PERS [Public Employees Retirement System]. 8:20:45 AM MS. LEA said members in TRS must have a certificate from the Department of Education and Early Development (DEED) in order to perform duties of their jobs. There are job classes outside of classroom teacher that meet that definition. Some librarians are required to be certificated because they are also teaching. School nurses sometimes must be certificated because they teach health classes. Superintendents must have certificates. They are covered under the bill because they are all TRS members. 8:21:34 AM SENATOR MICCICHE said there were 325 diversified positions in the 10-year period [of the last retiree rehire program]. The largest employer was the Lower Kuskokwim School District. It demonstrates the program is only used in a clutch. An average of 32 teachers a year statewide used the program. 8:22:29 AM SENATOR GIESSEL said they have heard the situation has gotten worse in the last eight years (the report goes to 2010). Since she is aware of the workers' compensation costs borne by school districts, which takes away money from classrooms, she wondered what kind of work comp cases resulted from hiring older people. CHAIR STEVENS said classrooms are generally a safe environment, but anything can happen. 8:23:40 AM MS. LEA said that is a question best put to Scott Jordan, Director of Risk Management, Department of Administration. 8:24:34 AM SENATOR HUGHES said they have heard of the national teacher shortage. They get the need as far as teachers but around half of the rehired were not teachers. She asked if there are verified shortages for these other categories and should the bill be designed so broadly. She wondered whether other public employees would want the same opportunity. 8:25:58 AM LISA SKILES PARADY, Ph.D., Executive Director, Alaska Council of School Administrators, answered questions on SB 185. She said the bill is designed for all TRS educators because Alaska is in such a crisis across the board. In Alaska, over the last four years, superintendents have had a 59 percent turnover rate. She is looking at another ten this year. Alaskan is struggling to fill superintendent positions. School boards have such diminished pools to select from that they are using long-term teachers to fill in as superintendents. The bill was written to address shortages in Alaska TRS populations. Principals have a 26 percent turnover rate. The teacher turnover rate is getting worse every year. The statewide average is 22 percent, but the rate grows from the urban areas to rural areas to isolated remote areas, where the retention rate is in the 50s. 8:29:33 AM DR. PARADY said research from [Richard] Ingersoll with the University of Pennsylvania shows the country has 3.3 million teachers. In 2015, 531,000 teachers left the profession, primarily because of working conditions. To replace them, 343,000 teachers were prepared to replace them. Nationally a gap exists between educators leaving and educators coming in, an ongoing deficit. Alaska relies on recruiting from the lower 48. Alaska is in the worst situation in the history of the state. The bill was designed to fill TRS positions: superintendents, principals, primarily teachers. The summary data from the last retiree rehire program shows this is not a mad rush. Districts want long-term stable teachers, principals, superintendents. Achievement is better when this happens. When districts cannot fill vacancies, they prefer to fill vacancies with retired people vs. what they are forced to do now, patch together something with subs or paraprofessionals who may not have the content knowledge. 8:31:57 AM SENATOR BEGICH asked, as the title suggests, whether the bill is simply TRS positions only, not PERS. 8:32:26 AM DR. PARADY said yes. It also does not deal with positions of 49 percent or less. This is about full-time, retired TRS employees. 8:32:47 AM CHAIR STEVENS asked whether the 10 days districts must advertise to fill a position is enough time to fill a vacancy. 8:33:21 AM DR. PARADY said most districts advertise much longer to attract certified employees. The reason for the bill is that districts are advertising almost throughout the year in some cases and not finding employees they need. Ten days are the minimum. She has every confidence that districts are doing that and more and are not able to attract certified employees to the position. 8:34:27 AM SENATOR MICCICHE said these are great questions to clarify the intent of the bill for the public. He said he has two children in public schools. An incredible teacher went on maternity leave. Her position was filed with a patchwork of teachers. This creates instability for kids. Sometimes a temporary teacher doesn't have experience. He told of being superintendent of a plant that reopened after being shut down for couple years. Suddenly they needed experienced employees to start a plant up. They brought in people from across the state who had worked at the plant in the last 40 years. They temporarily collected a level of expertise until they filled those positions. 