Legislature(2017 - 2018)ADAMS ROOM 519
04/17/2018 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB185 | |
| SB105 | |
| SB92 | |
| HB119 | |
| HB409 | |
| SB105 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 224 | TELECONFERENCED | |
| + | SB 185 | TELECONFERENCED | |
| + | HB 119 | TELECONFERENCED | |
| + | HB 409 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 105 | TELECONFERENCED | |
| += | SB 92 | TELECONFERENCED | |
CS FOR SENATE BILL NO. 185(EDC)
"An Act relating to reemployment of persons who retire
under the teachers' retirement system."
9:11:04 AM
Co-Chair Foster noted that the bill was companion to HB 224
by Representative Jennifer Johnston.
SENATOR PETER MICCICHE, thanked the committee for hearing
the teacher retire/rehire bill. He spoke to the nationwide
shortage of teachers and educators. Historically Alaska had
relied on the recruitment of teachers from the Lower 48,
but the pool in the Lower 48 had shrunken, which had
exacerbated the teacher shortage in Alaska. He reported in
2015 there were 3.3 million teachers in the U.S.; 344,000
new teachers had graduated in 2017 and 531,000 teachers
left the profession. He shared that the turnover rate in
poverty schools was much higher; it was a nationwide
problem. He detailed that teacher job fairs in Alaska had
seen a steady decline in prospective teachers. In 2017
there had been only 211 registrants, 172 from in-state and
39 from out of state. He detailed that typically the
numbers were more balanced. He elaborated that 36 districts
had been represented. In 2018 the number of registrants had
dropped to 179 and only 31 were from out of state. In some
schools there were high school graduates supervising
certain classrooms.
Senator Micciche explained that the bill returned to the
retire/rehire provisions in place from 2001 to 2010. He
explained that to be eligible [for re-employment] a person
62 years of age or older had to be retired for 60 days and
a person younger than 62 had to be retired for six months.
There were no salary deductions, retirement and benefits
could still be received, there was no credited service, and
there was no hit to the Teachers' Retirement System (TRS)
system. He commented that the department would speak to the
fiscal note later in the meeting. The districts would
continue to pay the 12.56 percent TRS requirement. Benefits
and pay would depend on the bargaining unit, some would be
union represented and some would not. Sick leave was
required by current state law and there would be a 12-month
contract just like any other teacher. He detailed that from
2001 to 2010 there had been only 325 teachers rehired. The
average reemployment time had been 18.7 months and the
shortest had been 3 months. He specified the number equated
to 32 teachers on average per year. He believed the number
would be higher if the bill passed.
9:15:11 AM
Senator Micciche expounded that the bill would put Alaska
retired teachers on equal footing with retired teachers
from other states. Currently any retired teacher from
another state could be rehired in Alaska; however, Alaska
could not rehire its own retired teachers. He believed an
experienced teacher was better for the students until a
school could fill a position with a new full-time teacher.
Additionally, he believed there were mentorship
opportunities for younger teachers. The bill enabled
districts to take advantage of a lifetime of experience at
the same or lower cost of a new teacher until the position
could be filled with a recent graduate. He pointed to a
handout specifying that rural remote schools had the lowest
retention among principals and teachers (copy on file). He
detailed that urban schools included Juneau, Anchorage, and
Fairbanks; the urban/rural fringe included Palmer, Sitka,
Seward, Kenai; the rural hub category included places like
Bethel, Healy, and Unalaska; and the rural remote category
included places like Adak, Arctic Village, and Yakutat. The
rural remote schools only retained 61 percent of their
principals and 64 percent of their teachers in 2017 to
2018, whereas urban schools had retained 88 percent of
their principals and 80 percent of their teachers. He
reiterated there was a problem facing the state, which the
bill would help to manage temporarily with qualified
teachers.
