Legislature(2021 - 2022)ADAMS 519
04/14/2022 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB220 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 220 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 220
"An Act relating to the Public Employees' Retirement
System of Alaska 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 of
Alaska and the teachers' retirement system; and
providing for an effective date."
9:03:31 AM
Vice-Chair Ortiz MOVED to ADOPT proposed committee
substitute for HB 220, Work Draft 32-LS0717\B (Klein,
04/13/22).
Co-Chair Merrick OBJECTED for discussion.
9:04:09 AM
REPRESENTATIVE GRIER HOPKINS, SPONSOR, introduced himself
and indicated that he was going to explain the changes in
the committee substitute (CS) through a presentation titled
"HB220 CS Version B House Finance 04/14/2022" (copy on
file). He wanted to address a few questions from the bill's
previous hearing on March 8, 2022. He confirmed that Alaska
was the only state in the nation that did not have a
defined benefit system for educators. Secondly, he assured
the committee that there was an analysis done which found
that the vast majority of Alaska employees would be able to
roll over their defined contributions to the proposed
defined benefit plan.
Representative Hopkins continued to slide 2 which reflected
the changes to Public Employees' Retirement System (PERS)
as follows:
• Change all PERS employee contribution rates to 8-12%.
Public Safety was 8-10%
o All others PERS was 6-8%
• Public Safety retirement age now 55 years old or 20
years of service.
o Previously 55 years of age with 20 years of
service.
• PERS All Other 60 years old with 30 years of service
or 65 years old.
o Previously 5 years of service and 60 years of
age.
Representative Hopkins continued reviewing the changes to
the teacher retirement system (TRS) in the CS on slide 3 as
follows:
• Change TRS contribution rate to 8-12%.
o Previously was 8-10%
• TRS 60 years old or 30 years of service.
o Previously was any age with 20 years of service
or 55 years old.
9:07:17 AM
Representative Hopkins advanced to slide 4 to continue
reviewing the changes as follows:
• High consecutive 5 years for pension calculator.
• Returned COLA and PRPA control to DoA Commissioner.
o Previous version controlled by ARM Board.
• Upon hire, all PERS and TRS starts at 8% employee
contributions.
Representative Hopkins reviewed the actuarial analysis on
slide 5. If a person stayed in Alaska and was eligible for
a permanent fund dividend (PFD), the individual would
receive a slight increase in pension adjustment. The
increase was intended to encourage the dollars that were
made in Alaska to stay in Alaska. In addition, the post-
retirement pension adjustment (PRPA) would reflect a 10
percent adjustment if the fund was at least 90 percent
funded. He emphasized that PERS and TRS both started at
eight percent contribution.
9:09:22 AM
Representative Josephson pointed to the middle bullet point
regarding the Alaska Retirement Management Board (ARMB). He
asked what would trigger the commissioner's decision to
change the cost-of-living allowance (COLA) or PRPA. He
asked if there was concern that the authority would be in
the hands of a single person.
Representative Hopkins responded that COLA was already in
the hands of a single person. He relayed that the
Department of Administration (DOA) and the Division of
Retirement and Benefits (DRB) requested that the decision-
making power remain in the hands of the DOA commissioner.
He wanted to ensure that risk reductions were available. If
there was a downturn in the economy, he wanted to ensure
that the commissioner had the authority to decide the level
of adjustment. Between the PRPA and the one percent
increase in the employee contribution level, there was over
half a billion dollars in risk sharing options available.
9:11:07 AM
Representative LeBon asked Representative Hopkins to define
the acronym "PRPA."
Representative Hopkins responded that it meant post-
retirement pension adjustment. He reiterated that if the
PRPA was at least 90 percent funded, the commissioner could
decide to increase pensions. The increase would correlate
to the COLA and be reliant on a person's eligibility for a
PFD. The goal was to keep dollars circulating in Alaska.
