Legislature(2015 - 2016)BILL RAY CENTER 208
06/18/2016 01:00 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB4002 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB4002 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
FOURTH SPECIAL SESSION
June 18, 2016
1:12 p.m.
1:12:59 PM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 1:12 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Brodie Anderson, Staff, Representative Steve Thompson; John
Boucher, Deputy Commissioner, Department of Administration;
Cori Mills, Assistant Attorney General, Department of Law;
Representative Lora Reinbold; Representative Mike Chenault;
Representative Gabrielle LeDoux; Representative Paul
Seaton; Representative Charisse Millett; Representative Liz
Vasquez; Senator Anna MacKinnon.
PRESENT VIA TELECONFERENCE
Joan Wilkerson, Assistant Attorney General, Department of
Law; Jake Metcalfe, Executive Director, Public Safety
Employees Association, Anchorage.
SUMMARY
HB 4002 INS. FOR DEPENDS. OF DECEASED FIRE/POLICE
CSHB 4002(FIN) was REPORTED out of committee with
a "do pass" recommendation and with one new
forthcoming fiscal impact note from the
Department of Administration and one previously
published zero fiscal note: FN1 (ADM).
HOUSE BILL NO. 4002
"An Act relating to major medical insurance coverage
under the Public Employees' Retirement System of
Alaska for certain surviving spouses and dependent
children of peace officers and firefighters; and
providing for an effective date."
1:13:33 PM
Co-Chair Thompson discussed the meeting agenda.
Co-Chair Neuman MOVED to ADOPT the proposed committee
substitute for HB 4002, Work Draft 29-GH2430\H
(Wallace/Wayne, 6/17/16). There being NO OBJECTION, it was
so ordered.
BRODIE ANDERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,
explained the changes in the Committee Substitute. The bill
contained only one change on page 4, lines 16 through 19.
The change limited the benefits for dependent children to
ten years; and limited the benefits for surviving spouses
to ten years or to the point of remarriage.
Co-Chair Thompson noted that Representative Mike Chenault
was present in the audience.
Representative Guttenberg asked about the change to the
legislation. He queried the ramifications of the changes in
the committee substitute.
JOHN BOUCHER, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, explained that the change would limit
duration of benefits to a maximum ten years.
1:16:52 PM
Representative Guttenberg surmised that, previously, the
surviving spouse was entitled to more benefits than
outlined in the provision.
Mr. Boucher replied that an individual's circumstances
outlined the outcome. He shared that a Tier II or Tier III
employee would be required to pay for medical care for a
period of time; for instance if the death occurred between
year 20 and 25 of service. He remarked that, in general,
the provision would place a limit ten years on the
particular benefit.
Representative Guttenberg noted that there could be a
dependent child who was an infant, so the benefits would
not carry until they were 18-years-old. He queried the
reason for the 10-year limit, rather than what it would be
should that person retire normally.
Mr. Boucher could not speak to the reason for the change in
the legislation. He deferred the question to another party.
Representative Gara remarked that the fiscal note started
at $175,000 and increased to $220,000 in the out years. He
felt that the fiscal note reflected the best estimate of
the cost of the original bill. He queried the reason for
the 10-year limit, and wondered whether the administration
proposed the limit.
Mr. Boucher answered that it had not been an amendment put
forward by the administration. He assumed it was an attempt
to limit costs of the benefit and limit the duration of the
benefit.
Representative Gara stated that one of his concerns was
that if a trooper or firefighter died in the line of duty
and a one-year-old child only received benefits until they
were 11 or 12. He did not support that idea. He queried the
circumstances regarding typical retirement, without death,
that would allow for benefits beyond ten years.
Mr. Boucher replied that a Tier I peace officer or fire
fighter died; or an individual who was less than ten years
from retirement died; they would be given benefits as a
reflection of accumulated service.
1:20:40 PM
Co-Chair Thompson asked Co-Chair Neuman to provide some
clarification.
Co-Chair Neuman wondered whether the bill allowed for the
child to receive the insurance until adulthood. Mr. Boucher
answered that under the provision the benefit would be
discontinued after 10 years. He shared that currently, the
individuals did not receive any medical care benefits.
Representative Gara spoke about Tier I employees who had
died in the line of duty in a period that was ten years
prior to retirement, and surmised that the dependents would
be entitled to coverage.
Mr. Boucher answered that Tier I was covered at any age. He
explained Tiers II and III had to wait for retirement
eligibility in order to have access to the system-paid full
medical benefits. He furthered that Tiers II and III may be
required to pay a premium.
Representative Gara queried the circumstances that entitle
dependents and spouses to health benefits.
Mr. Boucher consulted his notes, because it was a complex
issue. He stated that current Tier I employees received
premium-free medical in the event of an occupational death.
He furthered that Tier II and III employees with 20 years
or less service had access to the system, but must pay a
premium. He explained that after the Tier II and III
employees reached retirement age, which is age 60 or 25
years of accumulated service, they would receive premium-
free medical care. He furthered that in order to have
access to the system at 100 percent premium paid, Tier IV
employees must have at least 25 years of service. He stated
that once one became Medicare age eligible or accumulate
enough service, the state would participate at the
designated rate depending upon service. He stated that,
typically, the individual would pay 30 percent of the total
premium. He summarized that there were different terms for
the different tiers.
Representative Gara expressed concern with the provision.
1:24:18 PM
Co-Chair Neuman asked whether the employees currently had
access to purchasing their own life insurance.
Mr. Boucher asked for clarification.
Co-Chair Neuman wondered whether the employees had access
to insurance policies that would cover their spouses,
should they be injured in the line of duty.
Mr. Boucher replied that many state employees and those
participating in the state's voluntary benefit programs had
access to a life insurance premium. He could not speak
categorically across all the occupations in the state.
Co-Chair Neuman asked if the organizations or unions had
the ability to develop a benefit package, which allowed for
members to pay toward the benefit package to cover their
own. Mr. Boucher answered that he imagined a union could
have that capability.
Co-Chair Neuman spoke to the cost. He thought it could be
as low as $4 or $5 per month. He queried the cost estimate.
Mr. Boucher replied that the cost depended on the benefit.
He shared that a term life policy may have a reasonable
premium of $4 or $5 per month. He imagined that a premium
may be higher for a longer duration of receiving benefits.
He remarked that there were many factors that would impact
the cost of the premium.
Co-Chair Neuman wondered whether Mr. Boucher had the
ability to negotiate the premium cost with the unions and
their contracts. Mr. Boucher responded that he negotiated
with some unions covered by the bill. He relayed that he
would negotiate with the Public Safety Employees
Association Union, which covered the Alaska State Troopers.
Co-Chair Neuman wondered whether the Alaska State Troopers
could buy into a policy. Mr. Boucher answered in the
affirmative.
Representative Wilson queried the age at which the benefits
would cease. Mr. Boucher answered that the maximum age for
dependent children was 23 in the bill. He stated that after
the age of 19, that child must continue in higher
education.
Representative Wilson queried the legality of the
retroactivity portion of the bill. Mr. Boucher deferred to
Ms. Wilkerson.
JOAN WILKERSON, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW (via teleconference), believed the question arose from
the Affordable Care Act (ACA). She remarked that the usual
age for coverage was age 26. She shared that the state's
present active employee plan covered employees' dependents
up to age 26. The statute was written to provide a benefit
pursuant to the Retiree Medical Plan (RMP), which was
exempt from ACA. The RMP covered up to age 19, or to age 23
for a child that was enrolled in full-time education.
Representative Wilson noted that the bill was retroactive
to 2013, in order to cover troopers who were killed in the
line of duty. She wondered whether there would be an issue
for those not covered before 2013.
Ms. Wilkerson replied that the Department of Law (DOL) felt
that there may be legal problems, should the retroactivity
be moved beyond 2013.
Representative Wilson asked for verification that there
would not be legal problems with the specific date that
included only some people. Ms. Wilkerson replied that the
provision would not create a legal problem because they
were creating a new benefit. She remarked that an amendment
to an existing benefit may result in a legal issue.
