Legislature(2017 - 2018)GRUENBERG 120
04/03/2018 03:15 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Overview of Permanent Fund Proposals | |
| HB407 | |
| SCR17 | |
| SB163 | |
| Approval of Introduction of Potential Committee Legislation | |
| HB83 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 407 | TELECONFERENCED | |
| + | SCR 17 | TELECONFERENCED | |
| + | SB 163 | TELECONFERENCED | |
| += | HB 83 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 83-TEACHERS & PUB EMPLOYEE RETIREMENT PLANS
5:23:07 PM
CHAIR KREISS-TOMKINS announced that the final order of business
would be the CS FOR HOUSE BILL NO. 83(L&C), "An Act relating to
new defined benefit tiers in the public employees' retirement
system and the teachers' retirement system; providing certain
employees an opportunity to choose between the defined benefit
and defined contribution plans of the public employees'
retirement system and the teachers' retirement system; and
providing for an effective date."
5:23:29 PM
EDRIC CARRILLO, Staff, Representative Sam Kito, Alaska State
Legislature, read the changes to HB 83 from a document titled,
"Explanation of Changes, HB 83, PERs/TRS, Version N to Version
T, which read as follows [original punctuation provided]:
Version T includes the following changes to HB 83
version N:
? Broadened the title to refer to more than the new
tiers, use the more precise title "Public Employees'
Retirement System of Alaska."
? Added a new Sec. 1 at the department's request,
making it easier for teachers to return to work after
recovering from a disability. The section will allow
TRS to accept a certification of rehabilitation from
other states' vocational rehabilitation offices.
? Changed Sec. 6 at the department's request to ease
potentially burdensome exams for teachers getting a
disability pension.
? Changed Sec. 7 at the department's request to allow
TRS to accept vocational rehabilitation services in
other states for teachers on a disability pension.
? Adjusted Sec. 9 at the department's request to
clarify which retiree medical plan applies to teachers
who retire in the new DB tier. Also updates the first
risk adjustment to health care premiums to 2024, five
years after the effective date.
? Removed from Sec. 12, at the Department of Law's
request, the requirement that a teacher's spouse agree
to the initial choice between the DB and DC plans.
? Adds a new Sec. 13 at the department's request so
teachers appointed to disability in the DC plan can
receive vocational rehabilitation in other states.
? Conforms Sec. 15 to the new effective date.
5:26:10 PM
MR. CARILLO continued to read the changes to HB 83 from a
document titled, "Explanation of Changes, HB 83, PERs/TRS,
Version N to Version T, which read as follows [original
punctuation provided]:
? Clarified Sec. 18 language covering non-occupational
disability benefits, as requested by the department.
? Changed Sec. 19 at the department's request to allow
PERS to accept vocational rehabilitation services in
other states for those on a disability pension.
? Adjusted Sec. 20 at the department's request to
clarify which retiree medical plan applies to
employees who retire in the new DB tier. Also updates
the first risk adjustment to health care premiums to
2024, five years after the effective date.
? Removed from Sec. 25, at the Department of Law's
request, the requirement that a teacher's spouse agree
to the initial choice between the DB and DC plans.
? Adds a new Sec. 26 at the department's request so
teachers appointed to disability in the DC plan can
receive vocational rehabilitation in other states.
? Sec. 29 has a conforming change to a section number
within the bill.
? Sec. 30 has been changed so it does not alter the
department's existing regulations process for the
retirement systems.
? Section 31 has conforming changes to reflect the
appropriate section numbers in the CS.
? Section 32 changes the effective date to July 1,
2019
MR. CARILLO stated those were all the changes to the bill.
5:27:42 PM
REPRESENTATIVE LEDOUX made a motion to adopt the proposed
committee substitute (CS) for HB 83 labeled as 30-LS0315\T,
Wayne, 3/30/18, as the work draft. There being no objection,
Version T was before the committee.