9:17:17 AM
RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, reviewed the
sectional analysis (copy on file):
Section 1
Adds new section to AS 14.20:
AS 14.20.136(a) allows school districts to rehire
educators that have retired under the defined benefit
plan or the defined contribution plan when;
AS 14.20.136(b)(1) the retired member certifies that
there was no prearrangement of reemployment made prior
to retirement;
AS 14.20.136(b)(2) the member has been retired at
least 60 days if they are 62 years of age or older or
six months if the member is younger than 62 years of
age;
AS 14.20.136(c) the school district has adopted a
rehire policy by resolution and has publicly
advertised the position for 10 business days and is
actively recruiting to fill the position with a person
other than a retired member.
AS 14.20.136(d) reemployment contracts may not exceed
12 consecutive months.
AS 14.20.136(e) the school district that hires a
retiree must provide the administrator with a copy of
the resolution and policy required by (e) as well as a
report stating the retiree's name, description of
circumstances, and actions taken to comply with the
policy. The school district is also required to make
contributions to AS 14.25.070.
AS 14.20.136(f) certain requirements of the section
don't apply to a rehire member that's eligible for
restoration of tenure rights.
Section 2
Allows retirees who are rehired, as permitted by
section 1, to continue to receive retirement benefits
during the period of reemployment unless they become
an active member.
Section 3
Makes retirees who are reemployed, as permitted by
section 1, ineligible to receive additional retirement
benefits based on their service and salary during the
period of reemployment.
Section 4
Clarifies that a member who is reemployed does not
become an active member, the member will continue to
receive retirement benefits, deductions under TRS will
not be made to their salary and reemployed educators
will not receive credited time for service during
reemployment. This section also ensures that a retired
and rehired teacher will be eligible to receive the
group health plan coverage that is provided to active
members employed by the school district if they so
choose.
Section 5
Inserts reference to section 1 which will require the
employer to make TRS contribution for reemployed
retirees at a rate of 12.56%.
Section 6
Applies the bill's provisions to contracts made on or
after the effective date.
9:19:31 AM
Co-Chair Foster listed individuals available for questions.
Representative Grenn asked why the tool had previously been
removed in 2010.
Senator Micciche replied that he could not answer the
question. He explained that as he had worked on the bill
someone had suggested using a short sunset window in order
to drive educators to find a long-term solution to the
shortage. He remarked that if educators elsewhere in the
U.S. could not solve the problem, he did not believe the
idea was realistic. He thought the situation was a frequent
challenge in the past. He spoke to the difficulty of
getting a piece of legislation passed. He did not know why
it sunset in the past. He thought they had probably
believed a solution should be achieved, but he did not know
that it was realistic. He believed the challenge was
frequent in Alaska depending on the status of the economy
and other issues.
LISA SKILES PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF
SCHOOL ADMINISTRATORS, responded that the school system had
missed that the law had sunset; they now needed it back.
Representative Wilson pointed to Section 2 of the
legislation that read "...continue to receive retirement
and benefits during the period of reemployment unless they
become an active member." She noted the language appeared
in two places in the bill. She wondered if a person could
be retired and receiving retirement and benefits and also
become an active member.
Senator Micciche replied that a person could always be
rehired and become an active member. He elaborated that a
retired person could decide they would no longer be retired
and go back to the profession of teaching. He stated that a
person could not be both. The bill would enable a person to
be a temporary teacher after retirement. He continued that
if a person decided to return to being an active member
they would come out of retirement and would no longer
receive their retirement benefits.
Representative Wilson observed that many teachers were not
coming out of retirement, otherwise the bill would not be
needed. She surmised that a retired teacher could decide to
come back [temporarily] under contract, while retaining
their benefits. She believed the benefit to the [TRS]
retirement plan was that 12.5 percent was put into the
system and no additional money would go to the retiree
because they were already in a plan.
Senator Micciche replied in the affirmative. He believed
people had not chosen to become active employees because
when people were ready to retire they were ready to retire.
He remarked that the bill would very likely bring a
significant savings for the state. He underscored that
people did not retire to go back to work. However,
sometimes a teacher retired and was amenable to coming back
for a temporary period. He believed there were many more
teachers in the queue in that scenario versus retired
teachers wanting to come back to work full-time.
