Legislature(2001 - 2002)
03/14/2002 03:03 PM House HES
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* first hearing in first committee of referral
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+ teleconferenced
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HB 416-REEMPLOYMENT OF RETIRED TEACHERS CHAIR DYSON announced that the next order of business would be HOUSE BILL NO. 416, "An Act relating to reemployment of and benefits for retired teachers and principals who participated in retirement incentive programs; and providing for an effective date." [Before the committee was CSHB 416(EDU).] Number 1369 REPRESENTATIVE CON BUNDE, Alaska State Legislature, speaking as the chair of the House Special Committee on Education, sponsor of the bill, characterized CSHB 416(EDU) as another tool in the toolbox that addresses teacher retention and recruitment; it would be available if school districts chose to use it. Referring to previous discussion of teacher shortage issues, he said this bill provides [districts] an opportunity to rehire teachers who have retired under a [Retirement Incentive Program (RIP)]. REPRESENTATIVE BUNDE explained that current law dictates that these [retired] teachers who decide to return to teaching repay a substantial bonus [to be eligible for rehire]; CSHB 416(EDU) allows teachers and principals to be rehired without that penalty, but the rehiring is at an entry-level step. This was included to give districts as much flexibility as possible while preventing possible abuses. REPRESENTATIVE BUNDE reported that this bill has been endorsed by the [Matanuska-Susitna] and Anchorage School Districts, the [Association of Alaska School Boards], and the [Alaska] Association of Secondary School Principals. He suggested it might be useful to look at the effects in different districts if [CSHB 416(EDU) becomes law]. There are 457 teachers who have applied for a retired teacher's teaching certificate, he noted. Referring to a document titled "Comparison: Average Salary at Retirement vs. Retirement Benefit + Returning Salary Under CSHB 416(EDU)," he pointed out that in most cases, retired teachers would earn more at a beginning teacher's salary with retirement benefits than if they had continued teaching [without retiring]. REPRESENTATIVE BUNDE brought attention to [Amendment 1], 22- LS1472\F.3, Craver, 3/13/02, which read: Page 1, line 2, following "programs": Insert "and to the employment as teachers of members of the public employees' retirement system who participated in a retirement incentive program" Page 2, line 17: Delete "a new subsection" Insert "new subsections" Page 2, following line 22: Insert a new subsection to read: "(e) A member of the public employees' retirement system who participated in a retirement incentive program under ch. 26, SLA 1986; ch. 89, SLA 1989; ch. 65, SLA 1996; ch. 4, FSSLA 1996; or ch. 92, SLA 1997, who subsequently becomes a qualified teacher, may become an active member under AS 14.25.040 without losing the incentive credit provided under the applicable retirement incentive plan and is not subject to any related reemployment indebtedness." Page 2, line 26, following "Act": Insert "; AS 14.25.043(e), added by sec. 3 of this 2002 Act" REPRESENTATIVE BUNDE noted that Amendment 1 addresses Public Employees' [Retirement System (PERS)] retirees who apply [to be rehired as teachers]. Number 1623 REPRESENTATIVE BUNDE informed members that he'd neglected to say CSHB 416(EDU) has no negative actuarial impact. He said he would refer questions about the retirement system to Guy Bell, Director, Division of Retirement & Benefits, Department of Administration. CHAIR DYSON offered his understanding that Representative Bunde had said these people don't have to pay back the severance bonus. He asked where that is in the bill. REPRESENTATIVE BUNDE said that was the intent in drafting [CSHB 416(EDU)]. Number 1680 KAREN McCARTHY, Staff to Representative Con Bunde, Alaska State Legislature, speaking as the committee aide for the House Special Committee on Education, offered her understanding from Mr. Bell that the answer to Chair Dyson's question is found on page 2, lines 13-16; the [exemption] is implied by the information contained therein. She offered that Mr. Bell could explain how it works. REPRESENTATIVE WILSON said that section looks as though it is being removed. REPRESENTATIVE BUNDE answered that by dropping that language, the payback provision [is omitted]. He added that the amendment was suggested by Mr. Bell. Number 1750 GUY BELL, Director, Division of Retirement & Benefits, Department of Administration, explained that the language in the bill that is being removed [originated in] HB 242, passed last year [to allow] Public Employees' Retirement System (PERS) and Teachers' Retirement System (TRS) [non-RIP] retirees