Legislature(2017 - 2018)BUTROVICH 205
03/01/2018 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB212 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 212 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 212-PEACE OFFICER/FIREFIGHTER RETIRE BENEFITS
3:35:00 PM
CHAIR MEYER announced the consideration of Senate Bill 212 (SB
212).
3:35:30 PM
SENATOR PETE KELLY, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 212, read the first paragraph of his sponsor
statement as follows:
SB 212 would create a new defined benefit pension
option for state and municipal peace officers and
firefighters under the Alaska Public Employees'
Retirement System (PERS) with new protections for the
state against unforeseen future pension liabilities.
He explained that one of the reasons the Legislature has
not changed any portion of the retirement system back to a
defined system is that there never have been appropriate
safeguards that would keep the system whole. He remarked
that herculean efforts have been made to improve the
liability in the retirement system and the peace officers'
proposal to initiate safeguards within a new system is
worthy of a look.
He referenced his sponsor statement to explain details in
the bill that might give the Senate State Affairs and other
committees a level of confidence to carve out a piece for
public safety while maintaining safeguards within the
retirement system:
Since ending defined benefit plans in 2006, one of
Alaska's greatest public safety challenges has become
employee retention and recruitment. Alaska is one of
the few jurisdictions that does not presently offer a
defined benefit type retirement for new public safety
employees. Additionally, many municipal public
employees do not participate in Social Security or the
Supplemental Annuity Plan (SBS-AP).
Since 2011, 126 Alaska State Troopers have left state
service, and 72 percent of them moved to law
enforcement agencies with better pay and benefits.
Recruitment remains one of the greatest challenges
facing the Department of Public Safety today. With an
average cost of $190,000 per trooper to recruit,
train, and send out into our communities, these
separations have an enormous cost to Alaska.
Similarly, in Fairbanks the average length of service
for each new firefighter is 1.9 years.
SB 212 is crafted to retain and attract quality peace
officers and firefighters while protecting the state
from undue financial risks in the future. The proposed
option would allow future peace officers and
firefighters under the PERS system and current ones
under the PERS Tier IV plan to join the defined
benefit plan. The proposal includes several safeguards
modeled after the most fiscally responsible plans in
the nation. These safeguards provide stability and
would help protect the state from undue financial
risks in the future. These provisions include a
minimum retirement age of 55 with 20 years of service,
flexibility setting employee contribution rates,
minimum 12-percent employer contribution rates,
mechanisms to prevent costly "pension spiking," and
the ability to withhold post-pension retirement
adjustments should the plan's funding drop below 90
percent. The plan mirrors much of the PERS Tier III
benefits for public safety, though it retains the
current Tier IV defined contribution retirement plan's
health reimbursement arrangement (HRA) and absence of
cost of living adjustments as an important cost
savings measures.
Alaska smartly ended the defined benefit plan in 2006
after we discovered how underfunded those accounts
were to meet anticipated retiree obligations. Knowing
that Alaska must meet our obligation to retirees, we
cannot afford to return to defined benefit retirements
workforce wide; however, the nature of the jobs that
peace officers and firefighters hold are uniquely
physically demanding and hazardous compared to other
public employees, and all Alaskans pay the cost for
understaffed public safety agencies.
SENATOR KELLY noted that he referenced the Alaska State Troopers
in his sponsor statement but affirmed that the bill is a public
safety carve-out. He asserted that the state has a retention
issue in public safety and the issue is a problem that must be
addressed. He said there is an overarching moral mandate in the
state constitution to provide for Alaska's public safety;
however, he pointed out that there are financial reasons as
well. He stated that the $190,000 cost per trooper and 2 years
lost in training is something that the Legislature must address.
SENATOR KELLY set forth that SB 212 is an option to start the
conversation in how the state deals with retention issues in
public safety. He said he is willing to discuss modification to
SB 212 to meet the best interest of the state, law enforcement
employees, and to keep peace officers and firefighters for a
longer time. He summarized that a retirement change is one of
the tools that can be used to address the public safety
retention issue.
3:41:15 PM
CHAIR MEYER noted Senator Kelly's reference to the high turnover
rate in public safety and asked if retirement is the reason or
due to a preference to work in an urban versus rural area. He
pointed out that Anchorage continues to hire police officers
with the current retirement program.
SENATOR KELLY conceded that the problem is a little bit of both.