9:24:44 AM
Representative Kawasaki referenced a one-page document from
the Division of Retirement and Benefits (copy on file) that
listed the Lower Kuskokwim School District as the employer
employing the largest number of individuals under the
retire/rehire program ["Retiree Rehire Program Experience
Summary 2001-2010 School Years (copy on file)]. He asked if
there were statistics available on other employers
particularly related to rural and remote Alaska.
Ms. Parady believed Representative Kawasaki was referring
to a summary of statistics in members' bill packets. The
document specified that the employer employing the largest
number of individuals under the retire/rehire program was
the Lower Kuskokwim School District. The information was
broken down by position. For example, there had been 149
teachers, 45 special education teachers, 18
superintendents. She explained it was possible to obtain
who used what by district if necessary. She remarked that
the program had been used more historically in rural areas,
the urban areas desperately needed it for specific
positions like special education. She believed every
district would use the tool provided under the bill if
possible.
Representative Kawasaki noted that the law had been in
effect from 2001 to 2010. The committee had heard
repeatedly in testimony that the reason so many individuals
were retained in school districts, trooper ranks, and other
places was primarily related to the retirement system
currently in place. He asked Ms. Parady for comment.
Ms. Parady answered that Alaska was reflective of the
national shortage, but it was having greater struggles due
to its remoteness combined with its loss of
competitiveness. She noted that teachers had testified
throughout session that the state had lost ground with its
retirement system and wages for the cost of living in
Alaska. The state no longer drew [new teachers] from the
Lower 48 as it had in the past. She noted that many
recalled when there had been lines out the door to work in
Alaska, whereas, currently the state was down to less than
200 and the majority were rotating between districts - not
from the Lower 48.
9:27:46 AM
Senator Micciche elaborated that there were currently
shortages in some areas that had some of the most lucrative
defined benefit plans in the nation. He remarked that it
was largely a social issue - the primary reason teachers
were leaving was dissatisfaction. The social norms where
teachers had been revered by parents and students had
changed. He stressed the need to turn the situation around.
He believed it was a national problem and that teachers
were tired of being abused and not being valued. The non-
monetary problems seemed to be more pervasive than whether
there was a lucrative defined benefit plan in a district.
Representative Kawasaki remarked that one of the criticisms
he had heard about a retire/rehire program (e.g. for city
police and teachers) was rather than hiring new teachers it
was a way to keep individuals who had retired previously.
He had heard the issue was a negative aspect of the
program.
Ms. Parady countered that the districts were unable to fill
vacant positions. She underscored it was not a situation
where jobs were taken away from new teachers. The
legislation was designed to require school districts to
advertise and try to recruit a permanent teacher into the
position. If the position was not filled, districts could
hire a retired individual to fill the position. She
understood that it may be a concern in times when the
districts were able to attract teachers, but it was not
applicable in the current situation. Currently there were
many districts patch-working substitutes or para-educators.
She believed the students would be much better served if
districts had the ability to rehire retired teachers who
were familiar with the Alaska content and was a proven
resource for students. She concluded that patchworking
substitutes and others to teach the class or to put
additional load on teachers by double-hatting or merging
classes was not good for students.
9:30:41 AM
Vice-Chair Gara stated the bill was easy for him to support
for the reasons mentioned by Ms. Parady. He believed the
bill had passed the other body unanimously because people
with different views on education funding saw a common
ground with the legislation. He recalled testimony that
several years ago the job fairs had been filled with
individuals looking to move to Alaska, whereas, currently
the state was having difficulty attracting qualified
teachers to come to Alaska. He believed the bill helped
fill the gap.
Ms. Parady answered that Alaska was seeing a crisis that
was unparalleled to anything in the past. She characterized
the situation as the perfect storm. There were not enough
new teachers being produced nationally. She referenced
research out of Penn from 2015 reporting there were 3.3
million teachers in the U.S.; 343,000 new teachers had been
prepared that year, but over 500,000 teachers left the
profession. The deficit in the country's teacher pool was
exaggerated in Alaska because of its reliance on recruiting
teachers from the Lower 48. She emphasized that education
was hard; teachers were asked to do much more than in the
past. She believed there were many reasons for the severe
shortage. She asked members to think about the education
system as a business.
