Legislature(2003 - 2004)
03/18/2003 03:31 PM Senate STA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 140-BENEFITS FOR CERTAIN RIP PARTICIPANTS
CHAIR GARY STEVENS explained the House removed the effective
date clause for HB 140. He asked Mr. Guy Bell to comment on the
legislation.
MR. GUY BELL, Division of Retirement and Benefits Director,
testified via teleconference and described the legislation as
narrowly construed.
It would allow a person who has participated in a state
sponsored retirement incentive program to return to Public
Employees Retirement System (PERS) or Teachers Employees
Retirement System (TRS) employment as a State of Alaska
commissioner without losing any benefits from the retirement
incentive program (RIP). There would be no actuarial impact on
the retirement systems because the employee and the employer
paid the full cost of the RIP at retirement so the fiscal note
is zero.
The individual would also be able to participate in the waiver
process enacted by the Legislature two years ago. This means the
person could continue receiving his or her retirement benefits
by agreeing not to accrue any additional retirement service
during reemployment.
CHAIR GARY STEVENS asked him to clarify that a retired person
who took the RIP would not be eligible for additional PERS or
TRS benefits.
MR. BELL explained a person who has taken the RIP and wants to
return to state employment is subject to substantial RIP
penalties. The penalties are up to 110 percent of the benefits
they received through the RIP. They lose the incentive credit
they received by virtue of the RIP, the cost of the benefits
already received, and they waive the benefits they earned as a
result of the RIP.
CHAIR GARY STEVENS asked if anyone had ever chosen to pay back
the 110 percent.
MR. BELL thought perhaps one or two had done so. He said he
could get the exact numbers but it would be a very small
percentage.
CHAIR GARY STEVENS said that wasn't necessary, but it was
interesting that so few had taken advantage of the option.
SENATOR JOHN COWDERY asked for confirmation there would be no
additional cost to the state beyond the earned salary and
benefits.
MR. BELL said that was correct.
SENATOR FRED DYSON asked for an estimated individual amount for
a 110 percent payback.
MR. BELL said it could be tens of thousands of dollars depending
on the individual circumstances.
SENATOR DYSON then asked if it might be up to $100,000.
MR. BELL thought the amounts would probably be less than
$50,000, but individual circumstances vary tremendously.
SENATOR GRETCHEN GUESS asked him why there were penalties at all
if there was no fiscal impact.
MR. BELL replied there were three different retirement incentive
program bills and the last two in particular included RIP
penalties. Typically, a person could claim up to three years
credit in the retirement system and the individual and the
employer each paid a percentage of the full actuarial costs of
those additional three years of credit. The Legislature made a
determination that if a person chose to return to public
employment after taking the RIP, there should be some sort of
penalty. Referring to this as a RIP penalty is his terminology.
The payment is not to make the retirement system whole; rather
it's a penalty that is paid to return to public employment after
having participated in the RIP.
SENATOR GUESS asked if the fiscal note would be zero if this
were open to all teachers instead of just commissioners.
MR. BELL replied it would. HB 20 would do the same for all TRS
members who participated in a RIP and for the same reasons there
would be no actuarial impact on the retirement system.
CHAIR GARY STEVENS thanked Mr. Bell for his complete answers.
There was no further testimony.
SENATOR GUESS observed this is open to all commissioners but
it's geared for the Commissioner of Education because this
Administration is having difficulty finding commissioners. Since
there would be no fiscal impact she was unclear why teachers
weren't included as well since Alaska has a significant teacher
shortage. She noted the previous Commissioner of Education took
significant financial and retirement penalties to become
commissioner and SB 38 would do nothing to rectify that
situation.
CHAIR GARY STEVENS advised HB 20 would allow all teachers to be
hired back without having to pay the 110 percent penalty. Both
bills are quite similar and if SB 140 passes it might give more
credibility to the need to make it available to everyone.
