Legislature(1999 - 2000)
04/15/2000 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
CS FOR SENATE BILL NO. 85(RLS)
"An Act relating to credited service in the public
employees' retirement system for temporary employment;
and creating a public service benefit in the public
employees' retirement system."
JEANNIE SMITH, STAFF, SENATOR MACKIE testified in support of
SB 85. She noted that the legislation was introduced on
behalf of constituents in Kodiak. She stressed that the
legislation would be an effective management tool to
minimize the impact of current and future budget reductions.
The bill would allow employees to meet their retirement
eligibility threshold sooner than they would otherwise be
able. Employees prone to use this benefit for retirement
credit are employees with higher service totals. Employer
costs decrease when these employees are replaced through
reduced costs to the Supplemental Benefit System (SBS) and
the retirement system. The replacement of Tier I and Tier II
category employees with new Tier III employees would lower
benefit costs. The fiscal note reflects a $4 thousand dollar
designated fund source of the Public Employees Retirement
Trust Fund. The legislation would be a simple economic tool
that may be used to minimize the impact of downsizing
Alaska's state government.
Ms. Smith noted that the legislation was changed in the
Senate Rules Committee to include certain legislative
employees. She noted that the full actuarial time would be
counted.
Co-Chair Therriault questioned if two years service in the
Public Employee's Retirement System (PERS) is needed to get
the credit in the Teacher's Retirement System (TRS). Ms.
Smith explained that the legislation would address employees
in the Department of Education and Early Development that
switched from PERS to TRS. The intent is for the employee to
pay the full actuarial cost of their temporary time, state
benefits and interest. The net impact to the state of Alaska
is zero.
Vice Chair Bunde asked how departments have reacted to the
legislation. Ms. Smith responded that other states are
allowing flexibility between departments to minimize the
impacts of downsizing. She noted that the agencies are
supportive.
Representative J. Davies questioned if the credit from the
first service would be transferred to the second service.
Ms. Smith clarified that the legislation would allow the
service to be transferred.
In response to a question by Co-Chair Therriault, Ms. Smith
clarified that temporary time could be added to their
threshold, but that it is impossible to use the time to
change their Tier I or Tier II status.
GUY BELL, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION provided information on the
legislation and provided a brief summary of the three
sections. Section 1 would allow employees to use temporary
time for 20/30 and out. Currently, employees have to have 20
or 30 years of membership service depending on their
employment. They can purchase their temporary time toward an
actuarially adjusted higher benefit, but not to add years
toward their retirement. The legislation would allow
temporary time toward their retirement. An employee with 29
and a half years of service and 6 months of temporary time
could pay for the temporary time in order to retire.
Mr. Bell noted that the second provision would address
legislative employees prior to 1979. These employees were
classified as temporary and their time did not count in
PERS. Their status was changed in 1979 and they were allowed
to claim the service until 1980. The legislation would
reopen the window and allow employees to purchase their time
toward the conditional legislative retirement benefit of
five legislative sessions. This provision would apply to a
small number of people at no state cost.
Mr. Bell discussed the third provision of SB 85. Individuals
with a minimum of two years paid up service in PERS would be
allowed to combine their service with TRS to reach the five-
year vesting requirement for a retirement benefit. The
Department of Administration would assure that the employee
and employer contribution meets the actuarial for the
benefit requirement. An actuarial adjustment could be made.
The provision would only apply to a small number of people.
Mr. Bell noted that there would be a small fiscal cost [$4
thousand dollars].
Vice Chair Bunde reiterated that only a small number of
people would be affected. Mr. Bell gave the example of an
individual that worked in the Department of Transportation
and Public Facilities and then transferred to the Department
of Education and Early Development. Some of his service is
in TRS and some is in PERS. The total is more than 5 years,
but he is not vested in either system.
Mr. Bell observed that the agencies have not expressed
concern with the legislation and that the bill is very
limited in scope.
Representative Foster MOVED to report CSSB 85 (RLS) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSSB 85(RLS) was REPORTED out of Committee with a "do pass"
recommendation and with a Department of Administration,
published 2/15/00.
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