02/14/2008 01:30 PM Senate LABOR & COMMERCE

         SB 183-REPEAL DEFINED CONTRIB RETIREMENT PLANS                                                                     
                                                                                                                              
1:31:13 PM                                                                                                                    
CHAIR ELLIS announced SB 183 to be up for consideration.                                                                        
                                                                                                                                
SENATOR ELTON,  sponsor of  SB 183,  reminded the  committee that                                                               
this bill  hires new  employees into  Tier III  PERS and  Tier II                                                               
TRS. It gives them a chance  to earn a guaranteed benefit pension                                                               
and retiree  health coverage at  no cost  to the system.  He said                                                               
they had  talked in  the past  about how  the defined  benefit is                                                               
expensive and when you aggregate Tiers  I, II and III on the PERS                                                               
side, it is  more expensive, but you have to  remember that prior                                                               
to  the passage  of the  defined contribution  all new  employees                                                               
were going  into Tier  III. Now data  from the  state's actuaries                                                               
shows that  the Tier III is  slightly more expensive on  the PERS                                                               
side and slightly less expensive on  the TRS side so it's kind of                                                               
a wash  for the state,  but it does  give new employees  a better                                                               
benefit.                                                                                                                        
                                                                                                                                
He stated that most of the  state's public employees don't have a                                                               
safety net, the  defined benefit, of social  security under them.                                                               
Also  our   retiree  economy  in   this  state  is   almost  $1.5                                                               
billion/year. One of  the reasons it is so strong  is because the                                                               
defined benefit plan has a  cost of living adjustment (COLA) that                                                               
encourages  people to  stay here  and spend  the money  here. The                                                               
defined contribution  plan does  not have  that COLA.  He thought                                                               
that lack  would actually encourage  some retirees to  move south                                                               
especially  since   one  of  the  consequences   of  the  defined                                                               
contribution  system  is that  some  families  could run  through                                                               
their health benefit account in as little as 18 months.                                                                         
                                                                                                                                
SENATOR ELTON  ended by  saying there are  some things  this bill                                                               
doesn't do. In  the review of the defined  contribution plan some                                                               
things made sense  and those things won't change.  Among them are                                                               
the requirement  for a second  actuary to  check the work  of the                                                               
first  actuary, mandatory  experience studies,  elected officials                                                               
are still out  of the system, the ARM board  having the important                                                               
financial experience of disinterested  members, the 2010 buy back                                                               
deadline and  no employer  under this bill  paying less  than the                                                               
normal cost.                                                                                                                    
                                                                                                                                
CHAIR ELLIS reminded  the committee that the bill has  a long way                                                               
to  go. He  personally thought  the discussion  about recruitment                                                               
and retention of employees and  teachers was worth having because                                                               
the state  learns more as  it goes along  and hears not  just the                                                               
anecdotal experiences, but the statistics as well.                                                                              
                                                                                                                                
1:36:57 PM                                                                                                                    
SENATOR DAVIS  moved to  pass SB 183,  version M,  from committee                                                               
with individual recommendations and attached fiscal notes.                                                                      
                                                                                                                                
SENATOR BUNDE objected.  He said he understood both  sides of the                                                               
issue, but he opined that in  the pipeline era the state couldn't                                                               
match  salaries so  it provided  "pretty lucrative  benefits" and                                                               
we're having to pay for those now.                                                                                              
                                                                                                                                
A roll  call vote was  taken. Senators Hoffman, Davis,  and Ellis                                                               
voted  yea;  Senator Bunde  voted  nay;  so  SB 183  passed  from                                                               
committee.