Vice-Chair Saddler queried the risk of lawsuits or other
legal action from Public Employees' Retirement System
(PERS) employees who would not be covered by the bill, who
have an occupational death with no access to the health
benefits for their dependents and survivors.
1:31:50 PM
Ms. Wilkerson answered that there was always a risk that
someone may sue the state. She remarked that the police and
firefighter group was separately recognized since the
inception of PERS. She remarked that there were different
approval rates and contribution rates. She did not believe
that the provision would create a risk of litigation by
recognizing a special benefit for the specific group.
Vice-Chair Saddler remarked that there was a consideration
of offering substantial benefits in the case of an unlikely
and horrible occurrence. He queried the range of existing
benefits available to the survivors and dependents of the
victims of occupational death. He specifically wondered if
there were life insurance benefits; accidental death and
dismemberment benefits; tuition assistance; or any other
benefits.
Mr. Boucher replied that there were other benefits
associated with an occupational death. He shared that there
was wage replacement, which was either 40 percent or 50
percent of the salary. He remarked that there may be a lump
sum payment associated with possible accidental death
insurance. He stated that there could be other benefits if
the employee participated in a voluntary insurance policy.
He shared that there may be other benefits that he could
not recall.
Vice-Chair Saddler asked whether an employee had to pay for
wage replacement, or was it included in a state paid
benefit. Mr. Boucher replied that the wage replacement was
an occupational death benefit for all PERS employees.
Vice-Chair Saddler surmised that a spouse or dependent
would receive 40 percent and 50 percent of the victim's
base pay. Mr. Boucher replied in the affirmative. He
explained that the benefit applied to all PERS employees.
Vice-Chair Saddler queried the time duration of the
benefit. Mr. Boucher replied that that the benefit would be
in place through the duration of that employee's projected
career until normal retirement age. The employee would then
receive a retirement benefit at the point of normal
retirement age.
Vice-Chair Saddler wondered whether the accidental death
and dismemberment benefit was an elective benefit. He also
queried the amount of the benefit.
Mr. Boucher replied that the accidental death and
dismemberment benefit was a voluntary benefit. Therefore,
the benefit was dependent on the level of coverage. He
noted that the state recently offered a voluntary benefit
package for those who participated in the supplemental
benefit system, which was a term life insurance policy. He
remarked that the policy had premiums based upon age and
the amount of insured money.
Vice-Chair Saddler queried the size of the amounts of the
benefit. He remarked that he had seen personal policies,
which were many times his salary at a low cost at a low
risk. Mr. Boucher answered that the benefit amounts ranged
from $48,000 to $300,000. He believed that at the time of
the policy enactment, the higher limit was closer to
$100,000.
Vice-Chair Saddler queried the amount range for the
accidental death and dismemberment policy.
Mr. Boucher believed that the accidental death and
dismemberment policy amount was at $48,000. He furthered
that life insurance was a higher amount.
Vice-Chair Saddler queried the limit for life insurance
policies. Mr. Boucher answered that currently it was
$300,000, but that amount was relatively new development.
He explained that until 2013 $100,000 was the limit.
Vice-Chair Saddler felt that there was a range of benefits
that were remunerative for the decedent's survivors and
beneficiaries, even without the additional benefit. Mr.
Boucher replied that there were a range of other voluntary
benefits.
Co-Chair Thompson stressed that those referenced benefits
were voluntary. Mr. Boucher agreed, and pointed out that
some benefits were paid and others were part of the
compensation package.
1:38:02 PM
Representative Gara wondered why all spouses and children
of the troopers and firefighters who were killed in the
line of duty were not treated equitably. He asked why the
bill only extended health insurance to someone who was a
survivor of someone killed in the line of duty after 2013;
rather than another year.
Co-Chair Neuman replied that the reason for the
specification was because of cost. He noted that the state
was looking at a $3.5 billion deficit. He remarked that
that the legislation may need to be reexamined in ten
years. He added that there may also be adjustments through
negotiations in union contracts.
Representative Gara requested testimony from the state
troopers. He stressed that a life ending in 2012 was as
important as a life ending in 2013.
Co-Chair Neuman wondered if prior governors had provided
assistance to the families of those who had died in the
line of duty prior to 2013. Mr. Boucher did not believe so.
He would have to review the records.
Co-Chair Neuman asked specifically about Alaska State
Troopers, and wondered whether those families were covered.
Mr. Boucher agreed to provide the information.
Representative Guttenberg noted that the state troopers and
firefighters as a specific category of state employee. He
wondered what would occur if they were divided, or adding
similar benefits to another group.
Mr. Boucher replied that it was not unprecedented to change
benefits when creating a new benefit structure. He stressed
that it was not unprecedented to change the offered
benefits to those individuals who were participating after
the date of change. He remarked that the structure would be
offered to all PERS employees, in order to maintain the
integrity of the benefit in the context of the overall
police and fire group.
1:44:12 PM
Representative Guttenberg queried the legal ramifications
for separating the police and fire group from the PERS
employees. Mr. Boucher deferred to DOL.
Co-Chair Thompson asked that Ms. Wilkerson respond to some
questions.
Ms. Wilkerson asked for a repeat of the question.
Representative Guttenberg queried the legal danger of
offering different benefits to people in one group; he also
queried the legal ramifications of mixing other singular
occupations in other groups into the group. He wondered if
there had been any rulings or lawsuits related to those
issues.
Ms. Wilkerson replied that singling out a single group in a
pension group to receive special benefits was wrong. She
stressed that private industry pensions were through
Employee Retirement Income Security Act (ERISA) prohibited
the limiting of benefits for members in the same pension.
She remarked that ERISA did not apply to the governmental
plan, therefore there were no federal law prohibitions. She
stated that the groups were divided by "Police and Fire"
and "All Others." The groups were coded with those names in
the PERS software system. She stated that maintaining the
two groups separately provided equanimity with how to award
the benefits.
Co-Chair Thompson recalled that police and fire had
different benefits and retirement length of service, which
distinguished them as a separate group. Ms. Wilkerson
answered in the affirmative.
Co-Chair Thompson stated that if the legislature tried to
bring another group under the bill it could bring legal
questions. Ms. Wilkerson replied in the affirmative.
Representative Guttenberg asked what would happen if the
group was divided. He provided a scenario of dividing the
benefit to either troopers or firefighters only. He
wondered if there was equal protection.
Ms. Wilkerson replied that the issue was more related to
the funding of the entire pension system. She shared that
the current bill applied to all police and fire that were
members of PERS. She stated a division within a group would
create the question of how to separate out a certain number
of employees receiving a benefit.
1:49:03 PM
Mr. Boucher furthered that currently the benefit was
structured by all employers paying a contribution rate to
receive the benefit. He explained that creating a benefit
structure that was not ubiquitous across the entire class
would require creating individual rate structures for each
of the benefits. He shared that benefit enhancements or
carve outs would result in portability of benefits, because
an individual may move from one PERS employer to another.
He stated that it would be difficult for the Division of
Retirement and Benefits to administer, because there would
be a separate class within the group that required creation
of a rate for the particular benefit. He stated that a very
small pool may introduce volatility for the particular
employers that belong to the benefit, because insurance
policies depended on the "law of large numbers." He
stressed that he recommended not subdividing the group, if
the retirement system was used as the vehicle to deliver
medical benefits. He remarked that using a different
vehicle to deliver medical benefits may be better. He that
it was the least risky to provide the benefits within the
confines of the existing groups.
Co-Chair Thompson recalled Representative Gara's question
about why 2013 was chosen. He surmised that choosing a year
earlier than 2013 would result in legal problems.
Ms. Wilkerson replied in the affirmative.
Representative Gara referred to a chart that included
police officers who had died in the line of duty [no title
from the Department of Administration dated June 1, 2016
(copy on file)]. He noted that there was a police officer
in Hoonah who was shot while on duty, and that police
officer had a surviving child. He remarked that, according
to the handout, that child had no medical coverage. He
wondered why that child would not be covered, when funds
were available. He queried the legal problems for covering
that police officer's child.
