Legislature(2021 - 2022)BUTROVICH 205

03/22/2021 09:00 AM Senate EDUCATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Scheduled but Not Heard
<Bill Hearing Rescheduled to 3/24/2021>
<Bill Hearing Canceled>
<Above Item Removed from Agenda>
Moved CSSB 80(EDC) Out of Committee
Moved CSSB 10(EDC) Out of Committee
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
Moved CSSB 6(EDC) Out of Committee
<Bill Hearing Rescheduled from 3/24/2021>
            SB   6-RIP FOR PUBLIC EMPLOYEES/TEACHERS                                                                        
9:29:45 AM                                                                                                                    
CHAIR   HOLLAND  reconvened   the  meeting   and  announced   the                                                               
consideration  of  SENATE   BILL  NO.  6  "An   Act  relating  to                                                               
retirement  incentives   for  members  of  the   defined  benefit                                                               
retirement  plan  of  the teachers'  retirement  system  and  the                                                               
defined  benefit   retirement  plan  of  the   Public  Employees'                                                               
Retirement  System  of Alaska;  and  providing  for an  effective                                                               
He noted  that there was  a work draft committee  substitute (CS)                                                               
and solicited a motion.                                                                                                         
9:30:07 AM                                                                                                                    
SENATOR HUGHES  moved to adopt the  work draft CS for  SB 6, work                                                               
order 32-LS0028\B, as the working document.                                                                                     
9:30:20 AM                                                                                                                    
CHAIR HOLLAND objected for purposes of discussion.                                                                              
9:30:24 AM                                                                                                                    
ED KING, Staff, Senator Roger  Holland, Alaska State Legislature,                                                               
noted two changes in the committee substitute.                                                                                  
     Change #1:                                                                                                             
          To address  the concern regarding  losing teachers                                                                    
          in  districts  already facing  teacher  shortages,                                                                    
          language was  added to direct the  commissioner of                                                                    
          administration  to   deny  an  application   by  a                                                                    
          teacher if  doing so  would create  undue hardship                                                                    
          for the school district.  The change is in section                                                                    
          2, subsection (b), which appears  on page 2, lines                                                                    
          14-15 of version B.                                                                                                   
     Change #2:                                                                                                             
          To  acknowledge   the  fact  that  there   may  be                                                                    
          financial benefits even in  situations that do not                                                                    
          result is a permanent  reduction to positions, the                                                                    
         last line of the intent language was deleted.                                                                          
MR.  KING  noted that  Senator  Micciche  expressed concern  that                                                               
allowing  teachers to  retire in  school  districts that  already                                                               
have recruitment and retention problems  might be problematic, so                                                               
language was added to attempt to address that.                                                                                  
9:31:26 AM                                                                                                                    
CHAIR  HOLLAND  removed his  objection.  There  being no  further                                                               
objection,  version  B  was  adopted.  He  invited  bill  sponsor                                                               
Senator Kawasaki to address the committee.                                                                                      
9:31:41 AM                                                                                                                    
SENATOR  SCOTT   KAWASAKI,  Alaska  State   Legislature,  Juneau,                                                               
Alaska, sponsor of  SB 6, thanked the committee  for bringing the                                                               
bill  forward. He  said retirement  incentive programs  have been                                                               
used since  the '80s in both  the private and public  sectors. In                                                               
Alaska, RIP bills were used in '86,  '89, and '96. A bill in 2004                                                               
did something  similar to  what SB 6  proposes. The  cost savings                                                               
are  tremendous.  In  '86  the estimated  savings  was  over  $25                                                               
million  in year  one. According  to Legislative  Audit, the  '89                                                               
retirement   incentive  program   demonstrated  $23   million  in                                                               
savings, representing  1,700 employees.  In '96, the  fiscal note                                                               
for an identical  bill showed a $41 million savings  in year one.                                                               
He said this  is a time to find savings  and prevent layoffs, and                                                               
SB 6 does that.                                                                                                                 
SENATOR HOLLAND invited John Holst,  the Sitka superintendent, to                                                               
