Legislature(2015 - 2016)SENATE FINANCE 532
04/07/2016 05:00 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB91 | |
| SB207 || SB208 || SB210 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 205 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 91 | TELECONFERENCED | |
| += | SB 207 | TELECONFERENCED | |
| += | SB 208 | TELECONFERENCED | |
| += | SB 210 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SENATE BILL NO. 207
"An Act relating to increasing employer contributions
to the defined benefit plan in the teachers'
retirement system."
SENATE BILL NO. 208
"An Act eliminating the Alaska education grant program
and the Alaska performance scholarship program; and
providing for an effective date."
SENATE BILL NO. 210
"An Act relating to the community revenue sharing
program; changing the name of the community revenue
sharing program to the community assistance program;
and relating to the municipal property tax exemption
on the residence of a senior, a disabled veteran, and
a widow or widower of a senior or disabled veteran."
5:11:21 PM
NORM WOOTEN, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL
ADMINISTRATORS, read from a prepared statement (copy on
file):
Thank you, Madame Chair. For the record I am Norm
Wooten, executive director of the Association of
Alaska School Boards. Our member school districts will
be testifying to the expected impacts of Senate Bill
207 on their schools and students. I would like to
address the overall impacts of this legislation on
Alaska's K-12 education system.
First, let me say that the education community has
been firmly in favor of the Alaska Legislature
adopting a long-range fiscal plan to address the major
revenue problems of state government. But never did we
imagine that any bill would get serious consideration
if it proposed - like SB 207 - to transfer more than
$2 billion dollars from K-12 schools operations to the
Teachers Retirement System. And not until today were
we asked for our input on how this would affect
operations of Alaska's 500 public schools.
The actuarial report from Buck Consultants dated April
3rd calculates that if SB 207 is enacted, it will mean
the diversion of $2.1 billion over the next 23 years
from school districts to the T.R.S. Where will this
money come from? School districts do not have taxing
authority and local governments do not own oil wells.
So, the $2.1 billion will have to come from local
taxpayers and/or our children's classrooms.
That is neither wise nor fair, in my opinion. SB 207
is unwise because it borrows from our future - the
education of the next generation of Alaskans. And it's
unfair because the unfunded liability of T.R.S. was
created by actions at the state and national level,
not local school districts. Passage of SB 207 could
have many unintended consequences, among them the
layoff of teachers and the removal of other caring
adults from the lives of our children. Many schools
districts already have difficulty in recruiting
teachers. The average salary of teachers statewide
dropped 1.9 percent this year, according to our
surveys, probably because of retired teachers being
replaced by new ones. School boards have been
wrestling with tight budgets for most of a decade, but
passage of SB 207 will make that deficit a permanent
fixture for K-12 education for the next two decades. I
urge you to put this bill aside.
Co-Chair MacKinnon stated that the purpose of the
conversation was intended for the day's conversation was to
better understand how the state and local communities could
work toward paying off and meeting the obligations of the
retirement system.
5:15:33 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
presented a spreadsheet (copy on file). He stated that SB
207 would raise the rate cap on the Teachers Retirement
Employment System (TRS) employers. The current rate was
12.56 percent, and the state paid the remaining. He shared
that the bill would increase the rate cap by 6.44 percent
in the first year, and 1 percent increases for the next
three years. The new rates would be 19 percent, and
climbing to 22 percent, at the point of stabilization. He
remarked that the increased rates reduced state assistance.
The baseline projections showed that the state would pay
$110 million, and then decline, and slowly climb again. The
change in state assistance would be $46.6 million in the
first year, and increasing with the increase in payroll. He
stressed that the schools would absorb the costs. He stated
that there was additional formula funding to the schools to
help alleviate the cost. He remarked that there was a
fiscal note attached that showed a constant $33.7 million
increase paid out in the same way as the formula.
5:21:04 PM
Mr. Teal noted that the bill shifted funding from
retirement assistance to education funding.
