03/02/2006 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB485 | |
| HB475 | |
| HJR25 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 344 | TELECONFERENCED | |
| + | HJR 25 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 485 | ||
| = | HB 475 | ||
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 2, 2006
8:05 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Carl Gatto, Vice Chair
Representative Jim Elkins
Representative Bob Lynn
Representative Jay Ramras
Representative Berta Gardner
MEMBERS ABSENT
Representative Max Gruenberg
COMMITTEE CALENDAR
HOUSE BILL NO. 485
"An Act amending the State Personnel Act to place in the exempt
service pharmacists and physicians employed in the Department of
Health and Social Services or in the Department of Corrections
and corporate income tax forensic auditors employed by the
division of the Department of Revenue principally responsible
for the collection and enforcement of state taxes who specialize
in apportionment analysis and tax shelters of multistate
corporate taxpayers; and providing for an effective date."
- MOVED HB 485 OUT OF COMMITTEE
HOUSE BILL NO. 475
"An Act describing contributions to the health reimbursement
arrangement plan for certain teachers and public employees;
clarifying eligibility for membership in that health
reimbursement arrangement plan; relating to the 'administrator'
of the Public Employees' Retirement System of Alaska; and
providing for an effective date."
- HEARD AND HELD
HOUSE JOINT RESOLUTION NO. 25
Urging the United States Congress to enact the American Veterans
Homeownership Act of 2005.
- MOVED CSHJR 25(STA) OUT OF COMMITTEE
HOUSE BILL NO. 344
"An Act relating to the commissioner of administration's
appointing agents to perform for compensation certain
transactions related to vehicles; and providing for an effective
date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 485
SHORT TITLE: STATE PHARMACISTS/DOCTORS/AUDITOR EXEMPT
SPONSOR(s): RULES BY REQUEST
02/15/06 (H) READ THE FIRST TIME - REFERRALS
02/15/06 (H) STA, FIN
02/23/06 (H) STA AT 8:00 AM CAPITOL 106
02/23/06 (H) Scheduled But Not Heard
02/28/06 (H) STA AT 8:00 AM CAPITOL 106
02/28/06 (H) Heard & Held
02/28/06 (H) MINUTE(STA)
03/02/06 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 475
SHORT TITLE: PUB EMPLOYEE & TEACHER RETIREMENT & SBS
SPONSOR(s): REPRESENTATIVE(s) SEATON
02/13/06 (H) READ THE FIRST TIME - REFERRALS
02/13/06 (H) STA, FIN
02/23/06 (H) STA AT 8:00 AM CAPITOL 106
02/23/06 (H) Heard & Held
02/23/06 (H) MINUTE(STA)
02/28/06 (H) STA AT 8:00 AM CAPITOL 106
02/28/06 (H) Scheduled But Not Heard
03/02/06 (H) STA AT 8:00 AM CAPITOL 106
BILL: HJR 25
SHORT TITLE: SUPPORTING VETERANS HOME OWNERSHIP ACT
SPONSOR(s): REPRESENTATIVE(s) KERTTULA
01/11/06 (H) READ THE FIRST TIME - REFERRALS
01/11/06 (H) MLV, STA
02/16/06 (H) MLV AT 1:00 PM CAPITOL 124
02/16/06 (H) Moved CSHJR 25(MLV) Out of Committee
02/16/06 (H) MINUTE(MLV)
02/17/06 (H) MLV RPT CS(MLV) NT 6DP
02/17/06 (H) DP: GRUENBERG, THOMAS, CISSNA, ELKINS,
DAHLSTROM, LYNN
03/02/06 (H) STA AT 8:00 AM CAPITOL 106
WITNESS REGISTER
JIM DUNCAN, Business Manager
Alaska State Employees Association/American Federation of State,
County and Municipal Employees (ASEA/AFSCME) Local 52
Anchorage, Alaska
POSITION STATEMENT: Testified on behalf of ASEA/AFSCME during
the hearing on HB 485.
JANET CLARKE, Assistant Commissioner
Central Office
Finance and Management Services
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
485.
MILA COSGROVE, Director
Division of Personnel
Department of Administration
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the division during
the hearing on HB 485.
JERRY BURNETT, Director
Administrative Services
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
485.
KATIE SHOWS, Staff
to Representative Paul Seaton
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding the sectional
analysis for HB 475 on behalf of Representative Seaton, sponsor.
BILL BJORK, President
National Education Association (NEA)-Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified on behalf of NEA-Alaska during
the hearing on HB 475.
GLEN RAMOS
Palmer, Alaska
POSITION STATEMENT: Testified during the hearing on HB 475.
KATHY WIGHT-MURPHY
Wasilla, Alaska
POSITION STATEMENT: Testified during the hearing on HB 475.
HANNAH McCARTY, Staff
to Representative Beth Kerttula
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Reviewed the sponsor statement to HJR 25 on
behalf of Representative Kerttula, sponsor.
BRYAN BUTCHER, Director
Governmental Relations and Public Affairs
Alaska Housing Finance Corporation (AHFC)
Anchorage, Alaska
POSITION STATEMENT: Related AHFC's support of HJR 25.
JOHN WILKINS, Director of Services
Disabled American Veterans - Alaska
Juneau, Alaska
POSITION STATEMENT: Testified in support of HJR 25.
ACTION NARRATIVE
CHAIR PAUL SEATON called the House State Affairs Standing
Committee meeting to order at 8:05:20 AM. Representatives
Gatto, Elkins, Lynn, Gardner, and Seaton were present at the
call to order. Representative Ramras arrived as the meeting was
in progress.
HB 485-STATE PHARMACISTS/DOCTORS/AUDITOR EXEMPT
8:06:19 AM
CHAIR SEATON announced that the first order of business was
HOUSE BILL NO. 485, "An Act amending the State Personnel Act to
place in the exempt service pharmacists and physicians employed
in the Department of Health and Social Services or in the
Department of Corrections and corporate income tax forensic
auditors employed by the division of the Department of Revenue
principally responsible for the collection and enforcement of
state taxes who specialize in apportionment analysis and tax
shelters of multistate corporate taxpayers; and providing for an
effective date."
8:06:44 AM
JIM DUNCAN, Business Manager, Alaska State Employees
Association/American Federation of State, County and Municipal
Employees (ASEA/AFSCME) Local 52, told the committee that his
union represents approximately 7,500 state employees who are in
the general government unit of the union. He said he listened
to testimony given on HB 485 on Tuesday and has no disagreements
with the statements made by the representatives from the
Departments of Revenue, Health & Social Services, and
Administration about the fact that pharmacists and corporate
income tax auditors are hard to recruit and are underpaid.
