Legislature(1997 - 1998)
03/19/1997 08:05 AM House CRA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
March 19, 1997
8:05 a.m.
MEMBERS PRESENT
Representative Ivan Ivan, Chairman
Representative Fred Dyson
Representative Scott Ogan
Representative Joe Ryan
Representative Jerry Sanders
Representative Al Kookesh
Representative Reggie Joule
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
*SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 164
"An Act providing that employment as a legislator or with the
National Education Association is not credited service under the
teachers' retirement system; prohibiting membership in the
teachers' retirement system for holders of limited certificates;
removing teachers holding limited certificates to teach Alaska
Native Language or Culture from membership in the teachers'
retirement system; and repealing a provision permitting members of
the teachers' retirement system to count unused sick leave credit
as credited service."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 164
SHORT TITLE: TEACHERS RETIREMENT: ELIGIB. & SICK LEAVE
BILL VERSION: SSHB 164
SPONSOR(S): REPRESENTATIVE(S) VEZEY
JRN-DATE JRN-PG ACTION
02/27/97 510 (H) READ THE FIRST TIME - REFERRAL(S)
02/27/97 510 (H) CRA, HES, STATE AFFAIRS
03/10/97 607 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
03/10/97 607 (H) CRA, HES, STATE AFFAIRS
03/12/97 (H) CRA AT 8:00 AM CAPITOL 124
03/12/97 (H) MINUTE(CRA)
03/19/97 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE AL VEZEY
Alaska State Legislature
State Capitol, Room 13
Juneau, Alaska 99801
Telephone: (907) 465-3719
POSITION STATEMENT: Sponsor of SSHB 164
BONNIE WILLIAMS, Legislative Assistant
Representative Pete Kelly
State Capitol, Room 411
Juneau, Alaska 99801
Telephone: (907) 465-2327
POSITION STATEMENT: Testified on SSHB 164
JOHN CYR, President
National Education Association - Alaska
114 Second Street
Juneau, Alaska 99801
Telephone: (907) 586-3090
POSITION STATEMENT: Testified on SSHB 164
RIC IANNOLINO
P.O. Box 21892
Juneau, Alaska 99801
Telephone: (907) 463-5226
POSITION STATEMENT: Testified on SSHB 164
REVA SHIRCEL, Director of Education
Tanana Chiefs Conference
122 First Avenue, Suite 600
Fairbanks, Alaska 99701
Telephone: (907) 452-8251
POSITION STATEMENT: Testified on SSHB 164
ISAAC JUNEBY
Tanana Chief Conference
122 First Avenue
Fairbanks, Alaska 99701
Telephone: (907) 452-8251
POSITION STATEMENT: Testified on SSHB 164
KEITH EVANS
Dillingham School District
P.O. Box 170
Dillingham, Alaska 99576
Telephone: (907) 842-5223
POSITION STATEMENT: Testified on SSHB 164
KRIS TIERNEY-SWORD, Teacher
Dillingham School District
P.O. Box 1128
Dillingham, Alaska 99576
Telephone: (907) 842-4848
POSITION STATEMENT: Testified on SSHB 164
BILL CHURCH, Retirement Supervisor
Division of Retirement
and Benefits
Department of Administration
P.O. Box 110203
Juneau, Alaska 99811-0203
Telephone: (907) 465-4460
POSITION STATEMENT: Testified on SSHB 164
ACTION NARRATIVE
TAPE 97-13, SIDE A
CHAIRMAN IVAN IVAN called the House Community and Regional Affairs
Standing Committee meeting to order at 8:05 a.m. Members present
at the call to order were Representatives Dyson, Sanders and
Kookesh. Representative Joule, Ryan and Ogan arrived at their
respective times: 8:06 a.m.; 8:07 a.m. and 8:09 a.m.
HB 164 - TEACHERS RETIREMENT: ELIGIB. & SICK LEAVE
CHAIRMAN IVAN indicated that the committee would consider Sponsor
Substitute for House Bill 164, "An Act providing that employment as
a legislator or with the National Education Association is not
credited service under the teachers' retirement system; prohibiting
membership in the teachers' retirement system for holders of
limited certificates; removing teachers holding limited
certificates to teach Alaska Native Language or Culture from
membership in the teachers' retirement system; and repealing a
provision permitting members of the teachers' retirement system to
count unused sick leave credit as credited service."
Number 099
REPRESENTATIVE AL VEZEY came forward as sponsor to testify on SSHB
164. He stated that this legislation stemmed from a considerable
amount of research he conducted on the pension funds, the cost of
areas where the legislature can take steps in statute to make the
state's pension fund fiducially sound and more manageable. He
noted that there were many reasons to do so including the
projection of costs for providing these benefits to employees, for
example, the cost in the Teacher's Retirement System took a
substantial jump to about 15 percent in 1997. This was because
some bad assumptions had been made and hence the rate had to be
increased. This means that about $8 or $9 million went to benefits
in 1997 in excess of what those benefits would have been in 1996.
