Legislature(2021 - 2022)ADAMS 519
04/27/2021 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB69 || HB71 | |
| HB92 | |
| HB55 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 69 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 92 | TELECONFERENCED | |
| += | HB 55 | TELECONFERENCED | |
HOUSE BILL NO. 55
"An Act relating to participation of certain peace
officers and firefighters in the defined benefit and
defined contribution plans of the Public Employees'
Retirement System of Alaska; relating to eligibility
of peace officers and firefighters for medical,
disability, and death benefits; relating to liability
of the Public Employees' Retirement System of Alaska;
and providing for an effective date."
11:24:53 AM
Co-Chair Merrick OPENED public testimony.
11:25:19 AM
JEFF JONES, SELF, KETCHIKAN (via teleconference), testified
in support of the legislation. He shared that he was a fire
medic and had been with the Ketchikan Fire Department since
2007. He stated a return to a DB [defined benefit] plan
could help the state and municipalities mitigate the cost
the associated with training and turnover with existing DB
plans. He provided information about the various positions
he had held with the [fire] department. He stated he was
not irreplaceable; however, it would be a long time before
someone new could receive the numerous certifications he
had obtained. He did not want to relocate his family to
another state with a DB program. He remarked it was well
known that firefighters working after the age of 55 put
them in greater risk of dying. He wanted to be able to hold
his grandchildren and enjoy his retirement. He started his
career when he was 28 years old and at 58, he would have 30
years with the department, but not enough to retire. He
emphasized that responding to a fire at that age put the
employee, coworkers, and the public at greater risk. He
believed the relatively small increase for the DB program
would be money well spent when considering the value of
retaining employees throughout their career. He encouraged
the committee to pass the bill.
11:27:24 AM
GERARD ASSELIN, CAPTAIN, ANCHORAGE POLICE DEPARTMENT,
ANCHORAGE (via teleconference), shared that he is a
lifelong Alaska resident. He supported the legislation. He
had been honored to serve his friends and neighbors for the
past 23 years with the department. He provided information
about his job duties. He worked with over 200 officers
providing critical service around the clock. Additionally,
he oversaw the field training program. He saw the direct
impacts of the recruitment and retention challenges that
existed within the profession in Alaska. He highlighted
that the department was fundamentally and increasingly in
search of qualified, educated professionals to work in the
career. He stressed that demands on the policing profession
had increased, making it more difficult to recruit people
into the profession and causing officers to reevaluate
their desire to stay. He detailed that after officers
received training, they became a valuable commodity.
Mr. Asselin shared that recruitment had become more
competitive and challenging than ever before. The
department saw officers leave on a monthly basis for
departments in other states. He spoke to the loss of
productivity that occurred with academy and field training
and the proficiency that came with experience. He witnessed
the loss of productivity daily with the department's
training programs. He reported that over the past month he
had interviewed 20 patrol sergeants and almost all had
vocalized the number one problem was young officers and
recruitment and retention. The situation led to
inexperience and a loss of productivity. He appreciated any
tools that could be given to improve recruitment and
retention for the department. He stated that the bill
provided an opportunity to put Alaska in a competitive
position to maintain the best public safety professionals.
He urged support of the bill.
11:31:14 AM
JODIE HETTRICK, FIRE CHIEF, ANCHORAGE FIRE DEPARTMENT,
ANCHORAGE (via teleconference), spoke in support of the
bill. She detailed that the Anchorage Fire Department was
the largest in the state with about 400 employees. She
shared that one of the department's biggest stumbling
blocks for recruitment and retention of members was the
retirement system. The situation was compounded by members'
ineligibility for social security. She explained that the
department was trying to get people to spend 20 to 25 years
serving the community and when they left, they only had a
401k. She explained it had significantly contributed to a
reduction in recruitment opportunities. She reported that
the department's application numbers were approximately 25
percent of what they had been pre-Tier IV. Additionally,
employees were leaving typically within their first five to
seven years. She shared that an employee had reached his
benchmark for his 401k under the Tier IV system, so he
retired at the age of 34 after working with the department
just under 10 years. She explained it was an investment of
close to $2 million the municipality had put into the
individual for training and other and it had gone right out
the door. She detailed that the department was not only
losing employees to other states, but to retirement because
they were comfortable living at a fairly low wage without
having to deal with the negative effects of a career in
emergency services.