Ms. Parady explained that education was the largest
business in most of the state's communities. She equated
superintendents to business CEOs and stressed there had
been a 60 percent turnover rate over a four-year period.
Additionally, districts had a 26 percent principal turnover
rate. She referenced the handout provided by Senator
Micciche about teacher turnover. She elaborated that the
picture worsened with time in schools that needed the most
stability. The bill was not a silver bullet, but it was one
strategy to help fill vacancies. She communicated that
educators understood that the proposal of additional
strategies was needed, and she believed legislators would
be seeing more proposals in the coming years.
9:34:53 AM
Senator Micciche spoke about retirement and believed money
had much to do with the issue nationwide. He thought that
the legislature was considering early funding for education
because he and Co-Chair Seaton had attended a meeting with
educators and administrators in Seward earlier in the year.
He hoped the effort was successful. He believed flat
funding had a dramatic impact on teaching. He agreed it was
a discussion that needed to continue. There was struggle
for many reasons and the bill offered a simple solution to
part of the problem.
Vice-Chair Gara stated that more experienced teachers had a
stabilizing effect. He believed mentors worked in numerous
ways and that experienced teachers were also beneficial for
other teachers. He remarked on a separate effort to get
more mentors in the child protection system.
Representative Pruitt referred to financial impacts of the
bill. He asked if retired teachers would come back to work
at a new teacher salary or other.
Ms. Parady answered that it would depend based on the
school district. She explained that a teacher was not
locked into the salary they received at their previous
district. She explained that if a person had been a master
teacher at a higher level before retirement, the rehire
negotiation would be between the school district and the
retired individual. She guessed that depending how long a
position had been vacant, the more leverage the retired
individual would have. There was no locked in amount or
prescribed way an individual would come back to work. The
individual could only be hired after the district had tried
to fill the position in the normal process.
9:38:42 AM
Representative Pruitt pointed to Section 1(d) and observed
that contracted reemployment could not exceed more than 12
months. He asked for verification that the rehired teachers
would not fall under a normal bargaining contract where
they would move into [payroll] steps and tiers annually. He
surmised it would be a year-by-year discussion and
negotiation.
Ms. Parady answered that depending on the collective
bargaining agreement of the district and the definition of
teacher, the individual would or would not fall under that
category. She confirmed that the contracts were negotiated
year-by-year (as with every teacher) and a retired person
would only be able to contract for one year at a time or
less depending on the needs of the district.
Representative Pruitt noted that rehired teachers would be
eligible for insurance under the current plan. He thought
healthcare insurance would be secondary from the retirement
system.
Senator Micciche read from page 2, paragraph 3 of the
fiscal note [OMB Component Number 64]:
Current retired members covered under the AlaskaCare
Retiree Health Plan who return to employment under
this bill will generate a cost savings as their
retiree health insurance will become secondary to the
active insurance received upon reemployment...
Representative Pruitt wanted to understand the fiscal
impacts of the bill. He stated there was always cost
concern about double dipping when there were discussions
about retiree rehire in teaching or other systems. He
recognized the need had been established due to the lack of
teachers. He asked how to ensure people were comfortable
that the legislature was not providing an opportunity for
an individual to potentially benefit off the system. He
stated that double dipping had cost some communities
substantially.
Senator Micciche answered that the bill would implement
some things that had not been in place under the prior
program. He noted there had also been some Internal Revenue
Service (IRS) changes. He elaborated that the bill required
bona fide separation with no prearrangement allowed. He
detailed that prearrangement had some significant
consequences, which increased the likelihood that
retirement systems would not be impacted. He explained that
the fiscal note provided a set of facts. He detailed that
if 100 percent were rehired from the retired population
there would be a savings. He reported there would be a
fiscal impact if people retired to take advantage of the
program earlier. He stated that if 50 percent of the
participants were retired over three years there would be a
savings to the program, which he expected to be the case.
He found it highly unlikely someone would retire to go back
to work for the incremental increase they would receive
with the program.