Number 246
REPRESENTATIVE VEZEY offered that when reviewing this statute over
the years the state has granted special privileges to different
groups of individuals, particularly employers. He said it was
difficult in his mind to justify why the state would grant special
privileges, but three of these instances are addressed in this
present legislation. At one point, it was deemed that a member of
the legislature could elect to participate in the Teachers
Retirement System (TRS) rather than the Public Employees Retirement
System (PERS). The state of Alaska in this situation is still the
employer creating an equal playing field, but the cost of the TRS
system is significantly higher than the cost of the PERS
retirement, including the benefits which accrue to an employee
which is also substantially higher. He stated it was difficult to
justify why some legislators would receive a higher level of
benefits and why the public should pay more benefits for some and
not others.
Number 346
REPRESENTATIVE VEZEY continued that another section addressed in
this legislation deals with the National Education Association
(NEA) which is by statute authorized to have its employees
participate in the TRS. He thought it was difficult to understand
why the state would extend this privilege to one employer, not to
mention that the National Education Association is a lobbying
organization. He added that if the state intended to open up their
public retirement system they should open it up to all private
employers. It shouldn't be limited to a few. The clear risk to
the state is that they currently pay approximately $45 million a
year for contributions to pension benefits for employees who have
already retired. This is done so under a "past service" rate and
it's a significant amount of money. Technically this rate reflects
employers who did not pay the full cost of pension benefits that
their employees were accruing at the time they were working. Now,
current employers have to pay a percentage of current employees
wages into the retirement fund to make good the benefits for those
who have already retired. The private sector employer who is
allowed to step into and out of this retirement system have the
full option of walking away from the "past service" rate.
Number 500
REPRESENTATIVE VEZEY stated that under the TRS there are 54 school
districts who participate in this program. There are seven other
employers. This is the limit of the information he was able to
obtain from the Retirement and Benefits Division. He assumed that
one of these employers was the NEA. He has not been able to find
out who the other six are. It appears that under the state's
Limited Certificate Program for teachers that the state allows the
employers of people who teach in schools on a part-time basis who
work for another entity other than the school districts to utilize
the TRS. Because of the state's obligations to the past service
rate and other factors involved, plus the obvious potential for
abuse of the PERS by a private employer, he thought that it would
be very prudent on the legislature's part to look at eliminating
these private employers from the TRS also. He assumed these
employees work under contracts. He thought that to obligate future
generations of Alaskans to pay pension benefits per employee
whether private or public is a concern of his.
Number 632
REPRESENTATIVE VEZEY noted that the retirement system is a very
complicated subject and the concept of the past service rate paying
for benefits accrued and not funded at the time of accrual is very
complex. He said he would attempt to answer any questions. This
legislation attempts to remove the seven private sector employers
as indicated and to disallow some legislators from participating in
one retirement system versus another.
Number 702
REPRESENTATIVE FRED DYSON assumed that this legislation looks
forward, not back. He asked if it has changed the status of past
employees.
REPRESENTATIVE VEZEY answered that he would suspect this to be the
case, but not that there was quite a body of law regarding current
contract obligations. He didn't want to say for sure without
researching this issue. An employee participating in TRS under
statute now could probably not have this benefit taken away.
Number 759
REPRESENTATIVE DYSON stated based on his understanding of the past
service rate that if an employee has been participating in a
retirement system which present analysis shows was underfunded,
without enough contributions made, then the employer is in the
unenviable position of having to make more contributions now to
cover the under-funding of years past.
REPRESENTATIVE VEZEY responded that this wasn't correct. Under-
funding of pension obligations is paid for by employers assessed
against current employees payroll. It's assessed at a percent of
current payroll against current employers.
Number 826
REPRESENTATIVE DYSON asked for clarification if an employer can
choose at their own option to stop to provide funding for a retired
employee.
REPRESENTATIVE VEZEY stated that this would not be an unfair
characterization. In the case of a private sector employer, and
the only one he's been able to identify is the NEA, this employer
could unilaterally decide not to participate in PERS anymore since
they would not have any employees paying into the TRS. They would
not be assessed any amount of money for past service pension
obligations.
Number 883
REPRESENTATIVE DYSON asked what would happen to the retirement
benefits if that retired employee had assumed they would continue
to receive.
REPRESENTATIVE VEZEY responded that again this was a question
related to a large body of established law. His understanding is
that these benefits once accrued cannot be taken away. This is a
constitutional guarantee in Alaska.
Number 921
CHAIRMAN IVAN asked about Section 3 and the proposed changes to it.
REPRESENTATIVE VEZEY responed that he'd have to look at each
section specifically, but generally the statutes repealed deal with
the issues of whether legislative members can participate in the
TRS as opposed to the PERS if they are so qualified. Section 3
also refers to the special statute that allows employees of the NEA
to participate in the teacher retirement system. The present
statute does not limit this to Alaskan employees of the NEA, but
could be applied to any employee, any affiliation in the United
States. The other statute refers to a more complicated section
where they have these limited certificates that allow individuals
to teach in Alaska schools. This is also a complex area of law and
it provides that they thought their employer, a private sector
employer, other than a school district can participate in the TRS.