SENATOR LYMAN HOFFMAN asked what kind of message this sends to
other commissioners who retired and participated in a RIP. He
said this person "retired, he RIPed out early, he knew the
consequences."
CHAIR GARY STEVENS said it was reasonable to make the exception
for the single position because the most likely candidates for
the Commissioner of Education job would be current or retired
superintendents.
SENATOR HOFFMAN asked if the same argument couldn't be made for
someone such as Commissioner of Public Safety William Tandeske.
Making the one exception is unfair to Commissioner Tandeske and
others returning under the same circumstance. He asked, "Why
aren't we opening it up to all commissioners?"
CHAIR GARY STEVENS asked Mr. Bell to comment on whether all
commissioners could take advantage of the waiver.
MR. BELL explained the bill would allow anyone who has
participated in a public employees or teacher retirement
incentive program to return as a commissioner of any state
agency. If a person retired without participating in a state
sponsored RIP and is returning as commissioner, they have the
waiver option available to them. He said, "In some ways you
could argue it's a level playing field."
SENATOR HOFFMAN asked which other currently hired commissioners
would be eligible.
MR. BELL said he doesn't track the retirement status of
commissioners so he wasn't aware of any others that were
currently hired who participated in a state sponsored RIP.
SENATOR GUESS commented there is an immediate effective date
with the amendment so Senator Hoffman's point still stands. She
asked when the RIP took place.
MR. BELL advised there have been several; the last was enacted
in 1996 and he thought it expired in 2000. His staff could give
a complete history of RIPs if she so desired.
SENATOR GUESS said that wasn't necessary. She asked him to
confirm that a commissioner who would have been eligible but was
hired previously could not take advantage of the waiver because
they were already hired.
MR. BELL thought she was correct because of the effective date.
People in place today wouldn't benefit; only those hired after
the bill is enacted would benefit.
SENATOR HOFFMAN commented this isn't a level playing field. It's
just level for those commissioners that are not yet hired.
Previously hired commissioners wouldn't find the playing field
level at all.
MR. BELL explained he doesn't believe there are any
commissioners hired under the current Administration who
participated in a state sponsored retirement incentive program
and therefore haven't been faced with the penalties associated
with the RIP. There may be commissioners who have been hired and
are participating in the waiver option, but he doesn't know that
for sure. This would allow newly hired commissioners who
participated in a state sponsored RIP to participate in the
waiver option that is available to people who didn't participate
in a state sponsored RIP.
CHAIR GARY STEVENS announced there was an amendment before the
committee and he would like a motion to adopt.
SENATOR COWDERY made a motion to adopt amendment #1 for HB 140.
SENATOR GUESS objected to ask a question. She asked if changing
the title wouldn't require a concurrent resolution.
SENATOR HOFFMAN replied, "If it gets to the floor you're going
to need one."
SENATOR GUESS asked whether a concurrent resolution was needed
to move the bill from committee. She said she was looking to the
senior member for an answer.
SENATOR COWDERY replied, "I don't believe so."
SENATOR HOFFMAN said a concurrent resolution would be needed
when the bill passed from the Rules Committee.
CHAIR GARY STEVENS agreed.
He asked for objections to amendment #1. There being none,
amendment #1 was adopted.
He asked for further discussion.
SENATOR GUESS said she wouldn't object to moving the bill from
committee, but she implored the Administration and the majority
to consider two points:
· First, she thought this was the appropriate vehicle to take
up HB 20. It's an important bill to take up now
particularly if there is an immediate effective date for
next year's hiring. This would be good for education today.
· Second, the previous Commissioner of Education shouldered
significant financial burden and lost years in retirement
for public service. She asked them to consider making the
bill retroactive to 1994.
There was no further discussion.
CHAIR GARY STEVENS asked for a motion to move the bill from
committee.
SENATOR COWDERY made a motion to move SCS HB 140(efd fld) (STA)
from committee with individual recommendations and zero fiscal
note. There being no objection, it was so ordered.
| Document Name | Date/Time | Subjects |
|---|