However, he opined that the approach in HB 485 to move those
positions from classified service into exempt service is not the
method that should be used to solve the problem. He explained
that this issue exists not only with those two job classes, but
also with numerous others in state government. He called the
proposed bill a "convenient and easy approach for management to
resolve a problem instead of addressing the real underlying
issue."
8:08:55 AM
MR. DUNCAN cited Article 12, Section 6, of the Alaska State
Constitution, which read:
6. Merit System
The legislature shall establish a system under which
the merit principle will govern the employment of
persons by the State.
MR. DUNCAN read a selection from "The Alaska Constitution: A
Citizen's Guide," as follows:
A state civil service keeps state jobs from becoming
political spoils of office, and it encourages
development of a competent, permanent work force.
Most permanent employees are included in the state's
system. Exempt are policy level positions in each
executive department, all employees in the governor's
office, and all employees in the legislature.
MR. DUNCAN said he thinks it's clear that pharmacists and
corporate income tax auditors are not considered policy level
positions.
MR. DUNCAN referred to a letter dated October 17, 1994, from
then Attorney General Bruce Bothello to then Senator Jim Duncan.
He read as follows:
The Alaska Constitution requires that the legislature
establish a system under which the merit principle
will govern the employment of persons by the state.
Alaska Constitution, Article 12, Section 6, is that
provision.
... This constitutionally required policy has been
described by the Alaska Supreme Court as the
weightiest public concern in the state employers'
trust.
MR. DUNCAN said the decision before the committee should be
considered a weighty one; he emphasized its importance. He said
it was after much debate that the founding fathers of Alaska's
constitution decided to use the word "shall" instead of "may" in
the previously included text of Article 12, Section 6.
8:11:59 AM
MR. DUNCAN asked the committee to consider what it would mean if
the legislature moves positions into exempt service, where they
can be subject to political pressure and are appointed not based
on competency and professionalism, but on a political spoil
system. He offered an example. He said he does not believe it
is good policy to put individuals charged with overseeing and
collecting of revenues and enforcement of tax laws into exempt
positions where they can be subject to political pressure,
changed at will, and where those individuals being audited could
perhaps bring pressure back to the policy makers of state
government that would have impact on the ability of the auditors
to do their job and do it well.
8:13:26 AM
MR. DUNCAN said the classified system is not the problem - the
pay plan within the system is. Pay plans can be changed,
subject to bargaining, he said. He recalled it was stated
during the 2/28/06 hearing on HB 485 that the highest possible
pay for a pharmacist or auditor would be a range 27, but he
indicated that that range could increase to a 30 through
bargaining. He stated, "In fact, I am preparing now a letter to
the state asking them to go back to the table to discuss a new
pay plan that would add those ranges that would be necessary to
accommodate the needs of the pharmacists and the auditors."
Studies were made based on internal alignment, he said, but they
can be made based on external factors, such as the market. He
stated his belief that the responsibilities of revenue auditors
probably do not compare well with "much more specific
responsibilities of some of the jobs they compared with."
8:15:01 AM
MR. DUNCAN said he has copies of federal regulations that
require that individuals who are funded by federal grants be in
a merit system, and he said pharmacist positions are federally
funded at approximately 50 percent. He questioned whether that
federal funding would be lost if the move were made to exempt
service. He continued:
Another constitutional provision - Article 1, Section
15 - says that statutes can't impair a contract. This
statute, with an effective date of July 1 of '06 would
impair a contract - our collective bargaining
agreement. Article 1.01 says that we will represent
all folks that are in the classified service and
[General Government Unit (GGU)] positions. The
pharmacists and auditors are in GGU positions at this
point. That prohibits this law moving them out of
classified into exempt service. If the law should
pass, we of course would have to take steps to
challenge it as impairment of a contract and challenge
it on a constitutional basis.
MR. DUNCAN opined that the process being used for revenue
auditors is flawed. He explained that he cannot find a job
description or position statement for "forensic auditor" to show
how that position's duties differ from the Income Tax Auditor
IV. He said he thinks they are one in the same. Mr. Duncan
highlighted the steps necessary to create a new position and
indicated that the those steps were not taken.
8:16:40 AM
MR. DUNCAN summarized his previously stated points and asked the
committee to consider each.
8:17:41 AM
REPRESENTATIVE GARDNER thanked Mr. Duncan for his compelling
testimony, but pointed out, "We're still left with, ... in the
immediate term, the problem of not having some of the essential
workers that we need." She asked Mr. Duncan if he had any
suggestions to meet the immediate need while other possible
fixes are being implemented.
8:18:06 AM
MR. DUNCAN said that is a serious issue, but it has been around
for a number of years. First, he recommended putting a pay plan
in place through a collective bargaining agreement, which would
add new pay ranges. Second, he said he thinks management should
review the classes that it is looking at for internal alignment.
He recollected that in her testimony from 2/28/06, the Director
of the Division of Personnel in the Department of Administration
- Mila Cosgrove - had said the division is putting together
proposals in order to do market-based comparisons with the
private sector and nonstate jobs. He said that should be done
immediately, after which, he suggested, the division should "put
those folks on the new pay plan, recruit, and fill those
positions." He said it may take two or three months to do that,
but it will be quicker than passing a piece of legislation that
is flawed and will be subject to challenge.
8:19:31 AM
REPRESENTATIVE GARDNER said she is looking for an even shorter-
term answer, for example, to place pharmacists in the Alaska
Pioneer Homes this week or next.
8:19:46 AM
MR. DUNCAN responded that he thinks there unfortunately is
nothing that can be done this week or next, but reiterated that
[HB 485] won't pass quickly enough to do that either. He said
the goal should be to look for a solution that would be in place
as quickly as the bill's effective date of July 1, 2006, without
moving from classified service to exempt service.
8:20:44 AM
CHAIR SEATON closed public testimony.
8:21:02 AM
JANET CLARKE, Assistant Commissioner, Central Office, Finance
and Management Services, Department of Health and Social
Services (DHSS), in response to a question from Chair Seaton,
said the questions raised by Mr. Duncan's testimony could be
best answered by the Department of Administration's Division of
Personnel. She stated that DHSS is the agency that has brought
the problem to the legislature and the administration and there
will be a serious "life, health, safety issue" if it is not
addressed. In response to a follow-up question from Chair
Seaton, she confirmed that she wants a fix that will put
pharmacists into the Alaska Pioneer Homes, and whatever answer
that the Department of Administration comes up with to
accomplish that is okay with her.