Number 1078
BONNIE WILLIAMS, Legislative Assistant, Representative Pete Kelly,
came forward to testify on SSHB 164. Ms. Williams from 1976 to
1991 ran the payroll system for the University of Alaska. She
noted that this was the reason she was asked to testify.
REPRESENTATIVE JOE RYAN noted that there was a portion of this bill
which interested him, a portion that deals with using sick leave
for retirement purposes. He asked, in her former capacity as
Payroll Director for the University of Alaska, for instance, where
people use this benefit, how much they use it, during what periods
of time credits are for, etc.
Number 1122
MS. WILLIAMS responded that the people on the PERS and TRS both
accrued sick leave. The people on the PERS programs became sick
and turned in sick leave hours. People on the TRS did not become
sick. It was a interesting phenomenon. Sometimes they went to the
hospital and had surgery. In these instances they couldn't avoid
being sick. The rest of the time they weren't sick. They had
twenty and twenty-five year careers without ever missing a day.
When they retired the accrued sick leave hours were turned over to
the retirement system as credited service which makes a big change
in the multiplier.
MS. WILLIAMS continued that this increased multiplier determines
how much a retired employee draws off the retirement system. This
is part of the equation of what percentage is charged the
employers. This increases the cost of the TRS to the University of
Alaska. It also increases the cost overall to all users of the
system. "If they followed the same kind of practice in other
public school systems of not reporting sick leave time, then you
had a lot of false time reporting and false credit, unearned
credit."
Number 1226
REPRESENTATIVE RYAN asked in her 18 years of experience for a rough
dollar figure to reflect the amount of people who participated in
using this sick leave for retirement credits.
MS. WILLIAMS responded that suppose there was a multiplier of 20
credited service years and this gets changed to 22. It could be
$1,000 to $2,000 a year or more for the life of an individual once
they've retired.
REPRESENTATIVE RYAN asked what amount of individuals take advantage
of this program.
MS. WILLIAMS responded that everyone that becomes vested. It isn't
something they ask for. It is a right that they have. It was
simply rolled in and became part of the credited service.
Number 1306
REPRESENTATIVE REGGIE JOULE asked that when all of this occured
whether or not a sick leave bank was being utilized.
MS. WILLIAMS stated that by the time she left service there was a
sick leave bank in place for community college teachers with
mandatory contributions. There was a voluntary sick leave bank in
place for PERS employees. She didn't know if this had changed
since. Any hours taken from an employee for a sick leave bank are
no longer theirs. These hours would no longer roll into credited
service.
Number 1387
JOHN CYR, President, National Education Association of Alaska, came
forward to testify on SSHB 164. He noted the position statement
which he submitted to the committee. He stated the NEA was
concerned with the chilling affect removing potential members of
the Legislature from TRS would have. This would set up two
separate classes of public employees. Those who are now in PERS
would get to keep their retirement, but those in TRS would have to
leave the system they are in and enter another one. NEA believed
this was patently unfair. Educators across the state have and do
make a valuable contribution to Alaska. If they choose to run for
the legislature, they should be able to continue in the retirement
system while serving in this capacity.
MR. CYR noted the section which removes NEA Alaska from the TRS.
He said they had no problem with this. The NEA has no employees in
this program except for one and this person is grandfathered, he's
been one of their employees for over twenty years. By regulation,
NEA Alaska has been out of TRS for a while. This doesn't affect
them. The NEA provides their own retirement system.
Number 1495
MR. CYR stated that the next two sections gave them real concern,
especially when the legislature proposes to remove individuals with
limited certificates from schools. These individuals are
predominately Native Language and Culture teachers, ROTC
instructors and certain vocational education teachers. He didn't
know why they would want to take those people who work in the
classroom every day with children, who in fact, the programs they
run throughout the state are seen as the most important programs in
the schools. Solid vocational education programs are in demand,
the ROTC programs provide millions of dollars in scholarships for
students who wish to continue their education, the Native Language
and Culture teachers are at the heart of many of the programs
especially in rural Alaska. It seemed patently unfair to take this
group of teachers out of the TRS program. He was at a loss to
understand why the state would want to do this. The retirement
system is sound.
Number 1576
MR. CYR continued in regards to the sick leave question. Sick
leave is an earned benefit. As a teacher he accrues 13 days a year
of sick leave just like he earns his pay. When he retires those
days of sick leave are transferred to his retirement. People will
use a benefit which they earn. If the right to apply this sick
leave to retirement is revoked people will use their sick leave.
Under this scenario districts will be on the hook to provide
substitutes and there will be a disruption in program. Teachers
will be out of the classroom. Nobody will leave this sick leave
money accrued on the table. It doesn't make economic sense to do
this. Almost all districts have sick leave banks. They are
voluntary for TRS employees, but all personal sick leave must be
used before an individual applies for hours from a sick leave bank.
