Legislature(2005 - 2006)CAPITOL 106
03/14/2006 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB475 | |
| HB448 | |
| HB438 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 475 | TELECONFERENCED | |
| += | HB 448 | TELECONFERENCED | |
| += | HB 438 | TELECONFERENCED | |
| += | HB 45 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 14, 2006
8:05 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Carl Gatto, Vice Chair
Representative Jim Elkins
Representative Bob Lynn
Representative Jay Ramras
Representative Berta Gardner
Representative Max Gruenberg
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Kurt Olson
COMMITTEE CALENDAR
HOUSE BILL NO. 475
"An Act describing contributions to the health reimbursement
arrangement plan for certain teachers and public employees;
clarifying eligibility for membership in that health
reimbursement arrangement plan; relating to the 'administrator'
of the Public Employees' Retirement System of Alaska; and
providing for an effective date."
- MOVED CSHB 475(STA) OUT OF COMMITTEE
HOUSE BILL NO. 448
"An Act relating to special license plates for the Free and
Accepted Masons."
- MOVED CSHB 448(STA) OUT OF COMMITTEE
HOUSE BILL NO. 438
"An Act relating to initiative, referendum, and recall
petitions; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 45
"An Act amending the definition of the term 'lobbyist' in the
Regulation of Lobbying Act; and providing for an effective
date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 475
SHORT TITLE: PUB EMPLOYEE/TEACHER RETIREM'T/SBS/D.C.
SPONSOR(s): REPRESENTATIVE(s) SEATON
02/13/06 (H) READ THE FIRST TIME - REFERRALS
02/13/06 (H) STA, FIN
02/23/06 (H) STA AT 8:00 AM CAPITOL 106
02/23/06 (H) Heard & Held
02/23/06 (H) MINUTE(STA)
02/28/06 (H) STA AT 8:00 AM CAPITOL 106
02/28/06 (H) Scheduled But Not Heard
03/02/06 (H) STA AT 8:00 AM CAPITOL 106
03/02/06 (H) Heard & Held
03/02/06 (H) MINUTE(STA)
03/07/06 (H) STA AT 8:00 AM CAPITOL 106
03/07/06 (H) Heard & Held
03/07/06 (H) MINUTE(STA)
03/14/06 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 448
SHORT TITLE: LICENSE PLATES FOR MASONS
SPONSOR(s): REPRESENTATIVE(s) ELKINS
02/13/06 (H) READ THE FIRST TIME - REFERRALS
02/13/06 (H) STA, FIN
03/07/06 (H) STA AT 8:00 AM CAPITOL 106
03/07/06 (H) Heard & Held
03/07/06 (H) MINUTE(STA)
03/14/06 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 438
SHORT TITLE: INITIATIVE, REFERENDUM, RECALL PETITIONS
SPONSOR(s): REPRESENTATIVE(s) RAMRAS
02/08/06 (H) READ THE FIRST TIME - REFERRALS
02/08/06 (H) STA, JUD, FIN
03/09/06 (H) STA AT 8:00 AM CAPITOL 106
03/09/06 (H) -- Meeting Canceled --
03/14/06 (H) STA AT 8:00 AM CAPITOL 106
WITNESS REGISTER
KATIE SHOWS, Staff
to Representative Paul Seaton
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided clarification regarding Conceptual
Amendment 6 to HB 475, on behalf of Representative Seaton,
sponsor.
MELANIE MILLHORN, Director
Division of Retirement & Benefits
Department of Administration
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 475.
TRACI CARPENTER, Project Manager
Health Benefits Section
Division of Retirement & Benefits
Department of Administration
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 475.
JAMES VAN HORN, Staff
to Representative Jim Elkins
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions raised during the last
committee hearing on HB 448, on behalf of Representative Elkins,
sponsor.
DUANE BANNOCK, Director
Division of Motor Vehicles
Department of Administration
Anchorage, Alaska
POSITION STATEMENT: Responded to questions during the hearing
on HB 448.
LOUIS S. BANDIROLA, State Deputy
Alaska Contingent
Knights of Columbus
Juneau, Alaska
POSITION STATEMENT: Asked the committee to consider including
the Knights of Columbus in HB 448.
JIM POUND, Staff
to Representative Jay Ramras
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Offered further details regarding HB 438,
on behalf of Representative Ramras, sponsor.
ANNETTE KREITZER, Chief of Staff
Office of the Lieutenant Governor
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 438.
SARAH FELIX, Assistant Attorney General
Labor and State Affairs Section
Civil Division (Juneau)
Department of Law
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 438.
WHITNEY H. BREWSTER, Director
Central Office
Division of Elections
Juneau, Alaska
POSITION STATEMENT: Addressed the fiscal implications of the HB
438.
BROOKE MILES, Director
Alaska Public Offices Commission (APOC)
Department of Administration
Anchorage, Alaska
POSITION STATEMENT: Talked about the fiscal implications of HB
438.
HOPE L. CERMELJ
Fairbanks, Alaska
POSITION STATEMENT: Testified on behalf of herself during the
hearing on HB 438.
ACTION NARRATIVE
CHAIR PAUL SEATON called the House State Affairs Standing
Committee meeting to order at 8:05:32 AM. Representatives
Gatto, Elkins, Gardner, and Seaton were present at the call to
order. Representatives Lynn, Ramras, and Gruenberg arrived as
the meeting was in progress.
HB 475-PUB EMPLOYEE & TEACHER RETIREMENT & SBS
[Contains discussion of SB 141 and SB 293.]
8:06:53 AM
CHAIR SEATON announced that the first order of business was
HOUSE BILL NO. 475, "An Act describing contributions to the
health reimbursement arrangement plan for certain teachers and
public employees; clarifying eligibility for membership in that
health reimbursement arrangement plan; relating to the
'administrator' of the Public Employees' Retirement System of
Alaska; and providing for an effective date."
[Before the committee was the committee substitute (CS) for HB
475, Version 24-LS1685\Y, Wayne, 3/1/06.]
[CHAIR SEATON handed the gavel over to Vice Chair Gatto.]
8:07:17 AM
REPRESENTATIVE SEATON brought attention to a consolidated
sectional analysis for HB 475, which was included in the
committee packet. He reminded the committee that during the
first hearing of the bill, there had been a review of the
original sectional analysis, in which many issues were repeated
for the various retirement systems. The consolidated analysis
combines those systems and provides clarity.
8:07:57 AM
CHAIR SEATON moved to adopt Conceptual Amendment 6, which read
as follows [original punctuation provided, but with some
formatting changed]:
Page 17, following line 15:
Insert new bill sections to read:
"* Sec. 45. AS 39.35 is amended by adding new
sections to read:
Sec. 39.35.957. Designation of eligible
employees, agreement to contribute, and amendment of
participation. (a) A political subdivision or public
organization shall designate the departments, groups,
or other classifications of employees eligible to
participate in the plan, and shall agree to make
contributions each year in the amounts required for
members of the plan under AS 39.35.750.
(b) If the employer does not participate in the
defined benefit retirement plan under AS 39.35.095-
39.35.680, an employee who is eligible under (a) of
this section and who is a member of the defined
benefit retirement plan under AS 39.35.095 - 39.35.680
shall not accrue credited service or make
contributions under that plan, but shall be a member
of the defined contribution retirement plan under AS
39.35.700-39.35.990 and make contributions under that
plan.
(c) An employer may request to amend its
participation in the plan to add or exclude
departments, groups, or other classifications of
employees by filing a resolution as provided by AS
39.35.950 or AS 39.35.955 with the administrator.
Sec. 39.35.958. Termination of participation in
the plan. (a) A political subdivision or public
organization may request that its participation in the
plan be terminated. The request may be made only
after adoption of a resolution by the legislative body
of the political subdivision and approval of the
resolution by the person required by law to approve
the resolution, or, in the case of a public
organization, after adoption of a resolution by the
governing body of that public organization. A
certified copy of the resolution shall be filed with
the administrator.
(b) If contributions are not transmitted to the
plan within the prescribed time limit, the
commissioner of administration may grant an extension
and shall assess interest on the outstanding
contributions at the rate established under AS
39.35.610. If the political subdivision or public
organization is in default at the end of the
extension, participation in the plan is terminated,
and it shall be sent notice of termination.
(c) When an employer's participation in the plan
is terminated, or when an employer terminates coverage
of a department, group, or other classification of
employees under AS 39.35.957(c), the administrator
shall assess the employer an amount that the
administrator determines is actuarially required to
fully fund the costs to the plan for employees whose
coverage is terminated, including the cost of
providing the employer's share of retiree health
benefits under AS 39.35.880, occupational disability
and occupational death benefits under AS 39.35.890 and
39.35.892, and retirement benefits elected under AS
39.35.890(h)(2).
