Legislature(1997 - 1998)

02/12/1998 01:40 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HOUSE BILL NO. 206                                                             
                                                                               
"An Act relating to credit under the Public Employees'                         
Retirement System for service as a village public                              
safety officer."                                                               
                                                                               
JOEL LOUNDSBURY, STAFF, REPRESENTATIVE PORTER testified in                     
support of HB 206.  He read the sponsor statement (copy on                     
file).  House Bill 206 would allow village public safety                       
officers (VPSO) to obtain retirement credit for service                        
rendered under the VPSO program.  The eligible participant                     
could receive credit for up to 5 years of service in the                       
VPSO program.                                                                  
                                                                               
WILLIAM CHURCH, RETIREMENTS SUPERVISOR, DIVISION OF                            
RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION                          
explained that participants would be required to pay the                       
full actuarial costs of benefits for the period of service.                    
Participants would buy the employee and employer portion.                      
The amount would be based on the benefit at the time of the                    
claim and the individual's vesting years' salary.                              
                                                                               
Co-Chair Hanley referred to the fiscal note by the                             
Department of Administration.  He observed the bill is                         
estimated to have an unmeasureable impact on the Public                        
Employee Retirement System (PERS) funding ratio.  There is                     
an increase to the unfunded liability of approximately $450                    
thousand dollars, which would result in an employer                            
contribution increase of approximately $40 thousand dollars                    
a year.                                                                        
                                                                               
Mr. Church explained that the full actuarial cost is based                     
on the entire population that could be eligible to claim the                   
service.  He noted that there are some individuals that will                   
not claim the service.                                                         
                                                                               
Co-Chair Hanley summarized that other state employees will                     
end up paying more to allow this group to buy their                            
retirement.  Mr. Church was uncertain if there would be a                      
measurable cost.                                                               
                                                                               
Co-Chair Hanley noted that, if the full actuarial cost is                      
not covered, the system would not be as sound in the future.                   
He observed that each state employee could have his or her                     
contribution reduced by $2 dollars a year.                                     
                                                                               
In response to a question by Representative Davies, Mr.                        
Church clarified that, under retirement law, a lifetime                        
actuarial reduction is calculated for an individual who has                    
claimed service and has indebtedness owed at retirement.  If                   
the retirement value for the service is greater than the                       
lifetime actuarial reduction than it is to the member's                        
advantage to buy back their service.  He clarified that                        
money paid into the retirement system is paid to the                           
beneficiaries upon the individual's death.                                     
                                                                               
Representative Davies pointed out that some individuals                        
would pay the money in anticipation of 25 years of benefits,                   
but would not receive 25 years of benefits due to death.  He                   
questioned if the cost is over estimated.                                      
                                                                               
Mr. Church noted that costs are based on the interest                          
assumptions of the fund and mortality rates.                                   
                                                                               
In response to a question by Representative Martin, Mr.                        
Church clarified that village public safety officers are not                   
state employees.  They are under contract to Native                            
Corporations.                                                                  
                                                                               
Representative Martin maintained that village public safety                    
officers deserve to be covered as employees of the state of                    
Alaska.  He emphasized the danger of their job.                                
                                                                               
Mr. Church clarified that in order to claim five years of                      
service in the VPSO program an individual must first be                        
vested in the state retirement system.  Officers can                           
purchase up to five years.                                                     
                                                                               
Co-Chair Therriault observed that the proposal is similar to                   
provisions for military service.  He expressed concern that                    
Village public safety officers be encouraged to remain in                      
their positions.  He provided members with an amendment                        
requiring that applicants have a minimum of three years                        
service in the VPSO program (copy on file).  He noted that                     
military service is generally for a three-year term of duty.                   
                                                                               
In response to a question by Representative Davies, Mr.                        
Church explained that approximately 125 village public                         
safety officers would be eligible.  He did not know if the                     
assumption concluded that all 125 would take advantage of                      
the provision.  He noted that 8 of 10 VPSO contracts provide                   
some form of retirement.  He noted that the Legislature does                   
not allow double dipping for military service.                                 
                                                                               