Employees usually use sick leave bank hours in the case of a
catastrophic illness to avoid economic hardship.
MR. CYR summarized that the NEA thinks this is a bad bill. This
hurts people unnecessarily and they saw no reason for this bill to
continue.
Number 1699
REPRESENTATIVE RYAN pointed out that the way the system has been
set up Alaska has some basic problems from a legislative
perspective. The legislature appropriates approximately $1.3
billion to K-12 to the university every year. He noted that this
was an awful lot of money. The legislature has no control over the
benefits and wages of teachers since this is decided by local
school boards. All the legislature does is get the bill. The
legislature has all the responsibility to fund this system, but
none of the decision making. This situation needs to be addressed
since it's becoming more and more difficult to fund with declining
revenue and the lower production of oil. He understood that this
was an earned credit, but he hoped that Mr. Cyr could understand
the legislature's position.
MR. CYR stated they believe that in point of fact the ability for
people in TRS to use their sick leave credit towards retirement
will actually save the system money. If a cost benefit analysis is
undertaken he believed that this sick leave will be used whether
the individual is sick or not. If people in TRS begin to take
their sick leave while in the field, the cost of the teacher's
salary is gone, they're not in the class room but they're still
paid. Then there's the cost of the substitute added onto the
salary plus there is the disruption of the program. The way the
system works now is a cost benefit to the state. He said that he
does appreciate the cost of education and the expense of it. He
also noted that at the first year of statehood education cost 44
percent of the state budget. Now the cost of education is below 17
percent and dropping. They have made some real inroads on the cost
of education percentage wise. He stated that education may be the
best value that this state gets for its money.
Number 1870
CHAIRMAN IVAN asked what changes would need to be made to make the
system of personal leave a combination of sick leave and vacation
time.
MR. CYR responded that he didn't know that anyone in TRS gets
vacation leave. He knew that teachers don't. They work so many
days as stated in their contract, usually between 180 to 190 days,
and they are paid only for these days. The salary is spread
throughout the year if so chosen. He couldn't think of any
instance in TRS of paid vacation days so the only days outside of
regular contract days worked would be sick leave days. The
exception to this is an illness in a direct family or a death. An
individual can use up to 5 days of sick leave in this instance. If
a direct family is ill or dies out of state most districts allow 10
days of sick leave because of travel time. He didn't think there
was any other types of leave to be taken.
Number 1955
CHAIRMAN IVAN asked Mr. Cyr who made contributions to his
retirement during his tenure as President of NEA.
MR. CYR responded that this varies from district to district
depending on how the contract in each district is written. It
varies from president to president. He noted that when he was a
local president in Mat-Su he was full time release and his
association reimbursed both halves of the districts money. When
there are local release presidents, they are released either with
pay and the association reimburses the district, or they are
released without pay and the association pays them directly.
Number 2002
REPRESENTATIVE DYSON referred to the letter submitted by Mr. Cyr
regarding limited certificates and asked if these individuals had
a different kind of credential than the rest of the staff and if
so, why.
MR. CYR stated that yes, they do. First language teachers are
hired on their ability. It's what they know about the language and
culture. A number of them do not have teaching degrees. If they
do, then they are issued a type A certificate and are a regular
teacher. If they don't, they're given a limited certificate, a
type D certificate. Vocational education teachers who have gone
through an education program get a type A certificate, but those
who are recognized experts in their field, a welder for example,
get a type D certificate to teach their craft. For ROTC people,
the same applies. He didn't think there were any ROTC people in
the state who hold a type A certificate. Their expertise is very
specific.
Number 2086
REPRESENTATIVE DYSON inquired about the individuals who hold type
D certificates and asked if they are often not full time employees.
MR. CYR responded that to his knowledge, the vocational education
employees are almost all full time, employed directly by the school
district and under contract. ROTC people are full time and
employed directly by the school district. He believed that most of
the first language teachers are full time employees of the school
district, but that he could be wrong about the smaller villages.
Number 2121
REPRESENTATIVE DYSON asked if the NEA or the contracts with
districts treat all the different types of credential A through D
the same in respect to tenure.
MR. CYR responded that the law has changed. He wasn't exactly
sure. In the past type D certificates did not get tenure, but
they're evaluated on a yearly basis and added that he honestly
didn't know. The NEA treats everyone the same way, but he didn't
know about the retirement system.
Number 2159
REPRESENTATIVE SANDERS referred to the statement made by Ms.
Williams about teachers and sick leave. Ms. Williams stated that
people under PERS get sick and people under TRS don't get sick. He
asked if she meant that when teachers are sick they take off
without pay or do they come to work sick or did she literally mean,
"teachers don't get sick."
MR. CYR shared his perception of what she might have meant. If a
person is going to lose a benefit that's accrued and it's theirs,
this person will probably spend it or use it. He thought that if
they take the ability for people to apply their sick leave toward
retirement, they will spend that money. They will in fact be sick.