Representative LeBon asked if the PRPA could go up or down.
Representative Hopkins responded in the affirmative.
Representative LeBon asked if the COLA could also go up or
down.
Representative Hopkins responded that it was dependent on
the consumer price index (CPI) for Anchorage.
Representative LeBon asked if the thinking was that the
COLA would only increase. He asked if it was an
inflationary adjustment.
Representative Hopkins replied that it would be an upwards
trend due to the way it was structured in the bill.
However, it would be based on each year individually and
previous years would not be taken into account.
Representative LeBon thought it could be flat lined.
Representative Hopkins replied, "Correct."
Representative Wool asked whether PRPA was as likely to
increase as COLA.
Representative Hopkins responded that the PRPA would
involve an additional increase of a certain percent which
was at the discretion of the commissioner.
9:13:08 AM
Representative Wool wanted to know if COLA increased, would
PRPA also increase.
Representative Hopkins responded in the affirmative.
Representative Wool asked about the choice to increase TRS
eligibility from 55 years of age or 20 years of service to
60 years of age or 30 years of service.
Representative Hopkins responded that it was 30 years to
fully invest in medical benefits. It was a policy decision
that he made to reduce the cost and the risk for the state.
Co-Chair Merrick WITHDREW the OBJECTION. There being NO
further OBJECTION, the committee substitute for HB 220
(version B) was ADOPTED.
9:15:06 AM
Representative Hopkins continued his review of the
actuarial analysis on slide 5. The slide depicted an
analysis of version A of the bill and version B of the
bill, which had been adopted. The analysis of version A had
been done by Buck, which was the DOA's actuary, and the
analysis of version B had been done by Cheiron, an
actuarial consulting firm. If the bill were to pass, it was
projected that the state would save $10.7 million in state
contributions in fiscal year (FY) 24 and there would be an
additional $29 million dollar reduction over the following
six years. He noted that PERS would continue to increase
because the contribution levels were at six to eight
percent. However, the changes in the adopted CS would
reduce the amount the state needed to pay. The additional
contributions on the bottom of the slide were based solely
on the cost of healthcare. The bill would allow employees
who were 65 or older and eligible for Medicare to gain
access to the state's healthcare without first needing to
retire. His understanding was that if he decoupled
healthcare from the bill, it would be cost neutral to the
state. He relayed that HB 220 would result in cost savings
to the state.
Representative Wool asked for some of the terms to be
defined. He also asked why TRS showed a decrease in cost on
the slide.
Representative Hopkins replied that he would defer the
question to a testifier from Cheiron, but the cost
reduction had to do with higher contributions by employees.
9:19:55 AM
GENE KALAWARSKI, CHIEF EXECUTIVE OFFICER AND PRINCIPAL
CONSULTING ACTUARY, CHEIRON (via teleconference), began the
Cheiron PowerPoint presentation (copy on file). He started
on slide 1 which showed an analysis summarizing the Buck
numbers. He would conclude by showing Cheiron's
calculations.
Mr. Kalawarski advanced to slide 2 showing the breakdown of
Buck's numbers. The slide depicted the total contributions
before HB 220. The solid colors represented the pension and
health costs prior to HB 220. The left showed HB 220 as it
was originally designed, and the right showed the bill with
the eight percent contribution rate. The sum of pension and
health costs on the left totaled to $229 million, which was
the bottom-line cost increase showed by Buck for FY 23
through FY 28. If the eight percent contribution rate was
implemented, Cheiron had calculated that there would be no
increase in pension costs.
Mr. Kalawarski moved to slide 3 which showed the impact of
the original version of HB 220. He reiterated that the
health increase would be eliminated, but the pension
increase remained. The impact of the modifications to HB
220 were shown in the bottom right of the slide.
Mr. Kalawarski continued to the projections prior to HB 220
on slide 3. The projections assumed that the plan would
earn 7.38 percent every year. It would begin at 68 percent
funded in 2021 but would be 140 percent funded by 2051. The
contributions from the state and employers were also
projected on the slide in red and blue respectively.