8:22:48 AM
REPRESENTATIVE LYNN said he understands there is an emergency
situation and the bill would not take effect until July 1;
therefore, he suggested [hiring contracted pharmacists] in the
mean time.
8:23:25 AM
MS. CLARKE said that is what is being done, but it is not the
best situation.
8:23:54 AM
MS. CLARKE, in response to a question from Representative Gatto
regarding contracting for pharmacists, emphasized that the cost
of that type of outsourcing is more expensive than paying state
pharmacists.
8:24:51 AM
MILA COSGROVE, Director, Division of Personnel, Department of
Administration, said Mr. Duncan made some good points, and she
echoed his statement that the decision before the committee is
one that should not be taken lightly. Notwithstanding that, she
said the Personnel Act also clearly contemplates the ability of
[the legislature] to move people out of the classified service.
She noted that AS 39.25.110 includes a list of classifications
other than exempt level policy and political appointees who have
been exempted for a variety of reasons. Ms. Cosgrove said that
although she appreciates Mr. Duncan's well-intended offer to
negotiate, she pointed out that he is not the sole
representative of the pharmacists. In fact, she said, most of
the pharmacist positions are in the Alaska Public Employees
Association (APEA) bargaining unit, in the supervisory
bargaining unit. She continued as follows:
While we can certainly take a look at raising the pay
scales and adding additional ranges, the question
still becomes, with these classifications, the pay
they're receiving in the market is so high that it
becomes difficult to place them at the upper ends of
the pay scale; essentially you'd be placing them at
the same level of commissioners or the governor. And
... there's a process where it's actually more
palatable to pay somebody a straight wage versus
attach them to a salary schedule, if that makes any
sense.
MS. COSGROVE noted that Mr. Duncan had raised some questions
regarding the concept of political spoils and competency. She
argued that pharmacists certainly would be competent, because
there is no way to put an unlicensed pharmacist into one of
those positions, and management would not put an incompetent
pharmacist in place, because "that simply wouldn't do for
patient safety." She said she doesn't think political pressure
would come into play either. She said she would make similar
arguments for the forensic auditors, because the department
needs people who are at the highest level of competency, able to
both perform the work and provide training and "knowledge
transfer" to the lower-level staff. She said, "They're in an
untenable position at this point and they're beyond being able
to function effectively in their current capacity. They need
additional staff ... now, and they need to have the access to
the wages in order to accomplish that goal."
8:28:38 AM
MS. COSGROVE, regarding Mr. Duncan's assertion about taking the
state to court if the legislature [adopts HB 485], said she is
not confident that that would be successful. She added that she
is not an attorney, thus her opinion should not "weigh too much
in that"; however, she reiterated that the legislature clearly
has the authority to remove people from classified status and
"the Personnel Act does consider that." Regarding contract
pharmacists, she stated her understanding that the state is
required to employ the chief pharmacist at the Alaska Pioneer
Home, which has to do with a relationship with the drug
enforcement agency. Ms. Cosgrove said when dealing with a
contract agency there is no continuity of employees.
Ultimately, the contracting firm can be held responsible for the
individual's performance, "but it becomes much more difficult to
deal with issues as they arise." Furthermore, she noted, it is
always difficult and often an unworkable situation when
contracted pharmacists are supervising state employees. She
explained that there are other state employees in the
pharmacies, such as pharmacy technicians. She said it is
desirable to have a clear line of supervisory authority. She
said she would gather that the home administrators don't have
the time and resources to adequately supervise the lower-level
staff.
8:30:16 AM
CHAIR SEATON said he knows that within some [exempt] categories,
people can be terminated without cause. He asked if that would
be the case for the pharmacists and auditors if they were made
exempt.
8:30:47 AM
MS. COSGROVE replied that there is nothing specific in the state
Personnel Act that addresses dismissal for cause or "not cause"
with exempt level employees. She reviewed from the 2/28/06
testimony that there are two types of exempt level employees.
There are those who are clearly political employees, such as
commissioners who purely serve at the will of the governor. She
said she would argue from a legally defensive human resource
standpoint that the state would need to have some level of cause
to dismiss them from employment, otherwise the state would be
subject to a legal challenge. She said across the nation there
are a majority of employers who have a high degree of their
workforce who are technically "at will," but those employees
still have to observe "the same sorts of processes and solid
business practices or they open themselves up for legal suits."
She concluded, "The legal environment of human resources is
becoming more and more contentious in that way, and employers
are being held to a higher standard of cause, even for at-will
employees.
8:32:13 AM
CHAIR SEATON asked if the pharmacists under federal
reimbursement contract have to be in the Ameripay system.
8:32:19 AM
MS. COSGROVE deferred to DHSS to answer that question.
8:32:40 AM
CHAIR SEATON recalled that Mr. Duncan had said he could not find
a job description for [the forensic auditor], and he asked if
there is a description or if forensic auditor is the same as a
[Corporate Income] Tax Auditor IV.
8:33:09 AM
MS. COSGROVE explained that the Department of Revenue did not
approach the Division of Personnel directly to announce its
intention to create a new job class. She said the division
recently conducted a classification study of all revenue
auditors. Prior to about a year ago, she said, they were all in
one job class. The division broke them out into distinct job
class families - corporate income tax, oil and gas, and tax
auditors - and did an internal alignment. She said, "So, in
that assertion they have followed the process. They came to us
with the work, we studied it, we did our internal alignment, and
we came up with where we believe the salary ranges were
appropriate given that internal alignment." Ms. Cosgrove stated
her understanding is that the body of work the department is
seeking to exempt is similar to that of the Corporate Income Tax
Auditor IV. She said there may be some additional duties
assigned, but she recommended asking that of the Department of
Revenue. She continued:
That said, I do know from talking with their division
management that the type of work assigned at that
highest level takes the highest degree of competency
from their auditors. And division director Wilson
discussed the special sets of skills those people need
in order to adequately and competently represent the
state in those types of audits. And those are the
types of skills and competencies that come at a fairly
high level of pay.
... If we were to take the whole series and adjust
them to market, then ... we would be raising their
lower levels up to a point where we were the market
leader in terms of pay at the lower level, and I don't
think that that's good business practice. I think
it's better ..., in this rare case, to take that
isolated group of people and put them in a different
class.
And for just the information of the committee, we do
encourage different exempt titles than classified
titles, so we can clearly articulate. So, if they
tried to name that group of work, "Corporate Income
Tax Auditor IV," we would come to them and say, "We
would like you to use a different name, because this
body of work is in the exempt service."