8:36:15 AM CHAIR STEVENS asked Mr. Wayne with Legislative Legal if sunset provisions and reporting requirements were standard in bills of this nature. 8:36:54 AM DAN WAYNE, Attorney, Legislative Legal Services, Legislative Affairs Agency, Alaska State Legislature, answered questions about SB 185. He said it is purely up to the legislature. CHAIR STEVENS asked whether that would be easy to draft if they want to pursue it. MR. WAYNE said yes. 8:37:19 AM SENATOR HUGHES asked if anything prevents multiple 12-month contracts. 8:38:05 AM SENATOR MICCICHE said nothing prohibits that, but the 10-year data show 18.7 months was the average time for reemployment. It truly is a temporary situation. The longest in that period was 46 months, which is four contracts. SENATOR HUGHES asked if the advertisement requirement is for each contract or just initially. DR. PARADY said the advertisement requirement is for each time a contract is issued. 8:39:11 AM SENATOR MICCICHE said as someone who wants less red tape, he questions the value of reporting. The bill has an indeterminate fiscal note, but once the actuarial data comes in, it is probably a zero fiscal note. He asked if reporting is worthy of the cost. 8:39:57 AM MARK MILLER, Ph.D., Superintendent, Juneau School District, supported SB 185. He supports the bill because it deepens the talent pool. He shared his frustration of learning about a $20 product that helps save students from committing suicide, but he lacks the funds to buy it for the district. He said he spent 5 hours in a budget meeting trying to cut $3 million and in end they added $60,000 for school nurses. The board decided that even in these tough times, schools need nurses to supervise kids with type 1 diabetes. They cannot find school nurses or psychologists. Then the only option is to call Oregon and sign a contract with a private firm, who takes a cut when it sends nurses or psychologists. Not a dime of that money stays in Alaska. They are doing the absolute best they can with the dollars they have. In Juneau the need is not with most classroom positions, but some special education positions go unfilled all year. This doesn't solve the problem, but it helps a little. It doesn't save them money, but it doesn't cost them money either. It allows them to get a better product to kids who need it the most. 8:43:10 AM CHAIR STEVENS asked whether adding a reporting requirement to learn from districts how they are using the retiree rehire program the bill would be that onerous. 8:43:56 AM DR. MILLER said that for Juneau the numbers would be about three to five employees. He did not think that it would that much to report. 8:44:29 AM JOSHUA GILL, Director of Personnel, Lower Kuskokwim School District, supported SB 185. He said the Lower Kuskokwim School District is one of the largest rural school districts in size, roughly the size of West Virginia, and has 27 schools spread out across that area that are completely remote. They know that Alaska has an acute shortfall of quality educators, teachers in particular. Lower Kuskokwim had eight positions it could not fill at the start of the school year. The impact of eight teachers affects over 100 kids. The district is doing everything it can to provide quality education to kids. Not being able to put teachers in classrooms is difficult. They have sat next to school districts in job fairs in Texas, where the starting salary is $10,000 more than what they offer, and they are asking teachers to live in remote areas away from their families. Of 60 teachers hired last year, one-third were retired teachers from other states, but he cannot hire retired teachers from Alaska. They are the ones who know their kids the best. When they cannot fill vacancies, SB 185 is the tool that would help them keep the best instructors in front of kids. That is the end goal, keeping quality educators. Students will benefit from Alaskan teachers who will provide quality instruction for their children. They deserve that. 8:47:30 AM CHAIR STEVENS asked if he knew of retired teachers who could have filled the eight vacant positions. 8:48:12 AM MR. GILL said he assumed there were, but he didn't look because that avenue was not open to him. Lower Kuskokwim has 400 certified teachers and principals, and twelve teachers are retiring this year. If that is the common average, they are out there. Now that the question has been asked, he can think of a couple he could have called. 