JOHN WALDRON, VILLAGE PUBLIC SAFETY OFFICER, YAKUTAT                           
testified via teleconference in support of HB 206.  He                         
maintained that village public safety officers are the rural                   
arm of the Department of Public Safety.  Village public                        
safety officers handle limited law enforcement, fight fires,                   
do search and rescue, provide alcohol and drug enforcement                     
training in schools and are agents for the state medical                       
examiner. He noted that village public safety officers are                     
the lowest paid law enforcement officers in the state of                       
Alaska.  He observed that most village public safety                           
officers have minimal retirement programs.  He noted that                      
there are no geographical pay differentials for village                        
public safety officers living in rural areas.  Overtime pay                    
is limited.  His family is not covered by his health                           
insurance.                                                                     
                                                                               
JIM GRIMES, VPSO PROGRAM MANAGER, BRISTOL BAY NATIVE                           
ASSOCIATION testified via teleconference in support of HB
206.  He added that he is a retired State Trooper.  He                         
stressed the importance of the VPSO program as a stepping-                     
stone to a career in law enforcement.  He observed that                        
village public safety officers are not well paid.  He noted                    
that village public safety officers receive credit with the                    
Alaska Police Standards Council for their time as a village                    
public safety officer.                                                         
                                                                               
Co-Chair Therriault asked if Mr. Grimes would support a                        
restriction allowing only those that move into law                             
enforcement to buy their retirement.  Mr. Grimes stated that                   
he would support limitation to law enforcement, police or                      
fire service.                                                                  
                                                                               
Representative Martin questioned why village public safety                     
officers are not state employees.  Mr. Grimes spoke in                         
support of making village public safety officers state                         
employees.  He noted that they are employees of one of the                     
ten Native Corporations.  He noted that legislative action                     
would be needed to allow them to participate in PERS.  He                      
observed that the State decided that it would be less                          
expensive to contract public safety officers with a                            
nonprofit corporation where they are only paid $12.50                          
dollars an hour.                                                               
                                                                               
Representative Davies stated that village public safety                        
officers could be hired through municipalities.  Mr. Grimes                    
noted that a qualified municipality could hire half of the                     
12 village public safety officers in his region.  He                           
emphasized that the Department of Public Safety does not                       
want to negotiate individual memorandums of agreements and                     
contracts with every village in the state.                                     
                                                                               
JOHNNY EVANS, DILLINGHAM POLICE DEPARTMENT testified via                       
teleconference in support of HB 206.  He maintained that                       
village public safety officers deserve more than they are                      
getting.  Village public safety officers are unarmed and                       
have no backup.  He observed that village public safety                        
officers handle domestic violence and alcohol related                          
crimes.  They even handle felony crimes until the state                        
troopers arrive.  He urged passage of the legislation.                         
                                                                               
BRENT MOODY, CHIEF, DILLINGHAM POLICE DEPARTMENT testified                     
via teleconference in support of HB 206.  He helped to run                     
the VPSO program for Tlingit and Haida.  He asserted that                      
village public safety officers deserve the legislation.  He                    
stated that the legislation should be limited to law                           
enforcement or fire service.  He observed that he hires                        
village public safety officers as policemen.  Out of 7                         
officers in Dillingham, 3 were village public safety                           
officers.                                                                      
                                                                               
In response to a question by Co-Chair Therriault, Chief                        
Moody noted that the VPSO officers that he has employed have                   
had 1 to 5 years' experience.  He stated that a one-year                       
requirement would be acceptable.  He stressed that village                     
public safety officers are the law enforcement heroes of the                   
state of Alaska.                                                               
                                                                               
DAISY STEVENS, ADMINISTRATIVE LIASION OFFICER, TANANA CHIEFS                   
COUNCIL (TCC), FAIRBANKS testified in support of HB 206.                       
She is a former VPSO coordinator for TCC.  She urged passage                   
of the legislation.                                                            
                                                                               
CRAIG PERSSON, PUBLIC SAFETY EMPLOYEES ASSOCIAITON,                            
FAIRBANKS testified in support of HB 206.  He emphasized                       
that the legislation is an incentive for village public                        
safety officers that want to continue their law enforcement                    
careers.  He did not object to limiting the legislation to a                   
police officer, fire fighter or correctional officer.  He                      
did not object to a one-year limitation.                                       
                                                                               
In response to a question by Co-Chair Therriault, Mr.                          
Persson stated that Village public safety officers should be                   
able to count years that were applied to another retirement                    
system for PERS credit.                                                        
                                                                               
Co-Chair Therriault noted that military personnel cannot buy                   
military service if they are already getting a retirement                      
from the United States government for the same five years.                     
                                                                               
