Legislature(2009 - 2010)
04/18/2010 05:16 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| HB280 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
April 18, 2010
5:16 p.m.
5:16:00 PM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 5:16 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Darwin Peterson, staff, Senator Burt Stedman; Miles Baker,
Staff, Senator Bert Stedman; Sonia Christianson, Staff,
Representative Kyle Johansen; Craig Campbell, Lieutenant
Governor; Kevin Brooks, Deputy Commissioner, Department of
Administration; Jerry Burnett, Deputy Commissioner,
Division of Treasury, Department of Revenue; Pat Shier,
Director, Division of Retirement and Benefits.
PRESENT VIA TELECONFERENCE
NONE
SUMMARY
HB 280 NATURAL GAS: STORAGE/ TAX CREDITS
CS HB 280 was REPORTED out of Committee with a
"do pass" recommendation and with one new fiscal
impact note from the Department of Natural
Resources and three previously published zero
notes: FN 1 (ADM), FN 2 (CED), FN 5 (REV).
HB 424 G.O. BONDS:EDUC./LIBRARY/RESEARCH FACIL.
CS HB 424 was REPORTED out of Committee with a
"do pass" recommendation and with one new fiscal
impact note from the Department of Revenue.
HB 369 IN-STATE PIPELINE/ MANAGER/TEAM
CS HB 369 was REPORTED out of Committee with a
"do pass" recommendation and with one previously
published fiscal impact note: FN 4 (GOV) and one
new fiscal impact note from the Department of
Revenue.
HB 50 LIMIT OVERTIME FOR REGISTERED NURSES
HB 50 was REPORTED out of Committee with a "do
pass" recommendation and with three previously
published zero notes: FN 4 (DHS), FN 5 (DHS), FN
6 (DHS) and one previously published fiscal
impact note: FN 7 (LWF).
HB 363 AIDEA MEMBERSHIP
HB 363 was REPORTED out of Committee with a "do
pass" recommendation and with one previously
published fiscal impact note: FN 2 (CED).
HB 345 SAM SCHUYLER MEMORIAL BRIDGE
HB 345 was REPORTED out of Committee with a "do
pass" recommendation and with one previously
published zero note: FN 1 (DOT).
HB 314 WORKERS' COMPENSATION
HB 314 was SCHEDULED but not HEARD.
HB 190 CHILDREN'S TRUST
CS HB 190 was REPORTED out of Committee with a
"do pass" recommendation and with three
previously published fiscal notes: FN 2 (CED), FN
3 (DHS), FN 4 (REV).
HB 36 INITIATIVES: CONTRIBUTIONS/ PROCEDURES
CS SS HB 36 was REPORTED out of Committee with no
recommendation and with two previously published
zero notes: FN 2 (GOV), FN 3 (GOV) and one
previously published fiscal impact note: FN 5
(ADM).
HB 225 STATE PROCUREMENT CODE
HB 225 was SCHEDULED but not HEARD.
HB 326 SUPPLEMENTAL/OTHER APPROPRIATIONS
HB 326 was REPORTED out of Committee with a "do
pass" recommendation.
CS FOR HOUSE BILL NO. 326(FIN)
"An Act making supplemental appropriations and other
appropriations; amending appropriations; repealing
appropriations; making appropriations to capitalize
funds; and providing for an effective date."
5:16:23 PM
Co-Chair Hoffman offered a forum for questions regarding HB
326.
Co-Chair Stedman MOVED to report HB 326 out of Committee
with individual recommendations. There being NO OBJECTION,
it was so ordered.
HB 326 was REPORTED out of Committee with a "do pass"
recommendation.
CS FOR HOUSE BILL NO. 280(FIN) am
"An Act relating to a gas storage facility; relating
to the Regulatory Commission of Alaska; relating to
the participation by the attorney general in a matter
involving the approval of a rate or a gas supply
contract; relating to an income tax credit for a gas
storage facility; relating to oil and gas production
tax credits; relating to the powers and duties of the
Alaska Oil and Gas Conservation Commission; relating
to production tax credits for certain losses and
expenditures, including exploration expenditures;
relating to the powers and duties of the director of
the division of lands and to lease fees for a gas
storage facility on state land; and providing for an
effective date."
5:19:10 PM
Senator Thomas MOVED AMENDMENT number 1. 26-LS1185\N.5,
Bullock, 4/17/10.