Ms. Hettrick stated that without an adequate retirement
system in place, it would be even more difficult to recruit
and retain valuable employees to serve the community. She
believed the bill went in the right direction and she
strongly urged support for its passage.
Representative LeBon referenced the retirement of the young
individual in Ms. Hettrick's example. He asked if the
individual had left the profession to seek other
employment. He remarked that retiring and drawing on a 401k
at the age of 34 would be very unusual. He wondered if the
individual had moved to another employer within the
profession or left the profession completely.
Ms. Hettrick answered that the specific individual had left
the profession entirely. The person had moved to a
community in the Lower 48 where he could live for much less
stable income. The individual had another career field in
woodworking and photography and would supplement his income
with retirement income. The department had never
experienced someone leaving that early for an official
retirement.
11:36:10 AM
ANGIE FRAIZE, OFFICER, COMMUNICATIONS OFFICER, ANCHORAGE
POLICE DEPARTMENT EMPLOYEES' ASSOCIATION, ANCHORAGE (via
teleconference), spoke in favor of the legislation. She
shared that the organization represented over 570 police
employees. She stated that the committee's support of the
legislation would directly and indirectly impact the
department's employees and the greater Anchorage area. She
shared it was her 20th year and she was eligible to retire
with a pension. Additionally, she loved the department and
was born and raised in Alaska. She emphasized that the
department was seeing its employees leave in droves after
their first five years. She relayed that the department
recruited a high number of military employees leaving the
military. She noted that the individuals were not from
Alaska and did not have extended family in the state, but
they were starting their families with the department. She
detailed that after about five years the officers started
having young children and were pulled away by family in the
Lower 48 and by lucrative offers from lateral departments
out-of-state offering more money and pensions. She
emphasized that the department was spending a substantial
amount on the employees. She added that the loss of
employees had resulted in a very young department. She
explained that it would have a huge impact on the
community. Additionally, due to the national narrative that
police were facing, professional, experienced, and educated
officers were needed.
She shared that there were only two officers left in the
department from her 2007 academy. She emphasized that the
department was hurting for experienced and professional
police officers. She hoped the committee considered
supporting the legislation.
Representative Rasmussen asked Ms. Fraize to speak to the
benefit a more experienced officer could bring in
situational awareness.
Ms. Fraize replied that there were many studies showing the
more education experience, the less force an officer used.
She noted it was a topic nationwide and fortunately the
department had not experienced the situation. She shared
that the department had a very junior patrol division and
over 80 percent had been there for three to five years. She
shared that when she had worked as an officer downtown, it
had taken her about five years to feel completely confident
in her handling of all situations. She explained that the
junior officers did not have the experience, through no
fault of their own. She stressed the need to continue a
highly educated and experienced department in order to
avoid seeing the community suffer like Ferguson and
Minneapolis.
Representative Rasmussen stated she found it astounding
there was only 20 percent of the department that had over
five years of experience. She observed that incoming
officers likely were not receiving the training they could
if there were more experienced officers serving as mentors.
11:41:18 AM
JUSTIN MACK, ALASKA PROFESSIONAL FIREFIGHTERS' ASSOCIATION,
ANCHORAGE (via teleconference), supported the legislation.
He shared that he had worked for the Anchorage Fire
Department for 10 years and currently served as a captain
for Fire Station 3. He relayed there was widespread support
for the bill within the organization of over 500
professional fire fighters and EMS personnel throughout the
state. The association had been advocating for a shared
risk solution where employees, employers, and the State of
Alaska shared a responsibility in addressing recruiting and
retention. He detailed that since the change to Tier IV,
there had been many unintended consequences. He stated that
perhaps the clearest consequence was the competitive
disadvantage Alaska faced in recruitment and retention. He
reported that the problem was widespread throughout the
state's fire departments. He pointed out that Alaska was
one of the only states to offer a mandatory defined
contribution (DC) for public safety employees.