(d) An employee whose coverage under the plan is
terminated as a result of termination of an employer's
participation under this section or amendment of the
employer's agreement under AS 39.35.957(c) shall be
considered fully vested in employer contributions
under AS 39.35.790(b) and in the individual account
established for the employee under AS 39.30.370. If
the employee is later employed with a participating
employer, the employee's membership service earned
under the plan during employment with a terminated
employer shall be credited for purposes of determining
vesting in employer contributions under AS
39.35.790(b) and eligibility for retirement and
medical benefits under this chapter and AS 39.30.300-
39.35.495."
8:09:33 AM
VICE CHAIR GATTO objected for discussion purposes.
8:09:42 AM
CHAIR SEATON spoke to Conceptual Amendment 6. He explained that
currently there are provisions in the defined benefit (DB)
retirement plan that allow employers to opt out of the plan.
Conceptual Amendment 6 would bring the defined contribution (DC)
retirement plan in conformity, so that if an employer decided to
opt out in the future, it could be done basically under the same
conditions that employers currently follow for the DB plan.
8:10:47 AM
KATIE SHOWS, Staff to Representative Paul Seaton, Alaska State
Legislature, on behalf of Representative Seaton, sponsor, and in
response to remarks made by Representative Gardner and
Representative Seaton, clarified that, under Conceptual
Amendment 6, a new employer can decide to opt into both a DC and
a DB plan, or just the DC plan. By opting into the DB plan, the
employer would be able to hire employees already established in
the DB plan and allow them to continue to accrue defined benefit
service. Alternatively, a new employer could opt to participate
solely in the DC plan, in which case, an employee with previous
DB service would effectively start over as a DC employee and be
a member of both plans, which would be treated as two separate
plans.
8:12:14 AM
REPRESENTATIVE GARDNER suggested it may be difficult for people
who have been in the DB plan but are not yet vested in it to
leave that plan in order to work for a new employee who has
opted to only be in the DC plan.
8:12:44 AM
MS. SHOWS responded that's correct. She stated that it is the
decision of the employer to decide whether or not to have that
flexibility in hiring [by offering both plans].
8:12:56 AM
MS. SHOWS, in response to Vice Chair Gatto, stated her
assumption that, under the Internal Revenue Service (IRS) code,
the employer could not offer one plan to one employee and not to
another.
8:13:09 AM
REPRESENTATIVE SEATON clarified that if a new employer chose to
be solely in the DC plan, "it would be exactly as if someone was
going to work for a private employer or somebody else that was
not a member of PERS."
8:13:42 AM
VICE CHAIR GATTO removed his objection to Conceptual Amendment
6.
8:14:29 AM
VICE CHAIR GATTO asked if there was any further objection to
Conceptual Amendment 6. There being none, Conceptual Amendment
6 was adopted.
8:14:48 AM
REPRESENTATIVE GRUENBERG directed attention to Conceptual
Amendment 7, which he explained is SB 293, with minor technical
changes. He said the amendment would delay [the effective date
of SB 141] from July 1, 2006, to July 1, 2008. He said [SB 141]
has had a lot of unintended consequences. It is more expensive
than the existing system for new employees, the greater part of
the expense is shifted to future employees, and the benefit risk
is shifted to employees. He said that risk is significant,
because Alaska's government employees, unlike government
employees elsewhere, are not generally eligible for a "social
security safety net." He stated, "The change from Tier III to
Tier IV will do nothing to pare down the unfunded liability, and
the changes do not deal with the fundamental driver of (indisc.
-- coughing) costs and skyrocketing health care costs."
8:16:34 AM
REPRESENTATIVE GRUENBERG moved to adopt Amendment 7, which read
as follows [with some handwritten changes and formatting
changes]:
"An Act relating to the teachers' and public
employees' retirement systems and creating defined
contribution and health reimbursement plans for
members of the teachers' retirement system and the
public employees' retirement system who are first
hired after July 1, 2008; providing for an effective
date by amending the effective date section of sec.
148, ch. 9, FSSLA 2005; and providing for an effective
date."
Add the following sections to the bill - insert in
appropriate places
* Section 1. AS 14.25.009 is amended to read:
Sec. 14.25.009. Applicability of AS 14.25.009 -
14.25.220. The provisions of AS 14.25.009 - 14.25.220
apply only to members first hired before July 1, 2008
[2006].
* Sec. 2. AS 14.25.012(c) is amended to read:
(c) Employees first hired after June 30, 2008
[2006], are not eligible to participate in the plan
established in AS 14.25.009 - 14.25.220.
* Sec. 3. AS 14.25.310 is amended to read:
Sec. 14.25.310. Applicability of AS 14.25.310 -
14.25.590. The provisions of AS 14.25.310 - 14.25.590
apply only to teachers who first become members on or
after July 1, 2008 [2006], or to members who transfer
into the defined contribution plan under AS 14.25.540.
* Sec. 4. AS 14.25.320(b) is amended to read:
(b) The defined contribution retirement plan
includes a plan in which savings are accumulated in an
individual account for the exclusive benefit of the
member or beneficiaries. The plan is established
effective July 1, 2008 [2006], at which time
contributions by employers and members begin.
* Sec. 5. AS 14.25.330(a) is amended to read:
Sec. 14.25.330. Membership. (a) A teacher who
first becomes a member on or after July 1, 2008
[2006], shall participate in the plan as a member of
the defined contribution retirement plan.
* Sec. 6. AS 39.30.300 is amended to read:
Sec. 39.30.300. State of Alaska Teachers' and
Public Employees' Retiree Health Reimbursement
Arrangement Plan established. The State of Alaska
Teachers' and Public Employees' Retiree Health
Reimbursement Arrangement Plan is established for
teachers who first become members of the defined
contribution plan of the teachers' retirement system
under AS 14.25.310 - 14.25.590 on or after July 1,
2008 [2006], and employees of the state, political
subdivisions of the state, and public organizations of
the state who first become members of the defined
contribution plan of the public employees' retirement
system under AS 39.35.700 - 39.35.990 on or after
July 1, 2008 [2006].
* Sec. 7. AS 39.30.310(b) is amended to read:
(b) The plan becomes effective July 1, 2008
[2006], at which time contributions by employers
begin.
* Sec. 8. AS 39.35.095 is amended to read:
Sec. 39.35.095. Applicability of AS 39.35.095 -
39.35.680. The following provisions of this chapter
apply only to members first hired before July 1, 2008
[2006]: AS 39.35.095 - 39.35.680.
* Sec. 9. AS 39.35.700 is amended to read:
Sec. 39.35.700. Applicability of AS 39.35.700 -
39.35.990. The provisions of AS 39.35.700 - 39.35.990
apply only to members first hired on or after July 1,
2008 [2006], or to members who transfer into the
defined contribution plan under AS 39.35.940.
* Sec. 10. AS 39.35.710(b) is amended to read:
(b) The defined contribution retirement plan is
a plan in which savings are accumulated in an
individual retirement account for the exclusive
benefit of the member or beneficiaries. The plan is
established effective July 1, 2008 [2006], at which
time contributions by employers and members begin.
* Sec. 11. AS 39.35.720 is amended to read:
Sec. 39.35.720. Membership. An employee who
becomes a member on or after July 1, 2008 [2006],
shall participate in the plan set out in AS 39.35.700
- 39.35.990.
* Sec. 12. AS 39.35.750(c) is amended to read:
(c) Notwithstanding (b) of this section, the
employer contribution for retiree major medical
insurance for fiscal year 2009 [2007] shall be 1.75
percent of each member's compensation from July 1 to
the following June 30.
*Sec. 11. Section 148, ch. 9, FSSLA 2005, is amended
to read:
Sec. 148. Sections 2, 8, 35, 40, 46, 61, 69, 80,
82, 122, and 134 of this Act take effect July 1, 2008
[2006].
* Sec. 13. The uncodified law of the State of
Alaska is amended by adding a new section to read:
CONDITIONAL RETROACTIVITY. If secs. 1 - 13 of
this Act take effect after July 1, 2006, secs. 1 - 13
of this Act are retroactive to July 1, 2006.
(These sections shall take effect immediately under
AS 01.10.070(c).)
Change title as necessary
8:16:51 AM
REPRESENTATIVE RAMRAS objected to Conceptual Amendment 7.
