Legislature(1999 - 2000)

04/20/2000 09:10 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
CS FOR HOUSE BILL NO. 335(STA)                                                                                                  
"An Act relating to information contained in                                                                                    
retirement system records; relating to retirement                                                                               
boards; relating to procedures and hearings under                                                                               
state retirement systems; relating to benefits for                                                                              
reemployed retired members of retirement systems;                                                                               
relating to eligibility for normal retirement for                                                                               
members of the teachers' retirement system who have                                                                             
Alaska BIA credited service; relating to disability                                                                             
benefits for members of state retirement systems;                                                                               
relating to deduction of premiums from retirement                                                                               
benefits; relating to protection of, and assignment                                                                             
and transfer of, amounts held in retirement systems;                                                                            
relating to retirement benefits for certain employees                                                                           
earning high salaries; relating to qualified domestic                                                                           
relations orders in state retirement systems; relating                                                                          
to the definition of 'retirement fund' in the                                                                                   
teachers' retirement system; relating to membership of                                                                          
state employees in the teachers' retirement system;                                                                             
relating to refund of contributions made to the                                                                                 
judicial retirement system or to the former elected                                                                             
public officers retirement system and repayment of                                                                              
refunded contributions in those systems; relating to                                                                            
self-insurance and excess loss insurance for persons                                                                            
receiving benefits from a state retirement system;                                                                              
relating to participation of elected officials in the                                                                           
public employees' retirement system; relating to the                                                                            
level income option benefit under the public                                                                                    
employees' retirement system; relating to                                                                                       
participation of employees of political subdivisions                                                                            
and public organizations in the public employees'                                                                               
retirement system; relating to crimes for defrauding a                                                                          
state retirement system; relating to the definition of                                                                          
'pension fund' in the public employees' retirement                                                                              
system; relating to calculation of years of service                                                                             
and of benefits under the public employees' retirement                                                                          
system for noncertificated employees of certain                                                                                 
educational employers; and relating to individual                                                                               
accounts maintained for members of the former elected                                                                           
public officers retirement system."                                                                                             
                                                                                                                                
                                                                                                                                
MELINDA HOFSTAD, Staff to Representative Bill Hudson,                                                                           
explained that this legislation was a retirement and                                                                            
benefits cleanup effort and it was introduced at the                                                                            
request of Division of Retirement and Benefits.  She noted                                                                      
that this legislation would bring the State of Alaska in                                                                        
compliance with federal laws, court settlements and other                                                                       
technical issues addressed in updated laws.  She added that                                                                     
efficiency measures requested by the various retirement                                                                         
boards, was also included.  She declared that there was                                                                         
nothing in this legislation that enhances or diminishes                                                                         
retirement benefits currently available to any state                                                                            
employees or retirees.                                                                                                          
                                                                                                                                
Senator Phillips asked if the word "interpret" was included                                                                     
in this legislation, with regard to allowing the                                                                                
Administration the authority to make arbitrary                                                                                  
interpretations of the statutes.                                                                                                
                                                                                                                                
GUY BELL, Director, Division of Retirement & Benefits,                                                                          
Department of Administration stated that he did not think                                                                       
that this word was included anywhere in the bill.   He                                                                          
reiterated that this bill outlined technical clean up to                                                                        
existing statutes.  He noted that this legislation                                                                              
clarifies the hearing process available to members, which                                                                       
usually center around disability appeals.  He advised that                                                                      
this legislation addressed confidentiality of member                                                                            
records and more specifically it makes needed changes to a                                                                      
law enacted last session, SB 9, based on a settlement with                                                                      
National Education Association (NEA) Alaska.  He specified                                                                      
that it addresses physician board member appointments and                                                                       
reporting issues.  He continued that this bill separates                                                                        
the Public Employees Retirement (PERS) Board from the                                                                           
Personnel Board.  He added that currently three of the five                                                                     
members on the PERS Board serve by virtue of being                                                                              
appointed to the Personnel Board.  He asserted that because                                                                     
of the volume of work involved for each of these boards, it                                                                     
was decided that these board appointments should be made                                                                        
separate.  He then outlined general changes to related                                                                          
board election rules.                                                                                                           
                                                                                                                                