Page 13, line 28:
Delete "Cook Inlet sedimentary basin"
Insert "state south of 68 degrees North latitude"
Page 13, lines 30-31:
Delete "outside of the Cook Inlet sedimentary
basin"
Insert "in the state north of 68 degrees North
latitude"
Page 15, lines 15-16:
Delete "Cook Inlet well lease expenditure
incurred"
Insert "well lease expenditure incurred in the
state south of 68 degrees North latitude"
Page 15, line 17:
Delete "Cook Inlet well lease expenditure"
Insert "well lease expenditure incurred in the
state south of 68 degrees North latitude"
Page 15, line 21:
Delete "Cook Inlet well lease expenditure"
Insert "well lease expenditure in the state south
of 68 degrees North latitude"
Page 15, lines 25-26:
Delete "Cook Inlet well lease expenditure
incurred"
Insert "well lease expenditure incurred in the
state south of 68 degrees North Latitude"
Page 16, line 1:
Delete "Cook Inlet sedimentary basin"
Insert "state south of 68 degrees North latitude"
Page 16, line 3:
Delete "Cook Inlet well lease expenditure"
Insert "well lease expenditure incurred in the
state south of 68 degrees North latitude"
Page 16, line 7-8:
Delete "Cook Inlet well lease expenditure is a
lease expenditure that is incurred in the Cook
Inlet sedimentary basin"
Insert "well lease expenditure incurred in the
state south of 68 degrees North latitude is a
lease expenditure"
Page 16, line 11, following "disposal well":
Insert "located in the state south of 68 degrees
North latitude,"
Senator Thomas explained that the amendment allows for an
expansion of the Prudhoe Bay landmark.
Co-Chair Stedman Removed his Objection. There being NO
OBJECTION, it was so ordered.
Co-Chair Stedman Moved to adopt Amendment 2, 26-LS1185\N.7,
Bullock, 4/18/10.
Page 13, line 18, through page 14, line 30:
Delete all material.
Renumber the following bill sections
accordingly.
Page 15, line 16:
Delete "December 31"
Insert "June 30"
Page 16, line 2:
Delete "December 31 "
Insert "June 30"
Page 16, line 4:
Delete "a transferable tax credit
certificate"
Insert "transferable tax credit
certificates"
Page 16, lines 5 -6:
Delete "is available for immediate use
and does"
Insert "certificates do"
DARWIN PETERSON, STAFF, SENATOR BURT STEDMAN, explained the
changes proposed in the amendment. Co-Chair Stedman REMOVED
his objection. There being NO OBJECTION, it was so ordered.
Co-Chair Stedman explained the fiscal notes.
Co-Chair Hoffman MOVED to report CS HB 280 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
CS HB 280 was REPORTED out of Committee with a "do pass"
recommendation and with one new fiscal impact note from the
Department of Natural Resources and three previously
published zero notes: FN 1 (ADM), FN 2 (CED), FN 5 (REV).
CS FOR HOUSE BILL NO. 424(FIN) am
"An Act providing for and relating to the issuance of
general obligation bonds for the purpose of paying the
cost of design and construction of library, education,
and educational research facilities; and providing for
an effective date."
5:27:20 PM
Co-Chair Hoffman MOVED to ADOPT proposed committee
substitute, work draft #26-LS1649/C, Cook, 4/15/10. Co-
Chair Stedman OBJECTED.
MILES BAKER, STAFF, SENATOR BERT STEDMAN, noted the changes
in the Committee Substitute (CS). He explained that the
original bill included the appropriation to the State Bond
Committee. He noted that the CS addresses the necessary
funding for the State Bond Committee in this General
Obligation (GO) bond bill. In order to take advantage of
the federal rates, the CS exempts issuance from AS3715040
and authorizes the Department of Revenue (DOR) to use a
negotiated sale for these bonds. The appropriation to the
State Bond Committee was added to the capital budget
currently on the House floor.
5:30:32 PM
Co-Chair Stedman WITHDREW his OBJECTION to the adoption of
the CS. There being NO OBJECTION, it was so ordered.
Co-Chair Stedman described the one fiscal note from the
Department of Revenue for $10 thousand in general funds for
FY11 to cover the cost of public notice requirements, debt
repayment will begin again in FY12 at a cost of
$29,769,600.
Co-Chair Hoffman MOVED to report CS HB 424 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
CS HB 424 was REPORTED out of Committee with a "do pass"
recommendation and with one new fiscal impact note from the
Department of Revenue.
CS FOR HOUSE BILL NO. 369(FIN) am
"An Act relating to an in-state natural gas pipeline,
the office of in-state gasline project manager, and
the Joint In-State Gasline Development Team; requiring
the development of an in-state natural gas pipeline
plan, to be delivered to the legislature by July 1,
2011, that provides for a gasline that is operational
by December 31, 2015; directing the Joint In-State
Gasline Development Team to assume responsibilities
under sec. 19, ch. 14, SLA 2009; requiring expedited
review and action by state agencies or entities
relating to the in-state natural gas pipeline project;
and providing for an effective date."