Senator Micciche did not view the bill as a retirement
incentive. He anticipated the bill would result in savings.
The fiscal note was indeterminate because it covered a set
of facts specifying there would be a savings at certain
percentages of people already being retired it would be a
savings, whereas, there could be a cost with lower
percentages and "x" number of people retiring to take
advantage of the program. He thought the probability was
unrealistic [that a cost would result].
9:43:30 AM
Representative Pruitt thought it was appropriate to mention
the individuals would not be adding into their retirement
when doing the work. Individuals would step away from
retirement and would be coming in under typical one-year
contract. He underscored that individuals would not be
adding to the retirement system or increasing the future
retirement liability.
Senator Micciche replied he believed it was a disincentive
to add to the program. He stated that if the situation
became desperate enough he could see districts hiring back
retired teachers to reenter as regular employees and then
adding to their retirement benefits. The bill discouraged
that situation and would allow districts to hire retired
teachers temporarily while remaining on their regular
retirement and not adding to their benefits. He concluded
that hopefully a savings would result because the
individuals were retired and there would be a savings in
healthcare to the system. He stated that if a Tier I
teacher was brought back they would begin adding to their
benefits again. He saw the bill as discouraging additional
cost in the retirement system.
Co-Chair Seaton clarified that the bill was different than
the prior retirement incentive program that covered all
state employees who would retire and be rehired at the same
rate. It meant there had not been an upward mobility path
for lower level employees. He appreciated that the bill
required a teacher to be separated from the system for a
minimum of 60 days or 6 months [depending on the person's
age]. He also appreciated that Section 5 required districts
to continue to put the 12.5 percent of salary into the
retirement system. He believed it would keep the retirement
system whole and would solve the problem of not being able
to fill positions. He thought one of the reasons the past
program had gone away was it had been combined with other
state employees.
9:47:02 AM
Representative Guttenberg asked about attracting teachers.
He remarked on the nationwide teacher shortage. He asked if
Ms. Parady had thought about other ways to attract teachers
to Alaska.
Ms. Parady replied that educators were actively thinking
about ways to shift the terrain because the situation was
not healthy for students or anyone. She remarked that the
situation had been dwindling downward and it was necessary
to figure out how to stop the cycle and move forward. She
referenced the organization's joint position statement she
had previously provided to members; all its members focus
and vote on the positions. One of the organization's
highest priorities was preparing, attracting, and retaining
qualified educators. She continued it would include
innovative, alternative pathways to attract teaching. She
spoke to the need to create education career pathways for
current students. The organization was working with the
University - she referenced University President Jim
Johnson's goal of 90 percent by 2025, which the
organization was supportive of. Many different strategies
were being considered. She believed they would bring
additional ideas about ways to attract teachers to Alaska
in coming sessions. She listed the need for reciprocity
with other states allowing certification in one state to
transfer to another state. She referenced alternative
certification. For example, making it possible for an
engineer to teach math if they were willing. She shared
there were many strategies used in other states that
deserved consideration and possible implementation.
Representative Guttenberg shared that he had a friend who
had started a dog mushing magazine and a local hospital had
said it was the biggest recruiting tool it had ever had for
doctors. He recalled a doctor in Juneau telling him he had
been recruited to Alaska and his son had discovered hockey,
which kept them in Alaska. There were many things outside
the norm that anchored people to Alaska. He believed the
state had a significant amount to offer.
Representative Kawasaki noted that the last sentence of the
fiscal note specified a complete analysis by the plan
actuary, Conduent Human Resources Services would be
submitted with the fiscal note. He remarked that the
analysis was not included in members' bill packets.
9:51:03 AM
Senator Micciche replied that he would have copies made and
distributed to members.
Co-Chair Foster OPENED public testimony.
