Legislature(1999 - 2000)
02/29/2000 01:45 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 335
An Act relating to information contained in retirement
system records; relating to retirement boards; relating
to procedures and hearings under state retirement
systems; relating to benefits for re-employed retired
members of retirement systems; relating to eligibility
for normal retirement for members of the teachers'
retirement system who have Alaska BIA credited service;
relating to disability benefits for members of state
retirement systems; relating to deduction of premiums
from retirement benefits; relating to protection of,
and assignment and transfer of, amounts held in
retirement systems; relating to retirement benefits for
certain employees earning high salaries; relating to
qualified domestic relations orders in state retirement
systems; relating to the definition of `retirement
fund' in the teachers' retirement system; relating to
membership of state employees in the teachers'
retirement system; relating to refund of contributions
made to the judicial retirement system or to the former
elected public officers retirement system and repayment
of refunded contributions in those systems; relating to
self-insurance and excess loss insurance for persons
receiving benefits from a state retirement system;
relating to participation of elected officials in the
public employees' retirement system; relating to
reinstatement of credited service in the public
employees' retirement system after a refund because of
certain levies; relating to the level income option
benefit under the public employees' retirement system;
relating to participation of employees of political
subdivisions and public organizations in the public
employees' retirement system; relating to penalties for
attempts to defraud the public employees' retirement
system; relating to the definition of `pension fund' in
the public employees' retirement system; relating to
calculation of years of service and of benefits under
the public employees' retirement system for
noncertificated employees of certain educational
employers; and relating to individual accounts
maintained for members of the former elected public
officers retirement system.
MELINDA HOFSTAD, STAFF, REPRESENTATIVE BILL HUDSON,
explained that HB 335 had been introduced at the request of
the Division of Retirement and Benefits, and is a clean up
bill. Ms. Hofstad noted that according to the Department of
Administration, there are federal laws, court settlements
and other technical issues that need to be addressed in
updated State law. Additionally, indicated in the
legislation are some efficiency measures requested by
various retirement boards. She added that there has not
been a clean-up bill for many years and some of the issues
addressed in HB 335 are longstanding ones.
Ms. Hofstad added that the legislation is aimed at
addressing issues involving clarification of current
practices and law, compliance with new federal laws,
compliance with various settlements, and board efficiencies.
She noted that every effort had been made to stay away from
policy changes.
Ms. Hofstad concluded that there is nothing in the
legislation that enhances or diminishes any retirement
benefit for active employees or retirees in any public
retirement system, and no section, which will increase
employer's costs.
Co-Chair Mulder MOVED to adopt the work draft version 1-
LS1217\K, Cramer, 2/29/00, as the version before the
Committee. There being NO OBJECTION, it was adopted
GUY BELL, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRAITON, spoke to the changes made in
the version before the Committee. He provided a brief
sectional analysis. Mr. Bell commented that he had spoken
to each Committee member or their staff regarding the
legislation. Representative J. Davies pointed out that
discussion had not been to the version before the Committee
at present time. Co-Chair Therriault advised that the
committee substitute had "dropped out" a few sections.
? Mr. Bell stated that Section 1 was needed as a result
of Court action. The section exempts member's records,
including retiree records under the Public Records Act.
Co-Chair Therriault asked why the retiree organization
should have access to that information. Mr. Bell replied
that those retirees would be representing the interest of
the systems retirees, and disseminating information from the
retiree organization.
Vice Chair Bunde inquired if that organization was composed
only of members from the State system. Mr. Bell replied
that the language is specific to retires receiving benefits
under one of the State's systems.
Vice Chair Bunde pointed out that it was the intent of the
Alaska Association of Retired Persons (AARP) to represent
people retired from a number of different systems. Mr. Bell
explained that the section was more narrowly defined and
that they must be affiliated with an organization
representing employees in this system.
Co-Chair Therriault inquired where that section came from.
Mr. Bell replied that piece resulted from requests from the
retiree organizations. He could not remember who that group
consisted of.
? Section 2 is a technical clean up for the physician
board members recommendation for efficiency for medical
disability appeals.