5:28:09 PM
REPRESENTATIVE BIRCH said he was opposed to anything that would
restore an undefined obligation. He was unsure if there was a
fiscal note for the defined benefits (DB) program. He then
remarked that there was not a fiscal note. He offered his
concern that the state would be "saddled" with liability and
long-term obligations, which he characterized as significant.
He argued that the state currently has a $7 billion to $8
billion unmet obligation. He related his understanding that an
evaluation must be completed to determine the cost of the plan.
He indicated members would be voting on something unknown. He
said he was not supportive of this.
5:29:13 PM
CHAIR KREISS-TOMKINS offered a note on process. He related his
understanding that the fiscal note would be completed when the
bill reached the House Finance Standing Committee. At that
point the Department of Revenue (DOR) would run an actuarial
analysis, he said. He acknowledged that it does put members in
the position of voting on policy issues rather than the fiscal
issues. He acknowledged that Representative Birch's comments
were noted and appreciated.
REPRESENTATIVE BIRCH said he objected to the policy.
5:30:54 PM
CHAIR KREISS-TOMKINS opened public testimony on HB 83.
5:31:23 PM
CHRIS CAIRNS, Staff, Information Technology, Juneau School
District; Representative, Alaska Public Employees Association
(APEA), testified in support of HB 83. He stated that HB 83
represents a balm to the myriad of uncertainties for public
employees. During a bargaining session he reviewed a chart of
the number of employees that occupy each cell of the support
staffs' salary schedule. He noticed many staff had served 1-6
or 15-25 years of service, but very few had 7-14 years of
service. He later confirmed that more than half of all Juneau
education support staff had seven or fewer years of service.
MR. CAIRNS said that he could not definitively state this
resulted from the 2006 switch from the DB to defined
contribution (DC) plan. The timeline certainly fits. He stated
that he and his co-workers have frequently discussed the concept
of DB plan and the peace of mind it provides. He related at
last night's APEA union meeting with the school board, a board
member asked besides wages what the biggest challenge employees
faced. The vice-president confidently identified the biggest
challenge as retention. He stated that the APEA needed to bring
back DB plans. Every head nodded in enthusiastic agreement, he
said.
5:33:14 PM
MR. CAIRNS, having spoken to management and labor organizations,
offered his belief that nearby areas such as Spokane,
Washington, would lure away the best employees. He reported
these areas pay as much or more while the cost of living was
much less than in Juneau. He also testified that these
employers commonly mentioned a DB option as a mitigating
enticement.
MR. CAIRNS offered his belief that retaining staff represents
the key to doing more with less. Currently, many public
employees face this challenge, he said. He predicted that prior
mistakes would be repeated, and training will reduce
efficiencies due to lost institutional knowledge. As an
example, he felt that if he left it would take a new employee
replacing him about two to three years to learn the job. It
takes time to build the necessary relationships and
comprehending the complexities of APEA's mission, process and
role. This would not include time to gain technical
competencies specific to school district information technology
needs or shaping policy and procedures in innovative and
productive ways.
5:34:27 PM
MR. CAIRNS offered that his job was not unique and other public
employees would relate to his point of view. As many perceive
it, since 2006 the Public Employees Retirement System (PERS)
incentivizes five years of service, which coincides with the
timeframe when employees have begun to excel at their jobs. He
lamented that five years was the most inefficient timeframe in
which to lose someone since they have learned their jobs and
they leave. He urged members to support HB 83 for these reasons
and many more that he does not have time to address. He
appreciated committee members' time and thanked them.
5:35:06 PM
REPRESENTATIVE BIRCH asked whether any private sector employees
have a DB program. He recalled previously the sense was that
most private sector employees were moving away from it because
of the uncertainty of the liability.
MR. CAIRNS responded no. He reported from an information
technology perspective that the wage level was less in the
public sphere than in the private sector.
5:36:01 PM
REPRESENTATIVE KNOPP asked for an explanation on the five-year
timeframe in terms of [employee retention].