5:34:19 PM
Co-Chair Hoffman MOVED to ADOPT proposed committee
substitute, work draft #26-LS152\K, Cook, 4/17/10.
DARWIN PETERSON, STAFF, BERT STEDMAN referred to Page 5,
Line 8. He stated that the previous version allowed the
Alaska Railroad chairman of the board to appoint a designee
to the joint instate gas development team created in the
legislation. The reference to the chair's designee has been
deleted specifying that the board chairman is part of the
team versus a designee. He continued that Page 7, Line 28
through Page 8, Line 7 includes the instate hire and job
training language inserted at the request of Senator
Thomas, which instructs the project developer to hire
Alaskans and contract with Alaskan businesses and use job
centers operated by the Department of Labor and Workforce
Development. He described another change on Page 8, Lines
12 and 13 including new language regarding the
confidentiality of proprietary information available to the
joint instate gasline development team. The previous
language was broad and caused concern among the industry
that proprietary information not directly related to a gas
pipeline would be available to the team. The new language
states that the team can access information directly
related to the planning design construction or operation of
the instate natural gas pipeline. He explained that Page 9,
Section 5 allows for the exemption of Enstar's Anchor Point
pipeline from the right of way leasing act since it does
not provide transportation services as defined in the act
and is an expansion of Enstar's existing system and
therefore exempt as it existed prior to 1972 when the act
was adopted. Next change on page 11 and subsection 1 of the
transitional provisions required the team to define the
project parameters by February 15, 2011. Subsection 2
states that between November 15, 2010 and March 15, 2011
the team was required to seek letters of interest from
private companies willing to develop the project. The dates
were removed and the responsibilities of the team remain
unchanged. Finally, section 11 in the previous version was
deleted and would have provided legislative authority for
the Alaska Natural Gas Development Authority to issue up to
$250 million in bonds for the project. The deletion of the
section required a title change reflected on Page 1, Lines
10 and 11.
Co-Chair Stedman WITHDREW his OBJECTION. There being NO
OBJECTION, it was so ordered.
Senator Thomas MOVED Amendment 1 26-LS1527\M.3, Chenoweth,
4/15/10.
Page 7, line 27:
Delete "and"
Following "state"
Insert", and facilitating the project
developer's commitment to negotiate, to the
maximum extent permitted by law, before
construction of the project begins, a project
labor agreement; if, in consideration of
complying with the project labor agreement, the
development team determines that the project may
be constructed by a private pipeline construction
company or companies, the development team shall
direct that this requirement be incorporated into
any construction contract agreement as a binding
commitment applicable to the corporation's
contractors; for this purpose, "project labor
agreement" means a comprehensive collective
bargaining agreement between the project
developer or, if construction is to be undertaken
by one or more private pipeline construction
companies, the project developer's contractor or
contractors and the appropriate labor
representatives to ensure expedited construction
with labor stability for the project by qualified
residents of the state.
5:40:47 PM
Senator Ellis stated appreciation for the amendment and the
expertise of Senator Thomas. He explained that local hire
and state hire and project labor agreements are Senator
Thomas' specialty. He commented that the subject of local
hire and Alaska hire is a difficult legal area and the
legislature has been disappointed and stymied by the courts
in the past. He thought that serious consideration of the
amendment would allow for the movement of this project
without regret. He considered that the amendment would
allow protection for Alaskan workers. He stressed support
of the amendment.
Senator Olson asked how the amendment changes the bill. He
supposed that the changes would necessitate further
conference committee. Co-Chair Stedman responded that a
conference committee would be necessary if the other body
was not supportive of the changes. Senator Thomas stated
that he understood that the issue was difficult to
understand and he hoped that consideration would be given
to the changes.
Senator Thomas WITHDREW Amendment 1.
Co-Chair Stedman described the two fiscal notes.
5:44:40 PM AT EASE
5:46:54 PM RECONVENE
Co-Chair Stedman noted that a new fiscal note matches the
$15,640,000 in general funds.
Co-Chair Hoffman MOVED to report SCS CS HB 369 out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SCS CS HB 369 was REPORTED out of Committee with a "do
pass" recommendation and with one previously published
fiscal impact note: FN 4 (GOV) and one new fiscal impact
note from the Department of Revenue.
5:47:29 PM
CS FOR HOUSE BILL NO. 50(FIN)
"An Act relating to limitations on mandatory overtime
for registered nurses and licensed practical nurses in
health care facilities; and providing for an effective
date."