9:25:47 AM
Mr. Kalawarski advanced to slide 4 which showed the
projections after the implementation of HB 220 but before
the 8 percent contribution rate was implemented. It would
begin at 68 percent funded in 2021 but would be 110 percent
funded by 2051.
Mr. Kalawarski moved to slide 5 which depicted the
projections after HB 220 and after the 8 percent
contribution rate. The projections were the same apart from
the modification of the additional 8 percent employer
contributions. The chart projected cost savings to the
state through 2029.
Mr. Kalawarski continued to slide 6 which showed the
projections after HB 220 and after a 12 percent
contribution increase. He explained that if member
contributions went up to 12 percent, the cost of HB 220
would be significantly lower. He relayed that Cheiron had
also completed various stress tests to the projections,
such as comparing the projections in a bear market to a
bull market. In all tests, the modified version of HB 220
would be less expensive than the current situation.
9:27:55 AM
Mr. Kalawarski discussed the PRPA risk sharing impact on
liabilities on slide 9. He noted that recent inflation had
exceeded 8 percent. Cheiron had calculated that a one
percent reduction in PRPA reduced liabilities by about $200
million. The risk sharing tools at the disposal of the
state were in excess of half a billion dollars.
Mr. Kalawarski indicated that Cheiron had consulted on at
least half of the statewide pension funds in the country.
He had been personally responsible for the success of
various state pension funds since he began at the firm in
1988.
9:29:45 AM
PERTER HARDCASTLE, ACTUARY, CHEIRON (via teleconference),
introduced himself and stated that he was available for
questions.
9:30:12 AM
Representative Johnson asked whether the 7.38 percent
projected yearly growth figure was given to Cheiron or was
it calculated by Cheiron.
Mr. Kalawarski responded that it was the number that was
currently assumed by Buck. Cheiron accepted Buck's numbers
and had not had time to examine the accuracy of the
projection. He had no reason to believe the figure was
unreasonable.
Representative Johnson asked if 7.38 percent was the
assumed rate of return.
Mr. Kalawarski replied that it was the current assumption
and Cheiron's cost estimates were based on the number. They
had done stress tests which showed returns different than
7.38.
Representative Johnson was trying to understand the rate of
return, being that the permanent fund had a rate of return
of 5.5 percent. She noted the significant difference in
return rate. She asked how much risk the state would assume
if the projected rate of return was not achieved.
Mr. Kalawarski indicated that most of the analysis was
based on comparing the system prior to HB 220 and after HB
220 as modified. He understood that there were risks,
however under the current arrangement, there were no risk
sharing tools.
Co-Chair Merrick asked for copies of the different stress
tests he had mentioned.
Mr. Kalawarski would get them to the committee.
9:33:32 AM
Representative LeBon understood needing to manage the risk
for the state. He understood that efforts such as lowering
the expected rate of return on investments and increasing
the cap for employee contributions aimed to manage the risk
to the state. He assumed that there was a risk of the plan
becoming underfunded. He asked if Mr. Kalawarski could
provide assurance that the state would not experience
underfunding in the future. He asked if the plan
participants would share the risk in reduced benefits
should the plan become underfunded.
Mr. Kalawarski replied that under the existing arrangement,
defined contribution plan members assumed 100 percent of
the risk of possible underfunding. The risk under HB 220
would be not nearly as severe as the defined contributions
system. A strategy to prevent underfunding that had worked
in other states such as Maine was taking measures to lower
the discount rate whenever there was a drop in the rate due
to good performance. The strategy ensured that
contributions would not have to be increased.
9:36:14 AM
Representative LeBon noted that if a private sector
employee retired with a 401k and rolled it into an annuity,
the employee would receive a certain payment per month in
retirement. The risk of the annuity was the responsibility
of the seller of the annuity who had committed to paying
the employee a particular amount of money throughout the
employee's retirement. He asked how a similar risk would
not be internalized to the state under HB 220.