Ms. Wilkerson did not know the answer to the question - she
did not have the chart in front of her. She did not know
whether the Hoonah Police Department was a contributing
PERS participant. She deferred to Mr. Boucher.
Representative Gara felt that there would be no legal
problems with providing coverage for dependents of someone
who died in 2010 as opposed to 2013.
Ms. Wilkerson wondered if Representative Gara was referring
to "dropping the bill."
Representative Gara felt that the constitution would allow
the protection of a child whose parent died in the line of
duty in 2010, as it would allow the protection of a child
whose parent died in the line of duty in 2013.
Ms. Wilkerson replied that her concern was not of a
constitutional nature.
Representative Gara wanted to protect as many people as
possible. He wondered if there was any protection offered
to the child of the police officer who had been shot in
Hoonah.
Mr. Boucher replied that the individual would not be
covered by the legislation. The legislation would need an
amendment to go retroactively for a longer period.
Representative Gara wondered whether the family in Hoonah
had any medical or pension benefit. Mr. Boucher replied
that he did not know the circumstances of that family. He
felt that the family may be depending on the retroactive
date.
Representative Gara surmised that the bill would cover the
person, should the bill have a 2010 retroactive date. Mr.
Boucher did not understand the question.
Representative Gara restated his question.
Mr. Boucher responded in the affirmative. He remarked that
there were challenges in retroactively paying six or more
years of health claims. He felt that it would be
problematic to administer. He stressed that, generally,
health care systems did not pay retroactive benefits to
that degree.
1:57:28 PM
Vice-Chair Saddler understood that the essential purpose of
the bill was to take care of survivors and dependents of
public service officials who died in the line of duty
protecting Alaskans. He felt that it was a positive
purpose. He noted that some were "outraged" about why the
state did not already provide the benefits. He noted that
there were existing benefits such as life insurance, which
could pay between $50,000 and $300,000 in a lump sum at
death; accidental death and dismemberment insurance, which
could pay a lump sum of $50,000 to $300,000; and, at no
cost to the spouses, they would receive between 40 and 50
percent of their deceased spouse's salary until the point
of retirement.
Mr. Boucher agreed, but remarked that he did not have a
complete inventory of all the benefits.
Vice-Chair Saddler noted that there were some bills to
benefit military veterans' survivors, which included free
tuition at the University of Alaska. He wondered whether
there were such tuition benefits for the dependents in the
legislation.
Mr. Boucher replied not that he was aware of any benefits
provided by the Division of Retirement and Benefits. He
remarked that there could be benefits through other
organizations or associations. He remarked that the
University of Alaska may provide that type of benefit.
Vice-Chair Saddler stressed that the legislature was not
"heartless" in taking care of the dependents, decedents,
and survivors.
Representative Wilson queried the point at which the ten
years would begin.
Mr. Boucher replied that at the point of the onset of the
benefit would begin the ten years of medical care
insurance. He assumed that the retroactive limit would
provide for five or six years, plus forward. He assumed
that the intent would be ten years from the onset of the
original benefit, therefore 2013 to 2023, etcetera.
Representative Wilson clarified her question. She remarked
that the state would owe all the medical costs from 2013 to
2016, and then remain a regular insurance policy. She had
originally understood the limit to only pertain to the ten
year limit beginning at the effective date, therefore 2016
to 2026. She felt that the two assumptions could not be
correct.
Co-Chair Neuman understood that currently the legislation
would not impact Tier I members, because they already
received those benefits. Mr. Boucher answered in the
affirmative. He explained that the ten-year limitation
would apply to Tiers II, III, and IV.
Co-Chair Neuman surmised that under existing PERS defined
contribution plan, no person was currently eligible for 100
percent system-paid major medical benefits. He remarked
that the draft bill allowed for 100 percent premium for
major medical benefits for eligible persons. Mr. Boucher
replied in the affirmative.
2:02:54 PM
Representative Wilson wondered if a family would be covered
to 2024, if the incident occurred in 2014. She specifically
wondered when the ten years would begin.
Ms. Wilkerson replied that the benefit would begin upon the
eligibility of the survivor starting from January 1, 2013
when the event occurred.
JAKE METCALFE, EXECUTIVE DIRECTOR, PUBLIC SAFETY EMPLOYEES
ASSOCIATION, ANCHORAGE (via teleconference), stated that
his organization represented police officers; state
troopers; airport police and fire officers in Fairbanks and
Anchorage; court service officers who policed the court
building; correctional officers in some municipal police
departments; and deputy fire marshals in the Department of
Public Safety (DPS). He stressed that some employees in his
organization were not state employees - some were local
employees. He stated that he did not have time to fully
study the committee substitute. He expressed concern with
the 10-year limit. He felt that the bill was a simple piece
of legislation that provided major medical insurance for
the survivors of police and fire fighters killed in the
line of duty. He stressed that the benefit was not the
current medical coverage, rather the benefit that was
received upon retirement. He stressed that the benefit was
less than the policy for a current employee.
Mr. Metcalfe stressed that the bill was limited to peace
officers and fire fighters, because those employees
protected the people of Alaska and worked in dangerous
conditions. He recalled quote about peace officers and fire
fighters, "Chaos is our normal." He stressed that the
benefit was specific to a unique class of public employees
whose job required dangerous circumstances where they could
be killed. He shared that 14 other states provided the
benefit, and the military also provided the benefit. The
bill had overwhelming support from all political
persuasions. He shared the former Governor Parnell
expressed support of the legislation. He remarked that Paul
Jenkins wrote a column for the Anchorage Daily News
expressing support for the legislation. He shared that the
Fairbanks News Miner editorial board wrote an editorial
urging the legislature to pass the bill. He stated that
Shannyn Moore supported the bill. He announced that Dermot
Cole wrote a column supporting the legislation. He
reiterated that there was a broad spectrum of support
across the state.
2:09:51 PM
Mr. Metcalfe shared that he provided research regarding any
legal issues related to the provisions of the bill. He
stated that no other state had been sued for providing the
benefit. He felt that the bill had minimal cost. He urged
the committee to pass the legislation. He felt that many
people in the state assumed that the benefit was already
provided to the first responders. He did not understand why
there was a limit to ten years. He shared that one office
killed had an infant child, so that child would not
continue to have coverage to adulthood. He felt there was a
small cost to covering the families of the heroes who gave
their lives protecting the people of Alaska. He reiterated
his support of the bill.
Vice-Chair Saddler wondered if his association every
bargained for the major medical benefits. Mr. Metcalfe
asked if Vice-Chair Saddler was referencing the health
insurance in the bill.
Vice-Chair Saddler replied in the affirmative.
Mr. Metcalfe replied that his association had not attempted
to negotiate the benefits. He felt that the bargaining
would be difficult, because his association represented
multiple municipalities and state employees. He stated that
the negotiations would need to occur with each contract. He
stated that bargaining required agreement from both sides.
He stressed that there was no guarantee in the
negotiations, and contracts were limited to three years. He
stated that the benefit in the bill would apply to all
employees within the PERS system. He shared that there were
many police departments in the state that did not have a
union representing them and did not have collective
bargaining, therefore those police departments would be
subject to that benefit. He noted that most employers
provided health insurance to employees in order to ensure
healthy workers. He felt that the benefit was recognition
of the work done by peace officers, correctional officers,
and firefighters.
2:16:37 PM
Vice-Chair Saddler wondered whether the major medical
benefit was more or less valuable than the current
occupational death benefit of between 40 and 50 percent of
salary.
Mr. Metcalfe did not believe a value could be placed on the
difference. He stressed that there were varying benefits
available in the occurrence of a death. He stressed that
there was no medical insurance for spouses and survivors of
a police officer or fire fighter killed in the line of
duty. He shared that his own children ranged in ages from
1-year-old to 22-years-old. He stressed that his younger
children would need medical benefits for 20 years. He felt
that the legislation outlined a valuable benefit. He hoped
that the employer would provide that benefit, should an
officer be killed in the line of duty. He reiterated that
he could not put a value on the benefit.