He opined that some conclusions can be drawn that if the people
are quitting and going to work in other law enforcement areas,
they are going with training and a certification that they
received on the "state's dime." He opined that the issue is not
necessarily related to the difference in work, but something
else going on. He admitted that he did not know if the
Department of Public Safety will be completely behind the
legislation and conceded that there are a lot of unanswered
questions in the bill. He reiterated that the legislation gets
the conversation started. He noted that preliminary actuarial
analysis indicated that the proposal is "not too bad." He said
there is a benefit in the legislation over Tier III, much of it
because a medical issue is addressed. He summarized that
answering some of the specific questions will be difficult for
him because not all the answers are known.
3:45:02 PM
CHAIR MEYER pointed out that Senator Egan had a bill that made
defined contributions an option. He noted that retired military
personnel that join law enforcement typically are interested in
defined contributions. He asked if the bill would have an option
for defined contribution or defined benefit.
SENATOR KELLY replied that Senate State Affairs is the first
committee of referral and referenced the Legislature's recent
history in addressing the state's retirement system. He
emphasized that his intent is not to introduce a bill that would
usurp the previous work done by the Legislature to create a
healthy retirement system. He asserted that SB 212 will keep the
state's retirement system healthy while addressing public
safety's retention issue.
CHAIR MEYER agreed with Senator Kelly. He asserted that the
biggest part of the state's unfunded liability is the medical-
side and he likes SB 212 because it deals with the medical
issue.
SENATOR EGAN pointed out that his bill was "still alive." He
noted that HB 83 was in the other body and the bill had a lot of
public hearings with no opposition.
3:48:05 PM
CHAIR MEYER opened public testimony.
3:48:19 PM
JOSEPH BYRNES, Staff, Senator Kelly, Alaska State Legislature,
Juneau, Alaska, clarified that the Alaska Professional
Firefighters Association brought the issue forward, not the
peace officers.
CHAIR MEYER announced that the committee will forgo the
sectional analysis for SB 212.
3:49:23 PM
DOUG SCHRAGE, Advocate, Alaska Fire Chiefs Association,
Fairbanks, Alaska, testified in support of SB 212. He set forth
that the Alaska Fire Chiefs Association has long recognized the
growing trend of experienced, trained fire fighters leaving the
state's departments for similar departments in other states,
particularly in the Pacific Northwest. He noted that
firefighting jobs in Alaska have historically been a "dream
job." He said departments with better retirement packages in the
Lower 48 have increasingly resorted to lateral-hiring because
there is a pool of well-trained firefighters in Alaska. He
summarized that recruiting, training and equipping firefighters
is expensive.
3:52:30 PM
COLONEL HANS BRINKE, Director, Alaska State Troopers, Alaska
Department of Public Safety, Anchorage, Alaska, detailed that
the Alaska State Troopers and the Alaska Wildlife Troopers have
a combined total-authorized positions of 389 with a combined
position vacancy of 45. He disclosed that over the past 2 years
the department has lost 30 to 40 troopers per year and hired
only 12, a net loss of 15 to 20 trooper per year. He provided
retirement statistics as follows:
• 38 percent of all troopers are eligible for retirement
within the next 5 years.
• 80 percent of the command staff are eligible to retire in
the next year.
• 94 percent of command staff are eligible to retire within
the next 5 years.
• An average of 15 to 20 retirements are expected per year
through 2026, a total of 120 to 160 trooper retirements.
COLONEL BRINKE addressed non-retirement trooper separations as
follows:
• 2014 to 2017 combined separations have averaged 24 troopers
per year, totaling approximately 126 troopers.
• Reasons for leaving:
o Lack of a defined benefits package.
o Being overworked.
o Pay disparities compared to other agencies throughout
the state and the Lower 48.
o Poor internal communications.
He disclosed that feedback from exiting-trooper interviews as to
what would keep them in their previous positions as follows:
• Defined benefit package.
• Wages that are comparable to other agencies.
• Restoration of a training budget.
He said he emphasizes trooper retainment versus recruitment. He
disclosed that the department will have to hire 40 troopers per
year for the next 8 years just to get back to even for the
authorized positions.
3:58:23 PM
SENATOR WILSON asked if the Alaska State Troopers support the
bill.
COLONEL BRINKE replied that the department is not at the point
to endorse the bill but added that the department supports the
concept of defined benefit packages.