VICE CHAIR GATTO said he wants to see a copy of SB
293/Conceptual Amendment 7.
[The committee moved to other business while waiting for copies
of SB 293 to be made and distributed.]
8:17:04 AM
REPRESENTATIVE GARDNER directed attention to the part of the
consolidated sectional analysis addressing a change from 120
days - the required time in which a decision on an appeal must
be issued - to 180 days. She asked if the original PERS and TRS
Boards had 120 days and if [the Office of Administrative
Hearings (OAH)] wants the 180 days.
8:17:37 AM
MS. SHOWS deferred to the Division of Retirement & Benefits to
answer.
8:18:40 AM
VICE CHAIR GATTO noted that the committee had just received a
copy of Conceptual Amendment 7.
8:19:09 AM
REPRESENTATIVE GRUENBERG said Conceptual Amendment 7 is simple;
it just conforms the language in the appropriate places in HB
475, to change the date from July 1, 2006, to July 1, [2008].
8:20:15 AM
REPRESENTATIVE RAMRAS maintained his objection.
8:20:17 AM
REPRESENTATIVE SEATON suggested hearing from representatives
from the Division of Retirement & Benefits regarding what they
think the impact of the delay proposed by Conceptual Amendment 7
would be.
8:21:15 AM
REPRESENTATIVE GRUENBERG remarked that the new Tier IV
retirement system is more expensive for employees than the old
system.
8:21:49 AM
MELANIE MILLHORN, Director, Division of Retirement & Benefits,
Department of Administration, said she doesn't agree with
Representative Gruenberg's statement. She said the normal cost
for Tier III [in TRS] and Tier IV [in PERS] is less expensive
than the existing Tiers II and III for TRS and PERS,
respectively. She said the DC retirement plan provides a more
predictable, stable employer contribution rate. The portion
that is not a defined contribution plan is the medical
component. Ms. Millhorn discussed rising health care costs and
noted that many states do not offer medical benefits to their
employees. She offered further statistics, and she concluded
that [the DC plan] reduces the cost to the employer and reduces
the volatility associated with defined benefit components.
8:26:35 AM
REPRESENTATIVE GRUENBERG clarified that he wants to know if [the
new defined contribution plan] would be more expensive to new
employees, and he said he thinks Ms. Millhorn's remarks indicate
that she agrees it really would be. He continued:
When we look at the health care costs too, we can't
artificially separate out the health care costs,
because ... from the employee's point of view it's the
total cost. And you have said that these total costs
are going to be a certain amount. You've also said
the employer section's going down. It just logically
follows then that the employee portion is going to go
up, doesn't it?
8:27:29 AM
MS. MILLHORN offered information relating to contribution rates.
8:27:55 AM
REPRESENTATIVE GRUENBERG stated that he is not talking about
just the contribution rate, but rather the total cost, of which,
under the new DC plan, the state will pay less. He said Ms.
Millhorn is talking about the contribution rate, not the amount
that the employee will have to pay the doctor.
8:28:26 AM
REPRESENTATIVE SEATON said he thinks Representative Gruenberg
and Ms. Millhorn are talking about two different issues. He
related that every time the state has changed from an existing
tier to a new tier, it could be said that those in the new tier
pay more, because they receive less. However, he pointed out
that the new DC plan includes occupational death and disability
benefits that were not provided under the DB plan. He stated
that the plans are different and it is difficult to measure what
employees get from one plan versus the other, because, for
example, it depends on how many employees will qualify for the
benefits. He offered examples. Chair Seaton said the
contribution cost to the employer is easily assessable.
8:30:57 AM
REPRESENTATIVE GRUENBERG stated that he has been under the
misimpression that the purpose of creating Tier IV was to cut
down the cost to the state. He added, "And if the total costs
remain the same, and the part the state pays goes less,
logically the part the employee pays must go up."
8:31:15 AM
VICE CHAIR GATTO said the unfunded liability was not just
climbing in interest, but also in principle each year. Stopping
that trend, he said, is certainly a savings to the state.
REPRESENTATIVE GRUENBERG responded that the employee would then
make up the difference.
VICE CHAIR GATTO said he would not agree that it would be the
entire difference.
8:31:42 AM
MS. MILLHORN said she does not believe that the cost to the
employee is increased. She said the employee's contribution is
set in statute at 8 percent, and the employer's contribution is
set in statute, as well. She explained that [the new DC plan]
will stop the growth of unfunded liability in the future "for a
system that has defined benefit elements that are subject to
change over time, that can differ with experience."
8:32:55 AM
VICE CHAIR GATTO said one question is whether the new employee
who will not be contributing into a DB plan will cost the state
more in the long run when he/she retires. He stated, "This says
the state will have to cough up some more money in the short
run, because we don't have the new employees contributing into
the plan; but we maintain the liability."
8:33:34 AM
REPRESENTATIVE GRUENBERG indicated that he is not particularly
disagreeing with Vice Chair Gatto, but rather is espousing a
different view point. He mentioned the cost of living, which he
noted comes from "the cash portion of the pension," and the
insurance cost, which he said "would come when the doctor is
paid. He stated that whatever those costs are, they are
projected to increase - especially the health care costs. He
reasoned that, given one amount, if the state's portion of that
amount is reduced, then it stands to reason that the employees'
portions will increase.
8:34:25 AM
REPRESENTATIVE SEATON explained that Representative Gruenberg's
estimation is not quite correct. He continued:
Seventy-five percent of the expense coming from
runaway health care is by people that have ...
retirement before the age of 65 - before Medicare
eligible age. So, there is a difference in benefit.
Those people - and they're not a vast majority - that
retire early, get that massive amount of benefit that
everyone pays for under the current plan. So, if you
are a Tier I employee and you could retire at 55, you
would have all your health care paid for from that
point on, and solely by the system. ... The current
plan, ... if you've got 30 years, will pay 90 percent
of the ... medical benefit, ... because Medicare picks
up a lot from that point forward. So, when you talk
about "to an employee," there is no average employee.
Some employees - those that retire early - get an
extreme benefit under the current plan because they
get all their medical paid for by the system. Those
people that work [until] they're 65 don't get that
benefit at all. In this plan, what happens is it
comes much more to everyone [who] qualifies for
benefits and shares equally. The medical benefits
that are provided under the defined benefit plan are
far [inequitably] distributed among the people,
depending upon when they retire. So, there is a
definite realignment that makes these -- like the HRA.
Everybody gets the HRA, based on the entire system
wide average of ... wage base. So, everybody gets an
equal amount of health care dollars there, depending
upon their years of service.
So, what you have is a system right now under DB which
is very ... weighted, and some people get a whole lot
of benefits, and some people get much less benefit.
And that's the entire cost of the plan. Whereas the
new defined contribution plan is very definitely
individually based and much more aligned with equality
for participants enjoying the benefits of their plan.
8:37:05 AM
REPRESENTATIVE OLSON asked Ms. Millhorn for a projection of how
many new employees would "pick up under SB 293, under the
current system."
8:37:19 AM
MS. MILLHORN said there is a projection, based upon the last 12-
month fiscal year, which shows that there will be approximately
4,400 new PERS and TRS members. She added, "So, what this
effective delay would do is it would allow entry of another
approximate 8,800 members, who would then therefore be entitled
to this very rich medical benefit."
8:37:44 AM
REPRESENTATIVE OLSON asked Ms. Millhorn if she knows what the
cost would be.
8:37:50 AM
MS. MILLHORN replied that the division has not yet analyzed the
cost.
8:38:05 AM
REPRESENTATIVE GARDNER asked Ms. Millhorn to describe the
difference in cost under the new and old systems for the medical
insurance portion between retirement and Medicaid eligibility.
8:38:35 AM
MS. MILLHORN stated that currently, under PERS, the normal cost
that the employer pays for the employee medical benefit is
approximately 8.68 percent, and under TRS it is approximately 9
percent. She continued:
When the tier redesign began a task force and ...
asked the employers ... and ... employees what's
really important ..., employers and employees said
it's very important to have that medical benefit.
When you actually start analyzing the cost for that
medical benefit, you have to redesign it in a way that
you preserved the benefit to the employees and to the
employers who have to recruit and retain a workforce.
So, this redesign was studied extensively, it was
reviewed, [and] the components within it are ... on
the leading edge of looking at that redesign.
I appreciate the comments from Representative Seaton
also, because before, under Tier I, for example, you
had a deferred, vested member - most of those parties
right now that are retiring are Tier I - you could
have five years of vested service, you could go work
for another employer, and then once you're eligible,
you can start drawing that pension and medical
benefit. So, by redesigning this plan that costs
shares with the employee, you ... inject consumer-
driven health care into your health plan where
employees value decisions that they have to make.
