Legislature(2021 - 2022)BELTZ 105 (TSBldg)

04/07/2021 01:30 PM Senate LABOR & COMMERCE

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Audio Topic
01:29:45 PM Start
01:30:54 PM Confirmation Hearing(s)
01:55:44 PM SB41
02:20:32 PM SB6
02:47:08 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees: TELECONFERENCED
Board of Certified Direct-Entry Midwives
- Tanya Kirk, Hannah St. George
Board of Veterinary Examiners - Rachel Berngartt
Board of Pharmacy - Tammy Lindemuth
Occupational Safety & Health Review Board
- Vincent Perez
Heard & Held
-- Invited & Public Testimony --
Heard & Held
-- Invited & Public Testimony --
Scheduled but Not Heard
<Pending Referral>
-- Invited & Public Testimony --
Scheduled but Not Heard
<Pending Referral>
-- Invited & Public Testimony --
Scheduled but Not Heard
<Pending Referral>
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
             SB 6-RIP FOR PUBLIC EMPLOYEES/TEACHERS                                                                         
2:20:32 PM                                                                                                                    
CHAIR  COSTELLO   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                                                               
[CSSB 6(EDC) was before the committee.]                                                                                         
2:20:46 PM                                                                                                                    
SENATOR  SCOTT   KAWASAKI,  Alaska  State   Legislature,  Juneau,                                                               
Alaska, sponsor of SB 6,  introduced the legislation paraphrasing                                                               
the following sponsor statement:                                                                                                
     Senate Bill  6 would  implement a  temporary, voluntary                                                                    
     Retirement Incentive Program  to increase state savings                                                                    
     by  allowing public  employees to  retire  up to  three                                                                    
     years early.  Long serving  public employees  are among                                                                    
     the highest paid in the  state. In many cases, pensions                                                                    
     paid to  retiring employees would  cost the  state less                                                                    
     money  than  their  current salaries.  Providing  high-                                                                    
     salaried  employees the  option to  retire early  would                                                                    
     save Alaska money through lower personnel costs.                                                                           
     SB  6  could  also   help  prevent  layoffs.  The  bill                                                                    
     presents   a  method   of   cost-cutting  and   payroll                                                                    
     reduction without  forcing anyone out of  the workforce                                                                    
     before they are  ready to retire. This  gives the State                                                                    
     of Alaska the opportunity  to reduce operating costs by                                                                    
     opening  vacancies that  enable the  placement of  more                                                                    
     junior  employees.  Retirement incentive  programs  are                                                                    
     regularly  used in  the private  sector to  efficiently                                                                    
     control  personnel  costs   through  market  incentives                                                                    
     rather than heavy-handed layoffs.                                                                                          
     Retirement  Incentive  Programs  have been  used  on  a                                                                    
     temporary  basis three  times in  Alaska's history  and                                                                    
     was last proposed in 2004.  In 1986, Senator Jim Duncan                                                                    
     estimated  savings  at  approximately  $25  million.  A                                                                    
     Legislative  Audit  of  the 1989  Retirement  Incentive                                                                    
     Program demonstrated  a savings  of $22.9  million with                                                                    
     nearly  1,764 individual  participants.  In 1996,  Rep.                                                                    
     McGuire  calculated the  state  gained  $41 million  in                                                                    
     savings through identical legislation.                                                                                     
     Senate Bill 6 is an  innovative policy option for state                                                                    
     agencies,  municipalities   and  school   districts  to                                                                    
     consider  as a  means to  reduce payroll  costs without                                                                    
CHAIR COSTELLO moved to invited testimony.                                                                                      
2:24:46 PM                                                                                                                    
DOUG  WOOLIVER,  Deputy  Administrative  Director,  Alaska  Court                                                               
system, Anchorage, Alaska, stated that  the Court System does not                                                               
have a  position on SB  6, but the  sponsor asked him  to testify                                                               
about   the  retirement   incentive  program   (RIP)  the   court                                                               
implemented  in  2016.  The  idea was  to  reduce  the  workforce                                                               
without having  to lay  off any employees.  The court  offered an                                                               
incentive  of  three  month's  salary to  anybody  who  had  been                                                               
eligible to retire for at least  three years and employees of the                                                               
Court System for at least 10  years. Of the 28 employees who were                                                               
eligible, 18 took advantage of the  RIP, which has resulted in an                                                               
annual savings  of $680,000.  The upfront  cost of  three month's                                                               
salary was about $400,000. He  acknowledged that this was a small                                                               
number compared  to PERS and  TRS, but  it accounted for  much of                                                               
the savings the court was looking for in FY16 and FY17                                                                          
MR. WOOLIVER  said the  Court System RIP  was a  little different                                                               
than SB 6. The  court did not have the ability  to change who was                                                               
eligible to retire but they did  have the authority to provide an                                                               
