02/10/2023 03:30 PM Senate EDUCATION

            SB  14-RIP FOR PUBLIC EMPLOYEES/TEACHERS                                                                        
                                                                                                                                
3:31:44 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."                                                                                   
                                                                                                                                
3:32:12 PM                                                                                                                    
JOE   HAYES,  Staff,   Senator  Scott   Kawasaki,  Alaska   State                                                               
Legislature, Juneau,  Alaska, provided the sponsor  statement for                                                               
SB 14 on behalf of the sponsor:                                                                                                 
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     Senate Bill 14 would implement a temporary, voluntary                                                                      
     Retirement Incentive Program to increase state savings                                                                     
     by  allowing public  employees to  retire  up to  there                                                                    
     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  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.                                                                                                                   
                                                                                                                                
3:33:06 PM                                                                                                                    
CHAIR TOBIN asked that the fiscal notes be reviewed.                                                                            
                                                                                                                                
3:33:16 PM                                                                                                                    
MR. HAYES stated  that the Office of the  Governor's fiscal note,                                                               
OMB 2144,  is $110,000  in the  first year.  Eighty-five thousand                                                               
would  go to  unrestricted  general funds  (UGF)  and $25,000  to                                                               
designated general  funds (DGF). The  second fiscal note  is from                                                               
[the Department  of Administration,]  Division of  Retirement and                                                               
Benefits, OMB 64.                                                                                                               
                                                                                                                                
He noted that $793,000 was the  amount of the fiscal note from FY                                                               
22 when the bill was first introduced.                                                                                          
                                                                                                                                
3:34:37 PM                                                                                                                    
CHAIR TOBIN opened public testimony on SB 14.                                                                                   
                                                                                                                                
                                                                                                                                
3:35:01 PM                                                                                                                    
BERT HOUGHTALING, representing self,  Big Lake, Alaska, testified                                                               
in opposition  to SB  14. He opined  that although  the incentive                                                               
program sounds wonderful at first  glance, it is problematic when                                                               
it becomes  a defined benefits  program midway through  the bill.                                                               
SB  14   resembles  HB   22  [Peace   Officer/Firefighter  Retire                                                               
Benefits] that the  House is trying to pass. The  problem is that                                                               
Alaska has  had a defined  benefits program  in the past,  and it                                                               
nearly bankrupted  the state. Alaska  still carries a  $4 billion                                                               
debt from  having offered  defined benefits.  The state  needs to                                                               
consider  how  much  municipalities and  boroughs  contribute  in                                                               
matched funds for bills such as SB  14 and SB 52. The Mat-Su area                                                               
is $400 million in debt  from its defined benefit obligations. He                                                               
suggested Alaska's  schools return to teaching  reading, writing,                                                               
and  arithmetic.   He  urged  the   committee  to   stop  pushing                                                               
ideological  agendas  that  indoctrinate  children.  The  way  to                                                               
retain  teachers is  to avoid  making them  act like  parents. He                                                               
supports  letting older  teachers retire  and return  to teaching                                                               
but  does  not  support  allowing  them to  opt  into  a  defined                                                               
benefits program like HB 22.                                                                                                    
                                                                                                                                
Senator Kiehl joined the committee at 3:36: p.m.                                                                                
                                                                                                                                
3:38:25 PM                                                                                                                    
CHAIR TOBIN closed public testimony on SB 14                                                                                    
                                                                                                                                
3:38:39 PM                                                                                                                    
CHAIR TOBIN held SB 14 in committee.