Representative Hopkins responded that there was upwards of
half a billion dollars in risk sharing opportunities for
ARMB to set. If the market went down and there was not
enough money to pay out the employee benefits, ARMB had the
opportunity to increase the employee contribution
percentage which would be injected back into the system to
help supplement the decline in the economy. Additionally,
not distributing a PRPA or COLA would save about $200
million. It resulted in about $500 million that could be
adjusted at the risk of the employees. Alaska had a
requirement in the Constitution of the State of Alaska that
pensions to retirees could not be diminished. There were
currently two actuaries looking at the analysis of ARMB to
ensure that the correct numbers were being calculated.
There was always a risk associated with a defined benefit
plan, but the risk was long-term and leveled out over time.
In about 30 years, the state would see an overfunded plan
unless there was an extreme circumstance like an economic
collapse.
9:40:41 AM
Representative LeBon appreciated the explanation. He
suggested that there was an internalized risk to the state
no matter the risk to the employee. If the state entered
into a defined benefit plan, the state would have a legal
obligation to protect the plan. He wanted to recognize the
reality of that risk.
Representative Hopkins responded that Representative LeBon
was correct. The root cause of the bill was the issue of
retention and recruitment and the impacts it had on the
performance of students and the overall performance of the
state. The bill could offset these issues, which imposed a
threat to the wellbeing of the state. There were studies
that showed a direct causation between reductions in
teacher retention and student performance. He agreed that
there was a risk to the state constitutionally but wondered
if that risk outweighed the continued decline in
performance and retention in schools.
9:42:43 AM
Representative Wool touched on the topic of risk. He agreed
that there was risk in doing nothing because the issue of
recruitment and retention needed to be addressed. He also
noted the cost burden of retraining new employees due to a
lack of retention. He suggested that the cost of training
and was not included in any of the calculations.
Representative Hopkins replied in the affirmative.
Representative Wool thought that if economic times were
hard, employees would be required to contribute more monies
to make up for the loses. The benefit amount could also be
reduced. He thought this would mean that employees would
pay more and receive less.
Representative Hopkins indicated employees would pay more,
however it was not permitted to distribute a lower check to
the employees than what was in statute. The check could not
be lowered but the check would also not be increased.
Representative Wool asked for more information regarding
additional health costs. He wondered if there was a health
plan once employees turned 65 or would they be fully
reliant on Medicare.
Representative Hopkins answered that the bill did not have
a healthcare plan component. The defined benefit
contribution for Tiers 3 and 4 TERS employees would not
change. There was a sliding scale once the employee turned
65 and the employee would pay a certain amount of the
insurance premium. The system in place would not be altered
by the bill. The change proposed by the bill was to allow
employees aged 65 or older to collect health benefits
without needing to retire. He explained that employees who
retired before turning 65 would no longer be required to
pay a monthly premium until they turned 65. However, if
this element was decoupled from the bill, it would save the
state money. He was amenable to the change if it was
desired.
9:48:04 AM
Representative Wool asked for the definition of a discount
rate and for examples of the contribution rate of other
states such as Maine.
Mr. Kalawarski responded that every pension fund
contribution and investment income had to pay for all
benefits and expenses. The discount rate examined the
expected amount of investment earnings. If 7.38 percent
earnings were assumed, the contribution amount would
correlate appropriately. If 10 percent earnings were
assumed, the contribution amount would be reduced. If
earnings were lower than 7.38, the contribution amount
would be higher. It was what was expected to be earned.
Representative Wool asked for Maine's contribution rate.
Mr. Kalawarski replied that since 1986 it had been between
15 and 20 percent.
Representative Wool clarified that the rate proposed for
Alaska was between 8 and 12 percent.
