02/27/2002 01:45 PM House FIN

HOUSE BILL NO. 254                                                                                                            
                                                                                                                                
     An Act relating to the teachers'  retirement system, the                                                                   
     judicial  retirement system,  and the public  employees'                                                                   
     retirement  system and  to the  tax qualification  under                                                                   
     the  Internal Revenue  Code of  those systems;  amending                                                                   
     the   definition  of  'actuarial   adjustment'   in  the                                                                   
     teachers'  retirement system  and the public  employees'                                                                   
     retirement system;  repealing certain provisions  of the                                                                   
     teachers'  retirement system  and the public  employees'                                                                   
     retirement system; and providing  for an effective date.                                                                   
                                                                                                                                
BARBARA  COTTING,  STAFF,  REPRESENTATIVE   JEANNETTE  JAMES,                                                                   
explained   that  HB   254  is   necessary   to  ensure   tax                                                                   
qualification  of the State  of Alaska's employee  retirement                                                                   
systems, including  the Public Employee's  Retirement (PER's)                                                                   
System,  the Teacher's  Retirement  System  (TER's), and  the                                                                   
Judicial  Retirement  System   (JRS).    The  legislation  is                                                                   
technical  in   nature,  addressing  Internal   Revenue  code                                                                   
requirements necessary for continued plan qualification.                                                                        
                                                                                                                                
She  continued, enactment  of the  legislation would  benefit                                                                   
public employees  and teachers  by allowing them  to purchase                                                                   
service credit  in their retirement  plans with  transfers of                                                                   
pre-tax  savings in  certain plans  allowed  by the  Internal                                                                   
Revenue code  or payroll deductions.   The provisions  in the                                                                   
legislation  allows  for  purchases  under  the  new  federal                                                                   
pension  legislation.   Incorporation  in  Alaska statute  is                                                                   
necessary for  Alaska public employees  and teachers  to take                                                                   
advantage of.                                                                                                                   
                                                                                                                                
Vice-Chair   Bunde  MOVED   to  ADOPT   Amendment  #1,   #22-                                                                   
LS0853\F.1,  Craver, 2/27/02.   [Copy  on File].   Vice-Chair                                                                   
Bunde OBJECTED for the purpose of discussion.                                                                                   
                                                                                                                                
Vice-Chair Bunde  understood that the amendment  consisted of                                                                   
technical references.                                                                                                           
                                                                                                                                
GUY  BELL, DIRECTOR,  DIVISION  OF RETIREMENT  AND  BENEFITS,                                                                   
DEPARTMENT  OF ADMINISTRATION,  noted that  Amendment #1  was                                                                   
requested by the  Division because in the  original drafting,                                                                   
a few  sections were  missed that  needed to  be included  in                                                                   
order for  it to  be in  compliance.   The amendment  makes a                                                                   
modest adjustment  to the  title of the  bill and  makes some                                                                   
reference  changes.   Most of the  references are  associated                                                                   
with sections in statute that  allows for purchase of service                                                                   
credit  by  members.    He reiterated  that  in  the  initial                                                                   
drafting, some sections had been missed.                                                                                        
                                                                                                                                
The  pre-tax option  is done  with a  qualified tax  deferred                                                                   
plan.    The  Division  is adding  a  provision  for  special                                                                   
service agency  requirements.  He highlighted  each change to                                                                   
the statute in the amendment.                                                                                                   
                                                                                                                                
Vice-Chair  Bunde asked  if anything  in the amendment  would                                                                   
have a negative actuarial impact on the retirement system.                                                                      
                                                                                                                                
Mr. Bell  advised that there would  be no change  in benefits                                                                   
or  actuarial costs  either to  employees or  employer.   The                                                                   
only change  would  be that the  person would  be allowed  to                                                                   
purchase service with pre-taxed dollars.                                                                                        
                                                                                                                                
Representative  Davies recommended  that the drafter  address                                                                   
the issues of renumbering the bill sections.                                                                                    
                                                                                                                                
Representative  Hudson voiced  his support  for the  proposed                                                                   
legislation.  He  stated that it is necessary  and beneficial                                                                   
to the employees of the State of Alaska.                                                                                        
                                                                                                                                
Representative Foster MOVED to  report CS SS HB 254 (FIN) out                                                                   
of Committee  with  individual recommendations  and with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CS SS HB 254  (FIN) was reported out of Committee  with a "do                                                                   
pass"  recommendation  and  with  a fiscal  note  #1  by  the                                                                   
Department of Administration.