Mr. Mack relayed other states had switched back from a DC
plan to a DB plan specifically to address the problems
currently happening in Alaska. The bill aimed to make
Alaska competitive in the hiring and retaining of public
safety employees. He stated it was a conservative plan
built by incorporating best practices of some of the most
successful plans in the country, including establishing a
minimum retirement age, removing DB medical, and using a
five-year average rather than a three-year average. He
remarked that the changes drastically reduced the state's
liability. He detailed that the plan also offered
mechanisms to address any adverse experience the plan may
have, including increasing employee and employer
contributions and withholding inflation proofing.
Mr. Mack stressed there was a significant cost of doing
nothing. He highlighted that too many public safety
employees had left the state who cited lack of retirement
as a primary cause. He stated that departments across the
state were hiring police, fire, and corrections officers
who would receive excellent training, yet had no long-term
plans to remain in Alaska. He informed the committee it was
becoming well known that Alaska employees were ripe for the
picking; the department received emails and flyers from
other states attempting to recruit its employees. Employers
were having to reinvest recruitment and retention dollars
several times over, which was wreaking havoc on public
safety budgets. He pointed out that the most talented
public safety officers were leaving the state. The
organization strongly supported the bill.
11:44:35 AM
NICK DAVIS, SENIOR CAPTAIN, ANCHORAGE FIRE DEPARTMENT,
ANCHORAGE (via teleconference), shared that he had about 17
years with the Anchorage Fire Department and was one of the
lead recruiters and testers for the department. He added
that he was in the Tier III retirement system. He detailed
that he had left for commercial fishing but had returned
for the Tier III defined benefits. He relayed it was one of
the only reasons he was in Alaska. He stated that his
retirement benefits kept him with the department. He
stressed it was very challenging to work in a fire station
where half the employees had retirement and half did not.
He underscored that the job was dangerous. He supported the
bill and plead with the committee to pass the legislation.
11:46:47 AM
JACOB WILSON, BUSINESS AGENT, ALASKA CORRECTION OFFICERS
ASSOCIATION, ANCHORAGE (via teleconference), spoke in
support of the legislation. He detailed that the
organization represented over 900 correctional officers
across the state. He shared that throughout his 10 years in
the job he had spoken with thousands of correctional
officers concerning their retirement and the reason they
came and left the profession. He emphasized that
correctional officers put their lives on the line every
day. He stressed that there was currently a recruitment and
retention crisis. He shared that one of the root causes was
the state's DC retirement system, which was not competitive
with other law enforcement retirement systems around the
country. He detailed that between January 2015 and January
2021, 650 correctional officers or just under 70 percent of
the total workforce had left the bargaining unit.
Mr. Wilson emphasized the high turnover had serious and
negative safety, security, and financial impacts on the
state. Every time an experienced officer left, the position
was backfilled with an inexperienced new officer. He
stressed there was significant cost to the state for
recruitment and training. He emphasized that hiring over
100 new recruits per year compromised safety and security
in the institutions. The DOC was not currently able to keep
up with demand for new officers. He reported that a study
published five years earlier found the institutions were
currently operating with insufficient staffing levels to
meet basic security operational requirements. The
legislation would help with recruitment and retention
problems. He stated the bill was a step in the right
direction. He reported that the Tier IV retirement system
did not offer enough incentive for officers to stay past
their five year mark. The association fully supported the
legislation.
11:49:36 AM
Co-Chair Merrick asked how the problems with recruitment
and retention lead to overtime.
Mr. Wilson replied there had been a substantial uptick in
overtime over the past five or so years. He explained that
the amount of mandatory overtime could result in 16 hour
days. He detailed officers serving 12 hour shifts could be
instructed to stay for four additional hours. Additionally,
officers being ordered to come in for work on their off
week had significantly increased over the last year. He
highlighted that COVID-19 illustrated the department's
understaffing.
Co-Chair Merrick asked Mr. Wilson to share the [written]
data with the committee.
11:50:48 AM
NICK CLARK, PARAMEDIC AND FIRE FIGHTER, FAIRBANKS FIRE
DEPARTMENT, FAIRBANKS (via teleconference), shared that he
is a Tier IV member and had been with the Fairbanks Fire
Department for almost 10 years. He reported that currently
34 out of 45 of the department's members were Tier IV. He
detailed that within nine years, the last seven Tier IV
members would be eligible to retire with their 25 years. He
elaborated that five of the Tier IV members were currently
in or moving into officer positions. He pointed out that
the top leadership of the department was about to be under
Tier IV. He shared that the academy had six new recruits
the past year, which was the largest group since the 1990s.
