04/05/2018 03:15 PM House STATE AFFAIRS

         HB 83-TEACHERS & PUB EMPLOYEE RETIREMENT PLANS                                                                     
                                                                                                                              
3:25:06 PM                                                                                                                    
                                                                                                                                
CHAIR KREISS-TOMKINS  announced that  the next order  of business                                                               
would be 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."  [Before the committee was CSHB 83, Version T.]                                                                
                                                                                                                                
3:26:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH  noted  that   he  does  not  support  this                                                               
legislation and voiced  his concern about the  cost and financial                                                               
impact this  will cause downstream,  and the state already  has a                                                               
$7 billion  to $8 billion  or more liability under  the PERS/TERS                                                               
program from the  last defined benefit (DB) program.   He pointed                                                               
out that  a fiscal  note had  yet to be  offered even  though the                                                               
committee was  advised that, at  some point in time,  there would                                                               
be a follow-up fiscal note.                                                                                                     
                                                                                                                                
REPRESENTATIVE   TUCK   offered   his   appreciation   for   this                                                               
legislation  because "we're  just not  getting the  bang for  our                                                               
buck  for investing  into training,  investing in  our employees,                                                               
letting them have  careers here in the State of  Alaska on behalf                                                               
of the  people of Alaska."   State employees are not  eligible to                                                               
pay into  social security,  there is  virtually no  retirement in                                                               
defined  contribution (DC).   It  is  well known  there are  many                                                               
fees, hidden  fees, and  transactions that  take place  without a                                                               
person's knowledge  and they  are charged for  that.   He pointed                                                               
out the importance of providing  something stable, something that                                                               
is secure, and people can rely  on, is very important in building                                                               
a good solid workforce in  Alaska.  In response to Representative                                                               
Birch, advised that  the fiscal note "to do  something like this"                                                               
will require an  expensive actuarial report so  it is appropriate                                                               
to  wait  until  the  legislation is  before  the  House  Finance                                                               
Committee before that exercise takes place.                                                                                     
                                                                                                                                
REPRESENTATIVE  KNOPP  said  that he  joins  Representative  Tuck                                                               
because "we're all a little  scared about defined benefits due to                                                               
where  the state  ended  up with  the  last one  we  had."   When                                                               
looking at the employees who do  not have SBS programs and social                                                               
security, he opined that it is  a valid argument because he never                                                               
wants the  state to return to  the situation "where we  were at."                                                               
The  actuarial must  be performed  in  order to  know whether  it                                                               
should move forward.   He opined that the state  has learned from                                                               
history, he wants  to be sure the program is  sustainable, and he                                                               
supports moving the bill out of committee.                                                                                      
                                                                                                                                
3:29:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WOOL opined  that by  removing benefits  from the                                                               
retirement package,  the results are  that it is hard  to recruit                                                               
and   retain.     Similarly,  prohibition   did  not   work,  and                                                               
potentially putting the  benefits back in is a step  in the right                                                               
direction,  he pointed  out.   Many people  testified that  it is                                                               
hard  for  teachers,  fire  fighters,  and  so  forth,  and  that                                                               
recruitment and retention  is a big problem  in Alaska currently,                                                               
he remarked.                                                                                                                    
                                                                                                                                
3:30:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH referred to  the previous testimonies from a                                                               
union  business  agent  and  from the  folks  within  the  system                                                               
advancing the  DB program and  noted that the question  was asked                                                               
whether there  are any private  sector employers moving  toward a                                                               
DB program.  The answer, he  recalled, was that no private sector                                                               
employers are  moving toward  a DB  program and  he is  not aware                                                               
that this is at all commonplace.   While, he said, he understands                                                               
the issues  of recruiting  and retention,  but putting  a package                                                               
together that the  state cannot afford is not  reasonable.  Also,                                                               
he pointed  out, it is not  reasonable for the committee  to vote                                                               
on  something with  an  undetermined cost  and  without a  fiscal                                                               
note.                                                                                                                           
                                                                                                                                
3:31:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX   noted  that  with  respect   to  private                                                               
employers, there  is a good  chance their employee is  earning at                                                               
least  a slightly  bit more  money than  a state  employee earns.                                                               
Even  more importantly,  she  stressed, a  person  working for  a                                                               
private employer has the ability  to pay into social security and                                                               
they  own  that  certainty  at  retirement.    Those  individuals                                                               
working for the State of Alaska  do not receive a social security                                                               
benefit, she pointed out.                                                                                                       
                                                                                                                                
3:32:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK advised  that he is part  of a multi-employer                                                               
DB plan with the International  Brotherhood of Electrical Workers                                                               
(IBEW),  which  means  every  time  the  union  signs  up  a  new                                                               
contractor, the contractor  is actually entering into  a DB plan.                                                               
The contractor can see and  realize the benefit of the collective                                                               
effort of  everyone pooling their  money together and  being able                                                               
to offer benefits that by itself  would not be able to offer, and                                                               
that is just  one example of why people are  entering into multi-                                                               
employer plans.  Also, he  expressed, a downward spiral is taking                                                               
place  all  over  America  wherein  less  and  less  people  have                                                               
retirement  programs  they can  rely  upon,  thereby, becoming  a                                                               
burden  on  everyone else.    In  the  event the  legislature  is                                                               
willing to  sustain livelihoods and  allow people to  retire with                                                               
dignity without being a burden  on society, it is imperative that                                                               
it take  place as a  collective effort.  Representative  Tuck put                                                               
forth  that  for  all  of the  teachers,  fire  fighters,  police                                                               
officers,  Department of  Fish &  Game (DF&G)  employees, and  so                                                               
forth, it  would be  nice to have  collective security  for these                                                               
employees.                                                                                                                      
                                                                                                                                
3:34:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK moved  to report  CSHB 83(L&C),  labeled 30-                                                               
LS0315\T, out  of committee  with individual  recommendations and                                                               
the accompanying fiscal notes.                                                                                                  
                                                                                                                                
REPRESENTATIVE BIRCH objected.                                                                                                  
                                                                                                                                
3:34:22 PM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.  Representatives  Tuck, Knopp, Wool,                                                               
LeDoux, and Kreiss-Tomkins voted in  favor of passing CSHB 83 out                                                               
of   committee.     Representative   Birch   voted  against   it.                                                               
Therefore,  CSHB 83(STA)  was  reported out  of  the House  State                                                               
Affairs Standing Committee by a vote of 5-1.