Legislature(2005 - 2006)HOUSE FINANCE 519
04/19/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB325 | |
| HB399 | |
| HB475 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 475 | TELECONFERENCED | |
| + | HB 325 | TELECONFERENCED | |
| + | SB 55 | TELECONFERENCED | |
| + | SB 200 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 29 | TELECONFERENCED | |
| += | HB 399 | TELECONFERENCED | |
HOUSE BILL NO. 475
"An Act describing contributions to the health
reimbursement arrangement plan for certain teachers and
public employees; clarifying eligibility for membership
in that health reimbursement arrangement plan; relating
to the 'administrator' of the Public Employees'
Retirement System of Alaska; and providing for an
effective date."
3:20:43 PM
At-Ease
3:21:53 PM
Representative Kerttula MOVED Amendment #2, 24-LS1685\L.1,
Wayne, 4/11/06:
Page 2, line 2, following "program;":
Insert "providing for an effective date by amending
sec. 148, ch. 9, FSSLA 2005, which contains an
effective date;"
Page 2, following line 3:
Insert new bill sections to read:
"* Section 1. AS 14.25.009 is amended to read:
Sec. 14.25.009. Applicability of AS 14.25.009 -
14.25.220. The provisions of AS 14.25.009 - 14.25.220
apply only to members first hired before July 1, 2008
[2006].
* Sec. 2. AS 14.25.012(c) is amended to read:
(c) Employees first hired after June 30, 2008
[2006], are not eligible to participate in the plan
established in AS 14.25.009 - 14.25.220."
Page 2, line 4:
Delete "Section 1"
Insert "Sec. 3"
Renumber the following bill sections accordingly.
Page 3, following line 12:
Insert a new bill section to read:
"* Sec. 7. AS 14.25.310 is amended to read:
Sec. 14.25.310. Applicability of AS 14.25.310 -
14.25.590. The provisions of AS 14.25.310 - 14.25.590
apply only to teachers who first become members on or
after July 1, 2008 [2006], or to members who transfer
into the defined contribution plan under AS 14.25.540."
Renumber the following bill sections accordingly.
Co-Chair Meyer OBJECTED.
Representative Kerttula explained that the amendment is a
two-year delay to enable more work to be done on the issues
just mentioned. It would allow time for corrections of
numerous problems and time for a reasonable decision to be
made.
3:23:24 PM
At-Ease
3:25:15 PM
Representative Kerttula clarified that the amendment would
delay the Committee Substitute for two years.
REPRESENTATIVE PAUL SEATON commented that Amendment 2 would
delay SB 141 for two years. He noted that that HB 475 is
for technical cleanups to SB 141, and the amendment is a
definite policy change, rather than a technical change. He
proposed that the other body and the Administration would
not agree with the amendment, and it would prevent HB 475
from going into affect. He suggested that this would create
compliance problems with the IRS, and prevent the
establishment of a new Tier Five.
3:27:30 PM
Representative Kelly commented that the amendment would
cause implementation problems and is irresponsible, since
Retirement and Benefits has already been tasked with the job
to implement SB 141 smoothly. He proposed that the
legislature should take advantage of the work already
completed. He suspected that there would be attempts to
bring more people into the plan, and suggested that this
would not, in affect, occur.
3:29:27 PM
At-Ease
3:37:06 PM
Representative Hawker offered a Conceptual Amendment to
Amendment 2 to delay the implementation one year to July 1
of 2007.
Representative Kelly OBJECTED to the Conceptual Amendment to
Amendment 2. He maintained that the implementation should
not be delayed at all.
Representative Hawker spoke to the Conceptual Amendment to
Amendment 2. He referred to last year's testimony on the
bill stating no need for changes to be made. Now there are
34 pages in HB 475 to correct issues. He pointed to
extensive testimony about unknown liabilities and IRS
issues. He maintained that a 2-year deferral is a very
comfortable deferral in order to resolve the many problems.
The Conceptual Amendment offers a more reasonable time
period to clean up issues. He termed it a sensible
approach.
Representative Kelly said if SB 141 is delayed, over 8,000
new employees will come into this failed system. He voiced
concern about the $5.7 billion unfunded liability. He
emphasized that it is irresponsible to delay the bill any
longer.