MARK MILLER, SUPERINTENDENT, JUNEAU SCHOOL DISTRICT,
JUNEAU, testified in support of the bill. He shared that he
had previously been a physics and chemistry teacher for 12
years. He provided details about his past career as a
teacher. He had a passion for teaching. He provided a
scenario where he decided to give up his job as
superintendent. He provided an option where he could choose
to work for ACE Hardware [he brought examples of items he
could teach people to use]; however, he would be forbidden
to return to teaching in Alaska if he worked part time. He
believed it was wrong. He stressed it was not a finance
issue, but a resource issue. He stated that whatever the
fiscal note was, it would be budget dust in comparison to
the overall state budget. Whether the bill passed or not,
no one looking at the budget in the next year would know
whether the bill passed. He detailed he and other
individuals at a time in their lives where they no longer
wanted a full-time job were the resource. He stated that
teaching came from the heart and soul. He believed great
teachers were born, not made. He wondered why a retired
teacher in Alaska had to move out of state if they wanted
to teach, yet a retired teacher from out of state could
teach in Alaska.
Mr. Miller stressed that some of the state's most valuable
resources (veteran teachers) were being wasted. He
characterized the program under the bill as a win-win for
teachers and school districts. The bill meant districts
could stop rotating substitutes with no teacher training
through classrooms and would allow retired teachers to work
part-time. He believed committee members had become
legislators because they wanted to contribute. He shared
his favorite quote from Horace Mann "be ashamed to die
until you have won some victory for humanity." He believed
the bill would mean a win for humanity and the kids of
Alaska. He did not believe the fiscal note would hurt the
state and the bill would provide a powerful option for
education in Alaska.
9:57:00 AM
MATT MOSER, NATIONAL EDUCATION ASSOCIATION-ALASKA, JUNEAU,
testified in support of the bill. He read from a prepared
statement:
NEA-Alaska supports having a qualified educator in
front of every Alaska student at the beginning of the
school year. We believe this legislation is one tool
to help make that a reality.
NEA-Alaska is supportive of efforts to return our
veteran educators to the classroom.
NEA-Alaska's understanding is that Senate Bill 185
will not affect existing collective bargaining units
of certificated educators.
Collective Bargaining Agreements in districts that
cover all "certificated educators" would continue to
cover all "certificated educators", including retired-
rehired educators and that the terms and conditions of
employment would continue to be subject to collective
bargaining agreements with the exception of continued
employment.
NEA-Alaska believes this is a band aid for ensuring
that students have a certified educator in every
classroom. We strongly believe that the state
legislature and governor will need to take a hard look
at how to actually attract and retain quality
educators. We believe that will happen by returning
to a defined benefit, looking at salaries keeping up
with inflation, and strong mentorship and professional
development programs.
9:59:06 AM
JENNIFER HALDANE, DIRECTOR, CONTRACT ADMINISTRATION, LABOR
RELATIONS and BENEFITS, ANCHORAGE SCHOOL DISTRICT,
ANCHORAGE (via teleconference), spoke in favor of the bill
with a prepared statement on behalf of superintendent Deena
Bishop:
The district appreciates the opportunity to speak
today in support of SB 185. As has already been
discussed, teacher recruitment in Alaska is very
challenging. The Anchorage School District hires
approximately 250 teachers a year. We are always
recruiting for qualified applicants and we
consistently have vacancies, especially in hard to
fill areas such as special education, CTE, and some of
our language emersion programs. SB 185 provides an
opportunity to utilize experienced retired teachers to
fill gaps in these areas and our students benefit from
that added flexibility. We believe this legislation
would have a positive impact on school districts
across the state. Thanks for your time today.
10:00:22 AM
SCOTT MCMANUS, SUPERINTENDENT, ALASKA GATEWAY SCHOOL
DISTRICT, TOK (via teleconference), testified in support of
the bill. He read from a statement:
You've heard today over and over how recruitment of
teachers in today's environment is becoming more and
more difficult. When I was a kid in the village being
a teacher meant something and it meant doing something
that was respected. Both my mother and father were
teachers in Ambler where I grew up and it was
something that I aspired to be. When I was going to
college I went to an apprenticeship as a cement mason
at a local 867 there and that was 35 years ago; 35
years ago, a journeyman mason made $30 an hour, which
is more than a starting teacher makes today.