Mr. Kalawarski responded that was the correct member
contribution. The 15 to 20 percent rate was what the state
would pay.
Representative Wool asked what the member contribution was
in Maine.
Mr. Kalawarski responded that it varied by group. He
estimated that it ranged from 5 percent to 8 percent.
Representative Hopkins expounded that Buck's analysis (copy
on file) on page 3, line 7 stated that the state's
contribution rate into the fund was currently 25.65
percent. The previous version of HB 220 (version A) would
have seen an increase of the state's contribution of 0.79
percent. The increase had been estimated before the
employee contribution had been increased to 8 percent. He
had not had the 0.79 number adjusted and reevaluated but he
planned to do so. The goal was that 0.79 would decrease to
a negative number. The proposed 8 percent contribution rate
would lower the yearly payments for TRS. He hoped to see it
mirrored in PERS as well.
9:52:15 AM
Vice-Chair Ortiz thought the discussion was broad. He asked
if Representative Hopkins had already informed the
committee of the number of states that currently did not
have a defined benefit program for teachers.
Representative Hopkins indicated Alaska was the only state
without a defined benefit for teachers.
Vice-Chair Ortiz mentioned he was sent a picture of a
teacher recruitment fair in another state and there were
more recruiters than applicants. The bill would help to
make Alaska more competitive in what was an extremely
competitive market. He thought the state had to become
competitive to attract teachers. He hoped better outcomes
would result from the passage of the bill.
9:55:17 AM
Representative Johnson agreed that it was vital to have
better outcomes and better education for the children of
Alaska. She asked if there was a comparative chart showing
that a defined benefit plan led to better outcomes. She
questioned whether defined benefits were working in other
states considering other states also were experiencing
recruitment and retention issues.
Representative Hopkins indicated Alaska also had job fairs
for teachers and the number of applicants had been
dropping. He had spoken with many teachers and
administrators who had identified the lack of a defined
benefits plan as a key driver for reduced retention and
recruitment. He relayed that teachers, firefighters, and
other public employees indicated they were leaving the
state because of a lack of financial incentives. Multiple
studies done by DOA indicated that the lack of a defined
benefit plan was one of the top three reasons for teachers
leaving the state. He thought that offering a defined
benefit plan was the number one thing legislators could
reasonably do to keep teachers in the state.
Representative Johnson suggested that the "grand exit" of
employees was difficult to pin on the lack of defined
benefits. She would have to do additional research.
Representative Hopkins agreed that it was exacerbated by
the "great resignation" currently taking place across the
nation. However, it was not a new issue and did not come
about due to the great resignation. The problem had been
getting worse over the past 15 years.
9:59:30 AM
Representative LeBon understood the motivation of
legislators 15 years ago to pivot to a defined contribution
plan based roughly on the private sector. He thought that a
defined benefit program represented a decades-long promise
to employees. He asked if the discount rates of other
states had been examined. He suggested splitting the
difference and offering a discount rate closer to 6.75
percent. He asked what it might look like if the long-term
expectation for returns was reduced.
Mr. Kalawarski responded that the discount rate was decided
by ARMB and its advisors. He noted that Maine's discount
rate was at 6.5 percent, but no matter the discount rate,
the current program costs would also be impacted before HB
220 and would also be impacted after HB 220. The result
would be similar, but the program costs would be higher
with a lower discount rate.
10:02:30 AM
Representative Wool noted the significant discussion about
Alaska being the only state without a defined benefit plan.
He wondered if there was a trend for states to offer
defined contribution plans and then return to defined
benefit plans. He asked if there had been a pendulum swing
and thought that it was typical for Alaska to be behind the
pendulum swing.
Mr. Kalawarski responded that there was a pendulum swing in
the 1990s. For example, West Virginia had offered defined
contribution plans in the 90s but had returned to a defined
benefit plan. The most recent state to change to defined
contribution was Oklahoma. Other states had a combination
of defined benefit and defined contribution plans that
allowed employees to make the choice for themselves.
