Legislature(2005 - 2006)BUTROVICH 205
03/07/2005 01:30 PM Senate HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| SB24 | |
| SB4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 24 | TELECONFERENCED | |
| *+ | SB 31 | TELECONFERENCED | |
| *+ | SB 4 | TELECONFERENCED | |
| + | TELECONFERENCED |
SSSB 24-REEMPLOYMENT OF RETIREES
1:35:26 PM
CHAIR DYSON announced SSSB 24 to be up for consideration.
SENATOR GARY STEVENS, sponsor of SB 24, advised the bill would
extend the retiree program instituted in 2001 and would add an
initial requirement that the administrator of the public
employee retirement system (PERS) must make an annual report to
the Legislature.
1:37:37 PM
SENATOR WILKEN moved Version \F committee substitute (CS) for
SSSB 24 as the working document before the committee. There
being no objections, the motion carried.
SENATOR OLSON arrived at 1:38 PM.
CHAIR DYSON asked whether SSSB 24 was being proposed to relieve
the shortage of qualified teachers by allowing administrators
access to the retired teacher pool.
SENATOR STEVENS said yes, the bill would allow them to return to
the profession without having to forfeit retirement benefits and
without having to contribute to the retirement program or make
further draws upon it.
1:39:35 PM
SENATOR STEVENS added the bill applies to retired employees who
are difficult to replace. He noted administrators in both
systems would have to demonstrate that their positions are, in
fact, hard to fill.
CHAIR DYSON asked Senator Stevens to describe the process for
certifying that a position is hard to fill.
SENATOR GARY STEVENS deferred the question Mrs. Millhorn.
SENATOR OLSON asked Senator Stevens his feelings on double
dipping.
SENATOR STEVENS replied he could not argue with the term "double
dipping" since they are receiving retirement benefits and a
salary. He reasserted these employees are rehired to fill
difficult positions and do not cause the system any additional
costs. It is not the intention of the bill to allow employees to
retire one day and return to work the next.
1:42:26 PM
SENATOR GREEN asked whether an employer is required to
demonstrate a recruitment challenge before they are allowed to
rehire a retired employee. She would not support the bill if it
did not include a firm test to establish the existence of a
recruitment challenge.
SENATOR OLSON noted retired employees have an unfair advantage
over recent graduates in the hiring process and asked how that
would be addressed.
SENATOR STEVENS said qualified entry-level applicants should be
given priority over retired applicants.
SENATOR OLSON asked how that could be guaranteed.
SENATOR STEVENS said generally experienced employees are much
more expensive to employ than new entries and the consideration
of the additional cost would encourage employers to hire new
entries.
1:45:45 PM
SENATOR ELTON said it is necessary to require a verifiable
recruitment challenge to prevent people from simply changing
hats after their retirement.
SENATOR GREEN asserted an employer should not consider hiring a
retired employee if they have an application from a qualified
applicant. She noted that the bill does not have such a
requirement and it does not require employers to make a strong
effort to seek out new employees in their hiring process.
1:47:42 PM
SENATOR STEVENS advised the administration was considering the
concerns forwarded by the committee.
1:49:04 PM
CHAIR DYSON asked whether retired employees usually start at
entry-level salaries or their former salaries.
SENATOR STEVENS believed the salary is determined by experience,
knowledge, and education.
SENATOR OLSON asked the number of people currently involved in
the program.
SENATOR STEVENS responded the teacher retirement system (TRS)
report shows there are 211 PERS and 114 TRS members currently on
waiver.
MARY FRANCIS, executive director, Alaska Council of School
Administrators, testified in support of SB 24. She said the bill
would allow administrators to maintain a highly qualified staff,
a factor important in meeting the requirements of the No Child
Left Behind Act. Many school superintendents rehire teachers
only if they are unable to find new employees or employees
willing to transfer.
CHAIR DYSON asked whether rehired teachers typically receive the
salary that they received when they retired.
MS. FRANCIS could not give details since the salaries are
determined on a case-by-case basis.
SENATOR ELTON asked how the school board ensures they are not
showing favoritism for a retired employee by allowing them to
return.
MS. FRANCIS responded it is up to the local school board and
administration to determine whether this is a useful tool for
the district.