Representative Guttenberg noted that there were other death
benefits available for state troopers and fire fighters
that could be obtained outside of the collective bargaining
agreement. He wondered whether the association had
negotiated those benefits. He asked if there were cost
prohibitive issues.
Mr. Metcalfe asked for clarification of the question. He
wondered whether Representative Guttenberg was asked about
medical benefits or general benefits.
Representative Guttenberg stated that his question referred
to the medical benefits that the surviving family would
receive.
2:19:44 PM
Mr. Metcalfe answered that he had not looked to see if the
benefit was available. He detailed that state troopers were
a part of the Public Safety Employees' Association Health
Trust. He elaborated that a health benefit was provided
through employer and employee contributions. He noted that
not all association members were a part of the health trust
(state employees were). He reiterated contribution from the
employer and employee was required for the benefit to be
provided. He stated that without an employer contribution
he did not know if the benefit would be available to
association members beyond the ten-year time period. He
furthered that because survivors and children were not
employees of the employer he believed it would be difficult
for the benefit to be provided.
Representative Gara remarked that Mr. Metcalfe had received
earlier questions about the importance of the health
benefit. He asked if Mr. Metcalfe believed it would cause
hardship for a family if a trooper was killed in the line
of duty and the spouse and children had no health
insurance.
Co-Chair Thompson interjected there was no question about
whether the scenario would cause a hardship. He questioned
how much it would cost a family if an infant were to get
leukemia. He stressed the importance of major medical
insurance and did not believe it was necessary to debate
its value.
Representative Gara agreed that major medical insurance was
important. He noted there had been some questioning of its
importance earlier.
Co-Chair Thompson recognized Representatives Charisse
Millett, Paul Seaton, and Liz Vasquez in the room.
Co-Chair Thompson CLOSED public testimony.
Co-Chair Thompson noted that Legislative Legal Services had
notified him there was a problem in the bill that needed to
be addressed.
2:22:38 PM
AT EASE
2:46:49 PM
RECONVENED
Co-Chair Thompson MOVED to ADOPT Conceptual Amendment 1:
Delete Line 17, Page 4, which limited the dependent
child's benefits to 10 years. By eliminating this,
benefits will extend to the child until they are 19 or
23 (if in college) according to what we have heard
today.
Co-Chair Neuman OBJECTED for discussion.
Representative Gara requested to be added as a cosponsor to
the amendment.
Vice-Chair Saddler asked for a restatement of the
amendment.
Co-Chair Thompson reread the amendment:
Delete Line 17, Page 4, which limited the dependent
child's benefits to 10 years. By eliminating this,
benefits will extend to the child until they are 19 or
23 (if in college) according to what we have heard
today.
Co-Chair Neuman WITHDREW his OBJECTION. There being NO
further OBJECTION, Conceptual Amendment 1 was ADOPTED.
2:48:20 PM
Co-Chair Thompson MOVED to ADOPT Conceptual Amendment 2:
Create a new section to extend the 10 year limitation
in Section 7, which applies to the Defined
Contribution Plan, to the Defined Benefit Plan.
Co-Chair Neuman OBJECTED for discussion.
Representative Gara asked for verification that without the
amendment state employees in Tiers III and IV would not
receive the ten-year benefit.
Mr. Boucher clarified that currently the committee
substitute included a ten-year limitation, which only
applied to Tier IV. The amendment would extend the ten-year
limit across all tiers that did not receive system-paid
medical.
Co-Chair Thompson clarified the amendment addressed the
Defined Benefit Plan. Mr. Boucher agreed.
Representative Gara asked for verification that without the
amendment, the benefits for the particular group [Defined
Benefit Plan participants] would be unlimited in time or
did not exist.
Co-Chair Thompson replied in the negative. He clarified the
current committee substitute only addressed the Defined
Contribution Plan. The amendment would also include the
Defined Benefit Plan, which had been left out of the
original legislation.
Co-Chair Neuman WITHDREW his OBJECTION. There being NO
further OBJECTION, Conceptual Amendment 2 was ADOPTED.
2:50:31 PM
Co-Chair Thompson MOVED to ADOPT Amendment 1, 29-GH2430\H.3
(Wallace/Wayne, 6/18/16) (copy on file):
Page 5, line 24, through page 6, line 1:
Delete all material.
Renumber the following bill sections accordingly.
Page 6, line 13:
Delete "Sections 1-13"
Insert "Sections 1 - 12"
Page 6, line 14:
Delete "Section 14"
Insert "Section 13"
Page 6, line 15:
Delete "sec. 16"
Insert "sec. 15"
Co-Chair Neuman OBJECTED for discussion.
Co-Chair Thompson explained the amendment, which had been
brought forward by DOL, removed Section 12. He explained
the section had been a remnant from a previous version of
HB 66 [2015 legislation related to insurance for the
dependents of deceased fire and police officers], which had
recently been identified for removal.
Ms. Wilkerson addressed the amendment. She explained that
in DOL's review, it had identified Section 12 as a remnant
of a prior bill version. The section contained a provision
that had been removed due to redundancy. However, in
retrospect, DOL had determined the provision would not be
redundant, but it actually performed an essential function
in maintaining the integrity of the entire plan. Therefore,
the department requested the removal of Section 12.
Vice-Chair Saddler asked for verification that the section
(page 5, line 24 through page 6, line 1) needed to remain
in the bill, but it had not been in previous bill versions.
Ms. Wilkerson replied that she was referring to the
provision in Section 12, page 5, line 29 "[OR
29.35.892(e)]," which would be removed. She explained DOL
did not want to remove the language. She elaborated that
Section 12 had no further purpose; therefore DOL asked for
the deletion of the section.
Representative Guttenberg asked if the language "OR" in the
provision was merely the word "or." Ms. Wilkerson replied
in the affirmative.
Representative Gara asked for verification that the
department was not proposing to delete the whole AS
39.35.894 (Section 12). He surmised Amendment 1 would
delete the deletion of "[OR 29.35.892(e)]." Ms. Wilkerson
replied in the affirmative.
Vice-Chair Saddler believed the amendment deleted all of
Section 12. Mr. Boucher replied in the affirmative.
2:54:32 PM
Ms. Wilkerson replied that "the purpose of Section 12 was
that change." Therefore, it had been determined that the
section was no longer needed.
Co-Chair Neuman WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment 1 was ADOPTED.
2:55:08 PM
Co-Chair Thompson MOVED to ADOPT Amendment 2, 29-GH2430\H.4
(Wallace/Wayne, 6/18/16):
Page 4, line 2:
Delete","
Insert "and"
Co-Chair Neuman OBJECTED for discussion.
Co-Chair Thompson explained the amendment had been brought
forward by DOL. He explained that the word "and" had been
removed, which resulted in potential confusion about the
eligibility requirements for a surviving spouse to receive
a death benefit. Amendment 2 would insert the word "and"
back in.
Ms. Wilkerson relayed DOL recommended reinserting the word
"and" and removing the comma. She detailed that the
deceased member would have to be a peace officer or
firefighter and the surviving spouse would have to be
eligible to receive the death benefit. The deletion of the
word "and" would add confusion to the reader about whether
the two things had to happen for a person to become
eligible for the benefit.
Co-Chair Neuman WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment 2 was ADOPTED.
2:57:01 PM
Co-Chair Neuman MOVED to ADOPT Amendment 3, 29-GH2430\H.1
(Wallace/Wayne, 6/17/16) (copy on file):
Page 1, line 3:
Delete "peace officers and firefighters"
Insert "officers of the Alaska state troopers"
Page 2, line 25:
Delete "peace officers or firefighters"
Insert "officers of the Alaska state troopers"
Page 4, line 2:
Delete "a peace officer or firefighter"
Insert "an officer of the Alaska state troopers"
Page 4, line 5:
Delete "a peace officer or firefighter"
Insert "an officer of the Alaska state troopers"
Representative Gara OBJECTED for discussion.