When I went to the job fair this year as the
superintendent, I went down there looking to hire five
teachers. There were 180 teachers at the job fair and
we were fortunate to be able to hire three of them.
For those of you who know my district, we're on the
road system, which gives us a little bit of an edge
over some school districts that aren't. I was pleased
with that outcome. I went down to the Portland job
fair and there were 22 school districts in the room
and less than 30 teachers looking for positions. I
only interviewed one person and didn't hire them. I
guess the point is that it's becoming more and more
difficult, as you've been hearing.
Teachers were leaving their jobs because they find
themselves in an unappreciated profession where they
don't think they're making a difference. They're beat
up by parents, they're beat up by politicians, they're
beat up by the press. They leave because it's one of
the lowest paying professions that require a college
degree, they leave because they don't feel they have
the support of the administration or the community,
they leave because they don't feel they are making a
difference. That is really the key. People want to do
something with their lives that has meaning, they want
to make a difference, they want to be a part of that
solution.
I did a project a few years ago for a post graduate
study and I surveyed 360 rural teachers in Alaska. I
was interested in a study about why teachers stayed.
It was really a profound learning experience. The
reason they stay and the reason they leave are the
same. Teachers stay where they feel like they're being
appreciated and where they're making a difference.
Teachers don't become teachers because they want to
get rich, they just want to make a good living, which
I think it's incumbent upon us socially that we do
that. They've got to feel like their lives have
meaning and if they're constantly getting beat up they
want to leave. The long-term solution to the teacher
shortage was like most things, it was really simple,
but it was very difficult to do. What we need to do is
effect social change that attracts quality teachers in
order to improve the public perception of schools and
in order to improve the quality of teachers we have to
change that perception. It was an egg/chicken
argument.
Personally, my feeling is that the long-term solution
- and I think this bill is a short-term, stop-gap
solution - but the long-term solution is counter-
intuitive. I think it needs to become more difficult
to become a teacher, not less. That's how you make it
mean something. There's a long waiting list of people
trying to get into military academies, there's no
shortage of people trying to get into ranger school or
getting into these special military schools, there's
no shortage of people trying to get into upper end,
elite ivy league schools because that means something
and they're willing to work really hard to do it. The
Finnish model of education really did that, they
closed a number of teacher preparation programs, made
it far more difficult to get in, as difficult to
become a teacher in Finland as it is to become a
doctor. I think we know what the end result of that
was. It wasn't because they pay them more, it's
because of their social status - they have some
meaning in their lives and because they're respected
by their community.
Mr. McManus concluded that the bill was a stop-gap
solution, but it would help. There were teachers in his
community he would hire if the bill passed.
Co-Chair Foster CLOSED public testimony.
10:05:46 AM
Vice-Chair Gara reviewed the indeterminate fiscal note from
the Department of Administration. He detailed that teachers
retiring after the bill's effective date may add some costs
and teachers retiring prior to the effective date would
save some costs. There was no way to know what mix of
teachers would utilize the system.
Representative Wilson asked about page 2 of the fiscal note
pertaining to the different percentages listed of teachers
rehired from the current retired population (100 percent,
67 percent, 50 percent, etcetera). She did not understand
why the information was shown for 200 and 400 rehired
retirees.
KATHY LEA, DEPUTY DIRECTOR AND CHIEF PENSION OFFICER,
DIVISION OF RETIREMENT AND BENEFITS, DEPARTMENT OF
ADMINISTRATION, answered the goal had been to look at a
band of numbers to demonstrate the potential impacts. She
detailed there had been 325 participants in the previous
program, but the department did not know whether more or
fewer individuals would participate in the new program.
Therefore, the department chose to show what would happen
if there were 200 participants and what would happen if
there were 400.
Representative Wilson asked about the 100 percent, 67
percent, 50 percent, and 33 percent [listed on the left of
page 2 of the fiscal note]. She asked if the information
indicated how a teacher retired with benefits or something
else.
Ms. Lea replied that the percentages represented the number
of retirees rehired under the program. She detailed that
there would be a savings to the retirement plans if 100
percent of the rehired teachers had been retired because of
the shift of cost from the retiree health plan to the
active health plan.