to return to public employment, through filing a waiver, while continuing to receive a retirement benefit. He said this was viewed as an incentive to bring retirees back into the workforce. Several things were omitted in [HB 242]. Therefore, [CSHB 416(EDU)] seeks to make one correction and one adjustment. The correction is in Section [1], where line 5 adds the Department of Education and Early Development (EED); this allows EED to rehire retired teachers. This was an inadvertent omission in HB 242. CHAIR DYSON asked if these people were professional staff or worked for Alyeska [Central School]. MR. BELL offered his belief that these are employees in the correspondence school, the [Alaska Vocational Technical Center], and Mount Edgecumbe High School - any job that requires a teaching certificate within EED. This allows any of these employers to declare a teacher shortage. Then the provisions of the rehired-retiree plan come into effect in Section 2, which allows organizations declaring a shortage to rehire retirees; these retirees are allowed to file a waiver that waives additional coverage in the [retirement] system. In return, these retirees can keep their retirement benefits, but don't accrue another retirement benefit during their period of reemployment. Mr. Bell noted that lines 13-16, page 2 of CSHB 416(EDU), delete language contained in HB 242. This language prohibited retirees who retired under the TRS-sponsored RIP from participating in the return provision. Deleting this language allows people, through a waiver, to return to teaching without having to pay a penalty. Number 1900 CHAIR DYSON inquired what "pay a penalty" means. MR. BELL replied that under the provisions of the RIPs over the years, there were penalty provisions: a "RIP retiree" returning to teaching would have to repay 110 percent of the benefit received. In addition, the retiree would forego any additional credit received as a result of the RIP. If the retiree received health benefits that person wouldn't have received otherwise, a repayment would be required. There is a significant penalty to a RIP-retiree returning to employment, he said; this law has not changed. By allowing a person to file a waiver, this waives his/her coverage so that the penalty provision does not apply. He continued: So by deleting ... on page 2, lines 13 to 16, a RIP person is allowed to come back. If the RIP person does come back and files a waiver, they are not in TRS-covered employment, and therefore penalty ... provisions wouldn't apply. So a RIP person could return to teaching and not pay the penalty; at the same time, though, that person would not accrue additional retirement credit, but they would continue to receive their retirement benefit. MR. BELL drew attention to Section 3 and explained that this provides for the retiree to be rehired at the entry level of the negotiated salary schedule. CHAIR DYSON sought further clarification on Section 2. He asked whether some of the incentives for early retirement were cash benefits. MR. BELL replied that some school districts offered cash incentives, but those aren't referred to in [CSHB 416(EDU)]. Referred to in the bill are the TRS-sponsored retirement incentive programs. Those basically gave a person up to three years of service credit if the employee and the employer paid the actuarial cost. CHAIR DYSON offered his understanding that one retirement incentive was the additional [years of service] granted to retirees in the form of [up to] a three-year "bonus" for someone who had worked 17 years, for example; the teacher had to make up the [difference] in the payments. MR. BELL concurred. Number 2007 CHAIR DYSON asked if enhanced health insurance was an incentive offered to retirees. MR. BELL replied that it was not enhanced health insurance. A retiree, by buying the three years, received health insurance through the retiree health plan at the point of retirement. A teacher who quit [after 17 years] would be ineligible for this health insurance [otherwise]. Number 2024 CHAIR DYSON offered his understanding that the intention of [the Division of Retirement & Benefits] was to guard against giving an incentive for people to "pull the pin" and retire, and then be rehired somewhere and be "double-dipping"; therefore, penalties were built in. MR. BELL said he wasn't present [during the RIP]; he surmised that there were public policy reasons at that time. One argument is that times have changed: now there is a shortage of teachers. With qualified people available who might wish to return to teaching, there is no actuarial cost to the retirement system; there may, in fact, be a savings to employers because they are not paying TRS contributions. Number 2065 REPRESENTATIVE BUNDE offered that there was some concern about double dipping. However, anyone who