MR. CAIRNS answered that employees receive a 25 percent vestment
after 2 years of service and an additional 25 percent every
additional year until the fifth year when employees become
vested.
5:36:34 PM
REPRESENTATIVE KNOPP asked whether employees lacked any
incentive to stay after becoming vested at five years.
MR. CAIRNS related that some employees in his department have
left citing this as a specific reason.
5:37:18 PM
ALICIA HUGHES-SKANDIJS, Member, Alaska State Employees
Association (ASEA), urged member to support HB 83. She said she
considers herself a poster child for the kind of state worker
who would benefit from this bill. She identified herself as a
Tier IV employee working for the Department of Health and Social
Services (DHSS). In September she would become fully vested,
she said. She has served as a grants administrator and she
loves her work. She feels the programs she serves make a
difference and benefit the state. She would like to keep doing
this job. She pointed out that the incentive of receiving a
pension would play a large role in her decision-making process.
In the four years since she has worked for the state,
significant turnover has occurred in her office. She reported
that when staff reach vesting and leave, it means she must
continually train people, which she felt was an inefficient use
of staff time. She has experienced trained staff leave. She
offered her belief that staff often left at the five-year mark
after having built up their resumes. Those who leave after five
years or more take institutional knowledge with them which adds
to organizational instability, she said.
5:39:21 PM
MS. HUGHES-SKANDIJS stated that she also serves as a union
steward, so she comes into contact with numerous state workers
in other departments. She speaks not only on behalf of herself
but for many employees who want and support this. She remarked
that the five-year vesting often comes up during conversations.
5:39:52 PM
MS. HUGHES-SKANDIJS stated she grew up in West Virginia before
moving to Alaska. They moved away from the DB to DC plan, which
lead to turnover problems, retention, quality of employees, and
the cost to the state. She reported that West Virginia did not
find it was a cheap way to administer. Not only did they have
an unfunded liability, but it was not working out for the state.
Since then, West Virginia has returned to a DB plan and 79
percent of public employees switched back. The DB plan was not
only better for employees but also better for employers, she
said.
5:40:35 PM
MS. HUGHES-SKANDIJS offered to provide some facts and figures to
the committee. She argued a DB plan has perks when best
practices were followed due to higher returns and risk sharing.
She offered her belief that this reflects the values of this
great state to compensate people who provide a lifetime of
service to Alaska with stability. She felt these people would
continue to participate in the economy when their standard of
living was higher at the end of their careers.
5:41:43 PM
REPRESENTATIVE BIRCH asked whether she had any information of
private sector entities that have moved to a DB program. He
said he was not aware of any. He expressed concern on
unconstrained costs due to actuarial estimates.
5:42:39 PM
REPRESENTATIVE LEDOUX asked for further clarification on how
many of the 49 other states have DC or DB plans.
MS. HUGHES-SKANDIJS offered her belief that Alaska may be the
only state without a DB plan for teachers. She further remarked
that benefits were better for public safety officers than for
educational employees. She was unsure of states that offer DB
plans for all employees. She stated that West Virginia does.
5:43:31 PM
REPRESENTATIVE TUCK asked whether she had social security
benefits in West Virginia.
MS. HUGHES-SKANDIJS said she was unsure. She recalled receiving
a letter from the Social Security Administration that she had
not contributed enough into the system to be eligible to receive
social security benefits upon retirement.
REPRESENTATIVE TUCK thanked the two testifiers.
5:44:18 PM
TIM PARKER, President, NEA-Alaska, stated he was also a former
teacher. He said more than half of the educators in Alaska fall
into the DC retirement system. This bill would allow them to
select a DB plan.
MR. PARKER stated that younger teachers were leaving Alaska in
numbers never seen before and replacing them has become more
difficult. Last year Alaska had 250 open teaching positions.
Last month the job fair that used to attract thousands only had
171 candidates. Over the past 3 years numbers have dropped
about 20 percent per year.