Representative Wool asked how much of the pendulum swing
back to defined benefits was due to economics and how much
was due to functionality and the resulting difficulty in
employee retention.
Mr. Kalawarski replied it was a combination of factors, but
economics were partially responsible. Investment fees
associated with defined contribution plans that were
absorbed by the investment industry dwarfed the fees that
were paid to defined benefit plans. It was in the interest
of the investment industry to lobby legislators to change
to a defined contribution plan.
10:05:32 AM
Co-Chair Merrick OPENED public testimony.
RONALD VIGIL, PRESIDENT, ALASKA PEACE OFFICER ASSOCIATION,
ANCHORAGE CHAPTER, ANCHORAGE (via teleconference), spoke in
support of HB 220. He emphasized the importance of
recruiting law enforcement officers and educators in the
state. Employees that had been with the state for decades
were promised specific benefits since 2006. After 2026, the
state stood to lose a number of Tier 3 employees. He wanted
to offer a defined benefit plan for peace officer
employees. He appreciated the committee for hearing the
bill and reiterated his support.
10:08:04 AM
NORM WOOTEN, ASSOCIATION OF ALASKA SCHOOL BOARDS, TEXAS
(via teleconference), spoke in support of HB 220. The
teacher shortage was a problem not only in Alaska, but
across the nation. However, it was particularly severe in
Alaska. The current teacher workforce was getting close to
retirement and there were not enough new teachers to
replace them. Additionally, young teachers were leaving for
positions outside of Alaska and the current defined
contribution system was to blame. It appeared that the
proposed bill would be cost neutral for the state. He
reiterated his support for the bill.
10:09:39 AM
STEVE DEVRIES, SELF, ANCHORAGE (via teleconference),
supported the passage of HB 220. He was a state employee
and retired from state service after 20 years. He had
personal experience with recruitment and retention
difficulties after 2006. He relayed that after 2006, the
quality of applicants decreased, and retention became a
significant issue. It was difficult to compete with the
private sector which could offer a much higher salary.
There was little or no incentive for employees to stay in
state jobs without a proper pension plan. Poor recruitment
and retention also resulted in a loss of institutional
knowledge. Existing staff were required to constantly train
and retrain new hires as they came and went as well as
cover work that would have otherwise been assigned to
employees in vacant positions. The use of outside counsel
become more of an acute need. He thought HB 220 would
benefit the state especially if the cost would remain
neutral for the state.
10:12:49 AM
JAN CAROLYN HARDY, STATE PRESIDENT, AMERICAN FEDERATION OF
STATE, COUNTY & MUNICIPAL EMPLOYEES, ANCHORAGE (via
teleconference), supported HB 220. The impact of an
insecure retirement system was often only understood when a
person reached the age of 70. The promise of social
security did not last for public employees, which he
identified as the first loss. The second loss was when
stock market volatility greatly impacted defined
compensation employees. The lure of Alaska only went as far
as the ability to secure a solid retirement in old age. She
emphasized that HB 220 was cost neutral, and the risk was
shared between the state and the employee. Additionally, HB
220 provided a choice to employees between defined benefit
and defined contribution plans. She urged support of HB
220.
10:15:09 AM
KATHLEEN YERBICH, SELF, WASILLA (via teleconference), spoke
in support of HB 220. After working as a teacher for the
state for 20 years, she would receive $852 per month after
retirement. She checked her social security account and was
informed that because she was a teacher in Alaska, she
would not receive all the monies in her account. She had
several jobs that required her to pay into social security,
but she was being penalized for being a teacher. She had
been speaking and writing letters to the state for years
about the issue and would continue until the punitive
system was dismantled. She asked members to pass HB 220.