They have these dollars set aside to make these
medical decisions and it provides a redesign of that
benefit that is very, very beneficial to both the
employer and the employee.
8:41:04 AM
REPRESENTATIVE GARDNER responded:
During that period when the employer's percentage
drops ... from 8.68 to 1.75 percent, doesn't the
former employee - who is now retired but doesn't yet
qualify for [Medicare] - ... pick up a significant
portion? And it comes out of the HRA account or a set
aside until that's gone, and then there's another big
hit. As I recall, last year there was some debate
about if payments were missed and they didn't bring it
current in a given timeframe, they would then lose
access in the future to medical coverage.
REPRESENTATIVE GARDNER, in response to a request from Ms.
Millhorn, clarified that she wants a comparison between the DB
and DC members "for that period between retirement from the
system as a fully vested member and access to [Medicare]."
8:43:06 AM
MS. MILLHORN stated that the normal retirement age for employees
under the existing DB benefit plan is 55, at which point those
employees who have met the membership service and vesting
requirements would be able to receive a pension and medical
benefit for themselves and for their eligible dependents. At
age 65, that benefit "coordinates with Medicare." Under the DC
benefit plan, employees who have a service eligibility of 30
years and are 55 years of age would be eligible for their health
reimbursement arrangement in order to pay the premiums [for
health care] until age 65. In response to a question from
Representative Gardner, she said the health reimbursement
arrangement is not a contribution account that the employee
makes any contributions to at all; it is an employer
contribution that is made on behalf of the employee into the
account to pay for medical expenses.
8:45:07 AM
REPRESENTATIVE GARDNER recalled from testimony last year that
there is a potential that that money can run out and the
employee would not have the funds from that account or elsewhere
to keep current with his/her medical coverage. She described
that time as occurring between when an employee has access to
"funds for maintaining coverage" and when he/she has access to
Medicare, and indicated that "that's where there's an additional
for the ... employee."
8:45:45 AM
CHAIR SEATON confirmed that that's what he was talking about:
"this unequal benefit by employees." He said the original Tier
I was too expensive for the state to maintain, so a new tier was
created. He continued:
But those people still have this very - if they take
advantage of that - this very unequal benefit. You
know, it could be a couple hundred thousand dollars a
year if you started ... late and missed service, came
back under Tier I, and then went forward and retired
early at 55. Now, if you work to 65 it doesn't make
any difference. If you continue to work so that
you're not accepting that benefit, then you have your
regular active medical plan ..., and then you get
Medicare and you get the ... retirement benefit.
But Tier III is different than Tier I: you don't have
the same retirement age, because we found that those
were very unequal benefits that were provided for
different employees and it couldn't be afforded. And
we're looking at the same thing in Tier IV: we're
looking at benefits that ... vastly cost the system
per individuals if they want to choose to retire as
early as possible and take those payments from the
system, versus the majority of the members in the
system.
And so, you again have to come back into the basic
philosophy ... [that] a DC plan equalized benefits
among people, instead of saying, "Okay, we're going to
throw out a very rich benefit for a certain select
group of people in our retiree population." ... If
you only want to consider the cost of somebody who
makes the selection that costs the system the most,
you'll find that that's the case. If you take the
person that retires at 65, then those differences
don't really exist. So, that's what you have to look
at, as well.
8:48:13 AM
REPRESENTATIVE GRUENBERG directed attention to a letter dated
Jan 7, 2006, to Senator Elton from Gail Schubert, Chair, Alaska
Retirement Management (ARM) Board, [included in the committee
packet]. He highlighted information from charts on the first
and second pages of the letter, which shows that the normal
costs to employers will drop when changing to a DC plan, whereas
the normal cost for employees will rise.
8:50:01 AM
MS. MILLHORN said she does not dispute the facts and figures in
the letter. She relayed that the new DC plan does have members
paying 8 percent and sets out what the employer contribution
rate is going to be. She said it was observed that the existing
DB plans did not appear to equally share costs. The entire
normal cost rate is over 20 percent and the employer pays the
bigger portion of it. The employer is also left with a lack of
predictability regarding ever-increasing costs that may be
different from assumptions. Based on those facts, Ms. Millhorn
said, the employer bears all of the risk for the plan. She said
the DC plan would be more equal in terms of the employer cost in
relation to the employee cost. She said members in focus groups
were surveyed in 2004, and some said they would be willing to
pay more for their valuable benefits, but statute prohibits them
from doing so.
8:52:00 AM
REPRESENTATIVE GRUENBERG indicated that he doesn't want to keep
beating "this horse."
8:52:19 AM
VICE CHAIR GATTO observed that the aforementioned letter
indicates a .5 percent increase in cost. He asked, "And the
short answer is balanced by ... the equity, or balanced by the
long-term unfunded liability, or is that reasonable?"
8:52:29 AM
MS. MILLHORN answered yes.
8:52:36 AM
CHAIR SEATON proffered:
These are the normal costs; these don't include the
past service cost, of course, which is associated with
Tier II [and] Tier III, under [the] defined benefit
plan. I would bring everybody's attention to how
close these are, and that the defined contribution
plan has very high benefits compared to other defined
contribution plans that have been done around the
nation. And we did this very specifically, because we
said that employers could pay [this] kind or [amount],
and employees could make these [kinds] of
distributions and continue hiring employees, not
having to cut their workforce, not having to lay
people off because of the high benefit cost. And so,
what this does is give security for people going
forward, but it's a very ... high cost, and that cost
is actuarially determined so that those benefits are
... quite similar, although they're different. So, I
would just speak against [Amendment 7], because what
we're going to do is continue a system that's going to
increase past service cost liability.
8:54:09 AM
REPRESENTATIVE GRUENBERG said he would like to call a question
on Amendment 7.
8:54:20 AM
VICE CHAIR GATTO stated his intention to wait until committee
members who recently vacated the room returned. [Amendment 7
was set aside.]
8:54:32 AM
REPRESENTATIVE GRUENBERG moved to adopt Amendment 8 to Version
Y, as follows:
On page 8, line 21:
Between "administrator" and "the appeal"
Delete "receives"
Insert "takes"
After "the appeal"
Insert "under advisement"
REPRESENTATIVE GRUENBERG said a court does not receive an
appeal; it "takes the appeal under advisement."
8:55:38 AM
REPRESENTATIVE SEATON objected to Amendment 8. For
clarification, he referred to the entire sentence to which
Amendment 8 applies [beginning on page 8, line 19], which read
as follows:
The final decision under AS 44.64 is delegated to the
administrative law judge and shall issue within 180
days after the date the administrator receives the
appeal, unless the administrative law judge and all
parties agree to another time.
8:55:52 AM
REPRESENTATIVE GRUENBERG responded, "I stand corrected."
CHAIR SEATON withdrew his objection.
REPRESENTATIVE GRUENBERG opined that is unusual to require a
judge to issue an opinion within a certain amount of time of the
appeal being filed. He said there are statutes that don't allow
the judge to get paid until he/she has issued a decision within
six months, "but it's within six months after the case is
submitted to the judge for the decision - after they take the
case under advisement." He asked Ms. Carpenter why the division
chose the date from which the administrator receives the appeal
rather than the date the judge takes the appeal under
advisement.
8:57:00 AM
TRACI CARPENTER, Project Manager, Health Benefits Section,
Division of Retirement & Benefits, Department of Administration,
said Representative Gruenberg brings up an excellent point. She
explained that the language in question was modeled on current
Office of Administration Hearings' statute, with some slight
variation. The current statute requires that the administrative
law judge shall prepare a decision within the agency having
received the appeal.
8:57:38 AM
REPRESENTATIVE GRUENBERG withdrew Amendment 8. He commented
that that is unusual, but he doesn't want to change existing
law.
8:58:10 AM
VICE CHAIR GATTO brought Amendment 7 back before the committee.
REPRESENTATIVE GRUENBERG said he wants Representative Elkins
present for the vote on Amendment 7.
The committee took an at-ease from 8:59:17 AM to 8:59:30 AM.
8:59:42 AM
REPRESENTATIVE RAMRAS maintained his objection to Amendment 7.
A roll call vote was taken. Representatives Gardner, Gruenberg,
and Lynn voted in favor of Amendment 7. Representatives Ramras,
Gatto, Elkins, and Seaton voted against it. Therefore,
Amendment 7 failed by a vote of 3-4.