He noted like all of us, he's gone to work when he didn't feel
well, but if he was going to loose this benefit maybe if he got a
slight headache he might change his mind.
Number 2285
RIC IANNOLINO, private citizen, came forward to testify on SSHB
164. The section he was particularly interested in dealt with
teachers holding limited certificates to teach Alaska Native
Language and Culture. He thought they would probably run into
problems with this under federal law, especially in Native language
dominant areas. He thought it was interesting to note that the
population most affected by this section would be the Alaska Native
people. If there was a disparate impact made along with a
discrimination complaint filed at the federal level, an
investigation would probably find that Alaskan Native people would
be affected based on race. If after an investigation it was
determined that Natives predominately fill these roles, they might
have an interesting civil rights case to deal with. He didn't
understand the import of naming this particular group.
MR. IANNOLINO noted that the definition of employment under civil
rights law includes benefits. This would squarely fit into the
consideration of a disparate impact complaint he would guess.
Number 2386
CHAIRMAN IVAN said that he could talk all day about his thoughts on
the Native Language and Culture program and offered to meet with
Mr. Iannolino individually.
REPRESENTATIVE AL KOOKESH thanked Mr. Iannolino for his comments.
He appreciated his observation and agreed with them. He noted that
this was a sensitive area for all of them to look at, but for
someone such as himself, a private citizen, to make these
observations, Representative Kookesh appreciated Mr. Iannolino
taking his time to do so.
Number 2430
REVA SHIRCEL, Director of Education, Tanana Chiefs Conference,
testified via teleconference from Fairbanks on SSHB 164. The
Tanana Chiefs are opposed to the passage of SSHB 164 as much as
they are opposed to the language in the original HB 164 that was
scheduled for a hearing last week. No matter what efforts are made
to improve HB 164, the bill still demonstrates unfair and unequal
treatment towards teachers of Alaska Native Languages and Culture.
In the current version of HB 164, a bone has been thrown to
teachers of their indigenous languages in which they are allowed to
obtain limited certificates, but are prohibited from membership in
the Teachers Retirement System.
MS. SHIRCEL continued that Alaska is noted by other cultures, other
states and other countries for its rich diversity of its culture
and languages. The people of the Tanana Chief Conference (TCC)
region have great respect for their teachers of Native Language and
Culture. They have teachers who have spent their entire life
teaching others, both Native and Non-Native about the rich
diversity of their Athabascan language and culture. Ms. Shircel
noted that teachers should be treated equally and fairly.
TAPE 97-13, SIDE B
Number 000
REPRESENTATIVE VEZEY asked if the Tanana Chief Conference employed
any persons who teach in the public school system.
MS. SHIRCEL stated no.
Number 050
REPRESENTATIVE RYAN asked where the funding came from for these
teachers.
MS. SHIRCEL responded that currently they are in process of
applying for a grant from the Administration of Native Americans
which is a federal government funding to hire seven interns to
learn the language from the elders. These people hired would
attend the Yukon College in Whitehorse to learn how to teach the
language and they will be paid to do so through the ANA Grant.
They also intend to apply for other grants that would supplement
their income once the ANA Grant ended.
MS. SHIRCEL added that they in the interior are in the process of
establishing a tribal college. They have provided funding for
certain people who wanted to teach a language in specific villages
in the region and paid them out of the funds which they have in
their TCC budget. As for public schools, these generally have been
funded by Indian Education funds and Johnson-O'Malley funds and
paid to teachers of the indigenous languages.
Number 144
ISAAC JUNEBY, Tanana Chief Conference, testified via teleconference
from Fairbanks on SSHB 164. He opposed the position that since
Native teachers of Native Language, Culture or Heritage be excluded
from TRS. In every village these are the individuals that everyone
looks up to. These individuals have many years of experience and
are the experts in everyone's respective minds. Teaching the
Native languages is the way to bridge the gap between the Natives
and Non-Natives. He shared his own personal experience of teaching
Native languages. He is currently working towards obtaining his
masters degree in Northern Studies/Linguistics. He urged the
committee to vote no on this bill.
Number 244
KEITH EVANS, Dillingham School District, testified via
teleconference from Dillingham on SSHB 164. He stated that he
wished to address two parts of the bill, the first, certification.
He asked why special certification is needed. This is because
there are not certifiable people currently available to teach these
particular areas that they need teachers specifically in vocational
areas and language areas. As a result, the local communities have
deemed it necessary in order to have these classes they need to
have someone to teach them. As a result they have special teachers
who have the ability, but not the graduate credits to be
certifiable as usual. If these individuals are eliminated from the
opportunity to have the same benefits as other teachers this would
be totally unfair.
MR. EVANS said that if they were talking about fairness from the
standpoint of being able to pay their way now and in the future,
both teachers and employers pay into the retirement system. If
they are currently not paying enough to "carry the ball" for the
future, then both parties should be contributing more to do that.