8:36:22 AM
MS. COSGROVE directed attention to a memorandum in the committee
packet [dated 3/2/06], which she said was information collected
anecdotally on the bequest of Representative Gardner and shows
turnover and retention in all job classes. She offered to
answer questions about the handout, and she said more detailed
data will be forthcoming.
8:37:32 AM
JERRY BURNETT, Director, Administrative Services, Department of
Revenue, in regard to Chair Seaton's question about whether
there are any differences in the job description for the
Forensic Auditor position and [Corporate Income] Tax Auditor IV,
said there has not yet been a formal job description completed
for the Forensic Auditor. He explained that the department
would create a formal job description after it has identified
"even possibly the person who's doing it so we can identify the
job description to their skill to some extent." He said the
department is trying to find people with very specific knowledge
and expertise having to do with corporate income tax returns.
He offered examples.
8:39:19 AM
CHAIR SEATON said he is somewhat troubled about the department's
practice of writing job descriptions after identifying people.
He suggested that it would help the committee to have job
descriptions broad enough to allow the department to choose
among people that have the required skills.
8:39:42 AM
MR. BURNETT responded, "In the exempt service it is very common
that the job descriptions are not very specific in terms of the
work as a classified system; ... "they're broad until they're
filled and then you hone in." He said this is not the same as
descriptions used in the classified system. Mr. Burnett noted
that the Department of Revenue has had investment officers since
the '80s who are in the exempt service. The $20-plus billion
that is invested by the Department of Revenue is handled by
exempt employees and he doesn't believe there is any evidence of
political influence in the department's investment policies that
has affected people's jobs in that time, he said.
8:41:00 AM
MS. CLARKE said she believes Mr. Duncan raised a question about
there being a federal issue regarding paying for individuals in
exempt service. She stated that she is aware of a federal rule
about the federal government not paying for the chief executive.
She offered an example. She said that is the only prohibition
that she is aware of regarding federal rules. She said the
department has many employees in the exempt service who are
being paid for by means of federal funds, for example, the
psychiatrists at the Alaska Psychiatry Institute (API). She
said she thinks the federal government looks at the work being
done to determine whether it is the work of a federal grant.
She said there are other states who have at-will or exempt
employees not in collective bargaining and get similar federal
grants. She concluded, "It's not a problem for our department."
8:42:54 AM
CHAIR SEATON asked Ms. Clarke to research that issue further to
ensure that there are no problems.
MS. CLARKE said she would ask Mr. Duncan to give her the
regulation he is concerned about.
8:43:34 AM
REPRESENTATIVE GATTO moved to report HB 485 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 485 was reported out of the
House State Affairs Standing Committee.
HB 475-PUB EMPLOYEE & TEACHER RETIREMENT & SBS
[Contains discussion of SB 141 and brief mention of SB 293.]
8:44:12 AM
CHAIR SEATON announced that the next order of business was HOUSE
BILL NO. 475, "An Act describing contributions to the health
reimbursement arrangement plan for certain teachers and public
employees; clarifying eligibility for membership in that health
reimbursement arrangement plan; relating to the 'administrator'
of the Public Employees' Retirement System of Alaska; and
providing for an effective date."
The committee took an at-ease from 8:44:31 AM to 8:46:15 AM.
8:46:19 AM
REPRESENTATIVE GATTO moved to adopt the committee substitute
(CS) for HB 475, Version 24-LS1685\Y, Wayne, 3/1/06, as a work
draft. There being no objection, Version Y was adopted.
[CHAIR SEATON handed the gavel to Vice Chair Gatto in order to
present HB 475.]
8:47:02 AM
REPRESENTATIVE SEATON addressed HB 475, as sponsor. He
explained that the bill is "the technical clean up bill for SB
141" - a bill passed last year regarding the Public Employees'
Retirement System (PERS) and the Teachers' Retirement System
(TRS).
8:49:22 AM
VICE CHAIR GATTO noted that HB 475 is a lengthy bill.
8:50:38 AM
REPRESENTATIVE SEATON directed attention to the new language in
[Section 1], page 2, of Version Y, which read as follows:
The final decision under AS 44.64 is delegated to the
administrative law judge and shall issue within 180
days after the date the administrator receives the
appeal, unless the administrative law judge and all
parties agree to another time.
8:53:05 AM
KATIE SHOWS, Staff to Representative Paul Seaton, Alaska State
Legislature, on behalf of Representative Seaton, sponsor,
responded to a question from Representative Lynn. She explained
that the sponsor statement is broad, and the issue being
discussed can be found on it at the fifth bullet point from the
bottom, which read, "Clarifies the procedure for an appeal to
the Office of Administrative Hearings."
8:53:56 AM
REPRESENTATIVE SEATON moved on to Section 2, regarding the
employer contribution rate. He said, "That was consistent
policy that we had in [SB 141] ..., and it didn't get done for
this one section."
8:54:30 AM
MS. SHOWS added that Section 2 has a delayed effective date of
2008, which is shown on the last page of the bill. She
explained the reason for that is there are a number of employers
whose assets actually exceed their liabilities and they need "a
few years to be able to account for that."
8:55:06 AM
REPRESENTATIVE SEATON directed attention to Section 3, which
addresses membership service for which contributions were
refunded. He explained that a person who leaves the system and
takes his/her money will "not be able to reinstate."
8:55:34 AM
VICE CHAIR GATTO offered his understanding that under the
current system, it is possible to leave the system and "buy back
in."
8:55:49 AM
MS. SHOWS said the sectional analysis in the committee packet
shows that Section 3 specifically deals with conditional service
for TRS membership. The way the bill was written, she
explained, if a retirement system member had at least two years
of TRS service and cashed out, he/she could buy back that
service and receive a conditional TRS benefit. She said, "This
means that in some cases a PERS employee could still be working,
and if they were a Tier I TRS employee for those two years,
could be receiving both a pension and a medical benefit for
those two years of service." She stated that a member who has
not cashed out of the minimum two years TRS service and comes
back to work for another employer would still be eligible for
the conditional service benefit.
VICE CHAIR GATTO asked what would happen to a person who had
worked in TRS and "just quit" - took his/her money and left -
and thought 30 years later that that was a mistake. He asked if
that action could then be reversed.
8:57:14 AM
MS. SHOWS answered, "You can until the year 2010, ... [at which
point] you will not be able to cash back into the system - pay
back - if you've already cashed out. And the reason for that -
and that was incorporated in SB 141 and we debated it
extensively - is because it represents a very large, unknown
liability to the system." She indicated that that issue will be
addressed further in the bill.