SENATOR GREEN asked whether the majority of superintendents in
the state discourage the retirement of people with essential
skills and experience.
MS. FRANCIS responded a good school administrator has the broad
perspective of the school district in mind and acts in its
interest.
SENATOR GREEN asked whether superintendents ever ask valuable
employees to reconsider retirement.
MS. FRANCIS said as a former superintendent, she never had that
sort of conversation with anyone.
1:55:51 PM
CARL ROSE, executive director, Association of Alaska School
Boards, testified in support of SB 24. He said statistics from
the Alaska Teacher Placement Center (ATPC) show a recent sharp
decline in the number of teachers pursuing jobs in Alaska. There
were 900 applicants ten years ago and only 300 last year. He
attributed this to a decrease in the relative amount that
Alaskan teachers make, noting in 1982, salaries were the highest
in the nation by almost double and now they are the highest by
only a small amount. In addition Alaska ranks fourteenth in the
nation for average teacher salary. He said allowing retired
teachers to return to work helps offset the effects of the
recent decline in out of state applications.
MR. ROSE continued he does not recall encountering many
incidents of abuse in the program and there is a tremendous need
for qualified teachers in Alaska. He noted the universities are
making a strong effort to satisfy the demand for teachers, yet
graduates only account for about 35 percent of the teaching
positions.
CHAIR DYSON asked the process that school administrators use to
determine a position is difficult to fill.
1:59:26 PM
MR. ROSE said they try to fill positions though local
recruitment and they also advertise the positions in job fairs
throughout the country.
SENATOR ELTON asked whether it is possible for school districts
to hire retired teachers on a part time basis.
MR. ROSE answered although there are a number of possible
scheduling alternatives, there are several specific core areas
in a given curriculum that require specialized training and it
is in the best interest of a school district to hire people
qualified to fill those positions.
2:01:21 PM
JOE DINNOCENZO, state TRS employee, testified in opposition to
SB 24, and expressed concerned that the lack of contribution
from rehires would strain the PERS fund. Most rehires he knows
in Kodiak are high-ranking members of their organizations who
were rehired to assume their former positions and salaries.
2:04:21 PM
CHRIS CHRISTENSON, deputy administrative director, Alaska Court
System, testified in support of SB 24. He said the court system
has two problems that are addressed by the program. It has a
number of one-person job classes with unique responsibilities
and it is difficult to provide continuity of services when they
become vacant. He noted most positions in the court system have
minimal requirements for employment and consequently it has a
hard time filling high-level positions through internal
promotion.
The second problem of the court system is it frequently has very
few qualified applicants for supervisory positions. This is due
to the high turnover rate among clerical positions.
2:07:43 PM
The RIP program created a personnel disaster for the court
system since it caused the loss of several qualified employees.
CHAIR DYSON remarked it is management's responsibility to
optimize working conditions and arrangements to prevent the
aforementioned problems. He asked the reason the court system
did not address their problems by increasing the salaries and
benefits of its employees.
2:09:38 PM
MR. CHRISTENSON responded the department was doing the best it
could with the funding allotted. The department would still have
problems recruiting mid-level specialists form entry-level
clerks and the private sector even if it was able to pay what it
used to pay.
SENATOR GREEN remarked that participation in the RIP program was
optional.
MR. CHRISTENSON said in the interest of fairness, the department
decided to let anyone participate so long as they saved money
for a judge. Consequently the department saved a little money
and lost a lot of ability.
2:11:07 PM
BARBARA HUFF-TUCKERS, Director, Governmental and Legislative
Affairs for the Teamsters Local 959, testified in support of SB
24. Although the employees she represents that are affected by
this legislation are limited to the Municipality of Anchorage
and number only eight, she has found the bill to be a very
valuable resource for coping with the loss of revenue sharing
and other budget cuts that affect the city.
MRS. HUFF-TUCKERS said the individuals she represents in
Anchorage are public health nurses and engineers. She noted the
state has not been able to match the salaries and benefits
offered to their private sector counterparts. All of the
positions were advertised under a collective bargaining
agreement and there was a thirty-day waiting period required
after the individuals left the job.
