Legislature(2003 - 2004)
02/17/2004 02:04 PM House FIN
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* first hearing in first committee of referral
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HOUSE BILL NO. 91
An Act relating to a cost-of-living allowance and
medical benefits for retired peace officers after 20
years of credited service.
REPRESENTATIVE TOM ANDERSON explained the changes made to
the work draft version of the bill before the Committee.
The committee substitute would remove the previous change to
the Cost of Living Allowance (COLA) and would remove Section
1, lowering the fiscal impact. He requested that the draft
be adopted.
Co-Chair Harris MOVED to ADOPT work draft version #23-
LS0426\I, Craver, 1/14/04 as the version of the legislation
before the Committee. There being NO OBJECTION, it was
adopted.
Representative Anderson pointed out that there are currently
twenty co-sponsorships to the bill, making it a priority for
legislative membership. A revised fiscal note has been
distributed with the adoption of the committee substitute.
Representative Anderson admitted for the record that he
thought the fiscal note could be reduced more and
recommended that be considered through further deliberation.
Representative Anderson stated that the goal of the
legislation is to create a "makes sense" bill that has
support, pointing out that the scope has been limited.
Co-Chair Williams noted for the record that he did support
the bill, however, given the size of the fiscal note, it
will be difficult to get the bill to pass through the
Governor's office. He indicated that he has been holding
bills that have fiscal notes. Given the current fiscal
crisis of the State each piece of legislation must be
justified. When the State is terminating the Longevity
Bonus Program, cutting education funding and troopers, HB 91
will be held in Committee until fiscal concerns have been
addressed. He asked if Representative Anderson had been
working with the Governor's Office.
Representative Anderson acknowledged that addressing the
fiscal impact is important, noting that the testimony of Mr.
Fox would address fiscal note concerns. He advised that
perhaps the House Finance Committee could determine
alternatives for those costs.
Co-Chair Harris emphasized two points for the record:
· Education is not being cut and the
· State Troopers will not be cut.
Co-Chair Harris acknowledged that the fiscal note was a
problem and noted that he was working with Mr. Fox and
Representative Anderson to address that concern.
Co-Chair Williams pointed out that this year, the State is
$70 million dollars "in the hole" resulting from the Public
Employees Retirement System (PERS) and Teachers Employment
Retirement System (TERS). Those costs must be accounted
for. He noted that $70 million was the cost for one year.
Representative Fate voiced support for the bill. He
indicated that there are processes in which the Legislature
can come up with reallocations. He reiterated that he would
do "everything that he could" to help the bill pass this
session.
Representative Hawker pointed out that the bill in the
Committee from last year would affect State and municipal
employees. He questioned if the municipal impact of the
bill had been considered. Representative Anderson noted
that he could not speak to Kenai or Fairbanks but in
Anchorage, Mayor Mark Begich has indicated that he disagreed
with the assessment given by the previous Administration.
Representative Anderson understood that Anchorage supported
the current version. He offered to find out more
information.
ERIC OLSON, PUBLIC SAFETY EMPLOYEES ASSOCIATION - SOUTHWEST
REGION, ALASKA STATE TROOPER, stated that he had began his
law enforcement work in Bush Alaska in 1992. At present, he
understands both the rural and urban aspects of the
profession. He informed Committee members that HB 91 is
very important. A career as a law enforcement officer is
mostly 24 hours a day, 7 days a week and it is not uncommon
to be on call, due to lack of manpower. The work takes a
huge physical and mental toll on a person. Normally, that
job class had allowed for retirement after 20 years of
service receiving full benefits, thereafter. However, due
to the current tier status change for Tier 2 & 3 employees
that is no longer possible. That employee will now have to
work 25 years before qualifying to receive medical benefits
at the end of their career.
Mr. Olson noted that when he started, he was under the
belief that he would be done after a 20-year career. He
noted that he was aware that other law enforcement agencies
in the lower 48, provide better benefits with a 20 year
retirement and that many members of his profession are aware
of that advantage.
Mr. Olson pointed out that from his graduating class, only
60% are remaining in Alaska. Some of the decline has
resulted from the hardships of the job and the lack of
benefits received. He emphasized that a benefit package is
a major consideration for people interested in the law
enforcement profession.
Mr. Olson reiterated that this work is a "burn out" for the
entire family and that HB 91 would revive an incentive for
law enforcement officers. He emphasized that law
enforcement officers give 110% for their jobs and because of
the current retirement opportunities, many law enforcement
officers are leaving State. He respectfully requested that
the Committee consider the legislation.