9:00:46 AM
VICE CHAIR GATTO closed public testimony.
9:01:25 AM
REPRESENTATIVE SEATON moved to report CSHB 475, Version 24-
LS1685\Y, Wayne, 3/1/06, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 475 (STA) was reported out of the
House State Affairs Standing Committee.
[VICE CHAIR GATTO handed the gavel back to Chair Seaton.]
HB 448-LICENSE PLATES FOR MASONS
9:02:18 AM
CHAIR SEATON announced that the next order of business was HOUSE
BILL NO. 448, "An Act relating to special license plates for the
Free and Accepted Masons."
9:02:33 AM
JAMES VAN HORN, Staff to Representative Jim Elkins, Alaska State
Legislature, answered questions raised during the last committee
hearing on HB 448, on behalf of Representative Elkins, sponsor.
Regarding Representative Lynn's previous suggestion that the
Knights of Columbus be included, he remarked that the title of
the bill would have to be changed. He noted that the bill was
originally called, "An act relating to special license plates
for benevolent associations", but after talking to [Duane
Bannock], the director of the [Division] of Motor Vehicles, the
title was changed to its present form. Mr. Van Horn said the
term "benevolent associations" is found only in the insurance
section of Alaska Statutes, and says a new benevolent
association may not be formed in Alaska after 1966. He
indicated that he was informed by the Division of Motor Vehicles
that the set-up cost of making a special license plate is about
$300.
9:06:08 AM
REPRESENTATIVE GARDNER asked for a description of "free and
accepted Mason."
MR. VAN HORN deferred to Representative Elkins, whom he said is
a Mason.
9:06:33 AM
REPRESENTATIVE ELKINS said he is not certain what the definition
would be for "free and accepted." Notwithstanding that he noted
that the organization is the oldest one of its kind in the
world, and it does not discriminate by religion. He shared,
"It's more of a way of life in what you practice when you're a
Mason; it's a very ritualistic lodge within the lodge."
9:07:25 AM
REPRESENTATIVE LYNN noted that George Washington was a Mason.
He said the Masons and the Knights of Columbus do much the same
things. He listed the principals of the Knights of Columbus as:
charity, unity, fraternity, and patriotism. He stated his
intention to eventually offer an amendment to add the Knights of
Columbus to the bill.
9:08:46 AM
REPRESENTATIVE ELKINS, in response to a question from Chair
Seaton, said he would have no objection to such an amendment,
but questioned if the committee would like to consider adding
other fraternal organizations.
9:09:12 AM
REPRESENTATIVE GRUENBERG asked Mr. Van Horn to distribute a copy
of the committee substitute he had mentioned previously. He
said he understands why Representative Lynn would like to
include the Knights of Columbus. He indicated concern that by
using the term "benevolent organization," some organizations
that are not so benevolent may try to be included, for example,
the Ku Klux Klan.
9:10:21 AM
REPRESENTATIVE LYNN recollected that Mr. Van Horn had told him
that some states have watchdog agencies that have the power to
decline applications.
9:10:53 AM
MR. VAN HORN clarified that Representative Elkins' office had
done some research regarding the Department of Licensing in the
State of Washington, and found that that department has 41
special license plates and has a special license plate review
board, broken up into categories. He deferred to Mr. Bannock
for further response on the issue. He noted that Version F is
actually the original form of the bill, and he reiterated that
statute does not recognize any benevolent organizations formed
after July 1, 1966. Mr. Van Horn stated, "So, hopefully the
Knights of Columbus were recognized by the state prior to 1966,
as, for example, the Elks, the Moose, and organizations such as
that." In response to a question from Representative Gruenberg,
he said he does not have a list of those organizations.
9:12:49 AM
REPRESENTATIVE GATTO said he shares Representative Gruenberg's
concern regarding the "benevolent organization" definition. He
explained that there could be some organizations that formed
before 1966, but changed their focus since then to something
less good. He stated, "I really feel good about having each
individual organization come before a body of legislators, and
I'm not happy about opening it up to whatever the definition of
benevolent association is."
9:14:19 AM
CHAIR SEATON opened public testimony.
9:14:37 AM
DUANE BANNOCK, Director, Division of Motor Vehicles, Department
of Administration, in response to a question from Chair Seaton,
stated that he has recommended creating a subsection in "this
chapter" for each individual license plate. Regarding previous
comment that other states have some sort of body that makes the
determination regarding license plates, he suggested that the
Alaska State Legislature is that body. A more "blanket"
approach, he said, would arguably take that authority away from
the legislature and return it to bureaucrats. Currently, the
legislature has the authority to approve or disapprove all
plates before the Division of Motor Vehicles produces and issues
them, which Mr. Bannock opined is a good process.
9:15:46 AM
CHAIR SEATON asked Mr. Bannock to clarify who pays the
previously mentioned $300 set-up fee.
9:16:04 AM
MR. BANNOCK explained that although he included that amount in
the bill analysis for informational purposes, traditionally the
DMV has paid that fee. He stated, "To be consistent, we have
never charged the individual organization for them."
9:16:40 AM
MR. BANNOCK, in response to a question from Representative
Ramras, informed the committee that the Advanced Business
Partners (ABPs) [who are qualified to do work related to
licensing and registration] often stock some of the special
license plates.
9:17:04 AM
REPRESENTATIVE GRUENBERG referred to the aforementioned statute
regarding benevolent association, and he asked, "Does the
Division of Motor Vehicles have any experience in determining
what are the relevant benevolent associations, et cetera, for
the issuance of license plates?"
9:18:28 AM
MR. BANNOCK replied, "In the last three years I can say zero
experience in that field."
9:18:37 AM
CHAIR SEATON reminded the committee that it does not have before
it a working draft addressing benevolent [associations], thus,
he asked the committee to focus on [the original bill version].
9:19:12 AM
LOUIS S. BANDIROLA, State Deputy, Alaska Contingent, Knights of
Columbus, asked the committee to consider including the Knights
of Columbus in HB 448. He said the organization has existed for
over 150 years, is spread throughout most of the Americas and
currently moving into parts of Europe, and has over 1.75 million
members worldwide. He spoke about the principals of the Knights
of Columbus, previously listed by Representative Lynn,
characterizing them as key goals. In Alaska, he noted, the
Knights of Columbus have just over 1,600 members; its first
council met in 1914 in Juneau. He noted that the Alaska
contingent did not receive statewide status "as a unit of its
own" until 1994. However, based on the work that the Knights of
Columbus have done in the past and hope to continue to do in the
future, Mr. Bandirola restated his hope that the organization
will be offered similar recognition in HB 488.
9:21:17 AM
REPRESENTATIVE GRUENBERG asked Mr. Bannock to explain the
significance of the last sentence in Version G, which read as
follows:
The department may disapprove the issuance of
registration plates under this subsection when the
requested plates are a duplication of an existing
registration.
9:22:02 AM
MR. BANNOCK said that is standard language, the purpose of which
is to clear up any confusion "from a customer point of view."
He offered an example.
9:23:10 AM
CHAIR SEATON, after ascertaining that there was no one else to
testify, closed public testimony.
9:23:20 AM
REPRESENTATIVE LYNN moved to adopt [Conceptual] Amendment 1, to
add the Knights of Columbus to HB 448, with an appropriate
change of title.
REPRESENTATIVE LYNN declared a conflict of interest; he revealed
that he is a "fourth degree Knight of Columbus."
CHAIR SEATON asked if there was any objection [to Conceptual
Amendment 1].
9:23:44 AM
REPRESENTATIVE ELKINS said he would accept [Conceptual Amendment
1].
9:23:55 AM
CHAIR SEATON announced that there being no objection, Conceptual
Amendment 1 was adopted.
CHAIR SEATON asked Mr. Bannock if the addition of the Knights of
Columbus should be made in a separate subsection (y).
MR. BANNOCK answered yes.
9:25:26 AM
CHAIR SEATON, in response to a question by Representative Gatto,
explained that he had just clarified with Mr. Bannock that by
putting the Knights of Columbus reference as a separate
paragraph, the license plate itself would be separate from the
design for the Free and Accepted Masons.
MR. BANNOCK concurred with Chair Seaton's explanation. He
stated, "What we would have is one bill that addresses two ...
distinctly different license plates."
9:26:06 AM
REPRESENTATIVE LYNN moved to report HB 448, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHB 448(STA) was
reported out of the House State Affairs Standing Committee.