Co-Chair Neuman explained the amendment tightened language
from peace officers and firefighters - which could
encompass firefighters, airport security officers,
university police officers, village public safety officers
(VPSO), and Department of Transportation and Public
Facilities commercial and inspection officers - to officers
of the Alaska State Troopers. He believed the entire topic
had arisen because of the desire to provide survivor
benefits to families of Alaska State Troopers who had died
while in the line of duty. He stated it was a very popular
offer to the individuals. He believed Alaska State Troopers
are heroes, who are willing to put their lives on the line,
which he believed was the reason there were only 400
troopers. He could understand the reason for trying to
assist their families; however, he did not believe the
individuals would be getting benefits if they were not
government or state employees. He was not aware of any
other private industry offering the benefits unless it had
been negotiated into a salary or benefits package. He
stressed the state had a $3 billion deficit. He noted the
committee continued to hear the bill would not cost "that
much"; however, budget items added up, which could result
in a $4 billion budget. He was very concerned about the
issue. He continued that it went back to trying to fight
coverage for troopers.
Co-Chair Neuman continued to address the amendment. He
believed firefighters, volunteer firefighters, and police
officers in all of the state's municipalities would be
covered under the legislation. He reasoned that one way or
another someone had to pay for the bill. Currently there
were discussions in the legislature about whether the state
could afford the 12.56 percent cap on the Teachers'
Retirement System (TRS) and the 22 percent cap in
municipalities. He relayed the bill would continue to add
to the burden of the state; he suspected the discussions
were forthcoming. He stated the cost was "upwards of
another $200 million for those other benefits - not just
these benefits here - to the state because we did tap that
I believe in 2008." He believed the bill reflected an
unfunded mandate to municipalities. He understood that a
document from Legislative Legal Services (provided as
backup to the amendment) specified the amendment may be
unconstitutional. He had spoken to the Department of
Administration (DOA) and relayed intent to ask additional
questions. He stated Mr. Boucher had conveyed the amendment
would be an administrative issue from the department's
perspective. He mentioned the Defined Benefit and Defined
Contribution Plans and Tiers I, II, III, and IV. He
specified that administratively the department would need
to have a carve-out for Alaska State Troopers. He asked if
that was the department's biggest issue with the amendment.
Mr. Boucher answered that from the perspective of the
retirement system he did not believe it was a
constitutional issue. He deferred to DOL pertaining to
constitutionality. He explained the amendment would create
a carve-out of a benefit for a subset of the existing
police/fire group, which would be a precedent setting
event. He noted that it had not been done previously
throughout the history of PERS. He did not want to discount
the event because it would require the state to set
separate employer rates for the State of Alaska or
employers with Alaska State Troopers versus municipality
employers or other entities that did not participate in
receiving the benefit.
3:02:06 PM
Co-Chair Neuman addressed DOL and relayed Mr. Boucher's
concerns about the administrative aspects of the amendment.
He asked if DOL believed there was a high risk of
municipalities suing the state if the legislature decided
to offer more benefits to Alaska State Troopers, but not to
everyone.
CORI MILLS, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,
responded that in general DOL agreed with the analysis by
Legislative Legal Services. She detailed when it came to
equal protection, it was impossible to know when someone
would sue. She could not specify the risk of a lawsuit. She
relayed the issue was more of an economic interest and DOL
did not see the amendment as raising significant legal
concerns from an equal protection perspective; however, the
specific class had been selected because peace officers and
firefighters were already set out as a category within
PERS. She furthered the category had existed for a long
time; therefore, there was less risk with the current
categories.
Co-Chair Neuman surmised DOL believed there could be issues
with law, but it did not see a significant risk to the
state. Ms. Mills answered in the affirmative.
Co-Chair Thompson observed that the amendment would remove
firefighters from the bill. He deduced the airport fire
departments entering a burning passenger plane to save
lives would not be covered.
Ms. Mills replied that the Amendment 3 would limit the
benefit to state troopers.
Representative Gara spoke in opposition to the amendment.
He noted the constitutional issue was interesting and
debatable, but it was not his present concern. He was
concerned the amendment defeated the intent of the bill. He
specified the bill aimed to grant health coverage to
surviving children and spouses of people who took dangerous
jobs that involved the clear risk of death. He stressed the
individuals included firefighters, police, and troopers. He
did not see a distinction between a trooper (who should
receive the benefit) and a police officer or firefighter
who would not get the benefit under the amendment. All of
the individuals had signed on for very dangerous jobs.
3:05:49 PM
Vice-Chair Saddler asked what the population of the covered
members was likely to be if the amendment passed. He asked
if 400 was accurate. Mr. Boucher replied that 400 was a
reasonable estimate, but he would have to follow up with
exact numbers.
Vice-Chair Saddler wondered if a group like the Public
Safety Employees' Association may sue.
Co-Chair Thompson stated did not want to speculate on
whether a specific group might sue the state.
Vice-Chair Saddler stated that it was a question about
where to draw the line. He remarked the amendment sought to
draw the line at one point, whereas the bill sought to draw
the line at a far different point. He reasoned it was fair
to consider that any state employee who may be killed in
the line of duty had no less needy dependents or survivors
than a public safety officer.
Representative Wilson stated the amendment would not
include fire service areas or firefighters (who were
contractors) or VPSOs. She stated it made the bill
difficult. She agreed that the state needed to protect
individuals in the line of fire for any reason. She
referred to university police and fire and students
(individuals who were not full-time employees); and airport
employees. She asked how many firefighters in the state
would be covered under the bill. She assumed the numerous
seasonal firefighters would not be covered.
Mr. Boucher responded that there were 97 firefighters; the
total covered population under the legislation was
approximately 3,600. The total could be divided between
peace officers and firefighters; of the 3,600 slightly
under 900 were in the firefighter category (roughly one-
quarter of the total).
3:08:44 PM
Representative Wilson asked if corrections officers were
included in the legislation. She asked for the definition.
She remarked the conversation kept referring to peace
officers and firefighters; however, the definition for
peace officers encompassed much more than police.
Mr. Boucher agreed. He consulted his notes.
Co-Chair Thompson noted that Senator Anna MacKinnon had
joined the audience.
Mr. Boucher pointed to the definition in AS 39.35.680,
which included police, chief of police, regional public
safety officers, correctional officers, correctional
superintendents, probation officers, firefighters, and fire
chiefs.
Representative Wilson wanted to make sure that they were
not only talking about police and firefighters. She
reiterated that peace officers included numerous groups.
She wanted to protect individuals in the line of duty. She
reasoned a DOT officer who got run over was in the line of
duty. She questioned whether the group in the bill should
be narrowed further or maintained at the bill's current
size. She wondered if the right thing to do was to offer
the benefit to anyone working for the state; the dependents
of the individuals would also have the same issue where
their insurance would be terminated [if the state employee
was killed on the job].
3:11:04 PM
Representative Edgmon was having trouble with the
amendment. He spoke to the entire intent of the bill, which
was to provide a benefit to the individuals who put
themselves in harm's way and may be killed. He reasoned
that duty was not restricted to state troopers. He weighed
the issue with the bill's additional cost and referred to a
roster of state employees who had been killed in the line
of duty, which represented a small number relative to the
state's 25,000 or so state employees. He stated that
thankfully it would stay the same going forward. He spoke
to what he believed was the right thing compared to the
potential incurred cost. He furthered that he did not know
that the additional cost would be prohibitively expensive
under the bill's present structure. He was struggling with
the idea of limiting the benefit to state troopers.
Representative Gattis wanted to be sure about how the bill
and amendment may affect her municipality. She asked if the
bill financially impacted municipalities. She also wondered
whether the amendment would financially impact
municipalities. She reasoned the amendment would affect the
Wasilla Police Department.
