04/20/2000 09:10 AM Senate FIN

HOUSE BILL NO. 277                                                                                                              
"An Act relating to payment of retirement benefits for                                                                          
subsequently reemployed retired members of the                                                                                  
teachers' retirement system."                                                                                                   
                                                                                                                                
                                                                                                                                
DARROLL HARGRAVES, Executive Director, Alaska Council of                                                                        
School Administrators commended the Committee for                                                                               
considering the serious teacher shortage developing in                                                                          
Alaska.  He added that field reports indicate that it is                                                                        
becoming more difficult to find qualified and certifiable                                                                       
teachers to enter classrooms, as well as Administrator                                                                          
slots.  He commended the Committee on subsection (b) on                                                                         
page two as well.                                                                                                               
                                                                                                                                
Senator P. Kelly stated that Alaska should seriously                                                                            
consider alternatives to certification in order to fill                                                                         
these teaching positions.                                                                                                       
                                                                                                                                
Co-Chair Torgerson asked for an explanation related to this                                                                     
legislation's fiscal note, especially the associated                                                                            
benefits, which might go up an additional ten percent.  He                                                                      
asked what section of the bill this increase referred to.                                                                       
                                                                                                                                
GUY BELL, Director, Division of Retirement and Benefits,                                                                        
Department of Administration responded that actuaries had                                                                       
looked at the state's cost for a person who, after 20 years                                                                     
retires and then is rehired.  He noted that this reference                                                                      
reflected a ten-percent increase in the net present value                                                                       
of the expected life line value of this individual's                                                                            
benefits.  He continued that if half the members decided to                                                                     
participate the cost to the system would be about .75                                                                           
percent of Teachers' Retirement System (TRS) payroll, which                                                                     
would be about $3.6 million.  He gave an example of a                                                                           
teacher with 20 years of service at a high salary of                                                                            
$50,000 per year.  He explained that if a teacher was                                                                           
rehired back into the system, the second retirement would                                                                       
be calculated on the teacher's higher salary, while not                                                                         
affecting their original benefits.                                                                                              
                                                                                                                                
BILL CHURCH, Retirement Supervisor, Division of Retirement                                                                      
& Benefits, Department of Administration added that an                                                                          
individual who had participated in a Retirement Incentive                                                                       
Plan (RIP) and who was rehired would lose the incentive                                                                         
credit given at their original retirement.  He continued                                                                        
with the example of a teacher first hired under the Tier 1                                                                      
level of benefits, who retires at age 43 after 17 years of                                                                      
service.  He noted that this individual would not be                                                                            
eligible to commence this first benefit until they reached                                                                      
age 55 for a normal benefit or age 50 for an early benefit.                                                                     
He noted that this would be the penalty for returning to                                                                        
employment, although this does not prevent anyone who has                                                                       
retired from being eligible for rehire under this scenario.                                                                     
                                                                                                                                
Co-Chair Parnell referred to the teacher shortage as                                                                            
previously noted and asked how many new teachers are                                                                            
presently needed in the state.  He wondered what the annual                                                                     
gross on average was in Alaska and if this was not enough,                                                                      
he asked what it should be.                                                                                                     
                                                                                                                                
Mr. Guy responded that the state must consider how many                                                                         
teachers are quitting and how many are retiring.  He noted                                                                      
that about 500 teachers retire each year and guessed that                                                                       
the same amount of teachers leave for various other                                                                             
reasons.  He added that about the same number of teachers                                                                       
come into the system for any given year.  He generally                                                                          
stated that there are 10,000 teachers in the system                                                                             
statewide, with roughly a 10 percent annual turnover.                                                                           
                                                                                                                                
Co-Chair Parnell stated that it seemed the numbers were                                                                         
staying level, along with a population decrease statewide.                                                                      
He wondered if there was a need for this legislation with                                                                       
these types of projections.                                                                                                     
                                                                                                                                
Mr. Church responded that districts were reporting                                                                              
shortages in some disciplines, something that has been on                                                                       
going for many years.                                                                                                           
                                                                                                                                
Co-Chair Parnell declared that he thought this legislation                                                                      
was a short-term fix and that it does not look towards the                                                                      
future, as to recruit and keep teachers.                                                                                        
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #102, Side A, 10:49 AM                                                                                           
                                                                                                                                
                                                                                                                                
Senator Green stated that this shortage of teachers was                                                                         
cyclical, just the same as overages.  She noted that this                                                                       
was not an unusual phenomenon.                                                                                                  
                                                                                                                                
Co-Chair Torgerson inquired about the advantage or                                                                              
disadvantage of a teacher who works twenty years and                                                                            
retires, as versus a teacher that stays on for the same                                                                         
period of time.                                                                                                                 
                                                                                                                                
Mr. Bell responded that he could not think of any advantage                                                                     
one way or the other.                                                                                                           
                                                                                                                                
Mr. Church added that either way, after twenty years, an                                                                        
individual would receive the same multiplier, which                                                                             
increases after twenty years from two percent per year to                                                                       
two and a half percent per year.                                                                                                
                                                                                                                                
Co-Chair Torgerson stated that HB 277 would be HELD in                                                                          
Committee.