HB 438-INITIATIVE, REFERENDUM, RECALL PETITIONS
9:27:08 AM
CHAIR SEATON announced that the next order of business was HOUSE
BILL NO. 438, "An Act relating to initiative, referendum, and
recall petitions; and providing for an effective date."
[Although it was never adopted, the committee substitute to
which the committee referred throughout this hearing was
committee substitute (CS) for HB 438, Version 24-LS1344\X,
Kurtz, 2/22/06, included in the committee packet.]
9:27:18 AM
REPRESENTATIVE RAMRAS introduced HB 438 as sponsor. He said he
learned recently that there is "a certain looseness" to the
processes related to initiative, referendum, and recall
petitions.
9:29:00 AM
JIM POUND, Staff to Representative Jay Ramras, Alaska State
Legislature, offered further details regarding HB 438, on behalf
of Representative Ramras, sponsor. He described the proposed
bill as a "tweaking" of House Bill 31 - legislation that was
passed in 2004. He stated, "The process is broken down
primarily between petitions and recalls, but it deals in
generalities between the two, as well." Although it is a law
that those collecting signatures must be residents of the state,
there have been cases where nonresidents have come up to work on
petitions during particular "drives." Mr. Pound said there is
language in [Version X] that would allow the signature gatherer
up to $15 a day for food if he/she travels more than 100 miles
from home. He explained that quite often, individuals from one
of the urban centers travel to outlying regions.
MR. POUND stated that HB 438 would require each "committee" to
receive training related to the rules of circulating a petition
or recall. Presently that is not a requirement. There would
also be a requirement that [the sponsors] instruct the
circulators as to what the rules are.
MR. POUND indicated that when signature collectors travel to
rural areas, they sometimes have no idea whether or not the
district they are in is "qualified"; therefore, the collectors
"run blind" until they turn in the petition books. He said HB
438 would allow the petition gatherers or the committee to
submit up to 2,000 signatures to the Division of Elections prior
to the actual turning in of the petition. He explained,
"There's a $1-dollar fee that covers expenses for the division,
but it will also allow the petition gatherers ... to ... have a
read on ... the number of signatures and the percentages that
they are receiving on an average."
9:31:49 AM
MR. POUND indicated [one of the provisions in Version X is] that
an individual may not start a recall effort if a public official
is within 270 days of the term's end. He offered an example of
"term's end." He said the proposed legislation would change the
formula for the recall petition from 10 to 20 percent. He
emphasized that the issue of recall is a serious one and should
only be approached when there is strong support. He posited
that the current requirement to obtain signatures of 10 percent
of those who voted in the previous election within a district
does not represent strong support, ultimately costs the state
money, and inflicts unnecessary hardship on the public official.
Mr. Pound said when a person seeks a recall, he/she must make
charges against the public official. Regarding those charges,
[he paraphrased proposed language in Version X, which read as
follows]:
(5) a certification by each member of the
recall committee, under penalty of perjury, that the
facts alleged in the application are true to the best
of the member's knowledge.
MR. POUND noted that there is no current definition of "normal
use" and "recall efforts," and he indicated that the sponsor has
attempted to supply those definitions. He said the proposed
legislation further defines the petition and recall process,
which will result in a better and "cleaner" public process. He
urged the committee to support the bill.
9:33:43 AM
MR. POUND, in response to a question from Representative
Gruenberg, said there are some legal opinions regarding HB 438
that he has not yet had an opportunity to review.
9:33:50 AM
REPRESENTATIVE GRUENBERG said he would like to view them. He
referred to [the language on page 4, lines 8-10, which read as
follows]:
Sec. 15.45.490. Time of filing application. An
application may not be filed during the first 120 days
or the last 270 days of the term of office of any
state public official subject to recall.
REPRESENTATIVE GRUENBERG said he wonders if the addition of "270
days" may be unconstitutional, because under Article 11, Section
8 of the constitution, all public officials of the state, except
judicial offices, are subject to recall. He said, "This would
carve out a class of people who are not subject to recall within
the last three-quarters of the year of their term.
9:34:46 AM
REPRESENTATIVE RAMRAS said, "I believe that presently in statute
it's 180 days, so all we're doing is adjusting the current
statute. So, the current statute would have to also be
unconstitutional. But it's just a tweak, so it may or not be
the case, and I think a lot of this is subject to the ...
Buckley case ...."
9:35:10 AM
CHAIR SEATON remarked, "Representative Ramras, the citation in
the bill, here, does not show a deletion of those terms."
9:35:14 AM
REPRESENTATIVE GRUENBERG clarified:
... No, what he is saying is on line 9: "may not be
filed within the first 120 days". And logically I
would have to agree that if that - the last 270 - is
unconstitutional, then probably the first 120 days
might also be subject to the same challenge ....
9:35:34 AM
MR. POUND noted that the review he received from Legislative
Legal and Research Services does not address that issue.
9:35:57 AM
REPRESENTATIVE GARDNER asked how many successful recall efforts
have been made in Alaska and how many recall petitions have
actually made it to the ballot.
9:36:01 AM
MR. POUND said he doesn't know the exact number.
Notwithstanding that, he related that in most of the cases where
there has been a recall, the individual in question has
resigned. In response to Representative Gardner's request that
he find out the answer, [Mr. Pound nodded].
9:36:27 AM
CHAIR SEATON noted that in Sections 5-8 of Version X, "270"
replaces "[180]", but Section 2 - referred to by Representative
Gruenberg - is also amended to "270 days", but from "120", not
"180". He suggested that there may be some discrepancy in play.
He asked Mr. Pound to check with Legislative Legal and Research
Services to find out if that was an omission.
9:37:22 AM
REPRESENTATIVE LYNN directed attention to page 1, [line 12,
through page 2, line 1, of Version X], which read as follows:
Sec. 15.45.003. Circulation; prohibition.
(a) A petition may be circulated only in person
throughout the estate. However, in the case of a
petition to recall a member of the state legislature,
a petition may be circulated only in person in the
senate or house district represented by the official
sought to be recalled.
REPRESENTATIVE LYNN asked if that means, for example, that [the
circulator] could not gather signatures in a supermarket across
the street if it was out of his/her district.
9:38:31 AM
MR. POUND answered that for recalls, everyone who signs the
petition has to be a member of the district in which the public
official being recalled resides. He added, "So, going outside
of the district would probably be considered a violation."
REPRESENTATIVE LYNN asked, "If you got the signature outside the
district, but the person lived within the district, would that
be acceptable?"
MR. POUND responded, "As I understand the change - no, it would
not."
9:38:56 AM
CHAIR SEATON clarified that the bottom of page 1 to top of page
2 [in Version X] is what is being discussed.
CHAIR SEATON, in response to a query from Representative Ramras,
clarified that the questions from Representative Lynn have to do
only with recalls, not with initiatives or referendums.
REPRESENTATIVE GRUENBERG said he thinks Representative Lynn has
made a good point; it shouldn't make any difference where the
signature is obtained, only that the person who signs the
petition is a registered voter in the district in which the
person being recalled resides.
9:39:48 AM
REPRESENTATIVE RAMRAS responded that his intent was not to draw
boundaries as previously described by Representative Lynn.
9:40:29 AM
CHAIR SEATON stated that HB 438 is a complicated bill, and he
said the committee would certainly work on it for awhile.
9:41:22 AM
MR. POUND, in response to a question from Representative
Gruenberg, stated that the person who signs the petition must be
a registered voter.
9:41:34 AM
ANNETTE KREITZER, Chief of Staff, Office of the Lieutenant
Governor, revealed that Lieutenant Governor Loren Leman has
spoken with the sponsor of the bill and has "encouraged us
strongly to work with the sponsor and help him accomplish the
goals that he's set out to do here." She stated that the
sponsor has said that he would like to have "this discussion on
the record." Ms. Kreitzer recommended that the most efficient
manner to study a bill is to deconstruct it first, and then
reconstruct it - to not build understanding of the bill on
assumptions, but rather on the sponsor's explanation of his/her
intent. She referred to a list of questions from the Office of
the Lieutenant Governor [included in the committee packet], and
she explained that they were formed to illicit the sponsor's
intent, not to be adversarial.
9:43:01 AM
MS. KREITZER, in response to a request for clarification from
Chair Seaton, she said the aforementioned list shows materials
submitted by Whitney Brewster, addressed to Ms. Pierson.