Co-Chair Harris asked how many years Mr. Olson had been a
police officer. Mr. Olson replied 12-years, five of which
was as a federal officer and seven years as a State Trooper.
Co-Chair Harris inquired how many State Troopers were
nearing the 20-year time frame. Mr. Olson did not know and
pointed out that half of the trooper force is young. Many
of those candidates are now moving down south to other law
enforcement agencies. He reiterated that every year, the
force is loosing officers to either retirement or moving on.
Co-Chair Harris asked if there was a mandatory retirement
age. Mr. Olson stated there is not and there are troopers
that stay 30+ years. That decision is a personal choice.
Co-Chair Harris asked if a Peace Officer, in the line of
duty of fieldwork, became less efficient and safe, as they
age. Mr. Olson acknowledged that they do. He noted that it
is a normal fact of life that our bodies wear and slow down
as we age. He stressed that the field is a demanding, high
risk and that a person's attention span becomes less keen.
He reiterated that all officers attempt to do their best.
Co-Chair Harris asked if it was true that a schoolteacher in
the State of Alaska was allowed to retire with full benefits
after 20-years service. Mr. Olson did not know. Co-Chair
Harris commented that the physical and life threatening
demands would be greater on a police officer than they would
on a schoolteacher. Mr. Olson echoed sentiments that the
job is stressful and demanding. Fights happen almost on a
daily basis, compounded with the aspect of being away from
home often, being involved with weapons, and drug offenses.
All those challenges wear a person down. He stressed that
the law enforcement profession is more stressful and
difficult than that of a teacher.
Representative Hawker pointed out that there are a number of
issues before the Committee this year for public safety
officers. He commented that he was attempting to reconcile
the State's investment for the "working guys" and the large
fiscal issues associated with that. He emphasized that
Alaskans are concerned with "letting government grow".
Mr. Olson replied that the Department of Public Safety
attempts to do everything to keep overtime costs down.
Historically, there was twice the number of officers and
half the amount of work. He understood that the salary paid
officers is citizen's money and reminded members that those
officers work at 110% capacity.
Representative Hawker commented that he was surprised by
testimony given at the last day of the statewide conference
hearing in Fairbanks. It was evident that many citizens
believe the only benefit they derive from the State's wealth
is the Alaska Permanent Fund dividend. He asked if Mr.
Olson agreed. Mr. Olson disagreed, noting that he was not
speaking on behalf of the Department. Mr. Olson claimed
that Alaskans are receiving a "huge" benefit from the law
enforcement officers, fire fighters and correctional
officers. Those people do more with less. Representative
Hawker voiced his appreciation for that response. He
emphasized that comments made at the statewide conference
make it difficult to justify spending State money.
Co-Chair Williams requested that the Committee not debate
those issues. He admitted that he understood the direction
of the discussion, noting that the Committee meeting was not
the place to discuss that now.
Vice Chair Meyer commented that he supports the bill. He
pointed out that often times retirement issues are
negotiated in labor contracts. He questioned if their
contract was currently in the negotiation process. Mr.
Olson clarified that the Department of Public Safety is
currently undergoing contract negotiations and that HB 91 is
not related to that.
Representative Croft understood that the argument for the
passage of the bill is that it would retain officers in the
State system. He noted that the State is loosing officers
at around the 15-year level and asked how that had been
indicated on the chart. Mr. Olson recommended discussing
that graph with Mr. Fox of the Alaska State Public Safety
Employees Association. Representative Croft requested to
see those numbers.
MICHAEL FISCHER, CORRECTIONAL OFFICER, LEMON CREEK
CORRECTIONAL FACILITY, DEPARTMENT OF CORRECTIONS, pointed
out that there are not many "old" correction officers that
would want to do "serve" an additional five years. Working
as a correctional officer is the same as being incarcerated
with the inmates. Without passage of the legislation, it
would be like having an extension to your 20-year sentence.
Mr. Fischer emphasized that Alaska has a very high turnover
of peace officers and currently, there is not enough
incentive to keep staff.
Mr. Fischer stressed that working in the prison system is
high stress and very difficult work and stated that it would
be determintal to keep older officers. Mr. Fischer
commented that very few correctional officers make it to 20-
years service.
TAPE HFC 04 - 24, Side B
Mr. Fischer urged passage of the bill.