8:57:53 AM
REPRESENTATIVE SEATON addressed Section 4, which relates to a
contribution into a trust account. He explained that SB 141
gave a new benefit to PERS and TRS members that had not existed
before in the defined benefit (DB) system, which was
occupational death and disability; however, it was not specified
that the contributions were to go into a trust account. The
result would be that each employer would have a small amount to
deposit, but with no way to pay the benefits, because the
benefit needs to be system wide "for that amount of money to be
able to pay those benefits to the people who are injured or
die."
8:58:56 AM
REPRESENTATIVE SEATON said Section 5 adds language stating that
the administrator may require a person who deferred
participation to show evidence of insurability. He explained
that the language "demonstrates that a person has either medical
insurance coverage from their early retirement until they're
eligible for selecting medical retirement under this plan ...,
or that they at least have a letter of insurability." In
response to a question from Representative Gatto, he confirmed
that "as long as they have any current insurance then they have
insurability."
9:00:43 AM
REPRESENTATIVE SEATON turned to Section 6, which addresses the
issue of what happens if a disabled member becomes ineligible to
receive occupational disability benefits before the normal
retirement date. In response to a question from Vice Chair
Gatto, he referred to the last line of the reason for Section 6,
as shown in the sectional analysis, which read as follows: "The
employer must also make the member's contributions to the
individual contribution account."
9:03:39 AM
VICE CHAIR GATTO stated the importance of reading the language
in the sectional analysis and subsequently being able to find
that language in the bill.
9:04:04 AM
REPRESENTATIVE SEATON directed attention to Section 7, regarding
the monthly amount of an occupational disability benefit of 40
percent. He said Section 7 would require the employer to
continue to make deposits for the employee into the defined
contribution account. However, at some point "when a person has
service" he/she would be able to start taking out the benefits
and they wouldn't be there when he/she retired.
9:05:18 AM
REPRESENTATIVE SEATON moved on to Section 8, which clarifies the
termination of disability benefits when a disabled member first
qualifies for normal retirement. Section 9, he noted sets out
the date at which that would happen, and adds "dependent" to
"child". Section 10, he said, addresses the timing of payments
for a surviving spouse or dependent child. Section 11 prevents
a person from draining his/her retirement account by making the
employer make the contributions while he/she is receiving
survivor's benefits.
9:08:30 AM
MS. SHOWS highlighted the new language that would be added to
Section 12 of the bill, which read as follows:
The period of time during which a survivor's pension
is paid under this section constitutes membership
service for the purpose of determining vesting in
employer contributions under AS 14.25.930(b) and
eligibility for retirement and medical benefits under
this chapter and AS 39.30.300 - 39.30.495
9:08:49 AM
REPRESENTATIVE SEATON stated that the intent of Section 12 is to
ensure that people qualify for benefits under the plan.
9:09:17 AM
REPRESENTATIVE SEATON directed attention to Section 13, which he
said addresses transfers from the defined benefit plan to the
[defined contribution plan] and provides:
Upon transfer, all membership service previously
earned under the defined benefit retirement plan shall
be nullified for purposes of entitlement to a future
benefit under the defined benefit retirement plan but
shall be credited for purposes of determining vesting
in employer contribution under AS 14.25.390(b)
REPRESENTATIVE SEATON explained that voluntary transfers from
the defined benefit plan to the defined contribution plan would
be allowed [through SB 141], but there was no specification that
the number of years a person had in the defined benefit plan
would qualify for vesting in the defined contribution plan. So,
not only would the money transfer over, but the years of service
would count towards vesting, he explained.
REPRESENTATIVE SEATON addressed Section 14, which would -
regarding the aforementioned voluntary transfer - provide a time
limit of not later than 12 months after the member's employer
notifies the administrator that the member's employer consents
to the transfer of the member. The employer has to allow any
nonvested member who wishes to transfer from the defined benefit
plan to the defined contribution plan to do so. Representative
Seaton offered further details.
9:13:07 AM
MS. SHOWS, in response to a question from Vice Chair Gatto, said
there is no difference between the terms defined contribution
(DC) plan and defined contribution retirement (DCR).
9:13:33 AM
REPRESENTATIVE SEATON moved on to Section 15, which he said
specifies the dates in which the 12-month conversion takes place
and also allows the employer additional time to give employees
another 12-month window in the future. In response to a
question from Vice Chair Gatto, he clarified that both the first
and second 12-month periods begin on the first of a month and
are "time-certain." Representative Seaton reiterated the reason
for having a 12-month window.
9:16:57 AM
MS. SHOWS reviewed Section 16, which read:
(3) "membership service" has the meaning
given in AS 14.25.220 and does not include any service
for which reinstatement indebtedness has not been
fully paid.
9:17:42 AM
REPRESENTATIVE SEATON directed attention to Sections 17 and 18,
both of which correct language to say that regulations are
"adopted by the commissioner", not by the Alaska Retirement
Management (ARM) Board. Section 19 addresses appeals, which
Representative Seaton reiterated would be given 180 days.
Section 20 deals with "the same thing on appeals that we dealt
with before." Section 21 addresses contribution by employers.
Representative Seaton said the health reimbursement account
(HRA) contribution will be based on the average wage of all the
employees, not just a single employer.
9:20:20 AM
REPRESENTATIVE SEATON noted that Section 22 would remove a
conflict regarding eligibility for retirement and medical
benefits in the HRA.
9:21:23 AM
REPRESENTATIVE SEATON, in response to a request for
clarification from Vice Chair Gatto, explained that there was a
dispute as to how long a person's HRA would be available to
him/her and whether it would terminate if that person did not
vest immediately. The House opined that an HRA contribution is
just like the retirement portion of a defined contribution and
should be "kept on the books for the person." He clarified,
"Those years of service and that amount would be held for them
in their HRA account; they would pick up their HRA account just
as if they hadn't left service at all."
REPRESENTATIVE SEATON directed attention to Section 23,
regarding eligibility and reimbursement, and he said the
addition of the word "or" means that a person does not have to
be eligible for both PERS and TRS. He said Section 24 relates
to the aforementioned 180 days of appeal time.
9:23:16 AM
VICE CHAIR GATTO suggested the language should read "180
calendar days" for purposes of clarity.
9:24:07 AM
REPRESENTATIVE SEATON suggested the committee could ask
Legislative Legal and Research Services or the Department of Law
whether a definition of 180 days already exists in statute.