Mr. Bell outlined technical issues relating to the ability                                                                      
to roll member contributions directly into individual                                                                           
retirement accounts.  He noted that this specifically                                                                           
addressed previous problems regarding the division of these                                                                     
accounts under qualified domestic relation orders.  He                                                                          
addressed the small, related fiscal note for $29,000, which                                                                     
allows for a $150 honorarium for members who serve on the                                                                       
PERS Board.                                                                                                                     
                                                                                                                                
Senator Phillips referred to Sections 58 and 59.  He asked                                                                      
for an explanation regarding each.  He wondered if these                                                                        
sections were in place before the bill passed out of the                                                                        
House.                                                                                                                          
                                                                                                                                
Mr. Bell responded that, yes, they were.  He pointed out                                                                        
that the Elected Public Officers Retirement System (EPORS)                                                                      
language was added to the Public Employees and Teachers                                                                         
Retirement Statute for simple and technical clarification                                                                       
related to payment of indebtedness.  He noted that this                                                                         
language would only affect 62 individuals eligible for                                                                          
EPORS benefits and of this, quite a number of them are                                                                          
still living and not receiving retirement benefits.                                                                             
                                                                                                                                
Senator Phillips pointed out that these individuals                                                                             
withdrew their money, and they are now given the ability to                                                                     
opt back into the system.  He then referred to lines 21 -                                                                       
23, on page 29.  He read the following language: ".who has                                                                      
withdrawn the balance of the officer's individual account,                                                                      
who returns to service as the governor, lieutenant                                                                              
governor, or as a member of the legislature."  He commented                                                                     
that this was a very exclusive group of people and pointed                                                                      
out that this measure was repealed by the voters in 1976.                                                                       
He pointed out that if someone has withdrawn his or her                                                                         
money, this should be a final decision.                                                                                         
                                                                                                                                
Mr. Bell responded that the idea of this clause supports an                                                                     
individual who has chosen to withdraw their membership                                                                          
contribution accounts.  He continued that if this same                                                                          
individual needs to return to work, they must pay this                                                                          
refund back, the employers contribution has already been                                                                        
made to the system for this individual.  He noted that this                                                                     
clause would create a consistency situation with all other                                                                      
state public employees.                                                                                                         
                                                                                                                                
Senator Phillips responded that these particular                                                                                
individuals are elected, this being the main difference,                                                                        
and he wondered if these individuals were really state                                                                          
employees.                                                                                                                      
                                                                                                                                
Mr. Bell countered that from the perspective of the Public                                                                      
Employees Retirement System, yes.                                                                                               
                                                                                                                                
Senator Phillips stated that he had a problem with this                                                                         
provision.                                                                                                                      
                                                                                                                                
SHEILA DICKMAN, President, Matsu Classified Employees                                                                           
Association testified via teleconference from Matsu.  She                                                                       
explained that she was speaking on the behalf of the Matsu                                                                      
School District employees.  She stated that this                                                                                
legislation makes many changes to the retirement system,                                                                        
more specifically Sections 37 through 40.  She added that                                                                       
there are a number of employees in Matsu with work hours                                                                        
reduced from 12 months to 10 or 11 months beginning in                                                                          
August of 2000.  She noted that these employees have two                                                                        
options under current law, they can do nothing and receive                                                                      
a partial year's credit for the rest of their work life or                                                                      
they can participate in the alternative option under SB 9.                                                                      
She advised that if they choose the latter, they must pay                                                                       
for the year 1999-2000 even though they will not receive                                                                        
any benefit for this school year.  She pointed out this was                                                                     
an oversight, which occurred in SB 9, and HB 335 will fix                                                                       
this problem.  She added that this change would also allow                                                                      
for members who are paying for this service to revoke their                                                                     
choice under some very strict guidelines if their job                                                                           
status changes in the future.                                                                                                   
                                                                                                                                
Ms. Dickman read a written statement by an employee named                                                                       
Gloria Lee as follows: "Public Employee's Retirement system                                                                     
confirms that if HB 335 does not pass, all current                                                                              
employees must choose to participate in alternative                                                                             
retirements or they will not be eligible next year.  That                                                                       
means current twelve-month employees will be required to                                                                        
pay for the 1999-2000 school year, even though they do not                                                                      
receive any benefits.  PERS states that the division has no                                                                     
choice due to the way the bill was drafted last year.  I                                                                        
thank Senator Green for her assistance on this bill and I                                                                       
support to move this bill from the Committee for the                                                                            
benefit of classified employees."                                                                                               
                                                                                                                                
