Legislature(1999 - 2000)
03/31/1999 08:03 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 85(L&C)
"An Act relating to credited service in the public
employees' retirement system for temporary
employment."
JEANNIE SMITH, staff to Senator Jerry Mackie sponsor of the
bill, testified. Currently, employees in the PERS system
could buy back their temporary time. However, this time
did not count toward the minimum service needed for their
retirement eligibility.
She told the committee this bill would allow these
employees currently covered under PERS to buy any temporary
time and have it credited toward that minimum service time
for retirement. It would provide equity among state
employees. It was an issue of fairness. They should be
allowed to pay for months that they actually worked.
The fiscal impact on this legislation for temporary service
as recognized under the retirement system provided that the
employee would pay the full actuarial cost. There were no
general funds involved. There would be computer
programming necessary to implement the program as reflected
in the Department of Administration fiscal note.
The legislation would allow the state to realize immediate
cost savings by enabling employees to meet the retirement
eligibility threshold sooner. The employees prone to use
this for retirement credit were employees with the higher
service codes thus they are on the higher end of the pay
scale, according to Jeannie Smith.
She continued saying SB 85 was a responsible piece of the
puzzle in the development of Alaska's long term budget
solution. This was a reasonable economic tool that may be
used to minimize the impact of downsizing Alaska's state
government.
She spoke of a position statement submitted by the
Department of Administration. It said that the bill would
have the effect of allowing the employees to meet the
retirement eligibility threshold sooner than they would
otherwise be anticipated.
She then noted a list of Alaskan employers who were
included within the umbrella of this bill who did not work
for the State Of Alaska.
She concluded by stating that this bill sent a positive
message to state workers and other employers and employees
across the state.
Guy Bell and Bill Church returned to the table to address
this bill. Guy Bell commented that this would allow
employees to pay the cost to use temporary service that
they had worked as membership service toward their
retirement. Public employees with temporary service time
would be affected. Currently, they could buy that temporary
service time but could not use it toward retirement
eligibility for 20 or 30 and out contracts. This would
allow them to pay some extra, which would be the actuarial
costs. He gave examples of the police or firefighter
component of PERS. The full responsibility for paying the
cost would rest with the employee.
Senator Randy Phillips asked if there was a difference
between seasonal and temporary employees. Guy Bell
explained that a seasonal employee was considered permanent
and they did pay into PERS during their period of work. A
temporary employee was not a PERS employee. There was no
deduction from their salary and they did not receive PERS
credit.
Senator Randy Phillips wanted to know how many temporary
employees were in the state system and what was the average
length of service in that status. Bill Church said the
division did not know since people did not claim their
temporary service. Senator Randy Phillips asked how many
permanent temporary workers were there. Bill Church
responded that the division did not track that information.
Based on the employees who did claim their temporary
service, they could prepare an estimate. Guy Bell added
that there were many public employees in the retirement
system and state employees were only a part. There were
people with temporary service who worked for other
employers.
Senator Al Adams asked about the fiscal note for SB9 and
wanted to know if this program could be implemented with
the computer modifications made to the other program for
school employees. Bell replied that the changes were
slightly different but that it was a small cost to the
system. The two were calculated separately because it was
not known if both bill would be adopted.
Co-Chair John Torgerson asked if this would be handled on
an individual basis or would a single percent be imposed
based on the actuarial costs. Guy Bell replied that it
would be calculated on an individual basis since each case
was different. The difference here was that an employee
would purchase time that they worked probably a number of
years ago. Very often, a person first worked as a temporary
and then worked into a permanent position. That had to be
calculated on an individual basis.
Senator Randy Phillips compared this to the last bill where
seasonal employees had no control of the number of months
they could work. He wondered if with the employees
addressed in this bill, were there any inequities within
the group of temporary employees that needed to be
adjusted. He spoke about the different classifications of
people and assumed most were serving a probationary period
before entering a full time status. Guy Bell said this was
different than probationary since they were hired as
temporary employees. When a person was first hired in a
permanent position they were on probation but still
contributed to PERS, he explained.
Co-Chair John Torgerson was confused about initial
testimony saying that temporary time did not count. Could
an employee go back and pick up time served in temporary
service even when they were not in the system.
Bill Church responded that employees could once they were
vested in PERS. Then they could claim all full-time
temporary service. That was the main difference with this
bill and SB 9. SB 85 dealt with employees who by the nature
of their employment were excluded from becoming a vested
member of PERS. They could then claim all full-time
temporary service and pay the rate for that.
Co-Chair John Torgerson wanted to know if buying in counted
toward becoming vested. Bill Church answered no; a person
must already be vested. Co-Chair John Torgerson asked if
once they were vested, how would the division calculate the
payment for the five-year period. Bill Church said once
they employee is vested they could go back and pay for the
earlier temporary service. He detailed his own situation
with his three months of temporary service.
Co-Chair John Torgerson wanted to know what was the average
term of temporary service. Bill Church said it varied and
depended on the term of employment. Co-Chair John
Torgerson had questions about qualifications for PERS.
Church replied it was calculated by time served as a paying
member of PERS.
Co-Chair John Torgerson asked if this bill had a
retroactive clause for an employee who was out of the
system. Bill Church replied that an employee would be able
to pay into the service to meet the eligibility for
retirement. The employee could chose to buy it as just
credited service or also for service to be credited for
accrual. It was an individual decision.
Co-Chair John Torgerson asked if this was an irrevocable
election. Bill Church affirmed.
Co-Chair John Torgerson asked why there weren't the same
triggers in this bill as in the last bill of 90 days and
180 days.
Tape: SFC - 99 #74, Side B 8:50 AM
Bill Church responded there was already an existing period
of service that had happened in the past. The election
could be made at any time before the employee retired. The
only difference would be the amount of interest accrued and
charged based on how long ago the temporary service was
performed. He detailed the differences in accrual
procedures between this bill and SB 9, which was an on-
going program.
Co-Chair John Torgerson then asked about the effect this
bill would have on the RIP. It seemed to him that this
would have a greater direct affect than the last bill had.
He noted that in order to qualify a saving to the state had
to be shown. Would this change some of those
determinations? Bill Church said this would only apply to
retirement qualifications and cost savings would still be
up to the employer.
Senator Randy Phillips asked if there was a difference
between union and nonunion employees' retirement. Church
said there was not.
Senator Randy Phillips referred to a letter in the packet
by a school district temporary employee on the Kenai
Peninsula. She had worked for nine years as a temporary.
It seemed like a long time for temporary. Church clarified
that the testimony was directed at the wrong bill and
really applied to SB 9 because she was a school district 9-
month employee.
Senator Randy Phillips noted different classifications for
different employees and the different benefits afforded
those. He wanted to know if this would cause inequalities
for those employees. Bill Church replied that union
affiliation would not matter in this program.
Barbara Huff testified via teleconference from Anchorage in
favor of the bill. She spoke about the difference of this
bill from the previous bill. This bill would impact the
majority of the members her organization represented within
the Anchorage Municipal Employees Association. She did not
see a significant number of employees who would be impacted
one way or another, but this bill would grant them an
opportunity if they chose. She spoke about the temporary
employees covered in the bargaining unit.
Co-Chair John Torgerson ordered the bill held in committee.
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