REPRESENTATIVE SEATON mentioned Section 25, which read as
follows:
(d) The employer contribution rate may not
be less than the rate required, after subtracting the
member contribution rate, to fully fund the
actuarially calculated benefits expected to be earned
by active members during a fiscal year.
9:25:47 AM
REPRESENTATIVE SEATON directed attention to Section 26, which he
said has to do with public service benefit and dual service
related to TRS and PERS. Section 27, he noted, would remove the
provision that would allow employees to repay refunded
contributions. Section 28 would add a provision for appeal to
the Office of Administrative Hearings of the Commissioner's
decisions on waiver requests under PERS. He offered further
details. Section 29, he noted, is in regard to the
commissioner's designee, while Section 30 relates to a trust
account providing money to pay "those disabled benefits under
the police/fire."
REPRESENTATIVE SEATON paraphrased the notation in the sectional
analysis for Section 31, which read:
AS 39.35.870(g). Requires a person who originally
chose not to participate in the retiree major medical
plan, but who later chooses to participate, to provide
a letter of continuous coverage or proof of
insurability.
REPRESENTATIVE SEATON said Section 32 relates to a period of
disability benefits constituting membership service. Section 33
clarifies that a member is not entitled to elect distributions
from the member's individual account while receiving disability
benefits, while Section 34 clarifies the termination of
disability benefits happens when [a disabled person] is eligible
for retirement.
9:28:37 AM
REPRESENTATIVE SEATON indicated that Section 35 is in regard to
fire fighters and peace officers not being able to draw from
retirement while receiving disability benefits. He reviewed
Sections 36, 37, and 38, which he said are in regard to
survivor's benefits.
9:29:26 AM
VICE CHAIR GATTO asked, "... Is it fixed that the surviving
spouse will always get the same amount of money that you were
getting?"
9:30:08 AM
MS. SHOWS noted that the pension benefit for "the survivor" is
40 percent of salary, an amount that is adjusted for Cost of
Living Allowance (COLA) and the post retirement pension
adjustment (PRPA). She said, "I would anticipate that the
benefit would increase with inflation." She suggested that Vice
Chair Gatto may get more specific information from the director
of Retirement & Benefits.
9:30:42 AM
VICE CHAIR GATTO stated that he would like to see language in
the bill ensuring that a surviving spouse would never get less
than "the same amount of money as if the deceased spouse were
still present." He said he thinks he can "demonstrate a
situation where that does occur."
9:31:31 AM
REPRESENTATIVE SEATON clarified that what Vice Chair Gatto wants
to know is whether the surviving spouse's benefit would be at
least as much as that of the person who died. He said he would
get that answer for the committee.
REPRESENTATIVE SEATON returned to the sectional analysis. He
said Section 39 - regarding a period of death constituting
membership service - means that when an employee dies, the
employer will continue to make contributions on the member's
behalf "until the normal retirement age." He said Section 40
addresses transferring from the DB to the DC plan. Sections 41
and 42 pertain to the first and second 12-month windows,
respectively. Section 43 offers a definition of the membership
service and clarifies that a [service] credit is eligible for
transfer. Section 44, he explained, clarifies that "member" and
"employee" mean the same thing in the context of the bill.
Section 44 also addresses the Department of Education and Early
Development positions that require teaching certificates. He
said if a position requires a teaching certificate, then the
employee would be in TRS, otherwise he/she would be in PERS.
9:35:13 AM
VICE CHAIR GATTO said his wife is a school nurse and a certified
employee. He said he would like it clarified what certified
means, because "there are a few people that are always outside
the teaching certificate, but which nonetheless are certified
employees."
9:36:20 AM
REPRESENTATIVE SEATON stated that a certificated employee who
requires a teaching certificate would be in TRS, while someone
who does not have a teaching certificate and whose position does
not require one would be in PERS. He offered his understanding
that [school] nurses are in PERS.
VICE CHAIR GATTO said nurses are not in PERS; they are in TRS.
He reiterated that there is a need to clean up the definitions.
REPRESENTATIVE SEATON directed attention to Section 45, which
provides the definition for peace officer and fire fighter
[under the DCR plan].
VICE CHAIR GATTO asked if that would automatically exclude the
Village Public Safety Officer (VPSO) program.
REPRESENTATIVE SEATON said he would ask that question of the
Division of Retirement & Benefits.
9:38:46 AM
REPRESENTATIVE SEATON noted that Section 46 is in regard to
appeals.
MS. SHOWS reviewed Section 47 in the section analysis, which
read:
Adds the Supplemental Benefit-Annuity Plan, Health
Reimbrusement Arrangement Plan, Deferred Compensation
Plan, and waivers of adjustment under the PERS and TRS
defined benefit plans to the jurisdiction of the
Office of Administrative Hearings.
REPRESENTATIVE SEATON said Section 48 would repeal the
requirement in SB 141 that the employer contribution rate must
not be less than the normal [cost] rate. Section 48 also would
repeal participation of the National Education Association (NEA)
employees in TRS. He stated the reason for this repeal, citing
from the pertaining language of the sectional analysis, which
read as follows [original punctuation provided]:
Reason: Although NEA had been included by the
legislature in the TRS DB plan in statute, NEA is a
non-profit organization and they do not qualify for
inclusion in the system. This error was acknowledged
by the Division of Retirement and Benefits, the
Department of Law, and the NEA in the early
1990's/late 1980's. In discussion with participating
NEA management it was decided by the TRS Board that
members participating at the time would be
grandfathered and inclusion of new members would be
discontinued (since then the last member has retired).
Inclusion in the new plan resulted from duplication of
existing statutes.
CHAIR SEATON mentioned that, additionally, Section 48 repeals
duplicative language.
9:41:13 AM
CHAIR SEATON directed attention to Section 49, which relates to
reinstating service associated with refunded contributions, and
Section 50, which deals with uncodified law. He offered further
details based on the sectional analysis. Sections 51, 52, and
53 address the effective date for certain sections of the bill.
9:44:31 AM
REPRESENTATIVE LYNN directed attention to the sponsor statement
and asked to which of the 53 sections does the following apply:
Establishes provisions for employer termination from
the plan
9:44:48 AM
MS. SHOWS explained that that applies to an amendment that is
forthcoming. She said it turns out that establishing
termination for employers in the plan is a complex concept that
will require the discussion of the committee. In response to a
request from Representative Lynn, she further explained that
currently if an employer chooses not to participate in the
defined benefit plan and requests termination from the plan from
the Division of Retirement & Benefits, the division consults its
actuary to calculate the employer's unfunded liability. The
employer would be required to make the payment of that unfunded
liability. She offered her understanding that if an employer
decides to terminate, all the employers are considered vested in
the plan at the point of that termination. She explained that a
similar process must be established for the defined contribution
plan.
