Legislature(2023 - 2024)BELTZ 105 (TSBldg)
02/08/2023 03:30 PM Senate EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| SB14 | |
| SB52 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 14 | TELECONFERENCED | |
| += | SB 52 | TELECONFERENCED | |
SB 14-RIP FOR PUBLIC EMPLOYEES/TEACHERS
3:31:42 PM
CHAIR TOBIN announced the consideration of SENATE BILL NO. 14
"An Act relating to reemployment of persons who retire under the
teachers' retirement system as mentors; relating to retirement
incentives for members of the defined benefit retirement plan of
the teachers' retirement system and the defined benefit
retirement plan of the Public Employees' Retirement System of
Alaska; and providing for an effective date."
3:32:43 PM
SENATOR SCOTT KAWASAKI, District D, Alaska State Legislature,
Juneau, Alaska, provided the sponsor statement on SB 14 as
follows:
[Original punctuation provided.]
"An Act relating to reemployment of persons who retire
under the teachers' retirement system; relating to
retirement incentives for members of the defined
benefit retirement plan of the teachers' retirement
system and the defined benefit retirement plan of the
Public Employees' Retirement System of Alaska; and
providing for an effective date."
Senate Bill 14 would implement a temporary, voluntary
Retirement Incentive Program to increase state savings
by allowing public employees to retire up to three
years early and to set in statute a way for a school
district to rehire retired educators through a 12-
month contract. Long-serving public employees are
among the highest paid in the state. In many cases,
pensions paid to retiring employees would cost the
state less money than their current salaries.
Providing high-salaried employees with the option to
retire early would save Alaska money through lower
personnel costs.
SB 14 could also help prevent layoffs. The bill
presents a method of cost-cutting and payroll
reduction without forcing anyone out of the workforce
before they are ready to retire. This gives the State
of Alaska the opportunity to reduce operating costs by
opening vacancies that enable the placement of more
junior employees. Retirement incentive programs are
regularly used in the private sector to efficiently
control personnel costs through market incentives
rather than heavy-handed layoffs.
Retirement Incentive Programs have been used on a
temporary basis three times in Alaska's history and
was last proposed in 2004. In 1986, Senator Jim Duncan
estimated savings at approximately $25 million. A
Legislative Audit of the 1989 Retirement Incentive
Program demonstrated a savings of $22.9 million with
nearly 1,764 individual participants. In 1996, Rep.
McGuire calculated the state gained $41 million in
savings through identical legislation.
Senate Bill 14 is an innovative policy option for
state agencies, municipalities, and school districts
to consider as a means to reduce payroll costs without
layoffs.
3:37:18 PM
JOE HAYES, Staff, Senator Scott Kawasaki, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis on
SB 14 as follows:
[Original punctuation provided.]
"An Act relating to reemployment of persons who retire
under the teachers' retirement system; relating to
retirement incentives for members of the defined
benefit retirement plan of the teachers' retirement
system and the defined benefit retirement plan of the
Public Employees' Retirement System of Alaska; and
providing for an effective date."
Section 1: Defines the purpose and intent of the bill.
Sec. 2 AS 14.20.136(a), Page 2, Lines 510
Is amended to update the statute under which
members (individuals who are eligible to
participate in the retirement plan and are
covered by the plan) are retired from AS
14.25.110(a) to AS 14.25.110.
Sec. 3 AS 14.20.136(f), Page 2, Lines 1117
Is amended by adding a new subsection AS
14.20.136(f)(2) to specify that (c), (d), and
(e)(1) of this section do not apply to the rehire
of a member who is paid by the hour to mentor
teachers who have taught for fewer than four
years. (c), (d), and (e)(1) require, in other
circumstances, that the school district describe
a shortage before rehiring retired members,
publicly advertise the position, make contracts
for no longer than 12 months, and provide the
administrator with related documentation.
Sec. 4 AS 14.25.043(f), Page 2, Lines 1827
Is amended to update the statute under which
members are retired from AS 14.25.110(a) to AS
14.25.110.
Sec. 5 AS 14.25.043(g), Page 2, Lines 2831, Page 3,
Lines 14
Is amended to update the statute under which
members retire to specify that this subsection,
which allows for retired and reemployed members
to receive group health plan coverage, does not
apply to retired members who are rehired and paid
by the hour to mentor teachers who have taught
for fewer than four years.
Sec. 6 AS 14.25.070(a), Page 3, Lines 713
Is amended to clarify that each employer shall
contribute to the retirement system 12.56 percent
of all base salaries paid to active and retired
members who are eligible to receive group health
plan coverage, which does not include retired
members who are rehired and paid by the hour to
mentor teachers.
Section 7: Page 3- 6 Lines 15- 24
Defines who are eligible to use the retirement
incentive program under the legislation.
Employer's may limit the program to specific
components, job classifications, geographic
location, or a combination of the three.
Section 8: Page 6 7 Lines 25 - 12
Requires interested eligible state employees must
be employed for at least 12 months prior to
application to an approved RIP. Prohibits
executive branch employees from participating in
a RIP.
Section 9: Page 7, lines 15 21
Authorizes certain University of Alaska employees
who are members of PERS or TRS may participate in
a RIP under the appropriate requirements for
their defined benefit retirement program
established under this bill.