SENATOR GIESSEL addressed Colonel Brinke's staffing challenge
and noted that her district had included the Kenai Peninsula.
She noted that she had discussions with the Alaska State
Troopers on staffing challenges in remote areas and remarked
that the Alaska State Troopers have been hurting from staffing
issues for a number of years.
4:00:32 PM
MAJOR BERNARD CHASTAIN, Deputy Director, Division of Alaska
Wildlife Troopers, Alaska Department of Public Safety,
Anchorage, Alaska, announced that he was available to answer
questions on SB 212.
4:00:56 PM
PAUL MIRANDA, Vice President-South Central, Alaska Professional
Firefighters Association, Anchorage, Alaska, testified in
support of SB 212. He detailed that Alaska began placing all new
state and municipal employees into the defined contribution plan
known as PERS Tier IV in 2006; however, the state has
experienced many unintended consequences. He asserted that the
clearest consequence is the competitive disadvantage the state
is now facing in recruiting and retaining public safety
employees. He pointed out that Alaska is one of the only states
to only offer a defined contribution retirement plan to public
safety employees. He noted that several jurisdictions in the
Lower 48 have switched from a defined contribution plan back to
a defined benefit plan specifically to address the same problems
that Alaska in now facing. He added that another unintended
consequence from the switch to Tier IV is the lack of retirement
security provided for public safety employees. He said SB 212
will make Alaska competitive in public safety hiring and
retention. He addressed benefit details and noted that Tier IV
medical benefits will be provided as opposed to providing full
pre-Medicare coverage.
4:05:41 PM
SENATOR GIESSEL asked what the definition is for a
"firefighter." She said her concern is the legislation ripples-
out without constraint and suddenly, "Secretaries at desks are
included."
MR. MIRANDA replied that the definition is classified as a P-
Class position that is used for frontline responders, peace
officers and firefighters.
SENATOR WILSON noted that Senator Egan brought up a point on
allowing the choice of opting in or out and asked Mr. Miranda if
he was in support of the ability to choose.
MR. MIRANDA replied that SB 212 provides a 90-day period to opt
into the new retirement plan versus staying in PERS Tier IV.
4:08:14 PM
SENATOR EGAN noted that the state troopers and firefighters did
endorse his bill. He detailed that his bill provides a choice
between defined benefit and defined contribution. He explained
that the reason for providing an option was for families that
transfer.
He addressed SB 212 and pointed out that he likes the bill's
conversion option because of its familiarity. He detailed that
if an unfunded liability opens, the bill has two ways employees
help close the liability. He noted that retirees skip their
inflation adjustments and active employees pay more out of their
wages. He asked if the two ways employees help close the
liability is equitable.
MR. MIRANDA replied that Washington state has similar provisions
in its law enforcement officers and firefighter's retirement
plan. He opined that the senator's question regarding the two
ways employees would help close a liability will be addressed in
an upcoming actuarial report.
4:11:00 PM
SENATOR EGAN added that there are states that have recently gone
back to direct benefit or allowed employees to choose between
defined contribution and defined benefit.
SENATOR COGHILL noted that Senator Kelly brought up the cost of
training state troopers and asked how much it costs to train
firefighters. He opined that cost recovery should be based on a
formula that considers the number of individuals that are
trained and the number of trained employees that leave.
MR. MIRANDA replied that the Anchorage Fire Department's
training cost is $100,000 to $165,000 for an individual that is
hired.
SENATOR COGHILL explained that knowing the training costs is
vital in getting cost recovery.
CHAIR MEYER asked if new recruits are trained in both emergency
medical technician (EMT) and firefighter training.
MR. MIRANDA replied that all firefighters in Anchorage are
cross-trained in both fire and emergency medical services (EMS)
and other jurisdictions throughout the state do the same.
SENATOR GIESSEL disclosed that the committee members did not
receive any cost numeration from the Alaska Professional
Firefighters Association.
MR. MIRANDA replied that he previously referenced firefighter
cost from the Anchorage Fire Department but would provide
additional information to the committee.