8:48:52 AM DR. MARY WEGNER, Ph.D., Superintendent, Sitka School District, supported SB 185. She said Alaska has 153 open teaching positions right now. Alaska desperately needs qualified teachers to fill vacancies. They can hire retired teachers from other states. They used to be able to hire retired teachers from Alaska. They want that opportunity back. Sitka has just under 120 teachers. The statewide vacancies are more than the entire district staff of Sitka. Picture a year of kids going to school and no one is there or someone who is not qualified. Providing an excellent education to every student every day requires experienced teachers, a culturally responsive learning environment, and targeted instruction. All this helps to achieve the three commitments of the Alaska Education Challenge-- increase student success, support responsible and reflective learners, and cultivate safety and well-being. By shutting out retired teachers, they are wasting a valuable resource. 8:51:28 AM CHAIR STEVENS asked if she has hired teachers from outside of Alaska. 8:51:43 AM DR. WEGNER said Sitka is in a good location for attracting teachers. She is testifying because Sitka has a 12 percent budget deficit. She has talented teachers who grew up in Sitka and returned to Sitka to teach. On Tuesday she had to present eliminating seven teaching position to the board. She asked what happens next year when she doesn't have those local talented teachers committed to their community. She needs the flexibility because she is concerned about the future. 8:52:42 AM TAM AGOSTI-GISLER, President, Anchorage School Board, Anchorage School District, supported SB 185. She said SB 185 will give the Anchorage School District flexibility with positions that are difficult to fill. It allows the district to expand 49 percent positions to full time, only as needed. This is a stopgap measure to have qualified teachers in every classroom. She pointed out that retired teachers still must keep their certificates valid. The lifetime certificate is valid for positions of not more than 20 days in length. This is a win/win for the state and district. The district would contribute to the unfunded pension liability, but members do not receive the benefit for working full time. 8:55:07 AM CHAIR STEVENS asked her to reflect on the fact that retired teachers from out of state can be hired but not retired Alaskan teachers. 8:55:28 AM MS. AGOSTI-GISLER said the district is trying to find teachers who are going to stay long term. It is difficult to attract teachers to Alaska when the compensation and benefits are not as attractive as other states. In 80s the package was very good for teachers. When she asks friends in other states to consider teaching in Alaska, they say the salaries are lower in Alaska and they have a much better retirement plan. 8:56:32 AM CHAIR STEVENS said he would like information about the Anchorage School District hiring retired teachers from Outside. 8:58:05 AM SCOTT MACMANUS, Superintendent, Alaska Gateway School District, supported SB 185. He said there is a shortage of quality teachers in the country and in Alaska. Alaska Gateway is small, with 40 teachers in an area the size of West Virginia. It has a relatively low turnover rate. Last year they had to replace six teachers. Three they hired a few weeks before school started, so they did start with a full contingent. He took a team of five to Anchorage last year and offered two contracts, but they all took jobs in other districts. He did not find a single teacher at the Portland job fair willing to come to a remote location, even though by Alaska standards it is not that remote because Alaska Gateway is on the road system. Alaska Teacher Placement is doing a good job, but it is an uphill battle when teachers can work elsewhere for better pay and retirement with a lower cost of living. It is a hard sell to get someone to live in Alaska. Alaska Gateway was fortunate to get two principals and the last teacher in the final weeks before school started. One teacher drove from Cincinnati, spent one day in Northway last year and then returned to Cincinnati. It took a month to find a replacement teacher. They do have retired teachers who have stayed in their districts but who do not want to jeopardize their retirement. These are teachers who are committed to the state, know their kids and know how they do things. SB 185 is another tool to support the mission of providing quality education to kids. 9:02:46 AM JOHN SEDOR, Representing Self, Attorney, Special Projects Director, Alaska Council of School Administrators, supported SB 185. He has represented school districts for almost 30 years and has traveled extensively in Alaska. He has seen first-hand the struggles of districts trying to recruit and retain teachers. SB 185 doesn't solve all problems, but it is a tool. He addressed the question of whether this would be used appropriately by school districts and retirees. He noted that the Division of Retirement and Benefits put in place the bona fide separation regulations, which are also in section 1 of the bill. The system would be protected because retirees cannot prearrange to come back to work for school districts. Retirees can work less than half time, but for many districts, the economics don't work to have a teacher work for less than half time. The bill gives retirees the opportunity to work full-time for school districts and not jeopardize their pensions. 