He shared that the department had hired four new members
and was on track to hire a total of eight in the current
year. He reported the department was running at least two
academies per year. Prior to Tier IV, the department ran
one academy every two years. He stated that Tier IV
employees who had left the department had lasted an average
of 2.3 years. The current Tier IV employees averaged 2.8
years with the department. He stressed the situation left a
large knowledge gap in the department. Additionally, it
cost the department approximately $120,000 in the first
year of bringing on a new recruit.
Mr. Clark explained that seeing so many people leave was a
morale killer. He reported that the candidate pool was
shrinking as people left the state. He relayed there was no
security with the Tier IV retirement, with no social
security, supplemental benefits system, and no chance of
successful retirement income. He shared that he had worked
with the department for nearly 10 years because he loved
Fairbanks and Alaska. Additionally, he was confident there
would be a return to a modified DB system. He wanted to
move away from Tier IV and improve things for future
generations. He urged the committee to pass the bill.
11:55:26 AM
Representative LeBon thanked Mr. Clark for calling in. He
referenced Mr. Clark's testimony that 38 members of the
Fairbanks Fire Department were in Tier IV. He asked if the
members were waiting for the legislation to pass to commit
to working for the department long-term. He asked if there
was a sense of what the response would be if the bill
passed.
Mr. Clark answered that the department had several
employees currently testing for jobs out-of-state. He
reported that many members were asking whether the bill
would pass and wanted to stay but were thinking about their
future. He believed the bill would help retain members. He
was confident the passage of the bill would give him more
security and help him feel more comfortable staying. He
stressed the turnover was hard on morale. He believed
members would stay.
Representative Thompson thanked Mr. Clark for calling in.
He asked how the large turnover within the department
impacted having experienced people move up the ranks in the
department. He asked if the department had enough
experienced members to move up to leadership positions.
Mr. Clark replied that there would be a big impact. He
reported there was currently one Tier IV employee in a
captain position and likely there would be a couple more in
the coming months. He explained that about half the captain
positions would be held by Tier IV members in the current
year. He noted that those four members had been with the
department the longest. He explained that beyond those
members, the experience gap dropped off substantially. The
knowledge the department was losing due to retirement and
the departure of employees was substantial. He stated the
situation would continue if turnover persisted.
Co-Chair Merrick CLOSED public testimony. She thanked the
testifiers for their service and testimony.
12:00:08 PM
Co-Chair Merrick asked to hear the Division of Retirement
and Benefits' perspective on the bill.
JIM PUCKETT, DEPUTY DIRECTOR, DIVISION OF RETIREMENT AND
BENEFITS, DEPARTMENT OF ADMINISTRATION (via
teleconference), shared that he did not have any prepared
remarks. He was available for questions.
Representative LeBon stated that the shared upside risk in
a DB program was capped at 10 percent for participants. He
noted the initial employee contribution rate was at 8
percent. He asked what the financial impact would be if the
ceiling was raised to 12 percent.
Mr. Puckett replied that the question should go to the
division's chief financial officer. He would follow up with
the answer.
Representative Josephson remarked that Buck, the state's
actuary, had stated the plan was around 99.3 percent
solvent in the past year. He asked if there was anything
that would change the number.
Mr. Puckett was not aware of anything that would change the
number. The division would hear an updated analysis the
following day and he would provide the information to the
committee.
HB 55 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster announced that the Legislative Finance
Division could help members with amendments.
Co-Chair Merrick reviewed the schedule for the following
meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 92 Amendments 1-2 LeBon 042221.pdf |
HFIN 4/27/2021 9:00:00 AM |
HB 92 |
| HB 69 FY21 Supp Transactions by Agency Cap 042721.pdf |
HFIN 4/27/2021 9:00:00 AM |
HB 69 |
| HB 69 21-04-26 House CS1 Summary.pdf |
HFIN 4/27/2021 9:00:00 AM |
HB 69 |
| HB 69 FY21 Supp Transactions by Agency Op 042721.pdf |
HFIN 4/27/2021 9:00:00 AM |
HB 69 |
| HB 55 Public Testimony 042721.pdf |
HFIN 4/27/2021 9:00:00 AM |
HB 55 |