9:33:40 AM                                                                                                                    
JOHN  HOLST,   Superintendent,  Sitka  School   District,  Sitka,                                                               
Alaska, said that he has read  through the bill several times. It                                                               
is  similar   to  bills  in   the  past,  but  it   seems  unduly                                                               
complicated.  Sitka  is in  the  middle  of  a reduction  and  is                                                               
offering a bonus of $10,000 that  is not connected to the Teacher                                                               
Retirement  System  (TRS).  Four   teachers  are  going  to  take                                                               
advantage of that.  It is a simple and  straightforward thing for                                                               
Sitka.  The  bill could  allow  for  more  local control  if  the                                                               
legislature  instructed  TRS  to  count  any  bonuses  as  earned                                                               
income. Right now, a bonus the  district offers is outside of TRS                                                               
and  does not  qualify as  earned income.  That one  change would                                                               
help Sitka immensely. People always want  to know if a bonus will                                                               
count for  retirement. The intent  of this  bill is aimed  at the                                                               
right  target.  In  the  past  these  bills  were  related  to  a                                                               
significant downturn  in population  and as such  allowed removal                                                               
of positions in an orderly  fashion. The current situation is the                                                               
need for pruning  budgets and making reductions  in positions. In                                                               
most  situations, the  people taking  the bonus  will have  to be                                                               
replaced. Inside  the bill, in  at least  once case, it  says the                                                               
position cannot be filled and must remain vacant.                                                                               
CHAIR HOLLAND clarified that Mr. Holst is invited testimony.                                                                    
9:37:43 AM                                                                                                                    
SENATOR  BEGICH pointed  out that  the bill  says the  retirement                                                               
incentive program is  not mandated, it is a "may."  Sitka has the                                                               
wherewithal to go beyond this  retirement program, so it is doing                                                               
so. The bill is provided as  a tool to give guidance to districts                                                               
that  cannot offer  a substantial  bonus. The  bill will  have no                                                               
material  effect  on  Sitka  if  it chooses  not  to  enter  this                                                               
particular state retirement incentive program.                                                                                  
SENATOR BEGICH  described the following  as a  critical component                                                               
of  the  bill:  "RETIREMENT  INCENTIVE PROGRAM  (a)  An  employer                                                               
including a state  agency, a political subdivision  of the state,                                                               
a public organization, and the  University of Alaska may elect to                                                               
adopt a retirement  incentive program under this Act."  It is not                                                               
designed to  negatively impact the  Sitka School District.  It is                                                               
designed to  provide a tool  for those districts that  don't have                                                               
the tax base or wherewithal  that Sitka enjoys. There are "shall"                                                               
retirement  incentive  programs  that  are  dangerous  for  local                                                               
jurisdictions that  he would  never support. This  is not  one of                                                               
9:39:35 AM                                                                                                                    
MR.  HOLST  said  he  understands  this  is  voluntary.  Whenever                                                               
teachers want  to tack on three  years to their service  in order                                                               
to retire and  get a larger benefit, the pressure  will be on the                                                               
district to participate. If it is  a year of negotiation with the                                                               
teacher union, it will be on  the table for discussion and may be                                                               
part of  the agreement. There  are significant  financial impacts                                                               
on  districts.  The  intent  is   wonderful,  but  it  is  unduly                                                               
complicated and going to create  problems for local districts. He                                                               
understands it is a choice  to participate, but the pressure will                                                               
come  from  teachers  and  their unions  to  force  districts  to                                                               
SENATOR HUGHES  questioned the  need for the  bill if  a district                                                               
can  choose to  participate and  structure the  program in  a way                                                               
that works for the particular district.                                                                                         
9:41:33 AM                                                                                                                    
SENATOR KAWASAKI answered that it  seems that Sitka is offering a                                                               
one-time  $10,000  payment to  retire.  By  contrast, the  school                                                               