MS. KREITZER said she examined the bill in terms of issues. One
of the first issues, she noted, is the qualification of a
circulator, to include the definition of "not registered to vote
in any other state." She said, "We do believe that this is not
consistent with the Buckley decision." She said the Office of
the Lieutenant Governor does not think there is a constitutional
issue regarding the mandatory training of sponsors, but has
recommended that the sponsor "separately and independently
verify that." In the recent past, the [Division of Elections]
has been asked to grant waivers for people who have gone through
the training in the past and don't feel the need to repeat it.
If the bill makes training mandatory, there will be no more
waivers.
REPRESENTATIVE GRUENBERG said it seems like a good idea to allow
[the division] the discretion of a waiver. He asked if Ms.
Kreitzer sees any benefit in disallowing the waiver.
MS. KREITZER said the sponsor and the director of the division
would most likely like to weigh in on the subject. She noted
that some people who have asked for and received the waiver
still had "some problems" that could have been avoided had they
undergone the training again.
MS. KREITZER cited another issue of the bill is in regard to
"the certification that a circulator has not received more than
$15 to cover meals." She said there are some sections in the
bill that would best be addressed by the Alaska Public Offices
Commission (APOC), and she noted that the director of APOC would
be available to testify.
9:45:54 AM
MS. KREITZER, regarding the enforcement of infractions of
election law, suggested that the committee hear from the
Criminal Division of the Department of Law, regarding how it
currently handles complaints related to those infractions. She
suggested APOC address the issue of who enforces and collects
civil fines. She mentioned an advance verification of
signatures requirement, which Mr. Pound had noted was being paid
for with $1 per signature fee. However, Ms. Kreitzer said, "As
you all know, [if] that fee goes into the general fund, we would
still have to reflect an increased cost to the Division of
Elections to implement this section."
MS. KREITZER, regarding the proposed raised thresholds related
to recalls, indicated that the decision to adopt them would be a
policy call of the legislature. She mentioned a requirement for
certification that facts in the recall application are true.
She added, "It is an interesting application of recall law that
these facts don't necessarily have to be true, and it's a very
important point." She offered to provide additional material on
the subject.
9:47:23 AM
REPRESENTATIVE LYNN questioned how something can be a fact if
it's not true.
9:47:39 AM
REPRESENTATIVE GRUENBERG said he would like to see that
material. Referring to the issue of raising the 10 percent to
the 20 percent, he noted that in the field of taxation, there is
a distinction between a tax that is regulatory in nature and one
that is called, "confiscatory" and has a "chilling fact on the
activity." He said he thinks it would be unconstitutional to
require that 100 percent of people in the district sign the
petition; it would have "a chilling effect on the ability to
exercise that activity." He questioned whether doubling the
requirement for signatures would have an "unconstitutional
chilling effect on the protected constitutional activity."
9:49:22 AM
REPRESENTATIVE RAMRAS countered, "What if it's too easy? What
if 10 percent is too low of a bar and it's easier to 'un-elect'
somebody than it is for a person to get elected?"
9:49:59 AM
CHAIR SEATON clarified the issue as follows:
We're talking about a legal question of saying, "At
what point of raising the amount do we get to a legal
question of inhibiting - probably unconstitutionally -
the ability to recall?"
CHAIR SEATON said it may be a good idea to get a legal opinion
in writing.
REPRESENTATIVE GRUENBERG asked Mr. Pound if this issue is
written in the legal opinion he spoke of previously.
9:50:28 AM
MR. POUND answered no.
9:50:53 AM
SARAH FELIX, Assistant Attorney General, Labor and State Affairs
Section, Civil Division (Juneau), Department of Law, concurred
with Chair Seaton that the aforementioned issue of raising the
percentages is not one that attorney Mike Barnhill focused on
when studying the recall aspects of the bill; therefore, she
recommended bringing the issue to the department and then
bringing an opinion back to the House State Affairs Standing
Committee.
9:51:44 AM
REPRESENTATIVE GRUENBERG said he would like both the Department
of Law and Legislative Legal and Research Services to discuss
any possible constitutional problems with the bill.
9:52:34 AM
MS. KREITZER noted that the following areas currently are not
defined in statute, but would be through Version X: corruption,
incompetence, lack of fitness, and neglect of duties. Regarding
Chair Seaton's previous observation that of the five proposed
changes in the number of days related to term of office, one of
the references did not match, she said it is most likely an
oversight and the department will research the matter.
9:53:43 AM
WHITNEY H. BREWSTER, Director, Central Office, Division of
Elections, addressed the fiscal implications of HB 438. She
directed attention to page 2, line 8, where reference is made to
a form from the division that a circulator would fill out
showing that he/she traveled more than 100 miles from home in
one day in order to receive $15 compensation. She said this
provision in the bill would require the division to develop
another form and administratively process the form. She
directed attention to page 3, [paragraph] (6), which read:
(6) that the circulator has not entered into
an agreement with a person or organization in
violation of AS 15.45.003(b);
MS. BREWSTER suggested that that language would take care of the
requirement without requiring another form to be processed,
because the circulator would sign that he/she has met the
requirements and has not "violated subsection (b) on page 2."
9:56:27 AM
CHAIR SEATON clarified that Ms. Brewster is saying the person
would make submissions to the signature gatherer that he/she was
out for 15 or 20 days, thus that proclamation would not have to
be on a separate form designed by the division. He stated, "The
fact that they have to sign that they ... haven't claimed more
than their due would take care of that fiscal responsibility."
MS. BREWSTER said that's correct.
CHAIR SEATON summarized, "The difference between those two
approaches is: in one way we would have a listing at the
division of the number of days that were claimed by the
individual, and the other way we would have a certification, but
no listing of the days. Is that correct?"
9:58:00 AM
MS. BREWSTER answered in the affirmative. Regarding the same
issue, she suggested, "This may be more of a responsibility of
APOC than a Division of Elections' responsibility." She
directed attention to page 2, line 21, subsection (e), which
read:
A person who pays a circulator and a circulator who
receives compensation other than that permitted under
(b) of this section are liable to the state for a
civil fine of $1 for each signature gathered by the
circulator on a petition filed with the lieutenant
governor.
MS. BREWSTER said the question is, "Who will assess and collect
this fine?" She explained that historically the division has
never been a "fining body." She suggested that the collecting
of the fine may be more appropriate a task for APOC than for the
division.
9:59:15 AM
MS. BREWSTER turned focus to language [beginning on page 3, line
31, through] page 4, line 2, which read as follows:
The sponsors may, before filing a petition, submit
individual numbered petitions containing up to a total
of 2,000 subscriptions to the director for review.
MS. BREWSTER said the additional signatures for review will
require additional staff time, which will have a fiscal impact.
The $1 per signature fee assessed will go to the general fund
and will not benefit the Division of Elections' budget. She
directed attention to page 4, line 17, which shows the increase
in the percentage of required signatures for a recall from 10 to
20 percent, which she said will result in additional signatures
for review, which could also have a fiscal impact on the
division.
10:00:59 AM
MS. BREWSTER, in response to Representative Gruenberg's
aforementioned query, said any time the required number of
signatures is increased, it makes it more difficult for an
individual or committee to recall or get an initiative on the
ballot. Whether that difficulty inhibits the person by creating
a threshold that is insurmountable is a question for the
Department of Law, she said.
10:01:37 AM
REPRESENTATIVE GRUENBERG said the recall process is part of the
balance of power among the people and the legislature. He said
he would like to hear feedback as to whether or not the raising
of the signature requirement would upset the balance of power in
state government from a constitutional point of view.
10:02:29 AM
MS. KREITZER interjected, "We're happy to await the Department
of Law's assessment."
10:02:45 AM
VICE CHAIR GATTO directed attention back to page 2, line 21,
[text provided previously], and stated his concern is not with
the fine, but is related to whether a signature collected "when
a person is performing an illegal act" qualifies as a valid
signature.
10:03:32 AM
MS. BREWSTER said [page 2, lines 25-27] answer Representative
Gatto's question as follows:
(f) In determining the sufficiency of a
petition, the lieutenant governor may not count
subscriptions on a petition circulated by a circulator
who violated (b) of this section.
10:03:49 AM
REPRESENTATIVE GRUENBERG said he would also like that issue
addressed in a legal opinion. He said, "It's one thing to fine
the person because they're getting paid too much, but it's
something else not to count the signature of the citizen who
wishes to endorse the petition." He said he would like that
issue examined from a constitutional point of view.
10:04:21 AM
CHAIR SEATON remarked, "I don't think we're just talking about
constitutional, we're talking about all legal issues in the
state."
REPRESENTATIVE GRUENBERG concurred.