5:45:58 PM
MR. PARKER said that Alaska teachers hired after 2006 have no
access to DB plans or to social security benefits. Due to
penalties any social security benefits teachers have earned in
any previous jobs have been drastically reduced by the
government pension offset. He characterized this as creating a
crisis in education. Educators have referred to Tier III and
Tier IV as the death tiers because they cannot realistically
retire on their wages. Many of them have gone onto other states
websites to calculate how much more money they need to put into
their retirement system monthly in order to retire at age 65.
He reported some have said it was up to $4,000 per month in
additional contributions.
5:46:55 PM
MR. PARKER expressed concern about losing quality educators at
such an accelerated rate. He estimated it may cost the state
$20 million per year.
5:47:11 PM
CHAIR KREISS-TOMKINS announced that some members were receiving
only about 50 percent or less of his comments due to the audio
quality.
5:47:47 PM
MR. PARKER offered to submit his comments in writing to the
committee. He reported that Alaska's teachers were the only
ones without access to a DB contribution system. He further
reported that Alaska was one of only 16 states without access to
social security benefits or supplemental benefits, which he felt
was a critical point.
5:48:31 PM
CHAIR KREISS-TOMKINS, after first determining no one wished to
testify, closed public testimony on HB 83. He announced that HB
83 would come back before the committee at a later hearing.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB407 Sponsor Statement 4.2.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 407 |
| HB 407 Sectional Analysis 4.2.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 407 |
| HB407 ver D 4.2.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 407 |
| HB407 Fiscal Note 4.2.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 407 |
| SCR 17 Sponsor Statement.pdf |
HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SCR 17 |
| SCR017A.PDF |
HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SCR 17 |
| SCR 17 Fiscal Note.pdf |
HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SCR 17 |
| SCR 17 Support CDVSA 2015 Victimization Survey.pdf |
HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SCR 17 |
| SCR 17 Support Ltr Women.pdf |
HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SCR 17 |
| SCR 17 Support Materials 2018 Theme.pdf |
HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SCR 17 |
| SCR 17 Support Materials CDC National Intimate Partner and Sexual Violence Survey.pdf |
HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SCR 17 |
| SCR 17 Support Materials News Article 11.20.2016.pdf |
HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SCR 17 |
| SB163 Sponsor Statement 3.28.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SB 163 |
| SB163 ver D 3.28.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SB 163 |
| SB163 Fiscal Note DOT-MSCVE 3.28.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
SB 163 |
| HB083 Sponsor Statement 2.28.17.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB083 Sectional Analysis 2.28.18.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB083 ver N 2.20.18.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM |
HB 83 |
| HB083 Fiscal Note DOA-COM 2.9.18.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB083 Fiscal Note DOA-DRB 2.9.18.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB083 Supporting Document - 401k retirement readiness 4.18.17.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB083 Supporting Document - Alaska Comparable Plans 4.18.17.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB083 Supporting Document - Compare DB to DC access 4.18.17.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB083 Oakley Presentation.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB083 Letters of Support 2.28.18.pdf |
HSTA 3/20/2018 3:15:00 PM HSTA 3/22/2018 3:15:00 PM HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB 83 ver T 4.2.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| HB83 Explanation of changes from ver N to ver T 4.3.18.pdf |
HSTA 4/3/2018 3:15:00 PM |
HB 83 |
| HB83 Legal Memorandum on ver T 4.2.18.pdf |
HSTA 4/3/2018 3:15:00 PM HSTA 4/5/2018 3:15:00 PM |
HB 83 |
| Work Draft 30-LS1526 ver D 4.2.18.pdf |
HSTA 4/3/2018 3:15:00 PM |
|
| Work Draft 30-LS1526 ver D Sectional Analysis 4.2.18.pdf |
HSTA 4/3/2018 3:15:00 PM |
|
| Overview of Permanent Fund Proposals Presentation 3.29.18.pdf |
HSTA 4/3/2018 3:15:00 PM |