Mr. Boucher referred to page 7 of a PowerPoint presentation
titled "Alaska Department of Administration Department
Overview" dated June 14, 2016 (copy on file). He detailed
that as the bill was currently constructed, DOA projected
the cost to go to the state because it would increase the
liability of employers, but currently employer liability
was capped at 22 percent. Therefore, the bill would
increase the state assistance payment it was statutorily
obligated to pay for costs above 22 percent for PERS. He
furthered that when the rates were built there was
essentially a rate paid by the employer up to the 22
percent cap. The bill would increase the base rate and in
the absence of a cap it could increase an individual
employer rate with peace or firefighter employees.
Representative Gattis asked if the bill would increase the
rate for the Wasilla Police Department.
Mr. Boucher responded that the Wasilla Police Department
would continue to only pay 22 percent on its employees. He
elaborated that if the cap was removed or the rate
decreased below 22 percent, all of the employers with peace
and fire officers would be contributing to the benefit
versus those who were not. According to his records, the
City of Wasilla had approximately 27 peace officers who
were members of PERS. He noted there may be other peace
officers who were not members of PERS. He elaborated that
without a 22 percent cap, employers of peace and fire
employees would be contributing to the benefit.
3:16:41 PM
Representative Gattis wanted to make sure the legislature
was not increasing rates without municipalities' knowledge.
She asked how the amendment would impact municipalities.
Mr. Boucher understood the amendment's purpose would be to
limit the benefit solely to individuals employed as Alaska
State Troopers. The dynamic he had spoken about would limit
the rate increase to the State of Alaska. Currently all
peace and fire rates for all employers were equal; the
officers all fell within the same pool. The amendment would
set a new precedent that the state could provide a
different benefit under PERS. The change would require
administrative support - the payroll for the particular
employers would be different in the long-term due to the
different "benefit suite." He was concerned about setting
that precedent. He detailed in the future an employer could
argue for another unique structure. He continued that over
time employers could be divided into separate benefit pools
instead of maintaining a pool that was somewhat ubiquitous
system-wide. He added there were already different tiers
with plenty of complexity. He was concerned about opening
the door to additional complexity.
3:19:05 PM
Co-Chair Thompson spoke to his involvement in negotiated
police in fire contracts (which included wages and the
employee's insurance contribution rate) as a former mayor.
He asked if it was possible for municipalities to negotiate
survivor benefits for employees outside the scope of the
legislation. He surmised municipalities could choose to pay
for the benefits at the local level (if the amendment
passed).
Mr. Boucher responded in the affirmative. He noted he did
not have experience at the municipality level. He added the
only issue that could arise was related to current PERS
employees who may not be represented by collective
bargaining or may not have the particular arrangement
committee members were familiar with in their political
subdivision. He specified that employers could provide the
benefit if they chose.
3:20:25 PM
Representative Pruitt believed the intent of the amendment
was to cover state troopers. He referred to historical
information provided by DOA showing that firefighters
should fall under the Department of Natural Resources
(DNR); there had been three employee deaths under DNR - the
most recent being in 1993. He added he did not know whether
firefighters had been among the deceased. He reasoned time
had passed since a firefighter had potentially passed away.
He believed the amendment's intent was for the state to
take care of its employees and a municipality could decide
to extend the benefit to additional employees (e.g. the
Anchorage Police or Fire Departments) and would therefore
be responsible for paying the cost. He asked if the
amendment would allow for a local municipality to pay for
the benefit or whether the state would still have
liability.
Mr. Boucher agreed with Representative Pruitt about the
amendment's intent to not have municipal or non-state
employers contribute. He explained it would depend on how a
municipality proposed to deliver the benefit structure. He
provided a hypothetical scenario where a group of
municipalities came to the legislature in the coming year
specifying they would like to deliver the benefits through
PERS just like the state did for the troopers. He detailed
that if a 22 percent cap was in place, the municipalities
would essentially be allowed to provide the benefit at no
additional cost to them. He agreed with Representative
Pruitt's premise, provided the committee change the
delivery method of the benefit from a retirement system
contribution.
Representative Pruitt surmised if a municipality decided it
wanted to offer the benefit under PERS and the legislature
passed legislation to that effect, the bill would need to
include a provision specifying the municipality would be
responsible for the entire cost. He elaborated the state
would only be responsible for the cost up to 22 percent. He
construed if the bill passed and something happened to a
local police officer before the legislature reconvened the
following session and a municipality chose to offer
benefits independently outside of PERS, the cost would rest
entirely on the municipality. He asked about the accuracy
of his statements.
Mr. Boucher agreed. He furthered that as long as a
municipality's insurance delivery system was not PERS, the
municipality or political subdivision would bear the cost
in full.
3:25:41 PM
Representative Pruitt reiterated that unless the
legislature made a statute change, municipalities would
have the opportunity to offer the benefits outside PERS and
would bear the entire cost. He wanted to ensure the state
would not be taking on the cost. He concluded the state
would bear the burden of the costs if the legislature
passed a different statute during the next session to
include the additional employees under PERS.
Representative Gara expressed confusion about the issue. He
asked if an Anchorage police officer killed in the line of
duty would receive the benefits under the current
legislation. Mr. Boucher answered in the affirmative, as
long as the individual was covered under PERS.
Representative Gara questioned why an Anchorage police
officer would not be under PERS.
Mr. Boucher responded that in his experience, individual
participation agreements were different for municipalities.
Municipalities choose who would be covered; there may be
individuals within the police department the municipality
may have decided to not cover (e.g. a dispatcher). He
underscored that in order to receive the benefit there had
to be a connection to PERS.
Representative Gara restated his understanding that if a
police officer was killed in the line of duty they would
receive the benefits under the current legislation. He
asked for verification that the state would pay 78 percent
of the cost and the municipality would pay 22 percent.
Mr. Boucher explained that the 22 percent cap pertained to
the ongoing personal services cost built in for individuals
for PERS. The state paid the actual rate above 22 percent
in its annual payment; it was nowhere near an additional 78
percent. Under the legislation, the funds would ultimately
be paid from the retirement health trust.
3:29:16 PM
Vice-Chair Saddler understood the complexity and challenge
related to accounting. However, he did not see the
potential accounting burden as a compelling enough argument
to prevent carving out peace officers and firefighters from
the legislation. He believed the state was supposed to be
enhancing the personnel accounting system and he hoped it
had the capability to make the calculations. He stated the
amendment addressed where the line would be drawn. He
continued if the legislature was willing to exclude some
PERS employees from the benefit he did not see a compelling
argument that others could not be excluded. He believed
"hammering it out more closely to cover troopers and not
firefighters seems to be legitimate and in keeping with the
spirit of this bill." He stated the department had
testified there were occupational death benefits for all
PERS employees. He reasoned carving the benefit in the bill
out for specific employees would not leave firefighters and
others bereft of other benefits. He believed if there was
an increase in costs it would be for PERS employees that
would be borne by the state because it had agreed to take
on the expense above 22 percent of the personnel cost. He
concluded if the bill pushed the cost up, the state would
pay the expense. He wondered if the cost would be covered
from the General Fund or the retirement trust.
Mr. Boucher replied that the fiscal note proposed a
projected change in the annual state assistance payment,
which was a direct payment by the state to the retirement
trust. Generally the payment had come from the General
Fund; however, in the current iteration of the budget a
different fund source had been used in addition to general
funds.
Vice-Chair Saddler clarified that ultimately the pockets
would be the state General Fund via the retirement or state
assistance funds. He was inclined to support the amendment
due to the substantial budget challenges. He reasoned that
everything the state paid for was good for some people, but
it "came back to roost" when it came time to pay for the
services. He referred to his earlier question about whether
someone would potentially sue the state over the
differential treatment of firefighters and state troopers.
He concluded if the amendment passed they would find out if
the distinction was allowable.
3:32:09 PM
Representative Wilson asked for verification that if the
amendment passed there was nothing preventing the
municipalities from deciding how to cover their own
employees.