10:04:42 AM
REPRESENTATIVE GATTO proffered, "It's possible for someone who
opposes the recall to collect a whole lot of signatures in
violation of the rule, and therefore nullify a whole bunch of
people who thought they were voting for a recall, but now have
been disqualified."
10:05:23 AM
MS. BREWSTER pointed out that if someone wants to sabotage a
recall effort, they could do that right now by not signing the
back of the book or not signing whether or not he/she has been
paid.
10:05:53 AM
REPRESENTATIVE GRUENBERG amended his previous request by asking
that the legal opinions also address the constitutionality of
the current law.
10:06:33 AM
MS. BREWSTER, in response to Representative Gardner's question
as to how many recall petitions have been successful and how
many have made it to the ballot, said she doesn't have that
information at hand, but will follow up on that.
10:06:47 AM
MS. KREITZER offered her understanding that there have been
three court cases on recalls that involved municipal-elected
officials, and only one for a state-elected official. The
latter recall was successful, she reported. It did not go to
the ballot, because the individual resigned; but had the
individual not resigned, it would have gone to the ballot. She
added that there is one recall pending in court.
REPRESENTATIVE GARDNER questioned why an effort is being made to
make recalls so difficult when there has only been 1 in 50
years.
10:08:18 AM
MS. KREITZER asked that Brook Miles be allowed to speak on
behalf of APOC, since currently any committee formed to support
or oppose an initiative, referendum, or recall is required to
file with APOC. She stated, "There is an opportunity to file
what's called a zero report for efforts that are merely
collecting signatures. And it would seem, since the focus of
those parts of the bill that I've mentioned before have to do
with the reporting of people that are collecting signatures,
that it may be a good fit, but it's for the committee to discuss
and decide."
10:09:27 AM
BROOKE MILES, Director, Alaska Public Offices Commission (APOC),
Department of Administration, said she hasn't had a chance to
study the bill to "explain whether or not it's a good fit with
APOC." She continued as follows:
As the committee may be aware, the requirements for
filing disclosure reports are limited to when groups
are collecting signatures. In other words, they're
filing zero reports until such time as a recall,
referendum, or proposition is certified to appear on
the ballot. At that point, the groups that are formed
to support or oppose the election must file a full
disclosure report. ... At this point we have no idea
who gets paid a dollar or doesn't get paid a dollar
for signatures, and I'm not really sure how that
report is going to look at APOC. And just from a
fiscal standpoint ... I have to, in all fairness, say
at this point I have such limited staff I don't have
one person who can do one more thing. So, it would
certainly have fiscal impact on this agency.
10:11:01 AM
CHAIR SEATON asked Ms. Miles to consider some of the issues that
the Division of Elections and the Office of the Lieutenant
Governor pointed out might be more appropriate for APOC, and to
assign any fiscal note necessary.
MS. MILES acquiesced.
10:11:41 AM
REPRESENTATIVE GARDNER referred to the language in the bill
regarding training, [found on page 3, lines 1-4], which read as
follows:
Sec. 15.45.005. Mandatory training. (a) At least
once during each two-year period between general
elections, the division of elections shall offer
training explaining the legal requirements for
petitions. Each committee applying for or circulating
a petition during that period shall attend the
training.
REPRESENTATIVE GRUENBERG asked Ms. Brewster to offer details
related to the training, including: where it is offered, by
whom, how much it costs, and how it would affect someone from a
rural area trying to recall a state representative.
10:12:32 AM
MS. BREWSTER relayed that currently the training is offered by a
division employee, in person or over the phone. She said she
does not know the cost, but can find out. She stated that an
individual or committee in a remote rural area could be offered
training by teleconference. In response to a follow-up question
from Representative Gardner, she offered her understanding that
the training takes several hours. In response to a question
from Chair Seaton, she said she doesn't believe [the training]
is required for municipal election recalls.
10:14:03 AM
CHAIR SEATON asked Ms. Brewster to get back to the committee
with that information, because he said it is important to know
which elections will be covered under the bill.
10:14:12 AM
HOPE L. CERMELJ, testifying on behalf of herself, revealed that
she is a circulator and petition gatherer. She directed
attention to a handout she had obtained from the Division of
Elections [included in the committee packet], showing statistics
from March 3, 2006, including that there will be 450,985 voters
in the next election. Ms. Cermelj stated:
240,211 people - possible voters - are upset with
what's going on with the Republican/Democratic process
here in the state of Alaska; that's why they
(indisc.). I myself was certified in the Fairbanks
office at the Division of Elections to be a voter
registrar, so I was on that ... petition trail doing
the same. We have a new political party in the state
of Alaska right now, which Loren Leman approved last
year, and that's the Veterans' Party.
MS. CERMELJ noted that [there is a missing column on the first
page of the handout], which should show a [column] "V," which
displays the numbers for that Veterans' Party. She implored the
Division of Elections to include that group's numbers on the
page of statistics so that the numbers are more accurate. She
noted that she has carried four petitions, and she listed places
in the state in which she has lived and mentioned legislative
topics of concern.
10:18:09 AM
MS. CERMELJ referred to the next two pages of the handout, and
pinpointed the areas on the page that show a list of reasons
that people who signed petitions will not be counted. She noted
that on the first page of petition totals, it shows that 8,171
people will not be counted because their names did not match.
Ms. Cermelj opined, "That is against their civil liberties."
The list shows that there were 1,968 duplicate names. She
indicated a connection between the proposed legislation and
ensuring that petition gatherers are registered voters from
Alaska who care about the issues. She talked about a man who
came up from the state of Washington to gather petitions. The
man, she related, was "in it for the money," and he intimidated
the Native elders of the village and was asked to leave. Ms.
Cermelj related further personal experience in petition
gathering.
10:20:32 AM
MS. CERMELJ indicated that there has recently been a change in
personnel within the Division of Elections and the director is
currently learning about a new system that will be in place
forthcoming. She relayed that, as a voter registrar, she has
received four phone calls from people who have yet to receive
their voter cards. She stated her believe that their rights are
being violated. Ms. Cermelj offered statistics from the handout
showing the petition totals from an initiative related to a 90-
day regular session of the Alaska State Legislature, emphasizing
that out of 450,985 voters, the number of unqualified signatures
was 11,370, which she reiterated is against the civil liberties
of those people.
10:22:56 AM
MS. CERMELJ shared further accounts, including one related to
homeless people who did not receive their voter registration
cards, and a story of a woman affected adversely by political
decisions made, and she emphasized that people sign petitions in
order to see change.
10:24:41 AM
CHAIR SEATON said the committee is not dealing with any one
specific petition, but with the system in general, and he
remarked that Ms. Cermelj brought up many points for the
committee to consider.
10:24:57 AM
MS. CERMELJ, in response to a question from Representative
Gardner, said she supports the bill, with the exception of the
$15 payment, which she said she hopes can be more.
10:25:28 AM
REPRESENTATIVE GARDNER, regarding Ms. Cermelj's previous
reference to the person from out of state, suggested that a
local person could also be rude and disruptive and be asked to
leave.
10:25:43 AM
MS. CERMELJ responded that that is true; however, the local
people have good training.
10:26:03 AM
CHAIR SEATON asked Ms. Cermelj to specify if she supports the
bill's proposal to increase the number of qualified signatures
for a recall petition from 10 to 20 percent, and also if she is
in favor of not allowing a petition to be filed within 270 days
of termination of office.
10:27:08 AM
MS. CERMELJ answered yes to both.
CHAIR SEATON noted that neither of the petitions for which Ms.
Cermelj brought the petition totals would have passed had the
percentage been at 20.
10:28:38 AM
REPRESENTATIVE GARDNER asked Ms. Brewster, "If somebody, say
Andy Jones, is registered as Andrew Jones, and he signs Andy
Jones and provides a correct birth date, would that signature be
qualified, or not?"
10:29:10 AM
MS. BREWSTER said that signature would count.
10:29:20 AM
REPRESENTATIVE GARDNER asked at what point is the name
dissimilar enough to be considered unmatched.
10:29:32 AM
MS. BREWSTER answered that if there is a qualifier that allows
the division to locate the signer within the voter registration
system, and the name is similar, then the signature will count.
If the name is entirely different, she said, it would not be
counted.
10:30:03 AM
CHAIR SEATON asked, "If someone signs Andy instead of Andrew,
would that mean that it probably wouldn't be a computer match -
that would be a manual match?"
10:30:11 AM
MS. BREWSTER said she believes that would be a manual match.
10:30:53 AM
CHAIR SEATON asked another testifier to return at the next
hearing.
[HB 438 was heard and held.]
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at
10:31:15 AM.
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