Mr. Teal noted the fiscal notes.
5:24:15 PM
Co-Chair MacKinnon queried how much the state would cover
of the local districts' costs. She queried the cash calls
on the state for the districts. Mr. Teal replied that the
12.56 percent was the normal cost of TRS. He stated that
those normal costs referred to the cost of actually paying
the pension. He stated that the numbers assumed all the
actuarial assumptions including life expectancy and
earnings came out as projected. He asserted that those
projections were not always accurate. He remarked that both
retirement systems recently lost money in investments, and
the actuarial assumptions were changed. He stressed that
the increased cost was neither the states' or school
districts' fault. He remarked that the legislature set the
12.56 percent rate.
Co-Chair Kelly noted that the approximately $8 million per
year increase was not reflected in the chart. Mr. Teal
replied that it was not reflected in the chart.
5:28:02 PM
Co-Chair Kelly remarked that the Base Student Allocation
(BSA) was increased in 2008 to accommodate expenses to the
local districts.
Co-Chair MacKinnon queried the actuary percentage number in
the Public Employees' Retirement System (PERS). She
remarked that school districts continued to expand their
programs, even with the 12.56 percent cap. She queried the
percentage call to the state in 2016 and 2017 that was
above the 12.56 percent. Mr. Teal replied that the number
for 2016 was $122 million for school districts, and other
couple million dollars for non-school districts.
Co-Chair MacKinnon queried the actuarial rate. Mr. Teal
replied that the TRS rate was over 50 percent until the $2
billion deposit. The rates were then reduced to 30 percent,
and the April projections showed the rate under 30 percent.
He remarked that the delta between the 12.56 and 22.56
percent, the state paid a larger share of the TRS cost than
the school districts.
Co-Chair MacKinnon surmised that the percentages were
reduced because of the $2 billion cash infusion. Mr. Teal
replied in the affirmative.
Co-Chair MacKinnon stated that there was a second actuarial
analysis on the proposal. Mr. Teal agreed.
Co-Chair MacKinnon announced that health care costs had
been reduced and there was a reduction in cash calls to the
system. Mr. Teal replied that the reduction in the cash
call for FY 18 was $25 million.
Co-Chair MacKinnon urged Alaskans to be thoughtful in the
approach to this issue.
5:34:25 PM
LISA PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL
ADMINISTRATORS, ANCHORAGE (via teleconference), testified
against the legislation. She remarked that the bill had
zero public opportunity to provide input. She stressed that
the impact of the legislation would impact school districts
in a negative way. She stated that the underfunded issues
in the state system were state-created. She remarked that
there would be a turn to the municipalities to cover the
cost.
Ms. Parady continued with her testimony. She remarked that
the bill did not provide a stable situation. She reiterated
her position against the bill.
5:42:34 PM
Co-Chair Kelly encouraged the education community to
declare their opposition to the bill, rather than offering
to work together.
Co-Chair MacKinnon stated that the committee would now
discuss SB 208.
5:45:16 PM
DIANE BARRANS, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON
POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT, read from a prepared statement (copy on file):
• Students in Alaska are likely facing substantial
increases in the costs of pursuing postsecondary
education and training.
• At current year average costs of attendance at our
public university ($21,500), after receiving an APS,
recipients must find other ways and resources to cover
78 percent to 87 percent ( between $17,000 and $19,000
annually) of the cost of full-time attendance.
• The UA Scholars program has been pointed to as an
alternative; however, it covers only 14 percent
($3,000) of current year costs and as of 2013-14, only
31 percent of APS recipients also received a UA
Scholars award
• While Pell grants are available on a financial
needs-basis, because many APS recipients are from
middle-income families, less than one in five qualify
for federal needs-based grants; and,
• For students who do qualify for federal aid, the
current maximum Pell grant covers a little more than
one-quarter of UA's average annual full-time cost of
attendance
As I prepared these remarks, I did so confident that
these are issues about which you are all familiar and
have shared interest and concern. If you were not
strong proponents of education and training, you
simply would not have supported these programs through
very substantial appropriations over the past five
years. So, in concluding my testimony--my proposition
to you would be, if SB208 is to advance, that the
Legislature consider extending the phase out window
during which graduating high school seniors can earn
eligibility through the class of 2018.