Representative Grussendorf questioned the appeal process.
Mr. Bell explained the way the disability process works. If
a claim is denied, the person has the right to appeal. The
retirement board then has a formal appeal. If it is a
medical disability, the board would include two physicians
to participate and then they would make the ruling. He
noted that decision could be open to challenge in the
Supreme Court.
? Section 3 would carry a fiscal impact. Mr. Bell noted
that a fiscal note had been submitted with the bill for
$29 thousand dollars. This section would provide an
honorarium payment to the Teacher Retirement System
(TRS) Board members.
? Section 4 would place in statute, regulations defining
a quorum.
Representative J. Davies asked what had been dropped. Mr.
Bell replied that Section 4 was dropped out of the work
draft before the Committee.
Co-Chair Therriault noted that after he had requested that
the committee substitute be drafted, he had reconsidered his
choice. He noted that he had an amendment drafted to
address that concern, 1-LS1217\K.1, Cramer, 2/29/00. [Copy
on File].
? Mr. Bell noted that Section 4 was an effort to make the
hearing process consistent with the appeals.
? Section 5 makes a clarification or correction which the
Department believes is appropriate for the penalty a
person takes when they retire early and then
subsequently comes back to work.
BILL CHURCH, RETIREMENT SUPERVISOR, DIVISION OF RETIREMENT
AND BENEFITS, DEPARTMENT OF ADMINISTRATION, noted that when
someone elects to retire before their normal retirement
date, they take a reduced benefit spread over their life-
time. When someone returns to work under the current law,
they forego their retirement benefit for reemployment. Once
they re-retire, their benefit is recalculated, however,
the first contract remains in place. There are no
adjustments to that benefit currently under law. Section 5
would give equity so that the individual would be able to
receive back the equity that they had lost.
? Mr. Bell commented that Section 6 would clarify the
existing practice for the Bureau of Indian Services
(BIA) section.
? Section 7 adds another clarification of how the State
does business on disability benefits for teachers.
? Section 8 addresses filing requirements for
disabilities by making them the same for teachers and
public employees. It would create consistency between
the TRS and Personnel Employee Retirement System
(PERS).
? Section 10, contained in the State Affairs version, has
been deleted from the current work draft. That section
clarified that the TERS board does have a roll in
advising on ad hoc pension and post retirement pension
adjustments.
Representative J. Davies asked why that section had not been
included. Co-Chair Therriault noted that the language would
"muddy" the waters by including it in statute as the
practice is currently being done.
Representative J. Davies inquired why the board had
requested that clarification. Mr. Bell replied that the
Board felt that this was an important role of theirs. He
acknowledged that this is not currently an issue.
Representative J. Davies acknowledged that he knew very
little regarding this area. He suggested that the language
might avoid expensive lawsuits.
Co-Chair Therriault asked if the Board would be making the
policy calls or giving the advice. He questioned if
inclusion of that language would provide an opening for
potential problems.
? Mr. Bell stated that Section 11 was a clarification of
the practice regarding the deducting of retiree
insurance premiums from the retirement checks.
? Section 12 addresses the Qualified Domestic Relations
Order (QDRO) and allows the alternate employee the
right to receive the identified portion of a
contribution account.
? Section 13 allows direct rollover of an individual's
retirement account to an IRA, which would be a
convenience to all members.
Representative Phillips questioned if there was a charge
associated for that service. Mr. Bell replied that there is
no charge or penalty for that service. It is more
convenient for the Department. The second part of Section
13 is a deletion for the authorization for a voluntary
deduction of the membership dues. It has been deleted in
the committee substitute.
Representative J. Davies asked why it had been removed. Co-
Chair Therriault advised that he personally did not like the
automatic system.
? Mr. Bell continued, Sections 14 & 15 clarify that if a
person commits fraud, it is a Class A misdemeanor.
? Section 16 is an Internal Revenue Service (IRS)
requirement adjustment.
? Section 17 sets a limit on compensation base
calculation of retirement benefits.