took the retirement and went to Oregon to teach could receive a full salary as well as Alaska's retirement. He indicated that Alaska's not allowing this to happen might be shortsighted. He pointed out that there is a sunset provision in the bill to allow for unforeseen [circumstances]. It will sunset in 2005. This will give the legislature an opportunity for redress. Number 2122 REPRESENTATIVE STEVENS pointed out that he was a school board member when the RIP was offered; substantial savings were realized by school districts when these teachers retired early, which was important at the time. However, teachers are no longer readily available. He concurred with Representative Bunde's point about districts in Oregon that don't care how much a teacher is receiving in retirement. Number 2175 CAROL KANE, Executive Director, Alaska Association of Secondary School Principals (AASSP), testified via teleconference, noting that AASSP represents K-12 administrators and has approximately 255 members in addition to 25 retired administrators. She said AASSP fully supports this legislation. She'd just returned from the national principal associations conference, where she observed that benefits offered to teachers and administrators include housing bonuses, signing bonuses, professional-growth incentives, and early contracts. She conveyed her concern that Alaska's salaries are in the bottom quartile when compared to the Lower 48. MS. KANE asked whether the language [in the title, page 1] on line 1 - "An Act relating to reemployment of [and] benefits for retired teachers and principals" - transfers throughout the bill, or whether the intention is to change that. She offered her association's support for the bill and the amendments as presented today. REPRESENTATIVE BUNDE clarified the intent that the legislation will apply to both teachers and principals throughout. Number 2263 MS. McCARTHY noted that Mr. Bell had provided her a copy of the statutes wherein the definition of "teacher" under the TRS section means a person eligible to participate in the system, a certificated full- or part-time elementary or secondary teacher, a school nurse, [or] someone at the University of Alaska. She sought further clarification from Mr. Bell. MR. BELL said, "A certificated person in a position requiring a teaching certificate as a condition of employment." REPRESENTATIVE BUNDE noted that all principals require [a certificate]. Number 2293 CHAIR DYSON offered, "The representation is that anyone that ... is a certificated teacher would qualify regardless [of] whether they're in the classroom in an administrative role as principal." MS. KANE explained that there are the following certificates: Type A for teachers, and Type B for administrators. Unless a person holds both certificates, she said, she doesn't believe that person would meet the criteria described in the [definition] of teacher. She asked for clarification on this. Some principals may not maintain a current teaching certificate, she added. Number 2331 MR. BELL answered that the Division of Retirement & Benefits does not differentiate between a [Type] A and B certificate; it only looks at certification. The law indicates it is a position requiring certification. He said, "From our perspective, we would just put on the record ... A or B; we would look at that as certification. And ... the language as written covers that." Number 2350 REPRESENTATIVE BUNDE made a distinction between being employed and qualifying for retirement. He said TRS covers anyone who is certified. He then returned attention to Amendment 1. TAPE 02-22, SIDE B Number 2400 CHAIR DYSON expressed his understanding that Amendment 1 allows a PERS [retiree] - who has subsequently become a [certified] teacher and wants to be employed - to not lose benefits. Number 2350 REPRESENTATIVE BUNDE acknowledged that this person might have been an uncertificated teacher aide and therefore not in TRS; this person would have been in PERS. The PERS retirement of a person who has since obtained a teaching certificate would not be forfeited. Number 2336 REPRESENTATIVE JOULE asked: If a PERS-eligible employee retired and then wanted to enter the teaching system, would this person accrue retirement benefits under TRS? MR. BELL answered that a PERS retiree who was hired by a school district as a certificated employee would continue to receive the PERS retirement. That person would be allowed to accrue a TRS benefit while employed as a teacher. They are two different systems. Number 2290 REPRESENTATIVE STEVENS moved to adopt Amendment 1 [text provided previously]. There being no objection, Amendment 1 was adopted. REPRESENTATIVE STEVENS moved to adopt Amendment 2, 22- LS1472\F.2, Craver, 3/13/02, which read: Page 2, lines 17 - 22: Delete all material. Renumber the following bill