MS. SHOWS, in response to a question from Representative Gatto,
indicated that the village of St. Marys terminated from the
plan.
REPRESENTATIVE SEATON noted, "There were a number of cities that
were trying to figure out how to do that ...."
9:48:08 AM
BILL BJORK, President, National Education Association (NEA)-
Alaska, told the committee that NEA-Alaska represents over
11,400 active school employees - both teachers and education
support professionals - and over 1,300 retired employees. Mr.
Bjork said he cannot resist saying "I told you so" to the
legislature. He explained that last year he urged the House
State Affairs Standing Committee to take its time in examining
HB 238 and the ramifications of SB 141, specifically encouraging
the committee to use the interim as a time to study the issues.
VICE CHAIR GATTO told Mr. Bjork that he would like him to focus
on HB 475. He said he knows HB 475 would affect SB 141, but
"the benefits, or consequences, or opinions about [SB] 141
should not be a part of the discussion of this bill."
MR. BJORK stated that as the committee moves towards creating a
bill that can work for Alaska, it will be looking at many
amendments that will profoundly affect the performance of SB
141. He agreed that SB 141 is not on the table today; however,
he pointed out that the way in which SB 141 is actually
implemented appears to be on the table for discussion.
9:50:40 AM
MR. BJORK paraphrased from his written testimony [full text
included in the committee packet] as follows:
We urge you to set aside [HB] 475 and, in it's place,
introduce a companion bill to SB 293, which would
delay the implementation of SB 141 until July 1, 2008.
According to the sponsor statement for [HB] 475, a
handful of errors and oversights were made that needed
to be changed for a smooth transition, though my hand
could hold four or five items, but not the thirteen
bulleted items that actually make many amendments to
the law. If this is the number of changes proffered
now, what might be the number discovered with further
study? In fact, no one is sure that the present plan
- even with the changes required prior to July 1, 2006
- will meet the compliance regulation of federal law.
In fact, several folks who understand federal
[Employee Retirement and Income Security Act of 1974
(ERISA)] regulations and [Internal Revenue Service
(IRS)] code believe the basis of the health reserve
account contribution has to be changed ... to the
average compensation for all plan participation.
MR. BJORK reiterated his request for the House State Affairs
Standing Committee to replace HB 475. He continued paraphrasing
from his written testimony as follows:
Last session, NEA-Alaska urged you to consider the
impact on the present retirement plans if the plans
are closed and, thus, payroll-based contributions are
reduced. You assured us that there was no impact, but
today we've learned that, in fact, there is. We know
employer rates for past service costs will continue to
rise as amortized liability is applied to a shrinking
payroll paid to members in the defined benefit plans.
Thus, not only did SB 141 not address the liability of
retirement plans, it increased the liability for
employers. Are you sure that the proposed change will
not lead to still greater problems? Do you have the
actuarial data to make this determination? NEA-Alaska
believes that the answer to both of those questions
[is] no.
... NEA-Alaska believes that the $5.7 billion
liability of the present plan is not growing as fast
as it was projected to grow last session. On reason
is larger than expected investment return. We're also
waiting for the actuarial reports to the Alaska
Retirement Management Board to determine whether or
not [Mercer Human Resources, Inc.'s] assumptions were
appropriate given the Alaska experience. It seems
inappropriate to act until we hear form the folks that
SB 141 authorized to make these recommendations to
you.
As the committee knows from NEA-Alaska's testimony
last year, we believe a defined benefits plan is far
superior to a defined contribution plan for retirement
purposes for public employees. We understand the ...
bona fide concerns of the entire legislature that
predictability of costs and the limitation of
liability must be primary components of such a new
plan. NEA-Alaska believes that a defined benefits
plan can be fashioned on a set contribution from the
employer and the employee, and the legislature really
ought to have the opportunity to choose between the DC
plan and such a plan as I've described. ... Last
year's forced choice was just not good public policy
from our perspective.
9:55:31 AM
MR. BJORK, in response to a question from Representative Lynn,
said Senator Kim Elton is the sponsor of SB 293.
9:56:42 AM
GLENN RAMOS told the committee that he is a member of NEA-
Alaska. He concurred with the prior testimony from Mr. Bjork.
He said he thinks there are a lot of unanswered questions and
[the legislature] needs the benefit of time to look at the
available data and to consider the possibility of meeting the
goal of the original bill, which he said was to address the
liabilities [in the retirement system].
9:57:21 AM
MR. RAMOS, in response to a question from Representative Lynn,
said he is a school psychologist.
9:57:34 AM
REPRESENTATIVE RAMRAS suggested that part of the reason that the
state may be facing a potential increased liability is that
House members worked to increase the state retirement
contribution by 2 percentage points over the original intent of
SB 141. He said, "As we go forward, we're going to find that
that extra 2 percent contributes mightily to the accrued
retirement benefits under this program. For as long as the
state transitions to a defined contribution plan there will be
more state resources that are going into the retirement accounts
of NEA members and members of ... TRS."
MR. RAMOS told Representative Ramras that he is aware of that.
9:59:14 AM
KATHY WIGHT-MURPHY noted that she is a member of the National
Education Association (NEA) in Washington D.C. and, thus, is
involved with NEA-Alaska. She said she is a teacher in the
Matanuska-Susitna Valley. She urged the committee to set aside
HB 475. She said it is apparent that the issue before the
committee is a complex one, and she urged the committee to
postpone the implementation of SB 141 until 2008, in order for
further studies to be done to ensure an effective retirement
system for future employees of Alaska. She said this is
essential for both recruitment and retainment.
10:01:01 AM
VICE CHAIR GATTO asked Ms. Wight-Murphy if she would rather the
committee did not clarify SB 141 but "simply work to set it
aside," or if she thinks "this is a benefit that we should pass
and deal with the other issue later."
MS. WIGHT-MURPHY responded that she would appreciate the
committee's allowing more actuarial studies and looking at the
details of the defined contribution plan in the tiered systems
to ensure that it is being implemented correctly. She said she
doesn't want to see another rush through a complex issue as
occurred last year. In response to a question from Vice Chair
Gatto, she said, "I would like to seek a substitute that would
be a companion bill to the senate bill that is already
introduced."