Representative Wilson asked for verification it had nothing
to do with how an individual retired, only the percentage
of retired individuals who would take advantage of the
bill. Ms. Lea answered in the affirmative.
Representative Kawasaki stated that when the first
retire/rehire program was done in 2001 the participants had
been in either Tier I or II. He wondered if Tier III,
implemented after 2004, had been taken into account.
Ms. Lea replied that the numbers in the fiscal note were
limited to the Defined Benefit (DB) population because once
a Defined Contribution (DC) employee could either leave
their contributions in the fund or take them out once they
retired. She explained the individuals were not accruing a
DB-type benefit; therefore, they could come back into
reemployment with no penalty.
10:10:02 AM
Representative Pruitt asked about a scenario where 50
percent of the people came back to the system. He was
trying to understand why there was a cost increase to the
retirement system for fewer people coming back in.
Ms. Lea answered that the information indicated that 50
percent were coming from the retired population and the
other 50 percent came from the active teacher population
who would retire and come into the program.
Representative Pruitt asked for verification the
information was split between retirement timeframes prior
to the bill and after the bill. He asked for the accuracy
of his explanation.
Ms. Lea answered in the affirmative. She detailed that the
chart looked at the utilization of the program between
individuals who were currently retired and individuals who
may come back in after retiring. She explained teachers
retiring after the program's effective date may retire
earlier than anticipated, which represented a cost.
Representative Pruitt surmised there was an expectation the
bill may encourage people to retire early, meaning there
would potentially be a cost to the system. He detailed that
a memo [Conduent memorandum addressed to Ms. Lea dated
March 19, 2018 (copy on file)] indicated that there was a
potential for people to retire sooner, meaning there would
be a cost to the system. He asked if he was understanding
the actuarial analysis correctly.
Ms. Lea answered that because the TRS DB plan was closed,
its value was based on its precise experience when the
valuations were done on what the future costs may be - in
order to not overstate the unfunded liability. Under the
current TRS system, most individuals retired within four
years past their normal retirement date - their benefit was
not 100 percent funded until that time. There was a table
used showing the likelihood a person would retire every
year after that person's normal retirement date. Anything
that may incentivize a person to retire on their retirement
date meant their benefit was not 100 percent funded at that
time, which was the reason for the cost.
10:13:32 AM
Representative Guttenberg surmised that if a person's
benefits were not 100 percent funded at a given point, they
would only receive the benefits they were eligible for at
that point. He provided a scenario where a person retired
at 18 years instead of 20 years and wondered if the
person's retirement benefit was diminished. He referenced
a retirement plan he had been a part of, where a person
received 90 percent or less if they retired early
(depending on how early they retired), similar to the
social security process.
Ms. Lea replied that Representative Guttenberg had
mentioned two different terms. She explained that early
retirement (before a person's normal retirement date) was a
reduced benefit. In the case of the bill, the information
looked at a person's age or service requirement (20 years).
History had shown that teachers generally may retire after
24 years or at age 64 instead of age 60. Anything that
incentivized teachers to retire earlier than the two
assumptions the actuary made in order to determine funding
for the plan, meant all of the funding was not there for
them. She clarified that it did not impact the member's
benefit. The member received the full benefit because they
reached normal retirement age. She explained that it meant
in the following valuation the state "on behalf" may be
affected. She elaborated that the employer contribution
could not be raised; therefore, the only place to get any
shortfall would be from state assistance. The memo provided
by the actuary and the department's fiscal note showed what
the affects on state assistance may be.
Representative Guttenberg surmised that for every year a
person did not retire they continued to pay benefits into
the retirement program, but their benefits did not
increase.
Ms. Lea clarified that an individual would earn additional
benefits as they continued to work.
Co-Chair Seaton MOVED to REPORT CSSB 185(EDC) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 185(EDC) was REPORTED out of committee with a "do
pass" recommendation and with one previously published
indeterminate fiscal note: FN2 (ADM).
10:17:30 AM
AT EASE
10:18:22 AM
RECONVENED