9:05:37 AM SENATOR BEGICH asked for his thoughts on adding a reporting requirement to SB 185. 9:06:11 AM MR. SEDOR said every requirement to track costs money and time. In rural districts they wear an incredible number of hats. They already have obligations that far exceed the time in the day that they have to devote to them. He asked what is the balance between the cost and the benefit. SENATOR BEGICH asked him to reflect from a lawyer perspective on how long he thought the crisis with the educator shortage would last. 9:07:42 AM MR. SEDOR said it will be around a long time. He noted the numbers that Dr. Parady had referred to. The state has fiscal challenges, which exacerbate the differential between the available number of teachers in the state and the national number. The struggles did not go away in 2010 when the last bill sunset. Districts struggle more and more to fill positions when the state has this resource of retired teachers. 9:09:14 AM JACK WALSH, Superintendent, Craig School District, supported SB 185. He said filling positions has been a challenge for a long time. Craig has someone working with an emergency certificate because they could not find a special ed teacher. The University of Alaska has an aggressive plan to fill teaching positions. They are working with them to make that happen, but the problem is not going to end soon. This is a well thought out plan that can help everyone and help ensure that Alaskan students have the best opportunities possible for their education programs. DAYNA DEFEO, Ph.D., Director, Center for Alaska Education Policy Research, Institute of Social and Economic Research (ISER), University of Alaska, supported SB 185. She said her expertise includes teacher supply and demand. The nationwide teacher shortage is a perfect storm in Alaska because of low teacher production. Every year Alaska graduates about 200 teachers but hires nearly four times that much from out of state. The teacher supply is shrinking in the lower 48 and the economy is booming. Other states have more attractive benefits packages. Alaska teacher salaries are not as high as they used to be. Teachers working here already can look to the lower 48 and find enticing teacher offers. It is harder to attract new teachers here in Alaska. This disproportionately affects rural schools because they rely more heavily on out of state hires. The administrative cost of teacher turnover is more than $20,000. This does not include the cost of teacher preparation or the impact on student learning. They have consistently documented that higher teacher turnover means lower student performance. In Alaska the gap in teacher quality between low income and middle income is the third highest in the nation. The state's economic situation means more teacher turn over. It will be increasingly difficult to hire qualified educators. This leaves rural and low-income schools in a bind. Districts do wonderful and creative things to fill vacancies, but when the size and quality of the applicant pool is diminishing, especially for the hardest positions to fill--special education, secondary math and science--the overall quality of education in the state goes down. Increasing the state's pool of highly qualified teachers and getting them into our schools, especially rural and low-income schools, needs to be a priority. 9:16:57 AM ACTING CHAIR COGHILL said the sunset provisions in previous retiree rehire bills required reporting. He asked if that reporting has been of any value to her as a researcher. 9:17:27 AM DR. DEFEO said she has not used it, but she will ask other researchers at ISER. 9:17:52 AM ACTING CHAIR COGHILL said that would be appreciated. ERIC GEBHART, Superintendent, Nenana School District, supported SB 185. He said Nenana is a small rural school district on the road system, 55 miles south of Fairbanks. His district has no significant teacher turnover, but in the past, they would have 15 to 20 applicants for teacher openings. Ten years ago it was 25 or more. Nenana has advertised two weeks for a high school math teacher and has five applicants. That is very concerning to him. Anything to increase the pool raises the potential quality of teachers. The bottom line is finding the best person at the time to put in front of kids to give them what they need. 9:20:51 AM ACTING CHAIR COGHILL held SB 185 in committee. There being no further business to come before the committee, Acting Chair Coghill adjourned the Senate Education Standing Committee at 9:20.