10:17:31 AM
NATHAN ERFURTH, PRESIDENT, KENAI PENINSULA EDUCATION
ASSOCIATION, KENAI (via teleconference), urged support for
HB 220. He noted Alaska was the only state that did not
have a defined benefit plan for its teachers. He argued
that districts could not compete because of the current
system in place. He noted that high teacher turnover rates
where experienced teachers were retiring and new teachers
were repeatedly being replaced would naturally lead to
worse testing outcomes for students. It impacted the state
because a strong education system made for a strong
workforce and economy. Alaska needed to support the
teachers responsible for educating its children. He
suggested that the state needed to take on the risk that
had been offloaded onto students.
10:19:47 AM
RYAN FROST, REASON FOUNDATION, OREGON (via teleconference),
spoke in opposition of HB 220. He thought the Cheiron
analysis was incomplete. He suggested that more tests
should be done to examine potential outcomes. He wondered
how costs would increase to the state and thought that the
projections were too optimistic. He argued that
implementing the system at a lower contribution rate would
be more reasonable. He challenged the notion that a pension
was what kept employees in their jobs.
10:23:19 AM
DANIELLE LOGAN, SELF, FAIRBANKS (via teleconference), spoke
in support of HB 220. She thought that educators hired
after 2006 were uniquely vulnerable. She argued that the
state had experienced low-quality educators due to
difficulty in recruitment and the quality would improve
with the passage of the bill. There was a trend that showed
that the schools with the highest turnover rates in the
state had the worst student reading scores. There needed to
be more stability for teachers and retirement security
would contribute to the retention of educators. She thanked
members for supporting HB 220.
10:25:59 AM
COREY AIST, PRESIDENT, ANCHORAGE EDUCATION ASSOCIATION,
ANCHORAGE (via teleconference), indicated that he
represented all certified educators in Anchorage's schools
apart from principals. He supported HB 220. Alaska had been
plagued with recruitment and retention difficulties. He
noted that Anchorage had over 100 unfilled teaching
positions and many unfilled support staff positions. He
argued that he repeatedly heard from educators that fixing
the retirement system was the number one issue in the
state. He strongly urged members to support HB 220.
WADE HARRISON, PRESIDENT, ALASKA PUBLIC EMPLOYEES
ASSOCIATION LOCAL 6141, NOME (via teleconference), spoke in
support of the bill. He reported that 88 employees had
turned over in Nome since 2019. Teachers were not retiring
from Nome anymore and the district was simply a training
ground for other states. He asked members to consider HB
220.
10:30:40 AM
AT EASE
10:31:32 AM
RECONVENED
WINTER MARSHALL-ALLEN, SELF, HOMER (via teleconference),
thanked Representative Hopkins for bringing HB 220 forward.
She had been a teacher for 15 years and has taught in
Alaska for seven years. She had previously taught in a
state with a defined benefit plan. She had thought about
leaving the education profession entirely due to the
difficult conditions for educators in Alaska. There was a
dire need for stability from the state and the state needed
to reciprocate support to educators who invested in the
state. She spoke of retention issues with educators and
peace officers. She thought the legislature could have a
significant impact by passing HB 220.
10:34:35 AM
KIM HAYS, ALASKA AFL-CIO, ANCHORAGE (via teleconference),
spoke in support of HB 220. She shared that one of the core
values of the union was dignity of life in post-employment.
There were public employees contemplating leaving the state
in order to obtain a job that provided a secure retirement.
She emphasized that the retirement system was in jeopardy
and the state was not treating its public employees well.
She emphasized the cost neutral nature of the bill. The
state was losing money and talent due to an unprecedented
recruitment and retention crisis. She strongly supported HB
220 and urged members to move the bill out of committee.
10:37:48 AM
SANDI RYAN, SELF, FAIRBANKS (via teleconference), has been
a teacher in Fairbanks for 28 years. She thought there was
a lack of understanding of the guaranteed risk of not
having quality teachers in the state. She relayed that when
she first applied for a teaching position in Alaska 30
years ago, there was not a single opening. Now, there were
many teaching positions that had been unfilled for an
extended period of time. She thought the grim reality of
the state of retirement for new teachers was heartbreaking.