2:14:21 PM
JOHN DAVIS, Alaska Bearing Straights School District, testified
in support of SB 24. Regarding Senator Olson's question, the
Bearing Straights School District and many districts throughout
rural Alaska cannot come close to filling their vacancies even
with the rehire program. Each school board meets and confers
with its administration to put forward a resolution that must be
submitted to TRS to declare the position is indeed hard to fill.
2:17:22 PM
JEFF JICHA testified in opposition to SB 24 and to SB 4. He
expressed concern that allowing Tier 1 retirees to return to
work would strain the PERS and TRS systems. He stated opposition
to SB 4.
2:20:49 PM
SENATOR ELTON noted one provision of the bill prevents the
incidence of unfunded liability for the PERS system.
KATHLEEN DAY testified in support of SB 24. She said there was a
30-day grace period between her retirement and rehire and that
she received a pay cut when rehired. She said her pay was low
compared to salaries in the private sector and noted she was
able to return to work only because of her retirement benefits.
She felt misinformed by the Division of Retirement and Benefits
(DRB) when told she would be grandfathered into the program. She
would not have retired had she understood the program would only
last three years.
LARRY SEMMENS, Finance Director, City of Kenai, testified in
support of SB 24. There were six municipal employees in Kenai
who were notified in writing by the DRB that all members
participating in the program on the sunset date would be allowed
to continue to participate in the program. Thereafter the
attorney general's office informed them this was not the case.
The City of Kenai feels this represents a fairness issue since
employees made important decisions based on their expectation
that the program would continue. Discontinuing benefits after
the sunset of the program would have a budgetary impact on the
City of Kenai.
2:27:03 PM
CHAIR DYSON asked the number of Kenai municipal employees
currently participating in the program and what the budgetary
impact would be.
MR. SIMMONS said there are currently six people participating
and the City of Kenai who would incur an expense of $125,000.
KEITH KORNELIS, City of Kenai, testified in support of SB 24. He
said he is representing the six Kenai employees in the PERS
waiver program. The division of PERS told his clients that any
member participating in the program in continuous employment
would be allowed to continue participating in the program. His
clients made important decisions based on that statement. The
City of Kenai would have vacancies in supervisory positions if
the program sunsets with continued benefits.
FRED MACVIE, employee of the City of Kenai, testified in support
of SB 24. He was not planning on retiring but decided, with the
advent of the program, to retire early. He had an extensive
discussion with municipality officials concerning whether or not
the program would be continued and was informed it would
continue.
2:35:36 PM
BRUCE SENKOW, president, Alaska Employees Association, testified
in opposition to SB 24. He said he does not put a lot of faith
in the actuaries' assurance that the program is cost neutral. He
supported Senator Green's demand for a provision requiring a
verifiable recruitment challenge, but asserted he did not
believe it possible to create such a standard. The only way to
prevent abuse is to rehire former employees only to non-
permanent mentorship positions.
RICHARD ROBERTS, Department of Public Safety (DPS), testified in
support of SB 24. He said 78 percent of the troopers serving in
the Mat-Su Valley have less than five years of experience and
the Alaska State Troopers are falling short of their recruitment
goals. There is currently a crisis of leadership as a result of
the lack of senior officers.
CHAIR DYSON commented often times public safety employees say
they want to retire after twenty years because it is a young
man's game, but Mr. Roberts said experience and maturity are
also important to these organizations. He asked Mr. Roberts to
speak on the relationship between the two observations.
MR. ROBERTS responded young public safety officers need
mentoring, leadership, and support in order to fulfill the
public's expectations of them.
2:47:07 PM
LARRY WIGET, Director of Government Relations for the Anchorage
School District, testified in support of SB 24. He urged the
Legislature to extend the sunset date for the state statute that
gives retirees the option to continue to receive both retirement
pay and salary with the caveat that similar types of
restrictions currently placed on TRS employees such as those of
AS.14.21.35 be adopted for PERS employees as well.
He said the school district has a list from which it selects
potential rehires for specialized positions and noted they do
not rehire anyone until August and only about 30 of their 5,000
employees are rehires.
UWE KALENKA, Alaskan's for Efficient Government, testified in
opposition to SB 24. He said SB 24 is extremely unfair to recent
graduates. He added the bill wastes state money by allowing
senior teachers to earn as much as $89,000 per year and
extensive benefits when new teachers who perform a comparable
service earn only $35,000 with limited benefits.