MIKE FOX, ALASKA STATE PUBLIC SAFETY EMPLOYEES ASSOCIATION,
RETIRED FISH AND WILDLIFE TROOPER, commented that a problem
with the proposed legislation is that the fiscal note has
not considered any savings. HB 91 would cut operational
costs by removing the five-year disincentive for peace
officers to take normal retirement. There would be a
$23,105 dollar savings in the base pay leave during the
first year after a Corrections Officer III takes home
retirement. For a Trooper Sergeant, that amount would be a
$32,508 savings the first year. Additional savings would
also be indicated for things such as overtime, vehicle
differential, and shift differential. When a peace officer
is pressured to defer normal retirement, they are likely to
have higher risks with health, business, stress and income.
Mr. Fox stressed that the bottom line is that it is
expensive to keep Peace Officers past normal retirement and
is not a good choice. He suggested that if all the Public
Employees Retirement System (PERS) members defer retirement
this year, the State would be concerned about how much that
would be costing. The current situation is creating
pressure to defer retirement, which is an expensive way to
run business.
Mr. Fox claimed that passage of the bill would improve the
retention of the younger peace officers. Reducing turnover
in the ranks of the younger officers saves money. The State
invests $91,460 dollars to hire and train a trooper.
Training time is 33-weeks. Every time a trooper remains in
service, costs are saved. It is expensive for the State
when an officer leaves early in their career.
Mr. Fox pointed out that HB 91 is a low risk fiscal bill.
The bill is not open ended and there would be no benefit if
they leave before the 20-years.
The only members impacted by the bill are peace officers who
retire between 20 and 25 years of service and are less than
60 years old. It is a small group. He added that it is not
known how many of the 700 correctional officers and the 300+
troopers are estimated to actually receive the benefit. He
questioned how could the accuracy of the bill be determined
without knowing how many people will be affected. The
fiscal range is difficult to determine. The one provided to
the Committee is 0.12% (12 one hundredths of one percent)
contribution rate. During the past 15-years, the declared
contribution rate has ranged 17.22%, down to 7.1%. The
average change has been 1.61% per year and the range over
15-years has been over 10%.
Mr. Fox pointed out the margin of error on the contribution
rates when they are established. He asked if .12% would fit
into that margin of error and if it would be noticed. Mr.
Fox questioned why a benefit received by others would not be
extended to the peace officers.
Representative Croft asked if the dip was obvious and if
there is a loss at the 15-year point of service. Mr. Fox
stated that the only people that the bill affects would be
those in Tier 2 & 3. There will be no Tier 2 people until
2006. There is a relatively consistent pattern from 0 to 20
indicating the drop off. Mr. Fox pointed out that the State
has been "all over the map" for funding and filling trooper
positions. Some years, zero people were hired and looking
at the percentages, Tier 1 people already receive the
benefit being asked for and 38% of those people are still on
the job. That is a model. The federal government has a
limit of when they will hire a peace officer, which is 37
years old and that can affect statewide peace officer
retention in the middle of their career.
MELANIE MILLHORN, (TESTIFIED VIA TELECONFERENCE), DIRECTOR
DIVISION OF RETIREMENT & BENEFITS, DEPARTMENT OF
ADMINISTRATION, ANCHORAGE, testified that the Division has
adopted a "neutral" position on the bill. She added that
the Division does have concerns regarding the fiscal costs
given the under funded status of the PERS retirement system
at this time. The funding ratio of PERS is at 75%. Ms.
Millhorn noted that the Mercer Actuarial Company did the
fiscal note preparation.
The bill would provide medical coverage for Tier 2 & 3
employees, appointed to their positions after 1986.
The actuarial consultant has computed the legislation to
increase the PERS accrued liability by approximately $13.45
million dollars. The estimated increase in the average PERS
calculated contribution rate would be 0.18% of payroll.
Based on a State PERS payroll of approximately $680 million
dollars, the annual cost increase to the State of Alaska
would be $1.224 million dollars and would be paid from all
State agency personal service line items. There are
approximately 900 officers that would become eligible for
the medical benefits through the legislation.
Representative Anderson referred to the analysis of
retirement paid by the State as presented by Mr. Fox. There
are savings in the payroll analysis. He recommended that
the Division of Retirement and Benefits work with Mr. Fox
and determine retirement and benefit statistics of those who
are retiring. He contended that the fiscal impact could be
reduced but stressed that it is not only about keeping the
law enforcement officers but preventing them from "wearing
out". He emphasized that there is a difference between
working in the criminal field and being a teacher.
Representative Anderson pointed out the 15-year level drop
statistic. He referenced Co-Chair Williams comment
regarding the Governor's support, stressing that the
Legislature must act as a separate branch of government. He
urged that all aspects of the legislation be considered
rather than just the retirement and benefits.
Co-Chair Williams stated that HB 91 would be HELD in
Committee for further consideration.
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