Legislature(2017 - 2018)SENATE FINANCE 532
05/07/2018 09:30 AM FINANCE
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HOUSE BILL NO. 47 "An Act requiring certain municipalities with a population that decreased by more than 25 percent between 2000 and 2010 that participate in the defined benefit retirement plan of the Public Employees' Retirement System of Alaska to contribute to the system an amount calculated by applying a rate of 22 percent of the total of all base salaries paid by the municipality to employees of the municipality who are active members of the system during a payroll period; authorizing the administrator of the defined benefit retirement plan of the Public Employees' Retirement System of Alaska to reduce the rate of interest payable by certain municipalities that are delinquent in transmitting employee and employer contributions to the retirement plan; and providing for an effective date." 9:34:02 AM Co-Chair MacKinnon read the title of the bill. She noted that the bill had been heard in committee on April 25, 2018; and the committee had opened and closed public testimony. Her office had received no proposed amendments. Vice-Chair Bishop discussed FN 4 from State Retirement Payments. He read passages from the Analysis on page 2 of the fiscal note: Conduent Human Resource Services (Conduent), the PERS actuarial consultant, has calculated the financial effects if this bill should pass. The basic result will be a shortfall in actuarially projected PERS employer contributions in the following amounts ($ are in thousands): FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 $141.0 $133.0 $124.0 $116.0 $107.0 $98.0 EXPLANATION - SUPPLEMENTAL APPROPRIATION Since the bill is effective immediately, this bill would also assume an FY2018 supplemental contribution for the impacted PERS municipalities for salary contributions that would not be collected as a result of the reduction of the salary floor for the four (4) municipalities. Conduent estimates that amount to be $148.0, and the fund source is state general funds. This bill is effective immediately and is prospective, principal amounts owed by the impacted PERS municipalities (the difference between the salary floor and the actual payroll amounts times 22% for each fiscal year) are still due for fiscal years 2009 to 2017. The interest rate to charge on these outstanding payments would be determined by the Plan Administrator. Currently, principal amounts owed by impacted PERS municipalities are as follows: Co-Chair MacKinnon added that there would be an associated estimated FY 18 supplemental budget request of $148,000. 9:37:03 AM REPRESENTATIVE NEAL FOSTER, SPONSOR, explained that the City of Galena had lost over 25 percent of its population due to the closure of the United States Air Force facility. As a result, the city lost a number of city employees; and was paying for employees it didn't have. The bill was a remedy to the situation. PAUL LABOLLE, STAFF, REPRESENTATIVE NEAL FOSTER, stated that the bill would reset the FY 08 floor for those communities that lost more than 25 percent of population between the 2000 and 2010 census. The reset date was FY 12. The bill also allowed the Public Employees' Retirement System (PERS) administrator to negotiate the interest rate on delinquent payments. Co-Chair MacKinnon summarized the purpose of the bill. Representative Foster affirmed the co-chair's summary. Co-Chair MacKinnon mused that the legislature was taking on the issues one community at a time. She thought the bill could be perceived by others as unfair. She mentioned the community of St. George, which had lost all its city employees. Representative Foster concurred with the co-chair's remarks. Vice-Chair Bishop MOVED to report HB 47 out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 47 was REPORTED out of committee with a "do pass" recommendation and with one previously published fiscal impact note: FN 4(ADM). 9:40:36 AM AT EASE 9:42:12 AM RECONVENED