4:15:54 PM
ALEX BOYD, Assistant Chief of Training, Anchorage Fire
Department, Municipality of Anchorage, Anchorage, Alaska,
testified in support of SB 212. He stated that firefighter
recruitment and retainment has become increasingly difficult. He
said the department has seen an increase in declines for
employment due to other agencies that offer a defined benefit
system. He disclosed that the cost of training a new hire
employee is $169,000 per employee for initial training and
deployment. He revealed that a recent survey indicates that
approximately 38 employees in the department are seeking outside
employment and the result would be a potential $6.4 million
investment loss if all 38 left the department, an amount that
would have to be added to the department's annual operating
budget to cover academy costs.
4:19:20 PM
AMANDA WRAITH, representing self, Wasilla, Alaska, testified in
support of SB 212. She said she is increasingly concerned with
the level of decline and the lack of adequate support to recruit
and retain well qualified officers. She concurred with previous
testimony that many state troopers have left Alaska for jobs
that offer defined benefits in the Lower 48.
4:22:12 PM
LANE WRAITH, representing self, Wasilla, Alaska, testified in
support of SB 212. He disclosed that he is an Alaska State
Trooper. He said state troopers are taking their training and
leaving Alaska for jobs with defined benefits. He added that the
state's academies are receiving fewer applicants and turning out
fewer recruits. He said SB 212 goes a long way in fixing the
retirement system that is currently not working as an incentive
to bring people in or to keep the ones that have joined.
4:25:36 PM
BRYAN BARLOW, Deputy Director, Alaska State Troopers, Alaska
Department of Public Safety, Anchorage, Alaska, announced being
available to answer questions on SB 212.
4:25:59 PM
DEREK DEGRAAF, Supervisor, Trooper Recruitment, Alaska State
Troopers, Alaska Department of Public Safety, Anchorage, Alaska,
announced being available to answer questions on SB 212.
4:26:38 PM
CHIEF JUSTIN DOLL, Chief of Police, Anchorage Police Department,
Municipality of Anchorage, Anchorage, Alaska, testified in
support of SB 212. He disclosed that the department is running
an uphill recruitment battle with Lower 48 departments that
offer a defined benefits system. He pointed out that within the
state, rural departments face a tremendous challenge in hiring
and retaining officers. He said his primary concern is retaining
officers that are in their mid-career phase. He disclosed that
the cost for a first-year officer's training at the department
is $170,000 to $200,000. He said SB 212 is the step in the right
direction and will help the department recruit and retain law
enforcement officers across the state, especially in Alaska's
rural areas.
4:32:49 PM
CHAIR MEYER noted that the Anchorage Police Department has hired
many new police officers. He asked where the new hires are
coming from.
CHIEF DOLL replied that a few people have been hired locally as
well as individuals from out of state. He said he is concerned
with training and losing out-of-state applicants. He revealed
that most states have officer-certification reciprocity with
other states where an applicant can be hired in their home state
after receiving certification in Alaska and that is huge concern
for the department. He noted that PERS portability is another
concern that he has, and SB 212 would allow departments to have
influence over departures.
CHAIR MEYER asked where the local hires are coming from. He
inquired if hires are coming from the Alaska State Troopers.
CHIEF DOLL answered that some hires have come from the Alaska
State Troopers, but not within the last year.
4:36:01 PM
SERGEANT MIKE JENSEN, Recruiter Supervisor, Anchorage Police
Department, Municipality of Anchorage, Anchorage, Alaska,
testified in support of SB 212. He concurred with Chief Doll
that the department has hired a few officers from the Alaska
State Troopers.
CHAIR MEYER asked if the department has an outreach process to
attract rural-area applicants, especially Alaska Natives.
SERGEANT JENSEN answered yes. He noted that the department
recruited at the recent Alaska Federation of Natives (AFN)
Convention. He disclosed that one of his recruiting staff
members is an Alaska native. He said in addition to target-
recruiting Alaska natives, the department also target-recruits
women.
4:38:42 PM
HUNTER BOMAR, representing self, Boise, Idaho, testified in
support of SB 212. He disclosed that he was a firefighter for
the Anchorage Fire Department and is currently working for the
fire department in Boise, primarily because of their defined
benefit retirement program. He asserted that Alaska is losing
more qualified candidates to states that offer better retirement
programs. He provided the committee with malady statistics that
tend to inflict firefighters and stressed the importance of
retirement programs for firefighters.
4:43:48 PM
TYLER STUART, representing self, Fairbanks, Alaska, testified in
support of SB 212. He disclosed that he has been an Alaska State
Trooper for six years. He revealed that many of his friends and
co-workers from various state agencies have left Alaska because
they do not have a defined benefit retirement program. He said
the current Tier IV retirement system leaves uncertainty for
future planning for himself and his family. He said SB 212 is a
move in the right direction towards a defined benefit program
and would provide a lot of confidence to troopers and
firefighters.