That two-year extension would give student and
families advance notice of your intent to terminate.
It would also allow the Legislature to base your final
decision on a full analysis of the programs' impacts.
You could then examine whether the return on your
investments in these Alaskans is worth
institutionalizing for the long-term. This additional
time would also inform your ultimate decision, should
you conclude defunding is unavoidable, whether to
fully repeal the programs or simply shutter them but
leave program authorization in place with confidence
that the State of Alaska will, in the future, have the
financial capacity and collective will to once again
support human resource development through these
efforts.
5:56:36 PM
SAICHI OBA, ASSOCIATE VICE PRESIDENT, STUDENT AND
ENROLLMENT SERVICES, UNIVERSITY OF ALASKA (via
teleconference), testified against SB 208.
6:03:04 PM
KATHIE WASSERMAN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL
LEAGUE, testified against the legislation.
Co-Chair Kelly understood the problem with communication.
6:05:09 PM
Ms. Wasserman spoked to SB 207. She also did not take a
firm stance on SB 210. She stressed that tax payers would
shoulder the cost of the increase, because the districts
had no taxing authority. The taxing authority fell to the
municipalities. She felt that the bill would be a way to
tax the municipalities instead of the state. She remarked
that the bill would not shrink the size of government
rather it would transfer the cost of one governing
authority to another. She did not know how the rural areas
would cover the cost without reducing the classroom
opportunities. She announced that the state was the only
entity with fiduciary responsibility. The districts and
municipalities did not have a say in how the system
operated, and simply paid the bills that the state required
them to pay.
6:12:09 PM
Co-Chair MacKinnon wondered whether the local communities
benefited from the $3 billion injection into the plans. Ms.
Wasserman replied that the municipalities received nine
more years of 22 percent.
Co-Chair MacKinnon wondered whether the payments were
reduced. Ms. Wasserman responded that their payments stayed
at 22 percent.
Co-Chair Kelly noted that the statement was made that since
the 2008 deal, the districts had covered the cost of TRS.
He felt that the cost of TRS was paid through the BSA
increase in 2008.
Co-Chair MacKinnon understood the concerns with the bills.
Senator Hoffman shared that he was in the legislature at
the time of reinstitution of the revenue sharing program.
He remarked that it was a result of the state's receiving
billions of dollars. He felt that reducing the program by
50 percent and making the changes were intended to save the
program with no guarantees.
Co-Chair MacKinnon understood that there would be impacts
to individuals and local communities.
SB 207 was HEARD and HELD in committee for further
consideration.
SB 208 was HEARD and HELD in committee for further
consideration.
SB 210 was HEARD and HELD in committee for further
consideration.
6:20:22 PM
AT EASE
6:21:15 PM
RECONVENED
Co-Chair MacKinnon discussed the following day's agenda.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 91 DVSA prevention Clarke.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 91 |
| SB 91 Public Testimony Stanfill.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 91 |
| SB 91Public Testimony Cordova Family Resource Center.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 91 |
| SB 91 Public Testimony Crane.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 91 |
| SB 91 Public Testimony Support Walsh.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 91 |
| SB 91 Public Testimony Support - AWARE.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 91 |
| SB 208 One-Page APS Inforgraphic - aps-elimination.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 208 |
| SB 91 Testimony ANDVSA.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 91 |
| 040716 SB 207 4 7 16 SFC SB 207.pdfpdf.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 207 |
| SB 207 Remarks of Norm Wooten AASB.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 207 |
| SB 208 Testimony D. Barrans.pdf |
SFIN 4/7/2016 5:00:00 PM |
SB 208 |