incentive  to those  already eligible  to retire.  It was  a good                                                               
program for  the court at  the time; it made  a lot of  sense, he                                                               
CHAIR COSTELLO asked  if the court found it  difficult to replace                                                               
the  older,  seasoned  employees  and  provide  training  to  the                                                               
MR.  WOOLIVER   replied,  the  court   did  lose   expertise  and                                                               
experience but within  a few years, everybody  had the experience                                                               
so that was not problem with the court's RIP.                                                                                   
2:29:39 PM                                                                                                                    
CHAIR COSTELLO noted that the  state was recovering from COVID-19                                                               
and asked the sponsor it he  had contemplated offering the RIP to                                                               
people  with  preexisting health  conditions.  She  asked if  the                                                               
legislation  intended  to address  the  budget  situation or  the                                                               
COVIC-19 situation.                                                                                                             
SENATOR  KAWASAKI  replied he  introduced  the  legislation in  a                                                               
previous legislature with the intention  of avoiding layoffs, but                                                               
he would acknowledge  that COVID-19 has fast-tracked  a new group                                                               
of  people  into  the  retirement  community.  He  recounted  the                                                               
requirements  to  qualify  for  this  RIP  and  pointed  out  the                                                               
employers  have the  ability to  limit the  program to  prevent a                                                               
brain  drain.  He said  the  applicable  conditions would  be  in                                                               
CHAIR  COSTELLO asked  if this  applies to  both Public  Employee                                                               
Retirement  System (PERS)  and  Teacher  Retirement System  (TRS)                                                               
SENATOR KAWASAKI answered yes.                                                                                                  
CHAIR COSTELLO asked for the number of PERS and TRS employees.                                                                  
SENATOR KAWASAKI offered to run  a report to find the information                                                               
but about  2,000 employees qualified  in each of the  1986, 1989,                                                               
and 1996 RIPs.                                                                                                                  
2:32:40 PM                                                                                                                    
SENATOR GRAY-JACKSON  stated support for  the bill and  asked for                                                               
the age limitations.                                                                                                            
SENATOR KAWASAKI  answered that  participants must have  at least                                                               
17 years of state service and be at least 50 years of age.                                                                      
CHAIR  COSTELLO asked  him to  clarify whether  that was  for the                                                               
bill  or  normal  retirement.  She noted  that  Mr.  Puckett  was                                                               
available to answer questions.                                                                                                  
SENATOR GRAY-JACKSON advised that  a firefighter reached out when                                                               
the bill  was introduced  in the  last legislature  to ask  if he                                                               
might qualify. She suggested that  she follow up with the sponsor                                                               
offline to discuss the situation.                                                                                               
2:34:09 PM                                                                                                                    
SENATOR  HOLLAND  asked   if  the  big  savings   come  from  the                                                               
difference between  the old and  new salary and that  the retiree                                                               
is paid through PERS or TRS and not the department.                                                                             
SENATOR KAWASAKI replied that is correct.                                                                                       
2:35:37 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on SB 6.                                                                                 
2:35:52 PM                                                                                                                    
RICHARD  SEWELL,  representing  self, Anchorage,  Alaska,  stated                                                               
that  as a  Tier I  PERS  employee of  a  certain age,  he has  a                                                               
personal  interest in  SB 6,  particularly the  last sentence  in                                                               
Section  1  that seems  to  require  the elimination  of  certain                                                               
position control numbers (PCN) if the employee opts for the RIP.                                                                
He  said  that language  is  troubling  because members  who  are                                                               
eligible for  a RIP typically  are senior employees who  would be                                                               
the last to be laid off  because the union layoff rules are based                                                               
on seniority.  Furthermore, these senior employees  typically are                                                               
in key  positions that commissioners  need to run  the department                                                               
so they  would be unlikely  approve those RIPS. He  suggested the                                                               
solution could be  to allow the department to have  a net loss of                                                               
one position  for every employee  that took  a RIP as  opposed to                                                               
losing the particular position. He  said he had other comments on                                                               
the bill, but the foregoing was the most important.                                                                             
CHAIR COSTELLO  said Section 1 is  uncodified law but even  if it                                                               
were law,  her reading is that  this is an option  for employers,                                                               
not a  requirement. She asked the  sponsor if he agrees  with her                                                               
reading and Mr. Sewell's comment about losing the PCNs.                                                                         