4:47:31 PM
CHAIR MEYER closed public testimony.
He disclosed that he has done ride-alongs with the Anchorage
Police Department and noted his appreciation for the work that
the police officers do. He said his eyes have been opened in
revisiting the retirement system that is being addressed. He
admitted that there are a lot of questions that need to be
worked out. He asked Mr. Byrnes to address the bill's sectional
analysis at a future committee meeting to know in detail what
the legislation does. He added that the bill's fiscal notes are
indeterminate awaiting an upcoming actuarial report.
MR. BYRNES replied that Kathy Lea from the Alaska Division of
Retirement and Benefits can address questions regarding the
retirement system and the fiscal note. He concurred that the
division's fiscal note is indeterminate due to the actuarial
report but suggested that the Senate Finance Committee could
address a determinant fiscal note.
CHAIR MEYER asked Ms. Lea to address the bill's fiscal note,
specifically when the actuarial report will be finished. He
pointed out that the legislation's cost will be a major factor.
He said the committee members would like to know what the bill's
financial implications are prior to going to the next committee
of assignment. He admitted that the resistance in the past has
strictly been the unfunded liability portion.
4:51:05 PM
KATHY LEA, Deputy Director and Chief Pension Officer, Alaska
Division of Retirement and Benefits, Alaska Department of
Administration, Anchorage, Alaska, explained that an actuarial
fiscal note is generally ordered when a bill gets to either
Senate Finance or House Finance due to the cost involved in
producing the actuarial evaluation; however, Senate leadership
can direct the division to order an actuarial fiscal note if the
feeling is the bill is going to go forward enough to warrant
one.
CHAIR MEYER replied that the committee will be in contact with
Senator Kelly and the Senate Finance Committee co-chairs
regarding the bill's fiscal note. He addressed the fiscal note
that addressed the administrative costs and noted that the
legislation would require hiring a full-time person and five
temporary people to administer the new program.
MS. LEA answered correct. She specified that the division is
looking at several non-permanent positions to handle the
conversion, the accounting for the conversion, counseling,
answering questions from the police/fire group as well as other
groups who may be wondering if they are eligible or how they get
to be eligible. She detailed that the division is not
necessarily anticipating that permanent positions will be needed
other than the one permanent position for a retirements and
benefits specialist to counsel. She explained that the
division's current counseling services for the defined benefit
plan is at maximum.
SENATOR COGHILL asked how many potential beneficiaries would be
anticipated from the bill.
MS. LEA replied approximately 2500.
SENATOR COGHILL commented that the number of potential
beneficiaries is a concept that should be addressed by the
committee.
4:54:24 PM
SENATOR GIESSEL addressed sections 3 and 33 that provided the
definition for "peace officer" and "firefighter." She referenced
AS 39.35.680(30) as follows:
"Peace officer" or "firefighter" means an employee
occupying a position as a peace officer, chief of
police, regional public safety officer, correctional
officer, correctional superintendent, firefighter,
fire chief, or probation officer, but does not include
a village public safety officer employed by a village
public safety officer program established under AS
18.65.670.
She asked for more information on the definition of corrections
and probation officers.
She addressed Section 29 in the bill that referenced AS
39.35.680(18)(C)(ii):
On or after July 1, 2006, with respect to employees
who are not peace officers or firefighters [ASSUMES
LIABILITY UNDER THE PLAN OF A POLITICAL SUBDIVISION OR
PUBLIC ORGANIZATION DESCRIBED IN (B) OF THIS
PARAGRAPH].
She said that for the sectional analysis she needed more
information on employees who are not peace officers or
firefighters.
4:56:09 PM
MR. BYRNES addressed AS 39.35.680(30) and said the definition
would only apply to "frontline personnel." He opined that the
Division of Retirement and Benefits may be able to properly
answer Senator Giessel's definition questions, especially
regarding non-frontline personnel. He noted that there are
different benefits provided for in Tier III for police officers
and firefighters.
CHAIR MEYER asked Mr. Byrnes to research the definitions that
Senator Giessel questioned and provide answers at a future
committee meeting.
[CHAIR MEYER held SB 212 in committee.]