Mr. Boucher was not aware of any barriers municipalities
would have if they chose to try to offer the benefit to
their peace officers, firefighters, or another group.
Representative Wilson asked for verification there was
nothing stopping the legislature from changing statute and
getting out of the PERS and TRS municipalities. She
believed the legislature could elect to stop pitching in
money for the municipalities.
Mr. Boucher asked if Representative Wilson was referring to
the state assistance payment.
Representative Wilson replied in the affirmative. Mr.
Boucher answered it was a decision made by the legislature
on an annual basis.
Representative Wilson supported Amendment 3. She surmised
that without the amendment the bill would act as another
unfunded cost. She remarked that the City of North Pole had
police and firefighters on a very limited budget. She could
not currently put additional pressure on the city and would
prefer to leave it up to the city to decide.
Mr. Boucher elucidated there was currently a statutory
requirement for the legislature to fund above 22 percent.
Co-Chair Thompson asked for verification the amendment
would not change the requirement. Mr. Boucher replied in
the affirmative. He detailed no one was changing the
existing statutory requirement for the legislature to fund
the amount [above 22 percent].
Representative Wilson clarified that the legislature could
elect to change the statutory requirement. She remarked a
bill had been proposed earlier in session, which had looked
at the possibility. She continued that as the state's
deficit continued, the legislature would be considering
numerous ideas. She understood that at the current time the
bill may not be increasing costs for municipalities, but in
the future it could be. She reasoned it was a step the
municipalities could take versus having the legislature
force something on them.
3:34:54 PM
Co-Chair Thompson liked the idea. However, he was concerned
about the idea of firefighters losing their lives when
running onto a burning airplane to save lives. He
questioned not providing the benefits to individuals doing
their job to save lives.
Representative Pruitt appreciated the Co-Chair Thompson's
comments. He discussed that the legislature could decide to
take care of state employees and leave the remaining
decision up to municipalities. He addressed the amendment
and wondered if instead of carving out firefighters and
others whether it was possible to apply the benefits to
state employees, while leaving the decision to cover
municipal employees up to the municipalities. It was
slightly different than the proposed amendment, but he
wondered it would help with concerns about covering
employees within the state's purview.
3:36:48 PM
Co-Chair Neuman provided wrap-up on Amendment 3. He relayed
he was not approaching the issue "as a heartless" person
who wanted to deny coverage for people who die in the line
of duty working for the state or municipalities. He knew
municipal and state police officers were aware their jobs
were very dangerous. He believed the state did its best to
provide the best equipment and training possible. He
relayed that his first question to state troopers when
doing a ride-along was about whether they felt safe, had
the right training, sufficient backup, and the right
equipment; the answer had never been "no." He commented on
the type of vehicles they used.
Co-Chair Neuman stressed the issue was about the cost of
the tens of thousands of expenditures the state had. He
relayed the state had been adding small expenditures over
50 years, which added up and had resulted in a large
budget. He detailed the budget had become larger in the
past ten years during a period of surpluses. He reasoned it
was much easier to pass a bill with a fiscal note during
good financial times. He believed discussion on the current
concept was to ensure the state provided coverage for
Alaska State Troopers who lost their lives in the line of
duty. He was trying to limit the focus to state troopers.
He remarked the costs had grown to encompass
municipalities, firefighters, police officers, and other.
He underscored the legislature had already considered
legislation on the state's budget during the current
session; it had covered a significant amount of the non-
formula General Fund expenditures for day-to-day state
operations. He believed the legislature had cut those
services to the point where it had looked at taking cable
television out of the Alaska Pioneer Homes because it did
not believe the state could afford the $24,000 or $28,000.
He noted he did not know what else an 80-year-old would do,
but the discussions had been necessary [given the state's
deficit]. He thought the cut may have been made and the
legislature had asked the Alaska Mental Health Trust
Authority (AMHTA) to help with funding.
Co-Chair Neuman reiterated that costs continued to grow
annually. He emphasized that the cost of medical and health
insurance killing the state. He questioned how many times
individuals had heard the state's retirement system was
upside down. He underscored there was a huge debt. He asked
whether the state could afford to add additional costs to
the budget. He was committed to providing coverage for
state troopers. He detailed municipalities had the option
to purchase their own insurance, which was not very
expensive. He believed some of the costs were an additional
$4 or $5 on an insurance plan. He remarked legislation had
been introduced related to formula undesignated general
funds, which was basically Medicaid, PERS, and TRS. He
continued the state was covering upwards of $200 million.
He suspected the legislature would need to consider whether
the caps could be maintained at their current level. He
referred to the state's $3 billion deficit. He surmised the
funding was municipal revenue sharing in its own way; the
action had been implemented in 2008 when the price of oil
had been increasing and the state had been able to put
billions of dollars into savings. He underscored that the
state was no longer in that position. He remarked that
committee members had participated in many difficult
discussions on difficult legislation and the associated
costs. He remarked it would be nice to have additional
money for departments. He stressed that more was being
added to the budget than the state could afford.
Co-Chair Neuman emphasized the legislation would add more
to the cost of the state. He referenced the testimony from
the departments on constitutional issues, which he believed
had been flushed out. He added the chances of the state
getting sued were probably small. He reasoned that another
union could say it also wanted the benefits given to
troopers, which could potentially result in a loss of the
benefit for troopers. His concern was about the state's
budget. He questioned whether the $200,000 would be taken
away from the troopers the coming year when the legislature
reduced the budget. He stressed he had denied requests for
additional funds from the municipalities and others for the
past two years. He provided additional examples about
denying funding requests. He elaborated the legislature was
trying to find money for other things in dire need of
funds. For example, he did not believe there was any money
included in the budget for the state's deferred maintenance
needs on its facilities. He stressed the bill would provide
coverage for troopers, which was the original intent. He
referred to requests to provide coverage for troopers from
former Governor Parnell and others. He understood there
were state firefighters. He would accept Representative
Pruitt's proposal as a friendly amendment; however, he
remarked the state could not afford an additional burden.
He also stated that the issue could be revisited and money
could always be added later. He reiterated the money had to
come from somewhere and presently it would have to come
from savings. He added the governor wanted to spend the
Permanent Fund to cover costs.
3:45:14 PM
Co-Chair Neuman elaborated that the public had vocalized it
did not want to see money taken from the Permanent Fund. He
continued that the public had recommended cutting the cost
of state government. He did not believe the cost of
covering troopers would be significant.
Representative Wilson requested an "at ease."
3:45:58 PM
AT EASE
4:12:32 PM
RECONVENED
Co-Chair Thompson indicated that the committee had been
considering Amendment 3.
4:12:54 PM
AT EASE
4:13:21 PM
RECONVENED
Representative Wilson MOVED to AMEND Amendment 3.
Co-Chair Thompson OBJECTED for discussion.
Representative Wilson proposed changing the Amendment 3
language to "peace officers or firefighters employed by the
state" instead of [offering the benefit to] Alaska State
Troopers only.
Representative Edgmon spoke in opposition to the original
Amendment 3 and to the proposed amended form. He noted
there had been a lengthy discussion during the recent break
about the underlying amendment. He believed the amendment
would open a Pandora's Box with the entire PERS system. He
believed the amendment further exposed the bill to a
challenge by a great many participants across the state. He
feared that if the committee veered from the underlying
bill it would endanger the very benefits the committee was
trying to provide to the state troopers.
Co-Chair Neuman viewed the amendment as friendly. He noted
the state came up against lawsuits daily. He remarked the
legal system process was lengthy and if problems arose he
believed there would be time to work them out. He continued
to express concern about additional costs to the state.
4:15:42 PM
Representative Gara was unclear what the amendment to
Amendment 3 would do. He thought it was intended to cover
only state employed troopers and firefighters.
Representative Wilson answered it would also include peace
officers employed by the state. Additionally, the amendment
would mean the state would not be making the decision [to
cover additional employees] for municipalities.