2:51:56 PM
KAREN BRETZ, Alaskans for Efficient Government, testified in
opposition to SB 24. She compared the financial condition of the
PERS and TRS system to beleaguered pension systems such as that
of Bethlehem Steel and the federal government. She remarked the
bill would create a strain on the PERS and TRS system by
increasing the number of its members.
2:53:56 PM
MIKE DAVIDSON, Fire Captain, City of Anchorage, testified in
support of SB 24. He said in fire service people often retire
from large towns to work in small towns. This is an important
means of transferring valuable firefighting skills and
experience from cities to rural areas. He said SB 24 would
offset the pay cut that such retirees receive when working in
small towns while still giving the state the benefit of hiring
experienced firefighters at lower salary rates and without
associated training costs.
2:59:10 PM
MELANIE MILLHORN, Director, Division of Retirement and Benefits,
introduced Deputy Commissioner Mark Tibbles to address concerns
raised by the committee and the public.
MIKE TIBBLES, Deputy Commissioner, Division of Retirement and
Benefits, testified in support of SB 24. The first concern of
his department is to strike a balance between creating
opportunities for career advancement and allowing organizations
to pursue their interest in maintaining efficiency.
To optimize the balance the department was considering requiring
organizations to report their recruitment efforts so recruitment
challenge could be evaluated. The department was also
considering requiring employers to describe how they plan to
transfer knowledge from employee to employee. He noted that HB
242 was intended to be a short-term solution to deal with
certain job vacancies but not intended to be a long-term
solution.
CHAIR DYSON said someone should determine whether the state has
exposed itself to legal action by misinforming people that they
would be allowed to participate in the program indefinitely.
MR. TIBBLES remarked the division was operating under the
assumption that individuals granted a 242 Waiver would continue
to receive benefits after the sunset of the program. Last year
they were informed by the Department of Law that this was not
the case.
SENATOR GREEN remarked the temporary nature of the program was
emphasized during the Legislature's deliberation over the bill.
CHAIR DYSON remarked the law that passed might not have
reflected its legislative intention and there may have been a
misunderstanding on the part of groups administering the bill.
He would enjoy some discussion about the appropriateness of
writing the sideboards in regulation instead of in statute.
3:08:14 PM
SENATOR ELTON noted a considerable amount of skepticism
expressed by many testifiers about the actuaries' statement that
the bill would be cost neutral to the PERS and TRS system. He
asked Mrs. Millhorn her thoughts.
MRS. MILLHORN responded she prepared fiscal notes for the
committee's review. Their actuary indicated the cost of the bill
would be negligible. Her department asked both of the plan
sponsors to craft a methodology that would ensure an additional
contribution amount on the past service of those employers who
have paid for the cost associated with continuing the program.
The report indicates that, due to the unfunded liability to TRS
as compared to PERS, when the TRS program reaches 100
participants, it will create an unfunded liability of
approximately $100,000.
SENATOR WILKEN expressed concern over the financial implications
of the bill. He said adopting it would add another $106,000
dollars in liability.
3:11:33 PM
MS. MILLHORN commented the DRB provided a quote on SB 140 and SB
242, which she feels is beneficial information for the concerned
parties to read. She noted former Senator Loren Lehman created
the impetus for SB 24 when he observed many teachers were
eligible to retire. Thereafter, the bill was introduced by
Representative Pete Kott to expand that program to include PERS.
The report indicates that 56 percent of the participating TRS
employers have filed 187 waivers since 2001 and 124 members
enrolled in the program as of November 30, 2004. Thirty-four
percent of the enrolled TRS members have since resigned their
positions and retired again. Some school districts are employing
a mentor program that pairs highly experienced teachers and new
teachers. There have been 89 teachers come back from the program
to return to 23 rural school districts.
Twenty-six percent of PERS employers have participated in the
program since November 30, 2004. There are currently 211 people
enrolled and the turnover from inception to date is 30 percent
compared to TRS with 34 percent. The leading job classifications
among participants are engineers and biologists.
The division acknowledges it was under a different understanding
of the program when it issued the aforementioned communications
and the Department of Law is looking at the issue.
CHAIR DYSON held SSSB 24 in committee.
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