Legislature(1995 - 1996)
06/06/1996 09:20 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 1003
An Act relating to public employees.
CHUCK O'CONNEL, BUSINESS MANAGER, ALASKA STATE EMPLOYEES
ASSOCIATION (ASEA) spoke in support of SB 1003. He stated
that ASEA can accept the compromise represented by the
legislation. He observed that the legislation makes changes
to the retirement system that ASEA has resisted. He noted
that there is no diminishment of benefits for any of the
present bargaining units. He observed that contracts would
have to be voted on again if there were reductions in
benefits for existing bargaining units.
MARK BOYER, COMMISSIONER, DEPARTMENT OF ADMINISTRATION
reviewed changes to SB 1003 made by the Senate. He observed
that references to geographic differentials have been
deleted. Reference to the geographic differential as it
relates to municipal assistance and revenue sharing were not
included in the legislation. He explained that it was
unnecessary to restate in Title 29 the differentials in
these programs. The legislation maintains the status quo.
The legislation would provide that leave be accrued at the
rate of pay in which it is earned. Presently, leave paid at
cash out is at the current wage rate, not the rate at which
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it was earned. Retirement will be based on the average
salary of the highest five years times the years of service
with a multiplier, instead of the highest three years. The
legislation also changes the qualification for retirement
health benefits. New employees will have to work for the
State for a minimum of ten years, instead of five, before
qualifying for retirement health benefits. New employees
would still be eligible for other aspects of the retirement
system after five years. The legislation also contains an
early retirement incentive program and clarifies the
qualifying criteria for cost of living differentials in the
marine units. A person must otherwise qualify as if they
were receiving a permanent fund dividend in order to prove
residency for the purposes of receiving a cost of living
differential. Legislators' salaries will not be increased
by the provisions that approve the monetary terms of the
contracts. Non-covered employees would also receive a 1.4
percent increase for three years.
In response to a question by Representative Brown,
Commissioner Boyer noted that section 10 was deleted from
the legislation because it duplicated language existing in
statute. He noted that it was not the intent of the
Governor to change differentials of the municipal assistance
and revenue sharing programs. Changes to the retirement
system of new police and fire department employees were
eliminated. He observed that the benefit calculation was
eliminated from sections 20 and 21. He added that sections
22 and 23 were eliminated. He explained that clarifying
language was added to provisions regarding salary
adjustments for judicial employees. A new section was added
to clarify that appropriations made for the University are
made for contracts during the current legislation session.
A reference to the limitation of employee salaries relating
to the geographical differential was eliminated. A
traditional period for conversion from an hourly bank to a
cash bank was included.
In response to a question by Representative Brown,
Commissioner Boyer noted that leave conversions only effect
non-covered employees. He added that retirement changes are
not subject to bargaining. Retirement changes would effect
new employees only. He explained that the Constitution
prevents modification or impairment of benefits for current
employees. The cost of living differential language will
effect new contracts in the marine highway system. He
observed that a recent Superior Court decision validates the
State's position that the State has the authority to change
the format of the differential. A new qualifying form has
been sent to marine highway employees that conforms to the
definition change included in the legislation.
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Representative Martin asked for more details on the proposed
retirement incentive program (RIP).
Commissioner Boyer noted that the contracts have a four year
span. There would be no increase the first year of the
contract. The total four year cost for the contract
increase is approximately $32 - $34 million dollars. He
observed that the changes included in the legislation would
save approximately $17.0 million dollars over the first five
years. This amount would grow exponentially over time. The
total savings over 25 years would be approximately 51
million dollars.
BOB STALNAKER, DIRECTOR, DIVISION OF RETIREMENT AND
BENEFITS, DEPARTMENT OF ADMINISTRATION reiterated that the
only remaining cost reduction provisions in the legislation
are the five year average salary and ten year requirement
for retirement health insurance. These will result in an
employer savings of approximately 1.8 percent. Employer
cost would be approximately 8 percent upon transition into
the Tier III environment. He noted that the RIP provision
has not been altered.
In response to a question by Representative Martin, Mr.
Stalnaker stressed that employees determine their ability to
RIP based on the level of salary they would receive at
retirement. He pointed out that some of the highest paid
employees are excluded from the RIP provisions. He
estimated that the majority of employees exercising early
retirements are at the mid range level.
Representative Therriault noted that the University saved
the most money in the previous RIP. Commissioner Boyer
noted that the University is eligible to implement the RIP
provisions.
Representative Mulder MOVED to report CSSB 1003 (FIN) am out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
Commissioner Boyer noted that the two accompanying fiscal
notes were not adopted by the Senate. He stressed that the
Department of Administration will ask the Legislative Budget
and Audit Committee for authority to expend retirement funds
if the fiscal notes are not appropriated.
CSSB 1003 (FIN) am was reported out of Committee with "no
recommendation" and with two fiscal impact notes by the
Department of Administration.
CSSB 1005 (FIN) am was reported out of Committee with a "do
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pass" recommendation.
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