GLEN GODFREY, COLONEL, ALASKA STATE TROOPERS, DEPARTMENT OF                    
PUBLIC SAFETY testified in support of HB 206.  He was                          
involved in the creation of the VPSO program while he was                      
stationed in Bethel in 1979.  He stressed that the VPSO                        
program is a tremendous asset to the citizens of Alaska and                    
the Alaska State Troopers.  He acknowledged the high                           
turnover rate in the program.  He noted a progression from                     
VPSO officer - to municipal police officer - to the Alaska                     
State Troopers.  He did not object to a one-year                               
requirement.                                                                   
                                                                               
Colonel Godfrey observed that the original intention of the                    
VPSO program was to hire people from a community to provide                    
law enforcement to their constituents.  He acknowledged that                   
there are many non-native VPSO officers.  Some villages have                   
found that it is a problem for individuals to be law                           
enforcement officers in their own communities.  He supported                   
restricting the program to individuals continuing in a                         
public safety field.  He did not support restrictions on                       
"double dipping".                                                              
                                                                               
In response to a question by Representative Martin, Colonel                    
Godfrey observed that of 79 Alaska State Trooper field                         
positions:                                                                     
                                                                               
- 26 were VPSO officers for 5 - 18 years                                       
- 3 were VPSO officers for 18 years,                                           
- 1 was a VPSO officer for 17 years,                                           
- 1 was a VPSO officer for 15 years,                                           
- 1 was a VPSO officer for 12 years,                                           
- 1 was a VPSO officer for 11 years,                                           
- 4 were VPSO officers for 9 years,                                            
- 3 were VPSO officers for 8 years,                                            
- 1 was a VPSO officer for 7 years,                                            
- 6 were VPSO officers for 6 years, and                                        
- 5 were VPSO officers for 5 years.                                            
                                                                               
Representative Martin questioned if the legislation would                      
encourage Native Corporations to drop their retirement                         
plans.                                                                         
                                                                               
(Tape Change, HFC 98 - 29, Side 2)                                             
                                                                               
Co-Chair Therriault explained that the intent of his                           
proposed amendment is to allow officers that are not vested                    
in their VPSO retirement system to count their time in PERS.                   
Officers that are vested in a VPSO retirement plan would not                   
be allowed to count the same years in the state system.                        
                                                                               
Representative Davis asked if the legislation would                            
discourage retention of VPSO officers.  He noted the need to                   
encourage VPSO officers to remain in their positions.                          
                                                                               
Colonel Godfrey stressed that the best way to attract                          
officers is by providing role models.  He stated that VPSO                     
officers cannot be expected to last on the job for 15 - 20                     
years.  He stated that it is natural for good officers to                      
progress to another police department or the Alaska State                      
Troopers.                                                                      
                                                                               
Co-Chair Therriault provided members with Amendment 1.  He                     
amended Amendment 1 to reference the definition of a police                    
officer or fire fighter under AS 39.25.200(28).                                
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment 1.                                
Representative Davies OBJECTED. He clarified that five years                   
of an individual's vested years in PERS would have to be as                    
a police officer or fire fighter.                                              
                                                                               
Representative Davies spoke against the amendment.  He                         
stressed that the amendment would limit the possible career                    
choices of a VPSO officer.  He observed that a public                          
official could not buy his VPSO service.  He emphasized that                   
99 percent of the cost is paid by the individual not the                       
state of Alaska.  He stressed that VPSO officers are under-                    
paid.                                                                          
                                                                               
Representative Martin spoke against the amendment.  He                         
observed that there is no restriction for buy back of                          
military service.                                                              
                                                                               
Representative Davis noted that teachers transfer time                         
within the same occupation.  Private teaching service can be                   
transferred to the state Teachers Retirement System.                           
                                                                               
Representative Davies noted that there is no restriction on                    
the purchase of municipal service under PERS.                                  
                                                                               
Representative Kelly pointed out that the question is                          
whether the intent is to create an incentive or an award.                      
He spoke against the amendment.                                                
                                                                               
Co-Chair Therriault noted that there is a natural                              
progression in law enforcement.  He stated that he would                       
like to encourage a continuation in law enforcement.                           
                                                                               
Representative Davies stressed that the intent of the                          
legislation is to reduce the turnover rate of VPSO officers.                   
He did not think that the intent was to encourage transfer                     
to the upper ranks.  He maintained that the "primary purpose                   
of the bill is to look at a class of citizens that are                         
serving us very well and to figure out someway to add some                     
incentive to become a VPSO in the first place."                                
                                                                               