Section 10: Page 7 8, Lines 25 2
Is amended to give specify benefit cannot be
enacted under this bill until an agreement is
executed with the administrator that authorizes
the employee to participate in the RIP. Allows
the legislature to change a RIP as it relates to
employees for whom an agreement has not been
executed.
Section 11: Page 8, Lines 5 - 10
Is amended to add a new section which allows the
commissioner to adopt regulations to implement
and interpret the Act.
Section 12: Page 8 - 9, Lines 13 - 12
Provides definitions of administrator, employer,
OMB, PERS, TRS, public organization and state
agency for purposes of the Act established under
this bill.
Section 13 Sec. 18: Pages 812
Is amended to update referenced section numbers.
Sec. 19 Page 12, Lines 1516
Is Amended to say Sections 1 18 of the acts
applies to contracts entered on or after the
effective date of the legislation.
Sec. 20 Page 12, Line 17
Is amended to specify that the only sections 1
and 717 are repealed on July 1, 2026. The
teacher mentoring provisions remain in effect.
Sec. 21 Page 12, Line 18
Provides an immediate effective date under AS
01.10.070(c).
3:41:52 PM
CHAIR TOBIN noted Senator Shower was in attendance.
3:42:00 PM
SENATOR GRAY-JACKSON asked if municipal employees would be
eligible.
3:42:15 PM
MR. HAYES replied that public sector employees would be eligible
for the program.
3:42:31 PM
SENATOR STEVENS opined that it is concerning to replace senior
professors with inexperienced hires. He asked whether the goal
of SB 14 is to save money or get the best teachers.
MR. HAYES replied that the governor had implemented budgets
forcing organizations to terminate employees. Generally, new
employees were the individuals let go. SB 14 offers agencies
another tool in their toolbox by allowing employees close to
retirement an opportunity to retire early, allowing newer
employees to remain. No agency would have to apply the
incentives in SB 14.
3:44:03 PM
SENATOR STEVENS asked if SB 14 allows older teachers to retire
early and return to teaching.
MR. HAYES said that the Department of Labor and Commerce
chairperson added the provision last year to incentivize
teachers to mentor new teachers. Senator Kawasaki decided to
leave the provision in SB 14.
3:44:51 PM
SENATOR GRAY-JACKSON asked how the retirement provision would
address the retirement age of various tiers.
MR. HAYES said every tier has the ability for early retirement
if the employee can pay the percentage required. SB 14 requires
an employee to be at least 50 years old, with at least 17 years
of service.
3:46:00 PM
SENATOR KIEHL stated a clause in SB 14 allows the Personal
Employee Retirement System and Teachers Retirement System (PERS
and TRS) administrator to withdraw approval of retirement
incentive pay (RIP) if it would actuarially harm the fund. He
asked if it is also a requirement for approving RIP.
MR. HAYES reiterated that SB 14 is just a tool. He replied that
agencies must decide who can apply. For example, if an agency
considers a deputy director too valuable to retire, that person
would not be allowed to retire. However, a senior employee might
be able to, provided the employee was outside the executive
branch.
3:47:20 PM
SENATOR KIEHL said the Division of Retirement and Benefits (DRB)
approves RIPs for school districts. He asked how a DRB employee
would know whether a school district could fill specific jobs.
He opined that it would be difficult for the head of DRB to know
the answers to the concerns of school districts, such as the
reasonable chance of filling a position.
3:48:11 PM
MR. HAYES replied that before it reaches the state level, the
assumption is school districts, working with the school boards,
would decide what positions could retire early. They would
select the provisions necessary to hire someone to fill the
position. Local government would make the decision and carry it
forward.
3:48:54 PM
SENATOR STEVENS asked how the University of Alaska and school
districts have responded to SB 14.
MR. HAYES replied that the University of Alaska had yet to
respond, and school districts have had a mixed response.
Although some school districts like having another tool in their
toolbox, others fear needed teachers will retire. Yet, school
districts control the retirement eligibility mechanism. He
stated he continues explaining SB 14 to those districts that are
uncertain.
3:50:02 PM
DOUG WOOLIVER, Deputy Director, Office of the Administrative
Director, Alaska Court System, Anchorage, Alaska, stated the
court system offered a retirement incentive program in FY 17 as
a money-saving tool. The agency did not have the authority to
offer early retirement, which would require statutory change.
Instead, it offered severance pay. If an employee worked for the
court system for a minimum of 10 years and was eligible to
retire for at least three years, the employee would receive
three months of salary as an incentive to quit. There were 28
eligible employees, making it easy to determine whether valuable
people would be lost. Fourteen people accepted the severance
package. The agency knew it could easily fill some positions and
not fill others. The first year was a saving of $680,000. The
amount of savings decreased each year as employees' steps
increased. It was a successful program used during tough budget
years.
3:52:41 PM
SENATOR KIEHL said he understood the reason for the ten-year
service requirement but asked for an explanation of the three-
year retirement eligibility requirement.
MR. WOOLIVER replied that it was to encourage eligible people to
retire.
3:53:37 PM
SENATOR KIEHL responded that people could have been encouraged
to retire one month after eligibility. He asked why the agency
chose three years instead.
MR. WOOLIVER replied he was unsure why the agency chose three
years except that people eligible for three years had probably
been considering retirement. Also, the agency looked at how
years of retirement eligibility affected participation numbers
to manage the loss of long-term employees. It is a balance
between saving money and keeping experienced employees.
3:54:40 PM
CHAIR TOBIN held SB 14 in committee.