? Section 18 is a Qualified Domestic Relations Order
(QDRO) definition to clarify that a former spouse has a
right to the contribution account of a member.
? Section 19 clarifies who in the Department of Education
is in the TRS system.
? Section 20 moves the Judicial Retirement System (JRS).
? Sections 21-24 address the same situation in the JRS
QDRO's concern and the ability to roll money directly
to an IRA and the deduction of premiums for insurance.
? Section 25 takes the same actions for the National
Guard and Naval Militia Retirement System.
? Section 26 adds language authorizing self-insurance for
the retiree-medical, dental, audio and long term care.
? Section 27 would separate the PERS Board from the other
personnel boards.
? Section 28 would change the election process.
Co-Chair Therriault advised that Section 28 was included as
the Alaska State Pension Investment Board (ASPIB) uses that
system. Representative Phillips asked if it was common
practice that a majority of members not be present for a
vote. Mr. Bell noted that over the past elections years,
there have been multiple candidates with voter run off.
? Mr. Bell commented that Section 29 identifies the
appointment and number of physician members to the PERS
Board.
? Section 30 provides for an honorarium payment to the
PERS Board members consistent with that paid to the
members of the ASPIB.
? Section 31 relates to the definition of a quorum for
the conduct of its business. He noted that this
resulted from the passage of SB 9, last session.
? Section 32 clarifies that the PERS Board has the
authority to adopt regulations for the conduct of
hearings.
? Section 33 is new and applies to PERS membership only
in how to move in and out of the retirement system for
elected officials.
? Section 34 addresses the early retirement system
previously addressed by Mr. Church.
? Sections 35-39 relates to SB 9 and the revocability of
an election for non-certificated school district
employees.
? Sections 40-41 address the filing requirements for
disabilities.
? Section 42 clarifies that the level income option,
which was repealed in 1996, is available to people in
the system before that date.
? Section 43 would clarify that the PERS Board has an
advisory role and ad hoc for post retirement pension
vestments. That section has been deleted in the work
draft.
? New Section 43 addresses the QDRO for member account
contributions.
? Section 44 allows the rollover into an individual
retirement account.
? Sections 45-47 removes language no longer necessary
because of sections added earlier in the bill.
? Section 48 is the authorization to deduct retiree
insurance premiums.
? Section 49 is a new section applying to PERS only. It
addresses issues where employee requests the employer
to withdraw their coverage in the PERS system.
? Section 50 defines the Class A misdemeanor and added to
that particular retirement system. Mr. Bell noted that
this was another clarification of SB 9, regarding the
basis calculation for the surcharge.
? Sections 51-52 are the highly compensated individual
requirements of the Internal Revenue Service (IRS) code
for PERS.
? Section 53 clarifies that the income on investments of
the PERS fund does belong to that fund.
? Section 54 speaks to the QDRO's related language for
the PERS.
? Section 55 would remove the physician's members of the
PERS and TRS board from the requirements of Sections 39
and 50.
? Section 56 provides repeller language to the current
language contained in law.
? Sections 57-58 are changes to the Elected Public
Retirement System (EPORS) and make that statute
consistent with the PERS and TRS.
? Section 59 was previously addressed and makes that
language consistent.
Co-Chair Therriault MOVED to adopt Amendment #1, which
speaks to the setting of the quorum. [Copy on File]. Mr.
Bell explained that the amendment would provide clear
authority in statute to allow the boards to do what they
currently have already been doing.
(TAPE CHANGE, HFC 00 - 44, Side 1).
Mr. Bell noted that any thing that the Board does could be
challenged in Court. The amendment would provide an
effective way to protect that challenge.
Vice Chair Bunde voiced support of the amendment. He asked
if the amendment should contain additional guidance language
assuming a minimum of members. Mr. Bell suggested that
would be a policy call for the Legislature to make. He did
not think that it would be a necessary call. The Board does
not have independent regulation making authority and it
would be subject to public process.
Vice Chair Bunde MOVED to report CS HB 335 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 335 (FIN) was reported out of Committee with a "no
recommendation" and with a fiscal note by the Department of
Administration dated 2/23/00.
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