Representative Martin agreed that the intent is to encourage                   
participation in the VPSO program.                                             
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Kohring, Mulder, Davis, Therriault                                   
OPPOSED: Grussendorf, Kelly, Martin, Moses, Davies, Hanley                     
                                                                               
Representative Foster was absent from the vote.                                
                                                                               
The MOTION FAILED (4-6).                                                       
                                                                               
Co-Chair Therriault provided members with Amendment 2 (copy                    
on file).  He amended Amendment 2 by changing 3 years to one                   
year.  Amendment 2 would clarify that:  "An employee is not                    
entitled to credited service for employment as a village                       
public safety officer unless the employee was employed as a                    
village public safety officer for at least one year."                          
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment 2. There being                    
NO OBJECTION, the motion was adopted.  There being NO                          
OBJECTION, it was so ordered.                                                  
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment 3.  Amendment 3                   
would add a new subsection to read:  "An employee is not                       
entitled to credited service under this section if the                         
employee is entitled to receive retirement benefits from                       
another employer for the same service."                                        
                                                                               
Representative Davies OBJECTED.  Co-Chair Therriault noted                     
that the language is similar to restrictions of credited                       
military service.                                                              
                                                                               
Representative Davies stressed that village public safety                      
officers deserve the additional benefit.  He noted that the                    
majority of the cost would be born by the officer.  There is                   
a small cost to the state of Alaska.                                           
                                                                               
Representative Davis spoke against the amendment.                              
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Kelly, Kohring, Martin, Mulder, Hanley, Therriault                   
OPPOSED: Moses, Davies, Davis, Grussendorf                                     
                                                                               
Representative Foster absent from the vote.                                    
                                                                               
The MOTION PASSED (6-4).                                                       
                                                                               
Co-Chair Hanley questioned the fiscal impact.  He suggested                    
that the fiscal note should reflect the fiscal impact.                         
                                                                               
Mr. Church clarified that any cost would be born by the                        
employer.                                                                      
                                                                               
Representative Davies requested that the impact of Amendment                   
3 be taken into account by the fiscal note.  He added that                     
some reduction should be taken to reflect the expectation                      
that not everyone that is eligible would take advantage of                     
the program.                                                                   
                                                                               
In response to a question by Representative Martin, Mr.                        
Church observed that the actuarial account is 98 percent                       
funded.                                                                        
                                                                               
Co-Chair Hanley noted that the amount of the indebtedness is                   
equal to the full actuarial cost of providing benefits based                   
on the service.                                                                
                                                                               
Mr. Church clarified that the full actuarial cost is                           
determined on an individual basis based on the individual's                    
age and their salary in their vesting years.                                   
                                                                               
Co-Chair Hanley observed that the fiscal note assumes that                     
the individual does not cover the full cost.                                   
                                                                               
Mr. Church reiterated that the there will always be some                       
margin of additional cost.                                                     
                                                                               
Representative Davies summarized that the full actuarial                       
cost is based on the assumption that individuals will remain                   
in the system.  The legislation allows employees to select                     
in the future.  The selection will be based on the benefit                     
to the individual.  The actuarial cost is based on                             
calculations further back in time.  The actual cost is based                   
on a future self-selection.                                                    
                                                                               
Mr. Church stressed that the employee would be vested in                       
PERS.  Previous VPSO service could be purchased.  They would                   
add to their credited service.  There is a lifetime                            
adjustment on any indebtedness owed at retirement.                             
                                                                               
Co-Chair Hanley noted that a determination is made at the                      
time an individual purchases their previous service.  He did                   
not understand what would result in the additional cost                        
outlined in the fiscal note.                                                   
                                                                               
Co-Chair Therriault noted that the a new fiscal note would                     
be prepared to reflect adopted amendments.  Representative                     
Davies reiterated that the fiscal note should address                          
Amendment 3 and the assumption of how many are expected to                     
take advantage of the provision.                                               
                                                                               
Representative Martin MOVED to report CSHB 206(FIN) out of                     
Committee with the accompanying revised fiscal note.                           
                                                                               
HB 206 was REPORTED out of Committee with a "do pass"                          
recommendation and with a revised fiscal impact note by the                    
Department of Administration.                                                  

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