Amendment #2: This conceptual amendment removes Sections 58                                                                     
& 59 from page 29, line 14 through page 31, line 21 of HB
335.                                                                                                                            
                                                                                                                                
Senator Adams objected.  He stated that these state                                                                             
employees should be treated fairly.  He continued that                                                                          
these 62 individuals have completed their public service to                                                                     
the state.                                                                                                                      
                                                                                                                                
Senator Phillips countered that this was a special                                                                              
arrangement passed a previous legislature, which changed                                                                        
from a two percent to a five percent standing per year up                                                                       
to 15 years or 75 percent of a person's salary.  He added                                                                       
that after this action was taken, in 1976, voters repealed                                                                      
this section.  He commented that at this same time, if an                                                                       
employee withdrew their money from EPORS and then wanted to                                                                     
come back into the system, the employee [indiscernible.]                                                                        
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR:  Senator Leman, Senator Donley, Senator Phillips,                                                                     
Co-Chair Torgerson.                                                                                                             
                                                                                                                                
OPPOSED:  Senator Adams, Senator Wilken, Senator P. Kelly.                                                                      
                                                                                                                                
PASS:  Senator Green.                                                                                                           
                                                                                                                                
The roll was voided to allow Senator Green to amend her                                                                         
nonvoting status.                                                                                                               
                                                                                                                                
BILL CHURCH, Retirement Supervisor, Division of Retirement                                                                      
& Benefits, Department of Administration clarified the                                                                          
issue raised by Senator Phillips regarding repayment of                                                                         
refunded contributions as noted in Section 58.  He detailed                                                                     
the way in which this legislation presently reads.  He                                                                          
continued that someone who has withdrawn his or her                                                                             
contribution and returns to work, has the opportunity to                                                                        
reinstate their credited service and repay the indebtedness                                                                     
of the reinstatement cost including interest within one                                                                         
year of the date of re-employment.  He continued that this                                                                      
section treats this group of individuals like any other                                                                         
under various state retirement systems.                                                                                         
                                                                                                                                
Senator Phillips agreed with this illustration that most                                                                        
state employees are presently at two percent for the first                                                                      
ten years, but he pointed out that a special piece of                                                                           
legislation passed in 1975, set these 62 employees at a                                                                         
five- percent benefits advantage and to that he objected.                                                                       
                                                                                                                                
Senator Donley stated that he agreed with Senator Phillips.                                                                     
He stated that these individuals are receiving an added                                                                         
benefit that no state employee has gotten since.  He noted                                                                      
that going back retroactively in this instance, would not                                                                       
be the same thing.                                                                                                              
                                                                                                                                
Mr. Bell referred to Section 59, which does not deal with                                                                       
indebtedness payments, but deals with distribution of                                                                           
member accounts under qualified domestic relation orders in                                                                     
the event of divorces.  He pointed out that this section                                                                        
would bring the State of Alaska in compliance with federal                                                                      
law.                                                                                                                            
                                                                                                                                
Senator P. Kelly asked if these individuals would                                                                               
repurchase time under the old system or under the present                                                                       
two percent system.                                                                                                             
                                                                                                                                
Mr. Bell responded that these individuals would repurchase                                                                      
as EPORS members at five percent.                                                                                               
                                                                                                                                
Senator Leman made a motion to move to divide the question                                                                      
between Section 58 and Section 59.                                                                                              
                                                                                                                                
Co-Chair Torgerson stated that Amendment #2A would be to                                                                        
delete Section 58 and Amendment #2B would be to delete                                                                          
Section 59.                                                                                                                     
                                                                                                                                
Senator Adams objected for discussion purposes.  He asked                                                                       
how many of the 62 individuals would actually buy back                                                                          
their service time.  He wondered how old these individuals                                                                      
were as well.                                                                                                                   
                                                                                                                                