Number 290
MR. EVANS stated that the second thing he wanted to address was
sick leave being applied to retirement. It would be considered an
unusual benefit to go from state to state to have the unused sick
leave apply, but he did say that this is an attractive benefit for
teachers to come to Alaska. "If you don't use them, you lose them
sort of attitude prevailing I think that it certainly will, if once
we establish the fact that you have this available to use for
retirement it is an incentive not to use them." In the bush
communities they have so few individuals available to substitute.
If there is not the incentive to have teachers apply their unused
sick leave to retirement he believed it would cost the districts
more money to find substitutes to fill in while teachers are out
sick. He then gave an example of how their sick leave bank works
in Dillingham.
Number 448
KRIS TIERNEY-SWORD, Teacher, Dillingham School District testified
via teleconference from Dillingham on SSHB 164. She wondered why
these types of public hearings are scheduled during the school day
when the potentially affected individuals cannot attend.
CHAIRMAN IVAN responded that the committee has scheduling
constraints which they must follow. He suggested that she submit
any questions or written testimony by fax.
Number 548
MS. TIERNEY-SWORD added that with a two-tier pay system frequently
being bargained for because of the lack of funds, they begin
eroding the benefits that are already in existence for new
teachers. This impacts the new hires who might be attracted to
Alaska. They will have a hard time attracting quality
professionals in light of the lower pay and the higher cost of
living.
MS. TIERNEY-SWORD continued that she had not heard any compelling
testimony that makes this bill sound like a good idea for anyone.
She questioned Representative Vezey's motives. She understood that
he had targeted NEA Alaska employees and they aren't even impacted
by this legislation. She thought it was interesting that he ran
against an ex-president of NEA Alaska, Claudia Douglas, in the last
election and Ms. Tierney-Sword knew this had gotten a little ugly
for a number of reasons. She said she would hate to think that
Representative Vezey is using his position of power in the House of
Representatives to further a personal vendetta against anyone. She
hoped that this wasn't the case.
Number 640
REPRESENTATIVE VEZEY commented that there were two areas of
confusion that seem to have arisen during testimony. The section
regarding the repeal of statutory right of teachers to turn in
their sick leave also entails the statutory right that the employer
pays both the employer contribution for this benefit and the
employee's contribution for this benefit. By taking this out of
statute they are not saying it can't be a benefit, but that it's
not statutorily mandated. This would go back to each school
district to determine a benefit to be negotiated or granted to
their teachers or not.
REPRESENTATIVE VEZEY addressed limited certificates. He noted that
a teacher is a teacher. He said he had studied the requirements to
be in TRS, but it's at the school district's discretion who is
eligible to participate in TRS. Regardless of what type of
certificate someone possesses if they are an employee of a public
employer they are eligible to participate in TRS. The existing
statute allows private sector employers to furnish contractors to
a public school and to participate as a private sector employer in
the TRS system. He believed that this was a loop-hole they should
address. He added that anyone working for a public employer and
that is a teacher under any kind of certificate is allowed to
participate in TRS, but if someone is working for a private sector
employer and they are providing free service or are under contract
to a school district, then he felt it was a legitimate public
issue. He asked if they wanted these private sector employers
participating in a public retirement system.
Number 764
CHAIRMAN IVAN stated that he had two amendments to propose to this
legislation. The first he would not offer, but the second
amendment labeled as such would delete all reference to teachers
holding limited certificates to teach Alaska Native Language or
Culture. He noted the limited amount of these teachers in the
program and the importance of keeping these languages and culture
alive was the reason this amendment was being offered.
Number 808
REPRESENTATIVE JOULE made a motion to adopt this amendment number
two which read:
Page 1, Line 4, following "certificates;":
Delete "removing teachers holding limited certificates to
teach Alaska Native Language or culture from membership in the
teachers' retirement system;"
Page 1, Line 6:
Delete all material in Section 1.
Renumber sections accordingly.
Page 2, Line 8, following "14.25.045":
Delete "14.25.048,"
Page 2, Line 9, following "14.25.220(6)(D)":
Delete "14.25.220(21)(F),"
Number 816
REPRESENTATIVE RYAN stated he wasn't clear on who actually pays the
individuals with limited certificates. If the money comes from the
federal government or by grants he asked if these individuals are
hired by the state of Alaska to perform this function. He wanted
clarification that these individuals are school district employees
paid through the K - 12 foundation formula or the whether the money
comes from another source which might mean that these people are
not technically employees of the state.
Number 869
BILL CHURCH, Retirement Supervisor, Division of Retirement and
Benefits, Department of Administration, came forward to testify on
SSHB 164. He responded that he didn't know where school districts
receive all of their funding from and how it applies. Within the
retirement system these individuals are hired as employees of the
school district. Contributions are made to the teacher retirement
system by both the employee and employer to fund their benefits.
As a note on this, in 1988, the law was established to allow Alaska
Native Language and Culture experts to participate in the
retirement system under TRS. Prior to this they were participants
under the PERS. If they were removed from TRS, they would be
enrolled in the PERS, as well as any new hires.