10:02:44 AM
REPRESENTATIVE GARDNER said she agrees with NEA-Alaska's
position on SB 141 and said she would certainly support
postponing its implementation. She asked, "... In the event
that that effort doesn't happen and the fact that SB 141 is now
law, would you support HB 475 or not?"
MS. WIGHT-MURPHY answered that she would need more time to
review HB 475, and she indicated that she would need to wait
until all the amendments to it had been made.
10:03:38 AM
CHAIR SEATON expressed hope that Ms. Wight-Murphy and the other
testifiers representing NEA-Alaska would view HB 475 not as an
entire bill to support or oppose, but rather as a whole series
of "changes, cleanups, [and] clarifications." He said he would
appreciate their feedback.
MS. WIGHT-MURPHY said that she appreciates the committee's
addressing the issues that were not addressed in SB 141 that
would impact future employees, and she said she is certain that
NEA-Alaska will assist the committee in giving recommendations.
CHAIR SEATON indicated that he would particularly like NEA-
Alaska to review the aforementioned provision regarding the 12-
month window.
MS. WIGHT-MURPHY replied, "We certainly will."
10:06:53 AM
VICE CHAIR GATTO announced that HB 475 was heard and held.
[VICE CHAIR GATTO turned the gavel back over to Chair Seaton.]
HJR 25-SUPPORTING VETERANS HOME OWNERSHIP ACT
10:07:17 AM
CHAIR SEATON announced that the last order of business was HOUSE
JOINT RESOLUTION NO. 25, Urging the United States Congress to
enact the American Veterans Homeownership Act of 2005.
10:08:12 AM
HANNAH McCARTY, Staff to Representative Beth Kerttula, Alaska
State Legislature, on behalf of Representative Kerttula,
sponsor, paraphrased from the following written sponsor
statement:
Alaska is one of five states participating in the
Veterans Homeownership Program, which makes low-
interest home loans available to veterans who served
before 1977 and apply within 30 years of leaving
active military duty. Unless Congress takes action to
extend the program, its effectiveness will dwindle as
less and less veterans qualify.
With about 70,500 veterans, Alaska has the largest per
capita population of veterans in the United States.
Approximately 11,700 Alaskan veterans have benefited
from the program since 1983. During the first three
years of the program, over 1,000 veterans per year
qualified for the loan. Last fiscal year, the number
was down to 57.
The American Veterans Homeownership Act, repealing the
pre-1977 service requirement, was inserted into the
Tax Reconciliation Bill last year. The U.S. House of
Representatives approved a version of the Tax
Reconciliation Bill with the language, but the U.S.
Senate's version doesn't have the language.
HJR 25 urges Congress to approve the American Veterans
Homeownership Act language in the U.S. House version
of the Tax Reconciliation Bill. This program is a way
for our nation to express its gratitude to those who
have served in the armed forces and should be extended
to benefit current and future veterans.
10:09:50 AM
CHAIR SEATON directed attention to the title of the bill, which
read:
Urging the United States Congress to adopt the United
States House of Representatives version of the Tax
Relief Extension Reconciliation Act of 2005, including
sec. 303.
CHAIR SEATON said he doesn't know enough about the U.S. House
version of the act to ask U.S. Congress to accept it. He asked,
"Is the purpose of this to really have us urge adoption of
Section 303 ...?"
MS. MCCARTY said she thinks perhaps the title doesn't
appropriately reflect the resolution language. In response to a
question from Chair Seaton, she said the sponsor would not
object to an amendment to change the title to reflect the
language in the body of the bill.
10:11:52 AM
BRYAN BUTCHER, Director, Governmental Relations and Public
Affairs, Alaska Housing Finance Corporation (AHFC), related
AHFC's support of HJR 25. He indicated that the five states
that participate in the Veterans Home Ownership Program have
been working to get the restriction removed that only allows the
program's housing loans to those veterans who served before
January 1, 1977. He likened the effort to "banging our heads
into the wall." However, he said this year appears promising.
10:12:59 AM
CHAIR SEATON inquired as to how the program works and requested
an explanation of the fiscal note.
MR. BUTCHER said he does not currently have a fiscal note, but
offered his understanding that it is a zero fiscal note. In
response to a follow-up question from Chair Seaton, he explained
that there is a list in the committee packet showing the number
of loans that AHFC has done. He said, "So, there is no actual
cost to the corporation - it's a benefit to the corporation -
because not only does it benefit veterans who can take advantage
of the program, but it also benefits the corporation ...,
because we get increasing mortgage loans." The chart
illustrates the gradual reduction of loans to veterans, with
each passing year since the year that veterans qualified. He
said the point has arrived where the program is not much use at
all to Alaska, Oregon, and Wisconsin; however, Texas and
California still contain "a fair pool of veterans."
CHAIR SEATON asked how the program differs from the Veterans
Administration (VA) loan.
MR. BUTCHER said the program allows the five participating
states to sell tax-exempt bonds to fund mortgages, which
translates into a break on the regular mortgage rate. He added
that it requires federal action to be allowed to do that.
10:15:53 AM
MR. BUTCHER, in response to a question from Representative
Gatto, explained that only five states are eligible to sell tax-
exempt bonds to fund the Veterans Homeownership Program.
10:16:23 AM
JOHN WILKINS, Director of Services, Disabled American Veterans -
Alaska, explained that his job is to ensure that veterans get
what they deserve. He stated that [the Veterans Homeownership
Program is a good one. He reported that veterans in his age
group have benefited from the program. He said he purchased his
first home in Alaska through the program, which is cheaper than
the VA loan. He said the 1986 federal tax code hurts all
veterans [who served] from the end of the Vietnam War to
present. Since 1977, the U.S. has been involved in a number of
conflicts and wars; the veterans from these wars are not
included in the program and pay higher rates with a VA loan.
Many of today's military have families to support and worry
about them when deployed. He asked the committee to support HJR
25.
10:19:31 AM
CHAIR SEATON closed public testimony.
10:19:46 AM
CHAIR SEATON moved that the committee adopt Conceptual Amendment
1, as follows:
Page 1, line 2:
Delete ", including sec. 303"
Page 1, line 1:
Between "adopt" and "the"
Insert "sec. 303 of"
CHAIR SEATON asked if there was any objection to Conceptual
Amendment 1. There being none, it was so ordered.
10:20:46 AM
REPRESENTATIVE LYNN moved to report CSHJR 25(MLV), as amended,
out of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, CSHJR
25(STA) was reported from the House State Affairs Standing
Committee.
10:21:27 AM
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 10:21
a.m.
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