sections accordingly. Page 2, lines 25 - 26: Delete "; AS 14.25.043(d), added by sec. 3 of this 2002 Act" REPRESENTATIVE STEVENS remarked that this discussion of RIP- retired teachers was a learning process; it might not result in a great number of teachers being rehired, but could be important. He added that after the bill left the House Special Committee on Education, upon further reflection, he'd thought [CSHB 416(EDU)] might be a bit punitive by requiring a teacher to return at the lowest [salary] level possible. He reiterated that other states are not concerned about the benefits a prospective teacher may already be earning from retirement benefits. [Alaska] might be only harming itself by saying that people must return at no more than what they were earning when they left," he suggested. REPRESENTATIVE STEVENS brought attention to the comparison chart showing average salaries at retirement and retired teachers' salaries including TRS benefits. He suggested [the small jump in salary] was hardly worth going through the retirement process. He pointed out the need to look at teachers who have retired from Alaska and are then "snapped up" by districts in other states. He offered an example of someone he knows. REPRESENTATIVE STEVENS pointed out that Amendment 2 deletes Section 3, which provides for a teacher's being rehired at only the rate of a new teacher. Amendment 2 leaves that [salary] decision up to the school district; the school district will be paying this teacher and must determine how badly it needs this teacher. It will add flexibility, and there is no actuarial impact, as Mr. Bell has indicated. REPRESENTATIVE STEVENS offered his concern that members learn from [EED] the number of teachers rehired under the bill after its implementation; EED does have a report that will convey that information. He noted that when this reaches the 2005 sunset date, the legislature will know how many teachers actually have been affected by this. He concluded that the main purpose of Amendment [2] is to allow districts the flexibility to decide at what level they want to rehire RIP teachers. Number 2106 REPRESENTATIVE BUNDE offered that this is an issue upon which reasonable people disagree in part. He agreed that [the legislature] should provide as much local flexibility as possible. He said: I could see a possibility of someone retiring at 60- plus, or ... getting their retirement and going back the next day at their former salary of 60-plus thousand ... if there was some good-ole-boy network ... in place. Now, I don't expect that this would happen, ... but we have seen some malfeasance in school administrators in the not-too-distant past, and ... I would suggest that it's wise to not encourage human weakness. REPRESENTATIVE BUNDE added that some people might be concerned about allowing people who, by good fortune, had retired with a substantial early-retirement bonus to return to teach and retain their retirement. He said, "Don't lose the good in search of the perfect. I would be concerned that there might be those who would be disinclined to support the bill if there was any possibility - no matter how remote - that it could be abused by a school district somewhere in Alaska." Number 2037 REPRESENTATIVE WILSON explained why she didn't support [Amendment 2]. As written, the bill provides leeway at the local level. Districts are not required to rehire a candidate at a [the lowest salary on the salary schedule]. Rather, the bill allows latitude in placement on the salary schedule through the negotiated agreement in each district. In some areas, districts can give credit [for education and experience]. Furthermore, the present language addresses the problem of morale [if a retired teacher could return at the same salary as for existing teachers]. Therefore, she would leave the bill as it is. Number 1980 REPRESENTATIVE BUNDE, in response to Chair Dyson, said he'd prefer that [Amendment 2] wasn't adopted. Number 1962 CHAIR DYSON asked about the impact of [line 7 of Amendment 2], which read: Delete ";AS 14.25.043(d), added by sec. 3 of this 2002 Act" REPRESENTATIVE BUNDE expressed his understanding that this is the language that requires districts to rehire [RIP-retired teachers] at the beginning salary. He mentioned that beginning salaries vary from district to district; for example, he thinks Kotzebue allows people to bring in six years [of teaching experience]. CHAIR DYSON pointed out that [the deletion of] lines 17 - 22 [on page 2] in Amendment 2 [removes the requirement for districts to rehire RIP-retired teachers according to the negotiated agreement]. He asked Representative Stevens about the impact of [the deletion of] lines 25 -26 [on page 2]. REPRESENTATIVE BUNDE replied, "It puts it in the uncodified section because it's going to sunset in 2005." Number 1925 