MR. CHURCH continued that this bill is prospective in nature.
There is a body of law tested in the Alaska Supreme Court that
guarantees benefits upon hiring and not upon eligibility for this.
Number 967
REPRESENTATIVE RYAN asked what would be the employer's contribution
under TRS and PERS. He asked if there was a substantial difference
under each of these.
MR. CHURCH responded that for about the last six to eight years the
TRS has been operating under a smooth contribution rate of 12
percent. This came into effect in 1990, when the TRS was changed,
reducing benefits but also adding the automatic post-retirement
pension adjustment which is a pre-funded cost of living increase.
At the time, this had a tendency to put upward pressure on the
contribution rate, but by putting in the smoothing rate
contributions stayed at the level of 12 percent. In the PERS each
employer is funded independently. The rate is calculated by the
actual experience of the employer. There is a tendency to have
rates that may go up and down depending on the employer and the
experience they have regarding retirements, numbers of people
drawing benefits, disabilities, deaths, etc., anything which
affects the actuarial process.
Number 1041
REPRESENTATIVE RYAN asked what the percentage rate was in PERS.
MR. CHURCH stated that he didn't have this rate. It varies each
fiscal year. He would have to calculate what the average rate is
and this is certainly calculable, but it is figured on each
individual employer and they pay this rate separately.
Number 1077
REPRESENTATIVE RYAN asked what the total dollar amount of the TRS
and he asked what the funding level was on this program.
MR. CHURCH responded that he didn't have the funding ratio, but
believed it was around 92 percent last year. It will probably go
up this year. As of last year, FY 95, there were 9,452 active
participants in this program.
Number 1100
REPRESENTATIVE RYAN asked that if he was a member of TRS and he got
elected to the legislature he noted that normally he would be
eligible for PERS. He asked as a member of TRS would he receive a
greater benefit than someone in PERS.
MR. CHURCH responded that this would certainly depend on how many
years an individual has put into each of the systems. He noted
that if someone has put in 20 years of service into PERS versus TRS
there is a greater multiplier under the PERS than under the TRS at
this point of 20 years. In PERS it's multiplied at two percent for
the first ten years, two and 1/4 percent for the next years and two
and 1/2 percent for each year over twenty. The TRS system is two
percent for the first twenty years, and 2 1/2 for each accrued year
after this as a multiplier.
Number 1150
REPRESENTATIVE RYAN asked what the disparity is between the two
systems regarding the amount of money a person would receive.
MR. CHURCH responded that this would be based on the salary that
one is paid in each system. As far as career tracks, someone in
the TRS can cover this track throughout 20 or 30 years or however
long they spend in the system. There is not a transfer so to speak
between PERS and TRS, in other words, someone cannot buy their PERS
time into the TRS to accumulate this under one retirement program.
The opposite is true as well. The only provision in the
legislature is that if someone is vested in one system and the
individual has a minimum of two years in the other system, they can
receive what's called a conditional service retirement benefit.
The salary used in the conditional benefit would be those that
would be achieved from the higher system.
MR. CHURCH continued that they could say that the benefit would be
fundamentally the same, however, retirement age differs when
someone would be eligible for that benefit. A teacher can retire
after 20 years, a PERS employee, if their a non-peace officer has
to wait until 30 years. The normal retirement age is 60 in PERS,
as well as in TRS. If a TRS member has their service interrupted
by a two to four year period while in the legislature, they will
not be able to receive a normal benefit for this period of service
until they reach the age of 60. From this aspect this would be
somewhat of a diminishment in their overall return of money over
their life expectancy.
Number 1361
REPRESENTATIVE RYAN asked if it was the same in TRS as in PERS that
the highest three years of employment figures are used as the base
to figure retirement benefits.
MR. CHURCH said that there was a slight difference. In TRS the
three highest years are used regardless of when worked. In PERS it
is three highest consecutive years whenever they were worked. This
has changed for newly hired individuals hired after July 1, 1996,
it is now the highest five consecutive years in PERS. The TRS
hasn't changed.
Number 1408
REPRESENTATIVE VEZEY referred to two comments which Mr. Church
made, one was that if they repeal this one statute with limited
certificates participating in TRS he said they would then go into
PERS. He asked why this was.
MR. CHURCH stated that permanent employees of an employer, i.e. a
school district in this case, if their position requires a
certificate and they do hold one, they are eligible for the TRS.
If they are in a position that does not require a certificate, but
they are a permanent employee of that employer, then they are
covered under the PERS, this situation defaults to the PERS.
Number 1465
REPRESENTATIVE VEZEY noted that this was not his understanding of
the law. He interpreted the law to mean that people with
certificates would qualify under TRS. He said if this was not the
case, he would like someone to explain to him why. In other words,
he didn't understand why these individuals would revert to PERS.