Representative Gara spoke in opposition to the amendment to
Amendment 3. He saw no distinction between a municipal
firefighter or police officer killed in the line of duty
and a state employee.
Representative Pruitt asked the department why it would be
potentially problematic to try to carve out state employees
from city employees.
Ms. Mills replied that PERS was a cost-share system. She
detailed municipalities were effectively a pool and each
contributed the same rate/amount of money. She believed the
current system had been created in 2008. She addressed
carving out the state employees. She specified peace
officers and firefighters had always been in place as a
category and all others had been in place as a separate
category. The amendment to Amendment 3 proposed to add the
state as yet another category of benefits and plans, which
would have to be calculated. The change would mean the
cost-share where all peace officer and firefighters paid
in, would no longer work. The change would mean
fundamentally modify the way the retirement system worked.
Representative Pruitt surmised the issue revolved around
the state's decision to cover everything in PERS. He
reasoned the state and municipalities could be separated in
just about everything; however, the "hiccup" arose because
both were included in PERS. He detailed that municipalities
could do something on their own (separate from PERS), but
given the PERS structure, there was no differentiation
between the state and municipalities in that specific area.
Ms. Mill responded in the affirmative. The bill dealt with
PERS, which was the reason it was difficult to carve out
different groups. She detailed if a different insurance or
benefit was offered in another manner there may be other
options where distinguishing between the municipalities and
the state would be easier.
4:19:46 PM
Representative Pruitt surmised the state could carve out
the state [employees] if a new program was created outside
of PERS. He reiterated his understanding that the challenge
lay with the fact the bill specifically dealt with PERS.
Ms. Mills agreed. She noted there was a possibility
numerous alternatives existed, but they would have to be
evaluated. She restated PERS caused the issues [in relation
to the amendment to Amendment 3].
Representative Munoz remarked that for the specific
category of employees, the employee and employer in PERS
were paying the same rate. She reasoned if state troopers
were carved out of the category it would be necessary to
create a different rate structure for those employees
because it would include an additional benefit that other
employees did not have. She asked for the accuracy of her
statements.
Mr. Boucher agreed. He detailed that statutes guided the
cost-share system and the administration was reluctant to
provide a customized benefit for a specific group that was
not within the existing categories.
4:21:19 PM
Vice-Chair Saddler agreed with the intent of the amendment
to Amendment 3, but wanted to ensure he understood it. He
surmised that because PERS was a cost-sharing program
between municipal and state governments, the amendment
would lower the overall cost of the bill, but it would
require municipalities and the state to share the cost and
only state employees would receive the benefit.
Mr. Boucher responded that once the state went down the
road of providing a custom benefit for a specific group,
the state would be compelled to have a different rate
structure, which would break down the cost-share principal.
He observed the policy direction the committee seemed to be
heading towards was "you should pay for what benefits you
receive." He explained that within PERS, the benefits were
the same across the board in order for rates to be
ubiquitous no matter what employer an employee had. He
concluded the system would be fundamentally changed if a
different direction was taken.
Vice-Chair Saddler spoke to the goal of ensuring people
paid for the benefits they received. He observed that as
the current system stood, the state was actually paying for
benefits or costs that municipalities should rightly pay
(because the state had agreed to pay all costs above 22
percent). He reasoned the current system was not perfectly
equal.
Co-Chair Thompson MAINTAINED his OBJECTION to AMEND
Amendment 3.
A roll call vote was taken on the motion.
IN FAVOR: Saddler, Wilson, Neuman
OPPOSED: Edgmon, Gara, Guttenberg, Kawasaki, Munoz, Pruitt,
Gattis, Thompson
The MOTION to amend Amendment 3 FAILED (3/8).
Co-Chair Thompson returned to Amendment 3.
Representative Gara MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Wilson, Gattis, Saddler, Neuman, Thompson
OPPOSED: Edgmon, Gara, Guttenberg, Kawasaki, Munoz, Pruitt
The MOTION to adopt Amendment 3 FAILED (5/6).
4:25:10 PM
Representative Kawasaki MOVED to ADOPT Amendment 4, 29-
GH2430\H.2 (Wallace/Wayne, 6/18/16):
Page 1, following line 4:
Insert a new bill section to read:
"* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to read:
LEGISLATIVE INTENT. It is the intent of the
legislature to consider methods and mechanisms to
provide payment of death benefits to the surviving
spouses, designated beneficiaries, children, or
parents of village public safety officers and
volunteer firefighters who die during the performance
of duties."
Page 1, line 5:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 6, line 13:
Delete "Sections 1-13"
Insert "Sections 2-14"
Page 6, line 14:
Delete "Section 14"
Insert "Section 15"
Page 6, line 15:
Delete "sec. 16"
Insert "sec. 17"
Co-Chair Thompson OBJECTED for discussion.
Representative Kawasaki explained the amendment. He
believed it had been clearly expressed that people serving
in a capacity as law enforcement and working side-by-side
with law enforcement officers (e.g. VPSOs, volunteer
firefighters) were subject to the same dangers as troopers
and PERS firefighters and public safety employees. He
detailed that because the bill dealt specifically with PERS
employees, he believed it was necessary to recommend or for
the legislature to consider, some sort of parity when
providing the benefits outside of PERS.
Co-Chair Thompson thought the amendment got carried away.
He observed it pertained to surviving spouses, designated
beneficiaries, parents, VPSOs, and volunteer firefighters.
He explained the individuals were not under PERS and there
was no instrument to do so. He thought the amendment should
be researched and presented as a separate bill in the next
session.
Vice-Chair Saddler opposed the amendment. He stated there
were already methods and mechanisms for receiving the
benefit. He detailed people could purchase insurance at a
low cost. He reasoned there were existing mechanisms in
place if the goal was to conserve resources and provide
benefits for high-risk employees. He agreed that including
designated beneficiaries, parents, and children was too
expansive. He facetiously asked about including the benefit
to neighbors and close friends.
4:27:12 PM
Representative Guttenberg believed it was problematic there
was not a coordinated effort to look at the issue. He
discussed that one village organization or volunteer fire
department may offer the benefit; however, the most
advantageous way to provide insurance was through a pooling
method. The amendment did not propose anything other than
intent to look at different options and at the big picture.
He elaborated that villages, local fire departments, and
volunteer organizations did not have the ability to have a
discussion focused on the big picture. He stressed that
only the state had the ability to look at the big picture
and to bring everyone in.
Representative Wilson commented there was no way for the
amendment to fit under the bill or in PERS.
Mr. Boucher replied in the affirmative.
Representative Wilson expressed opposition to the
amendment. She believed the concept was a good idea, but
not under the current legislation.
Co-Chair Thompson MAINTAINED his OBJECTION to Amendment 4.
A roll call vote was taken on the motion.
IN FAVOR: Edgmon, Gara, Guttenberg, Kawasaki
OPPOSED: Gattis, Munoz, Pruitt, Saddler, Wilson, Neuman,
Thompson
The MOTION to adopt Amendment 4 FAILED (4/7).
4:29:11 PM
Co-Chair Neuman MOVED to REPORT CSHB 4002(FIN) as amended
out of committee with individual recommendations and the
accompanying fiscal notes. Authorization was given to
Legislative Legal Services to make any necessary technical
or conforming amendments. There being NO OBJECTION, it was
so ordered.
CSHB 4002(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one new forthcoming fiscal
impact note from the Department of Administration and one
previously published zero fiscal note: FN1 (ADM).
Co-Chair Thompson recessed the meeting to a call of the
chair [note: the meeting never reconvened].
ADJOURNMENT
4:29:58 PM
The meeting was adjourned at 4:29 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 4002 CS WORKDRAFT H.pdf |
HFIN 6/18/2016 1:00:00 PM |
HB4002 |
| HB 4002 CS WORKDRAFT H amwndments 1-4.pdf |
HFIN 6/18/2016 1:00:00 PM |
HB4002 |
| HB4002 Version Change A-H.pdf |
HFIN 6/18/2016 1:00:00 PM |
HB4002 |