The state was training teachers but quickly losing them to
more lucrative opportunities in states with secure
retirement plans. She urged support of HB 220.
10:39:53 AM
EMILY MOODY, SELF, CORDOVA (via teleconference), spoke in
support of HB 220. She had been teaching in the state for
11 years and was a Tier III employee. She felt that the
bill was a fix for Alaska's broken retirement system and
would improve retention and recruitment. She had recently
read an article that stated that many teachers were drawn
to the profession because of stable retirement plans
usually involving defined benefits. Reading the article
brought her to tears because she was reminded that Alaska
was the only state that did not have a defined benefit plan
and teachers were denied access to social security.
Teachers in the state did hard work with the most
vulnerable population in a state with the highest cost of
living and received very little in return. There was no
guarantee of being able to retire with dignity. She relayed
that 73 percent of teachers would likely outlive their
retirement savings. The turnover rate cost the state
millions of dollars in training and hurt student
achievement. It took an amazing amount of time, training,
and dedication to be a successful teacher. The passage of
the bill would allow her to no longer need to consider
packing up her family and moving away from Alaska. She
urged the passage of the bill.
10:43:23 AM
HERMAN BECKER, SELF, JUNEAU (via teleconference), spoke in
support of HB 220. He and his wife were teachers in Juneau.
He thought that the state was spending significant time,
energy, and money to train new teachers only to lose them.
He provided some details of his teaching career in Alaska.
He did not fully understand the weight of being a Tier III
employee when he began teaching in the state. He spoke
about how much he loved teaching and expressed that most
mornings when he was getting ready for work, he was excited
to go. He urged support of HB 220. He hoped he would be
able to stay in Alaska.
10:47:14 AM
SARAH CAMPBELL, SELF, KETCHIKAN (via teleconference),
supported HB 220. She was a lifelong Alaskan and had been a
teacher for 22 years. She believed strongly that students
needed and deserved the best teachers they could get. She
thought the bill would go a long way in motivating teachers
to stay in the state. She had contemplated leaving Alaska
due to the instability of her retirement account, but she
wanted to stay. She spoke of the difficulty of recruiting
Alaska State Troopers as well due to the lack of a stable
retirement plan. She thought HB 220 was essential
legislation for the state. She thanked members for their
energy and time on the bill.
Vice-Chair Ortiz thanked Ms. Campbell for her testimony. He
shared that Ms. Campbell had been a student of his in
Ketchikan.
10:50:26 AM
Co-Chair Merrick CLOSED public testimony.
Co-Chair Merrick indicated amendments for HB 220 were due
by noon on Tuesday, April 19, 2022. She thanked the
presenters and reviewed the agenda for the afternoon
meeting.
10:51:16 AM
Representative LeBon commented that there was an analysis
from Buck in the committee packets. He wondered how to
request a "Monte Carlo analysis" that assumed a 6.5 percent
discount rate rather than the proposed 7.38 percent.
Co-Chair Merrick had already requested the information from
the bill sponsor and would distribute it.
HB 220 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 220 Public Testimony Rec'd by 041322.pdf |
HFIN 4/14/2022 9:00:00 AM |
HB 220 |
| HB220-CS Presentation 4.14.2022.pdf |
HFIN 4/14/2022 9:00:00 AM |
HB 220 |
| HB220 - Buck Analysis 032422.pdf |
HFIN 4/14/2022 9:00:00 AM |
HB 220 |
| HB220 - Cheiron Presentation 4.14.2022.pdf |
HFIN 4/14/2022 9:00:00 AM |
HB 220 |
| HB220 - CS WorkDraft Version B 041322.pdf |
HFIN 4/14/2022 9:00:00 AM |
HB 220 |