He stated that it was not the intent of this present legislation to
take people under the TRS program who are public employees and
enroll them in PERS. He didn't think this bill did that.
MR. CHURCH offered that in order for an individual to participate
in PERS they are required to possess a certificate along with the
fact that their position requires a certificate as well. They do
have folks with certificates in the school districts who's position
does not require a teaching certificate and these individuals are
in the PERS. This is a matter of fact of how people are situated
in the field. This legislation does not affect anyone who is
presently employed in one of these positions. For example, someone
in a TRS position with a limited certificate, teaching Alaska
Language and Culture will not be impacted by this bill. He added
that the financial impact this legislation will have on the
retirement fund will be immeasurable as far as the fund is
concerned on removing the Alaska Native Language and Culture
teachers.
Number 1561
REPRESENTATIVE VEZEY noted that several people were under the
misconception that what this legislation proposes to do is to
remove limited certificate holders from TRS. What the bill
attempts to do is to remove private sector employers from being
able to use the PERS. He stated that he doesn't understand some of
Mr. Church's testimony. He interpreted it to mean that without
this statute a person who is required to have a limited certificate
would not be able to stay in TRS they would have to participate in
PERS. He didn't think this was correct.
REPRESENTATIVE VEZEY continued that what they were attempting to
address is private sector employers using the PERS. This report
says that there are seven other employers participating in TRS
other than school districts, he noted that one of them is the NEA.
He added that they have written to Mr. Church's department and have
not heard back who the other six are.
Number 1621
MR. CHURCH offered that he would be happy to provide the identity
of these other six. He attempted to list these entities: the NEA,
Southeast Regional Resource Center, Special Education Attendance
Area in Anchorage, TRS Legislators, but he couldn't remember the
others off hand. He inquired as to whether Representative Vezey
was interested in an employer hiring someone under a personal
services contract or an outside contractor.
REPRESENTATIVE VEZEY said both.
Number 1680
MR. CHURCH stated that he didn't believe that these types of people
cannot participate in TRS anyway. They would not be considered an
employee of a given school district. They would have a separate
contract with this school district as an independent company to
perform some service, but they wouldn't be a permanent full time or
part time employee of this employer. He wasn't sure if these
situations existed.
REPRESENTATIVE VEZEY stated that his interpretation of the statute
is that this is one of the vehicles that allows employers, not
necessarily public ones, to utilize the TRS if they are employing
persons with limited certificates. The legislature has a
responsibility to determine who is accessing the states public
retirement system.
Number 1789
REPRESENTATIVE DYSON stated that in light of what he just heard he
recommended that the committee postpones further consideration on
this legislation until some of these questions get answered.
CHAIRMAN IVAN noted that it was his intention to hold the bill over
for further consideration. He then asked Mr. Church if limited
certificate teachers are enrolled in TRS, including ROTC, Native
Education, and vocational education.
Number 1877
MR. CHURCH stated that he knows of one school district where the
ROTC instructors are in TRS, but are PERS employees. He knows of
one school district where the Vocational Education teachers are in
PERS. The employers have said a teaching certificate is not
required and some of their employees have type A certificates and
some do not have a type A certificate, but yet, they are only
covered under PERS because the position itself does not require a
certificate.
Number 2008
CHAIRMAN IVAN asked that Mr. Church provide written responses to
some of the issues raised.
REPRESENTATIVE VEZEY stated that he appreciated having this bill
held over. He knew there were a lot of questions unanswered. He
suggested preparing a committee substitute for next time. He said
it seemed 90 percent of the questions pertained to the limited
certificate area. He suggested taking this out of the bill in this
committee substitute and this issue could be addressed separately
later.
Number 2105
REPRESENTATIVE DYSON said he'd be interested to see if
Representative Vezey hits his target which he understood to be that
a contractor or a non-school district employee through a private
employer are granted access to TRS.
REPRESENTATIVE VEZEY again stated he would remove all these
sections from the proposed committee substitute and then those
issues can be addressed later.
Number 2200
CHAIRMAN IVAN stated that he would withdraw amendment number two as
proposed.
REPRESENTATIVE KOOKESH stated that the Johnson-O'Malley Funds and
the Indian Education money goes directly to the school district
which is then allocated to teachers. He thought this information
would also be helpful in reflecting how these limited certificate
teachers are being funded in the school district.
REPRESENTATIVE JOULE added that last week when reviewing some
minutes of his local school board he noted a limited certificate
had been granted to someone who had been in the classroom for
years. This woman stated that she didn't want a raise, she just
wanted to teach. He noted that the reasons these people were
getting in the classroom should be looked at and commended.
Number 2452
CHAIRMAN IVAN stated that any opportunity they can give these
limited certificates to teachers he would recommend. He thought
this would go a long way to help children in the schools to respect
institutions and the authority of their elders. He indicated that
164 would be held over until the next committee meeting.
TAPE 97-14, SIDE A
Number 000
ADJOURNMENT
CHAIRMAN IVAN adjourned the meeting at 10:39 a.m.
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