district in  Fairbanks has  a $25 million  deficit next  year and                                                               
there may  be 200 layoffs  throughout the system,  from custodial                                                               
staff to certified teachers. Fairbanks  does not have the cash to                                                               
pay an incentive to retire.                                                                                                     
SENATOR   HUGHES  asked,   should  become   law,  if   the  Sitka                                                               
superintendent could  continue to  offer a monetary  incentive to                                                               
retire  or if  that district  would  have to  follow the  process                                                               
structured in the bill.                                                                                                         
SENATOR  KAWASAKI   answered  that  nothing  prevents   a  school                                                               
district from  offering a signing bonus  or retirement incentive.                                                               
SB  6  codifies  the  retirement  incentive  program  for  school                                                               
districts,  the  university,  and   state  service.  It  includes                                                               
everyone in the TRS or PERS (Public Employee Retirement System).                                                                
SENATOR  HUGHES  recalled  that  either last  year  or  the  year                                                               
before,  Senator Micciche  introduced  a bill  to rehire  retired                                                               
teachers. She asked how  that law would mesh with SB  6 and if it                                                               
had a two-year wait period like SB 6.                                                                                           
SENATOR KAWASAKI  responded that  the retiree rehire  bill, which                                                               
was Senate Bill  185, passed the Senate 19-1.  Its conditions are                                                               
different from  SB 6. A retired  educator can be rehired  if they                                                               
have been  retired for at  least six months  and are 62  years of                                                               
age or younger.  If older than age  62, they have to  wait for 60                                                               
days.  If people  want to  retire with  the retirement  incentive                                                               
program in  SB 6,  they would  be under a  different part  of law                                                               
than  the retire  rehire  system.  He deferred  to  Mr. Hayes  to                                                               
discuss the particulars.                                                                                                        
9:45:02 AM                                                                                                                    
JOE   HAYES,  Staff,   Senator  Scott   Kawasaki,  Alaska   State                                                               
Legislature, explained  that under SB  6, the district  can bring                                                               
educators  back under  contract  or as  substitute teachers,  but                                                               
they cannot come back under TRS.                                                                                                
SENATOR  HUGHES  recalled  that under  Senator  Micciche's  bill,                                                               
retired  educators  cannot  return   under  TRS.  She  noted  the                                                               
different  waiting periods  for the  two bills  and asked,  since                                                               
there  is a  teacher shortage,  if it  would make  more sense  to                                                               
bring the early  retired teachers back in six  months rather than                                                               
two years.                                                                                                                      
SENATOR  KAWASAKI advised  that  under  Senator Micciche's  bill,                                                               
retirees have  to come back  under TRS and school  districts will                                                               
be required to pay 12.56 percent of base salary to TRS.                                                                         
CHAIR HOLLAND noted that the  next committee of referral is Labor                                                               
and Commerce  and then  Finance. The  committee has  resolved the                                                               
education aspect of  the bill. There will be  time for additional                                                               
SENATOR  HUGHES  asked  the  sponsor to  entertain  the  idea  of                                                               
shortening the  waiting period for  teachers because  the problem                                                               
is not going to go away, especially in rural communities.                                                                       
9:47:56 AM                                                                                                                    
CHAIR HOLLAND opened  public testimony on SB 6;  finding none, he                                                               
public testimony. He solicited a motion.                                                                                        
9:48:22 AM                                                                                                                    
SENATOR HUGHES moved  to report the work draft CS  for SB 6, work                                                               
order    32-LS0028\B,    from     committee    with    individual                                                               
recommendations and attached fiscal note(s).                                                                                    
CHAIR HOLLAND  found no  objection and  CSSB 6(EDC)  was reported                                                               
from the Senate Education Standing Committee.                                                                                   

Document Name Date/Time Subjects
CSSB6 ver. B.pdf SEDC 3/22/2021 9:00:00 AM
SB 6
SB 80 version B.pdf SEDC 3/22/2021 9:00:00 AM
SB 80
SB 10 Committee Substitute (SEDC).pdf SEDC 3/22/2021 9:00:00 AM
SB 10
SB 80 Explanation of Changes in version B.pdf SEDC 3/22/2021 9:00:00 AM
SB 80
SB 6 Explanation of Changes in version B.pdf SEDC 3/22/2021 9:00:00 AM
SB 6
SB 10 Explanation of Changes in version G.pdf SEDC 3/22/2021 9:00:00 AM
SB 10