03/27/1997 03:35 PM Senate STA

 Number 460                                                                    
                                                                               
            SB 129 PERS REQUIRED SAVINGS UNDER RIP                           
                                                                               
  CHAIRMAN GREEN  brought SB 129 before the committee as the next              
 order of business.                                                            
                                                                               
  SENATOR DUNCAN , prime sponsor of SB 129, explained the legislation          
 relates to the Retirement Incentive Program (RIP) passed last year            
 by the Legislature.  Last year's bill allowed cost savings to be              
 calculated over a three-year period of time, and SB 129 amends that           
 provision to a five-year cost savings calculation.  He said he                
 thinks it is an important provision to consider as far as ensuring            
 that the program that passed last year will work to its maximum and           
 allow the cost savings that he believes should be generated under             
 the program.                                                                  
                                                                               
 Senator Duncan pointed out that the five-year cost savings                    
 calculation is not a new concept, having been in two previous                 
 Retirement Incentive Programs.  The numbers of people who not only            
 were eligible but designated to participate were of a much higher             
 percentage than what is occurring in the current program.  Changing           
 to the five-year calculation would increase the number of people              
 who would be eligible to retire and who potentially would retire.             
 Therefore, as that happens, there is more cost savings in state               
 government and it will have a very positive impact on helping                 
 reduce government expenditures overall, he stated.                            
                                                                               
 Number 420                                                                    
                                                                               
  CHAIRMAN GREEN  commented that in listening to the budget process            
 this year, she was disappointed in the amount of cost savings being           
 shown.    SENATOR DUNCAN  said he thinks this program is being                
 managed much more conservatively than previous programs were,                 
 primarily because the legislative intent was to do that.  He said             
 it is hard to compare this program with previous programs because             
 of the three-year calculation and because the last two programs had           
 only one window period whereas this program runs through 1999.  He            
 noted Senator Sharp has introduced legislation that would require             
 eligible employees to take the RIP in the first window they are               
 eligible.                                                                     
                                                                               
 Number 400                                                                    
                                                                               
  SENATOR WARD  commented that it would appear that the Administration         
 has been restrictive and selective in their approach, making the              
 program not necessarily working in the way the Legislature had                
 intended.  He also noted that Senator Sharp's bill, SB 126, has a             
 broad enough title to extend the three-year calculation to five               
 years, but it is his understanding that the 5-year calculation was            
 rejected by Senate Finance because that tool was not considered as            
 a necessity.   SENATOR DUNCAN  agreed that the provision was                  
 discussed in the Senate Finance Committee, but he said it was never           
 rejected by the committee.  It was only discussed because Senator             
 Adams asked a question of a union representative.  He also stated             
 he would have no problem with amending Senator Sharp's bill to                
 include a 5-year cost savings.   SENATOR WARD  then voiced his                
 concern that he was not sure if changing the provision from three             
 years to five years was good public policy.                                   
                                                                               
 Number 340                                                                    
                                                                               
  BILL CHURCH , Retirement Supervisor, Division of Retirement &                
 Benefits, Department of Administration, came forward to respond to            
 questions from the committee.                                                 
                                                                               
  SENATOR WARD  asked if it was correct that out of the state's 12,500         
 department employees, there have been 46 individuals that have                
 actually retired under this RIP.   MR. CHURCH  responded that it is           
 probably a little bit more at this point in time.  There are people           
 retiring each month under the program so it's very dynamic in                 
 nature.  He agreed with Senator Duncan that they are seeing fewer             
 people retire under this program than they have in previous RIPs,             
 although this program is structured much differently than previous            
 programs.                                                                     
                                                                               
  SENATOR WARD  asked Mr. Church if he thinks the new RIP has been             
 structured to the letter of the legislative intent, or has it been            
 selective and restrictive on the part of the Administration.   MR.            
 CHURCH  replied that he wasn't at the committee hearings when the             
 bill was passed, but it his understanding that the program is being           
 run in accordance with the guidance and understanding that was                
 given through the Legislature.                                                
                                                                               
 Number 300                                                                    
                                                                               
  SENATOR DUNCAN  asked Mr. Church his reaction to computing cost              
 savings over five years instead of over three years.   MR. CHURCH             
 said when the law was changed in the previous RIP from three years            
 to five years, there were many more individuals who met the                   
 qualifications to be able to retire under the program.  He added he           
 believes it was very successful by allowing more people to take               
 advantage of the RIP, reducing personal services costs to the                 
 employers.                                                                    
                                                                               
 Number 270                                                                    
                                                                               
 There being no further testimony on SB 129,  CHAIRMAN GREEN  said she         
 was willing to move the bill out of committee, but she didn't think           
 there were the signatures to do so.  She advised SB 129 would be              
 held over to the April 1 meeting.