Legislature(2007 - 2008)HOUSE FINANCE 519
03/19/2007 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Overview: Pers/trs Accounting Issues | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 19, 2007
1:40 p.m.
CALL TO ORDER
Co-Chair Chenault called the House Finance Committee meeting
to order at 1:40:47 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Les Gara
Representative Mike Hawker
Representative Reggie Joule
Representative Mike Kelly
Representative Mary Nelson
Representative Bill Thomas, Jr.
MEMBERS ABSENT
Representative Richard Foster
ALSO PRESENT
Charlene Morrison, Chief Financial Officer, Division of
Retirement and Benefits, Department of Administration;
Annette Kreitzer, Acting Commissioner, Department of
Administration
PRESENT VIA TELECONFERENCE
None
GENERAL SUBJECT(S):
^OVERVIEW: PERS/TRS ACCOUNTING ISSUES
The following overview was taken in log note format.
Handouts will be on file with the House Finance Committee
through the 25th Legislative Session, contact 465-6814.
After the 25th Legislative Session they will be available
through the Legislative Library at 465-3808.
TIME SPEAKER DISCUSSION
1:41:46 PM ANNETTE Spoke of two of the governor's bills
KREITZER, dealing with PERS/TRS issues. HB 204,
ACTING a "technical fix bill", clarifies the
COMMISSIONER, death and disability benefits for peace
DEPARTMENT OF officers and fire fighters and
ADMINISTRATION addresses IRS structural issues. HB
206 deals with accounting issues
associated with the cost share
legislation. The Alaska Municipal
League, the Alaska Retirement
Management Board, and the governor,
have recommended this accounting change
to the PERS Defined Benefit (DB) Plan.
1:43:40 PM CHARLENE Provided a handout entitled "PERS DB
MORRISON, Plan - Accounting Issues" (copy on
CHIEF file.) She addressed the purpose of the
FINANCIAL presentation - to address concerns
OFFICER, about the employer level accounting
RETIREMENT AND resulting in contribution rates not
BENEFITS being supported by employer level
accounting records, and to set the
stage to discuss a solution - Slide 2.
She discussed proposed solutions of the
cost share legislation - Slide 3.
1:45:24 PM Ms. Morrison Explained that the state would assume
65 percent of the unfunded liability at
6/30/2006.
1:45:57 PM Ms. Morrison Addressed Slide 4 - the unfunded
liability.
1:46:20 PM Ms. Morrison Explained that PERS is one system, but
two plans, the defined benefit plan and
the defined contribution retirement
plan - Slide 5.
1:46:55 PM Representative Asked if there was any deviation from
Stoltze the plan to have a Tier IV. Ms.
Kreitzer replied there is no change of
plan.
1:47:52 PM Ms. Morrison Reported that the PERS DB plan has no
impact on TRS, benefits paid to
members, PERS as a whole, or PERS
Defined Contribution Plan - Slide 6.
1:48:55 PM Ms. Morrison Reviewed the Agent Multiple Employer
Plan - Slide 7.
1:49:33 PM Ms. Morrison Related components of Alaska Statutes -
Slide 8.
1:50:08 PM Ms. Morrison Continued on Slide 9 with statute
information.
1:50:31 PM Ms. Morrison Explained the calculation where assets,
minus liabilities, equals a surplus, or
unfunded liability - Slide 10.
1:51:14 PM Ms. Morrison Described how employer contributions
are accounted for in two separate
accounts - Slide 11.
1:52:03 PM Ms. Morrison Explained Slide 12 - Retiree Reserve
Account funding sources.
1:52:36 PM Ms. Morrison Addressed Slide 13 - How transfers are
calculated.
1:53:12 PM Ms. Morrison Explained Slide 14 - the allocation
process.
1:53:41 PM Ms. Morrison Explained Slide 15 - an allocation
example.
1:54:12 PM Ms. Morrison Continued with Slides 16 and 17 to show
the allocation process. She explained
the transfer from the employer
contribution account into the
retirement reserve account - Slide 18.
1:55:35 PM Ms. Morrison Explained Slide 19 - fully funding the
retiree reserve account. She spoke of
the various ways an employer can be
impacted.
1:56:35 PM Ms. Morrison Discussed the effect of both the
allocation and transfer process - Slide
20.
1:57:18 PM Ms. Morrison Addressed how the liabilities are
calculated - Slide 21.
1:58:00 PM Ms. Morrison Gave an example of liability allocation
- Slides 22 and 23. She termed it an
extreme example.
1:59:45 PM Ms. Morrison Addressed the impact on contribution
rates - Slide 24. The unfunded
liability is the basis of the past
service cost portion of the employer's
contribution rate.
2:00:29 PM Ms. Morrison Summarized the proposed solution -
Slide 25. The PERS DB plan would align
with TRS, is supported by ARMB, AML,
and the governor, and is simpler to
administer.
2:01:57 PM Representative Question the role of pension obligation
Gara bonds.
2:02:52 PM Ms. Kreitzer Replied that scenarios will be provided
at a later date regarding pension
obligation bonds.
2:04:09 PM Co-Chair Commented that members of the committee
Chenault have bills regarding PERS/TRS. This
issue will come before the committee at
a later date.
2:05:36 PM Adjourn.
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