3:44:29 PM
Representative Hawker offered a point of clarification. He
indicated that the governor's budget had 400 employees in
it. He questioned the number of employees mentioned by
Representative Kelly. Co-Chair Meyer clarified that it
would be 4,000 employees statewide, including
municipalities.
Representative Seaton said the number is about 4,400 per-
year turnover of new employees. He clarified that changes
to SB 141 that were made on the floor and in conference
committees added complexity to the bill. Those are what are
being cleared up in HB 475.
A roll call vote was taken on the motion to ADOPT the
Conceptual Amendment to Amendment 2.
IN FAVOR: Hawker, Joule, Kerttula, Moses
OPPOSED: Foster, Holm, Kelly, Stoltze, Wehyrauch, Meyer,
Chenault
The MOTION FAILED 4-7.
3:47:46 PM
Representative Kerttula addressed Amendment 2. She noted
that it would be responsible to work for two years more on
the bill. Representative Hawker stated strong support for
Amendment 2. It is the financially responsible and
conservative approach to properly implement the policy
decision made last year to adopt SB 141.
A roll call vote was taken on the motion to ADOPT Amendment
2.
IN FAVOR: Hawker, Joule, Kerttula, Moses
OPPOSED: Weyhrauch, Foster, Holm, Kelly, Stoltze, Meyer,
Chenault
The MOTION FAILED 4-7.
Representative Joule MOVED to ADOPT Amendment 3:
Page 2, line 15, following "AS 14.25.065.":
Insert "The maximum change in the contribution rate for
an employer from one year to the next shall be not more
than five percentage points, as actuarially calculated,
whether the change is an increase or a decrease."
Page 3, line 1:
Delete "The"
Insert "Subject to the limitation on maximum change
from one year to the next under (a) of this section,
the"
Page 16, line 2, following "section.":
Insert "The maximum change in the contribution rate for
an employer from one year to the next shall be not more
than five percentage points, as actuarially calculated,
whether the change is an increase or a decrease."
Page 17, line 9:
Delete "The"
Insert "Subject to the limitation on maximum change
from one year to the next under AS 39.35.250(a), the"
Co-Chair Meyer OBJECTED for discussion purposes.
3:50:15 PM
ALLISON ELGEE, STAFF, REPRESENTATIVE JOULE, addressed
Amendment 3. She related that this amendment would limit
the Alaska Retirement Management Board to rate adjustments
for the retirement systems in any one year to 5 percent,
both up and down. Previously, the PERS Board adopted a
regulation that limited those rate adjustments to 5 percent
per year, and that has been the experience for the last
several years. This would put into statute what has in the
past been effective regulation.
Representative Hawker spoke against Amendment 3. He related
that the policy call in SB 141 was to bankrupt the old plan,
trigger a public bailout, and put a new plan in place to
pick up where the old plan left off. It would be
irresponsible not to start funding it as soon as possible.
This amendment would dig the hole deeper.
3:52:36 PM
Representative Joule said he raised the issue because there
has been no discussion on the amount of money that would be
involved. There is $40 million in TRS alone. He wanted to
draw attention to the fear that the schools and cities will
carry the brunt of the cost.
Ms. Elgee said that based on the underfunding just for the
school districts, the amount is approximately an additional
$200 million to the foundation formula to cover the cost,
were it to go to the full actuarial calculated cost in 2008.
Representative Joule asked if that is a check the
legislature is willing to write next year.
3:54:36 PM
Representative Seaton appreciated the mention of the
unfunded liability. He stated that the purpose of the bill
is for a long-term plan. The amendment would delay the
money for the unfunded liability. He agreed with
Representative Hawker.
Representative Joule stated that this is not going to be a
liability. Representative Seaton drew attention to
education funding with the 5 percent increase, and no lack
of funding for TRS. He stated full commitment to fund TRS,
as it is included in the formula.
Representative Weyhrauch recalled that this was an amendment
offered last year to HB 141. He concurred with
Representative Hawker's view that "we are going to have to
pay for the problem". He opined that Amendment 3 is not the
correct solution.