MS. McCARTHY added that Amendment 2, lines 6-7, takes out the reference of Section 3 from the uncodified section of statute, where temporary [laws] are placed. Number 1907 REPRESENTATIVE STEVENS thanked Ms. McCarthy for her explanation. He explained that Amendment 2 removes Section 3 from the bill; line 7 of [Amendment 2] removes the reference to Section 3. He returned to [the potential for] malfeasance and pointed out that many teachers might be going to districts [other than the ones in which they had taught]. REPRESENTATIVE STEVENS, referring to Representative Wilson's comments, highlighted line 21 [page 2 of CSHB 416(EDU)], which addresses the rate of pay for new teachers. If this language is left in, he said, a returning RIP teacher would be paid the rate for new teachers on the salary schedule. He expressed concern that without [Amendment 2], there might not be any RIP teachers returning. Drawing attention to Anchorage's salaries on the comparison chart, he said, "Would they really want to come back for a thousand dollars more? I don't know." He requested confirmation of his understanding that substantial savings will be realized by districts regardless of salary placement, because districts will not be paying for health insurance or retirement. These costs are covered by the retirement [system]. He asked Mr. Bell to clarify for members any additional savings to districts. Number 1807 MR. BELL offered the division's interpretation that the retiree medical plan is such that if a person becomes an active employee, the active-employee health insurance becomes a person's primary insurance. He said the Division of Retirement & Benefits anticipates that districts will still be required to pay for health insurance. He added that the major savings to the school district would be the employer contributions to the retirement system - 11 percent of salary. REPRESENTATIVE STEVENS indicated he thinks most members believe the local level is where education decisions should be made. He said: The goal here is not to give a loophole for someone to come back and rip the system off. ... If we leave it as it is, I'm afraid there will not be much of an impact; there will be very few ... RIP teachers coming back to Alaska. If we change it, it allows local option - it allows the district to decide ... how much ... to pay this person. So it does put more option at the local level. Number 1748 REPRESENTATIVE JOULE added that teacher shortages exist in rural and urban areas across the country. He offered that drawing teachers to rural Alaska might be even more difficult; [Amendment 2] allows school districts more latitude to attract teachers to rural districts. He observed that some, though not many, teachers live in the community and become "part of the family." He expressed hope that some of these teachers would [be rehired under this legislation]. He concluded that rural areas need to have this tool to attract teachers. Number 1708 REPRESENTATIVE COGHILL said, "I would tend to agree with Representative Bunde." Teachers will receive the retirement base; in addition to this is the healthcare benefit and the salary [upon rehire]. He offered his opinion that this is enough incentive, and said the benefits under early retirement were significant and a "real benefit to those who took it." He stated that there is still a benefit for teachers to return even without Amendment 2. He turned attention to the wisdom of 20- year retirements. He said, "At this point, I think that I would rather just ... stay with the way the bill is written." Number 1662 REPRESENTATIVE WILSON asked Ms. McCarthy if the bill's current language provides that a returning teacher would be rehired at the rate of a new teacher who had no experience, or if it allows latitude for the local district to negotiate. MS. McCARTHY replied that the bill's current language refers to the negotiated salary schedule that gives credit for experience and education beyond a bachelor's [degree]. She referred to a chart in the committee packet titled "Examples of Possible Salaries for Reemployed Teachers Who Participated in a Retirement Incentive Program." She said the last column shows the number of years of experience each listed district will allow a teacher to bring in. She noted that a teacher with 20 years' experience being rehired in Kotzebue would receive 6 years of credit with a bachelor's [degree] and 8 years with a master's [degree]. Galena allows for 5 years to be brought in, or 6 years if a shortage exists in a specific teaching area. Number 1583 REPRESENTATIVE WILSON said that gives "pretty good latitude" to the local areas, the way the bill is written. MS. McCARTHY agreed. Number 1570 REPRESENTATIVE STEVENS pointed out that a teacher moving to Anchorage would receive no years of experience credit. He said, "It is