Mr. Church responded that the majority of these individuals                                                                     
were between 40 to 60 years old.  He added that he did not                                                                      
have the exact numbers of how many of them would                                                                                
participate, but that it would probably be a minority.                                                                          
                                                                                                                                
A roll call vote was taken on the motion to adopt Amendment                                                                     
                                                                                                                                
IN FAVOR:  Senator P. Kelly, Senator Green, Senator                                                                             
Phillips, Senator Donley, Senator Leman, Co-Chair                                                                               
Torgerson.                                                                                                                      
                                                                                                                                
OPPOSED:  Senator Wilken, Senator Adams.                                                                                        
                                                                                                                                
The MOTION PASSED (6-2)                                                                                                         
                                                                                                                                
Senator Phillips made a motion to WITHDRAW Amendment #2B.                                                                       
                                                                                                                                
Amendment #1: This amendment adds new and deletes old                                                                           
language as follow:                                                                                                             
                                                                                                                                
The governor shall fill a [A] vacancy in an unexpired                                                                           
elective term [SHALL BE FILLED] by [ELECTION FOR A NEW                                                                          
SIX-YEAR] appointment for the remainder of the term.                                                                            
                                                                                                                                
Senator Wilken made a motion to adopt Amendment #1, and                                                                         
referred to page 15, line 18 and 19, by reading the                                                                             
following language: "A vacancy and an unexpired elected                                                                         
term shall be filled by elections for a new year term."  He                                                                     
explained that during the subcommittee budget process, this                                                                     
exact situation happened and the department was required to                                                                     
conduct an election, which cost $100,000.  He then read the                                                                     
pertinent language of Amendment #1 as noted above.                                                                              
                                                                                                                                
Co-Chair Torgerson asked if the terms of office were six                                                                        
years.                                                                                                                          
                                                                                                                                
Senator Wilken responded affirmatively and that they were                                                                       
six-year staggered terms.                                                                                                       
                                                                                                                                
Co-Chair Torgerson suggested a conceptual change to fill                                                                        
the term until the next election.                                                                                               
                                                                                                                                
Senator Leman asked if Senator Wilken had considered                                                                            
another way to fill these vacancies, such as having the                                                                         
existing board fill this vacancy rather than the governor.                                                                      
                                                                                                                                
Senator Wilken explained that the governor appoints three                                                                       
of these members and that two are elected.                                                                                      
                                                                                                                                
Senator Green suggested the addition of language, "by                                                                           
appointment until the next regularly scheduled election."                                                                       
                                                                                                                                
Mr. Bell responded that this would create a situation where                                                                     
there are no longer any staggered terms.  He added that                                                                         
this was not necessarily a bad thing, but there could                                                                           
potentially be new people re-instated every six years.                                                                          
                                                                                                                                
Co-Chair Torgerson disagreed and pointed out that                                                                               
municipalities do this type of thing all the time.  He used                                                                     
the example of appointing someone to take a position until                                                                      
the next election, remaining in this capacity for the                                                                           
remainder of this term.                                                                                                         
                                                                                                                                
Co-Chair Torgerson called an at ease at 10:05 AM and                                                                            
reconvened at 10:08 AM.                                                                                                         
                                                                                                                                
Senator Wilken made a conceptual amendment that would                                                                           
essentially allow the Governor to fill a vacancy in an                                                                          
unexpired elected term for a new six-year term until the                                                                        
next regularly scheduled election, while giving the                                                                             
Department of Legal Services the ability to conform the                                                                         
language accordingly.                                                                                                           
                                                                                                                                
Hearing no objection, the amendment to the amendment was                                                                        
adopted and Amendment #1 was AMENDED.                                                                                           
                                                                                                                                
Hearing no objection, Amendment #1 as amended, was ADOPTED.                                                                     
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #101, Side B, 9:59 AM                                                                                            
                                                                                                                                
                                                                                                                                
Senator Wilken made a motion to move HB 335, version 1-                                                                         
LS1217\M as amended from committee with individual                                                                              
recommendations and a $29,200 fiscal note from the                                                                              
Department of Administration.  Hearing no objection HB 335                                                                      
was MOVED FROM COMMITTEE.                                                                                                       
                                                                                                                                

Document Name Date/Time Subjects