3:57:58 PM
Representative Kelly said that we should resist going the
route of Amendment 3. It will take work by the state, the
cities, and the schools to solve the problem. BUCK provides
actuarial services to many state and local government
pension systems. This is the first time BUCK has had a
client that was prohibited from increasing deductibles, full
pays, and prescription drugs for its retirees. In normal
circumstances, there would be some way to have assistance
from those being served. He spoke against the amendment,
but said it is in the right spirit.
Representative Joule said he raised this idea because it
involves real dollar figures. He urged caution in the
future with the respect to school districts. He WITHDREW
Amendment 3.
4:01:59 PM
Representative Weyhrauch MOVED to ADOPT Amendment 4:
Page 4, line 8:
Delete "AS 14.25.485 and 14.25.487"
Insert "AS 14.25.310 - 14.25.590"
Page 9, lines 21 - 23:
Delete "[BENEFICIARIES] based on the deceased member's
gross monthly compensation at the time of occupational
death
[(1)"
Insert "[BENEFICIARIES BASED ON THE DECEASED MEMBER'S
GROSS MONTHLY COMPENSATION AT THE TIME OF OCCUPATIONAL
DEATH
(1)"
Page 19, lines 12 - 13:
Delete "AS 39.35.890 and 39.35.892"
Insert "AS 39.35.700 - 39.35.990"
Page 25, lines 26 - 28:
Delete "[BENEFICIARIES] based on the deceased
employee's gross monthly compensation at the time of
occupational death
[(1)"
Insert "[BENEFICIARIES BASED ON THE DECEASED EMPLOYEE'S
GROSS MONTHLY COMPENSATION AT THE TIME OF THE
OCCUPATIONAL DEATH
(1)"
Representative Weyhrauch related that on pages 4 and 9 of HB
475, the statutory reference has been changed to include all
disability and death benefits. He explained that without
the change it is too narrow. This amendment would allow
employer contributions to be collected in order to fund
death and disability benefits. The second part of the
amendment, on pages 19 and 25, clarifies that the
calculation of the employer contribution is for survivor
pension benefits, as well. An unnecessary reference is also
deleted.
4:03:26 PM
Representative Seaton said Amendment 4 is a clean-up
amendment and not a policy call.
Representative Kerttula asked how it was figured out without
the amendment, and how it is changed with the amendment.
4:04:36 PM
KATIE SHOWS, STAFF, REPRESENTATIVE PAUL SEATON, explained
that with the amendment, the employer contribution rate for
death and disability benefits would be calculated in the
same manner. It provides a shorter mechanism to get to that
point. In Section 55 for PERS, and in Section 16 for TRS,
the benefit formula is laid out, which takes 13 percent of
the deceased member's gross monthly salary at the time of
death and multiplies it by the number of years until that
member would have reached normal retirement. That figure is
then actuarially calculated for a percentage of contribution
that the employer will have to make annually. It does not
change the way that the benefit is calculated.
Co-Chair Meyer WITHDREW his objection.
Representative Hawker OBJECTED to the motion to adopt
Amendment 4. He noted that he has been repeatedly told that
the bill needs no changes. He asked what else should be
changed.
Co-Chair Meyer noted that the sponsor is in favor of
Amendment 4.
A roll call vote was taken on the motion to ADOPT Amendment
4.
IN FAVOR: Holm, Joule, Kelly, Stoltze, Weyhrauch, Foster,
Meyer
OPPOSED: Hawker, Kerttula, Moses
The MOTION PASSED 7-3.
4:08:06 PM
Representative Foster MOVED to REPORT CSHB 475 (FIN) out of
committee with individual recommendations and the
accompanying fiscal note.
Representative Weyhrauch OBJECTED.
4:08:38 PM
At ease.
4:10:08 PM
A roll call vote was taken on the motion to move HB 475 out
of Committee.
IN FAVOR: Holm, Kelly, Stoltze, Foster, Hawker, Meyer,
Chenault
OPPOSED: Joule, Kerttula, Moses, Weyhrauch
The motion passed 7-4.
CSHB 475 (FIN) was REPORTED out of Committee with a "no
recommendation" and with a new zero fiscal note by the
Department of Administration.
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