up to the individual districts ... what their salary schedules are like." MS. McCARTHY agreed, adding that it would be the responsibility of the individual to decide whether it would be an advantageous move. Number 1532 CHAIR DYSON noted his agreement with Representative Coghill, saying, "We see lots of unintended consequences of the 20-year retirement system ... across a lot of different areas. And we do them all with good intentions, and they end up presenting real problems for us downstream." He continued: Personally, somebody that will move to Oregon for $30,000, I say good riddance. ... What I want to represent ... is the people that are committed to living in Alaska whatever it costs, and money isn't the issue. They love this country and its people, and they're here forever. But I realize everybody ... [doesn't] march to the same drummer as I do, and money is an issue. And I can't imagine how much money it would take to get me to live somewhere else. CHAIR DYSON also noted his agreement with Representative Stevens that flexibility needs to be given to local people. "Yes, they'll misuse it, and yes, I want to trust them and give them that flexibility," he said. "My own vote will be to accept the amendment." A roll call vote was taken. Representatives Dyson, Cissna, Joule, and Stevens voted for Amendment 2. Representatives Kohring, Wilson, and Coghill voted against it. Therefore, Amendment 2 was adopted by a vote of 4-3. REPRESENTATIVE WILSON remarked that if the bill had been left the way it was, schools that are able to recruit teachers more easily wouldn't have had to raise [salaries] as much; this would have enabled more teachers to be hired in areas that have more difficulty in recruiting teachers. Number 1436 REPRESENTATIVE KOHRING commented that he was troubled that the legislature initially passed the RIP provision and created a situation that necessitated this legislation. He said, "I'm just troubled that we're continuing to provide more and more benefits for a profession ... that you just don't see in other professions. I recognize the intent of the sponsor, ... that he's trying to get the good, qualified teachers back in the system [and that] there's a shortage." He relayed his belief that over the years the legislature has been extremely generous to the teaching profession with tenure, retirement packages, and salaries. REPRESENTATIVE KOHRING returned attention to the salary chart. He said the Anchorage salary of [$62,889] divided by nine months is nearly $7,000 a month; there are three months off during the year as well. He said, "I'm not putting teachers down; I'm just saying that they've been rewarded very, very handsomely over the years. And I'm just troubled with the fact that we continue to advance legislation that ... provides them more and more benefit and more gain." He noted that he would not object to moving the bill out of committee, however. Number 1343 REPRESENTATIVE STEVENS pointed out that the bill as amended forces no district to hire anybody. He offered his opinion that teachers who were poor teachers would never be rehired. This is a tool that allows a district to decide at the local level how badly it needs a teacher in a time of shortage. He offered his belief that the shortage will worsen over time, and that Alaska is in a less competitive situation and will find it even more difficult to [hire] the necessary teachers. Number 1295 REPRESENTATIVE WILSON reiterated, "What we did with that amendment ... is that we've just given the school districts that can afford to pay a real good salary a little bit of an advantage over the ones that can't." She offered that the starting salary in [Wrangell] is only $27,000 because the district doesn't have enough money to pay teachers more. "We have a hard time getting people to come to our area now," she said. "And that ... would've helped just a little, because it would've kept Anchorage at not giving them those extra years, and it would've maybe made people look at ... another area." Number 1250 REPRESENTATIVE STEVENS responded that Anchorage is not the villain, that the entire country is facing a shortage, and that Anchorage needs teachers as badly as Wrangell or Kodiak. REPRESENTATIVE COGHILL said he couldn't support the bill, since the scope had been narrowed. Number 1209 REPRESENTATIVE CISSNA moved to report CSHB 416(EDU), as amended, out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE COGHILL objected. A roll call vote was taken. Representatives Dyson, Cissna, Joule, Wilson, Stevens, and Kohring voted to move CSHB 416(EDU), as amended, out of committee. Representative Coghill voted against it. Therefore, CSHB 416(HES) was moved out of the House Health, Education and Social Services Standing Committee by a vote of 6-1.
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