2:39:55 PM                                                                                                                    
SENATOR KAWASAKI agreed  that the Purposes and  Intent in Section                                                               
is uncodified law so there  is no requirement. The position could                                                               
be held, vacant, or eliminated.                                                                                                 
CHAIR  COSTELLO  asked if  he  agrees  that  the entire  bill  is                                                               
uncodified law.                                                                                                                 
SENATOR KAWASAKI answered  no; just Section 1  is uncodified. The                                                               
bill itself is in Sections 2-10.                                                                                                
CHAIR  COSTELLO said  she would  follow  up and  talk about  that                                                               
2:41:05 PM                                                                                                                    
CHAIR COSTELLO closed  public testimony on SB 6.  She thanked Mr.                                                               
Sewell  for  his  testimony.  She  welcomed  him  to  submit  his                                                               
comments in writing.                                                                                                            
2:41:36 PM                                                                                                                    
MR. SEWELL  said he had one  more comment relating to  Section 2,                                                               
page 3,  lines 28-31  to page 4,  lines 1-2.  Paragraph (f)(3)(B)                                                               
talks about 20 years [of credited  service] as an employee and he                                                               
wondered   if   that   was  total   time   accrued   in   various                                                               
jurisdictions. He  said he  started as a  PERS employee  with the                                                               
Municipality  of  Anchorage  and  now  works  for  Department  of                                                               
Transportation and Public  Facilities (DOTPF) but he  does not 20                                                               
years of service. He asked how his employment is counted.                                                                       
2:42:20 PM                                                                                                                    
CHAIR COSTELLO  said she reads  the bill  to mean 20  years total                                                               
with the state and it could  be in one or more jurisdictions. She                                                               
asked Senator Kawasaki if he agreed.                                                                                            
SENATOR KAWASAKI answered  yes; the employment could  be with the                                                               
state and a municipality.                                                                                                       
CHAIR  COSTELLO  asked  if  PERS  and  TRS  employment  could  be                                                               
combined to reach 20 years.                                                                                                     
SENATOR  KAWASAKI suggested  that Mr.  Puckett might  be able  to                                                               
answer the question.                                                                                                            
CHAIR COSTELLO asked Mr. Puckett to respond to the questions.                                                                   
2:43:25 PM                                                                                                                    
JIM  PUCKETT,   Deputy  Director,  Division  of   Retirement  and                                                               
Benefits, Department of  Administration, Juneau, Alaska, answered                                                               
that a combination of PERS and TRS  can be used in some cases. He                                                               
offered to provide more information in writing.                                                                                 
CHAIR COSTELLO  asked him to  send the information to  her office                                                               
and she would distribute it to the members.                                                                                     
SENATOR GRAY-JACKSON pointed  out that the savings  when there is                                                               
a  RIP is  not only  the salaries  but also  the benefits,  leave                                                               
accruals, and PERS contributions.                                                                                               
CHAIR  COSTELLO asked  Ms.  Ricci  if she  wanted  to respond  to                                                               
Senator  Gray-Jackson's  comment  about savings  in  addition  to                                                               
2:45:55 PM                                                                                                                    
EMILY RICCI,  Chief Health Administrator, Division  of Retirement                                                               
and Benefits, Department of  Administration, Juneau, Alaska, said                                                               
the division  will have  a better  idea of  the savings  once the                                                               
bill reaches the  Finance Committee and the  division analyzes it                                                               
with help from their actuaries.                                                                                                 
CHAIR  COSTELLO noted  that the  Finance Committee  was the  next                                                               
committee of referral.                                                                                                          
CHAIR COSTELLO asked the sponsor's  staff to visit the members in                                                               
their  offices  to  answer any  questions  and  address  concerns                                                               
before the next meeting. The  sectional analysis could wait until                                                               
CHAIR COSTELLO held SB 6 in committee.                                                                                          

Document Name Date/Time Subjects
SLAC GOV Appointee Tanya Kirk Board Application Redacted.pdf SL&C 4/7/2021 1:30:00 PM
SLAC GOV Appointee Tanya Kirk Resume Redacted.pdf SL&C 4/7/2021 1:30:00 PM
SLAC GOV Appointee Hannah St George Board Application Redacted.pdf SL&C 4/7/2021 1:30:00 PM
SLAC GOV Appointee Rachel Berngartt Resume Redacted.pdf SL&C 4/7/2021 1:30:00 PM
SLAC GOV Appointee Tammy Lindemuth Board Application Redacted.pdf SL&C 4/7/2021 1:30:00 PM
SLAC GOV Appointee Vincent Perez Resume Redacted.pdf SL&C 4/7/2021 1:30:00 PM
SB 41 Sponsor Statement.pdf SL&C 4/7/2021 1:30:00 PM
SB 41
SB 41 Sectional Analysis Version A.pdf SL&C 4/7/2021 1:30:00 PM
SB 41
SB 41 Presentation 4.7.21.pdf SL&C 4/7/2021 1:30:00 PM
SB 41
SB 41 Letter of Comment Premera.pdf SL&C 4/7/2021 1:30:00 PM
SB 41
CSSB 6 (EDC) Sponsor Statement Version B.pdf SL&C 4/7/2021 1:30:00 PM
SB 6
CSSB 6 (EDC) Sectional Analysis Version B.pdf SL&C 4/7/2021 1:30:00 PM
SB 6
SB 6 Letter of Support Michael Ripke.pdf SL&C 4/7/2021 1:30:00 PM
SB 6