5:48:07 PM
Co-Chair Stedman noted that there were three zero fiscal
note from the Department of Health and Social Services and
one indeterminate fiscal note from the Department of Labor
and Workforce Development.
Co-Chair Hoffman MOVED to report CS HB 50 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
HB 50 was REPORTED out of Committee with a "do pass"
recommendation and with three previously published zero
notes: FN 4 (DHS), FN 5 (DHS), FN 6 (DHS) and one
previously published fiscal impact note: FN 7 (LWF).
CS FOR HOUSE BILL NO. 363(FIN)
"An Act relating to the membership of the Alaska
Industrial Development and Export Authority."
5:49:07 PM
Co-Chair Stedman referred to the fiscal note from the
Department of Commerce, Community and Economic Development
for $22,800,000 in Alaska Industrial Development and Export
Authority (AIDEA) receipts.
Co-Chair Hoffman MOVED to report CS HB 363 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
HB 363 was REPORTED out of Committee with a "do pass"
recommendation and with one previously published fiscal
impact note: FN 2 (CED).
HOUSE BILL NO. 345
"An Act designating the bridge to be built on the
Dalton Highway at approximately mile post 308 as the
Sam Schuyler Memorial Bridge."
5:50:15 PM
Co-Chair Hoffman MOVED to report HB 345 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HB 345 was REPORTED out of Committee with a "do pass"
recommendation and with one previously published zero note:
FN 1 (DOT).
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 36(FIN) am
"An Act relating to ballot initiative proposal
applications, to ballot initiatives and to those who
file or organize for the purpose of filing a ballot
initiative proposal, and to election pamphlet
information relating to certain propositions."
5:53:46 PM
SONIA CHRISTIANSON, STAFF, REPRESENTATIVE KYLE JOHANSEN
explained that HB 36 is an attempt to bring additional
information to the public prior to elections. She explained
that HB 36 has provisions that require early financial
disclosure for ballot measure campaigns. She stated that HB
36 delays the disclosure deadline requiring financial
disclosures throughout the signature gathering portion of
ballot measure campaigns. Currently, no disclosure exists
for the process. Up to one year can pass before financial
disclosures are required for ballot measure campaigns. She
stated that the legislation also requires public hearings
in four judicial districts of the state, with two judicial
districts moderated by the lieutenant governor, which
brings the initiatives closer to the people and allows
Alaskans to meet with the sponsors and the opposition to
ask questions and voice opinions.
Ms. Christianson continued that HB 36 requires a
legislative hearing allowing affected state agencies to
discuss a ballot measure with the legislature. She
explained that the bill requires signature gatherers to
carry a full copy of the initiative.
5:56:27 PM
Senator Olson asked if the administration was in favor of
the changes.
CRAIG CAMPBELL, LIEUTENANT GOVERNOR stated that his office
is responsible for initiatives in the state from the
administration perspective and his office supports HB 36.
Senator Olson noted the initiative process in the past ten
years has become more involved. He asked if HB 36 would
further complicate the process.
Lt. Governor Campbell responded that the sponsor's
intention is to create a more transparent process allowing
for better understanding of the initiatives. He stated that
his office supports the public hearing process. He believed
that the legislation would allow the citizens of Alaska to
have greater understanding and vetting of the initiatives.
Senator Thomas asked about the concept of not allowing the
use of per signature commission. Ms. Christianson responded
that the mentioned provision was removed from the bill on
the House floor and is no longer applicable.
5:59:04 PM
Senator Huggins asked how the provisions would have
affected the Pebble Initiative. Ms. Christianson responded
that the provisions in HB 36 would have required disclosure
earlier in the process. Technically, if money is not
transferred in the signature gathering phase to the
campaign phase, there is no disclosure. The legislation
would have allowed the public to witness the signature
gathering phase which is an essential part of the
initiative.
Co-Chair Stedman mentioned one fiscal note from the
Department of Administration for $60,200 in general funds
for one permanent full time position and two zero fiscal
notes from the Office of the Governor on behalf of the
Lieutenant Governor's office and the Division of Elections.
Co-Chair Hoffman MOVED to report SCS CS SS HB 36 out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS SS HB 36 was REPORTED out of Committee with no
recommendation and with two previously published zero
notes: FN 2 (GOV), FN 3 (GOV) and one previously published
fiscal impact note: FN 5 (ADM).
CS FOR HOUSE BILL NO. 190(FIN)
"An Act amending the Alaska children's trust and
relating to the trust; establishing a children's trust
grant account; relating to birth certificates and
certificates of marriage; relating to special request
Alaska children's trust license plates; and amending
the State Procurement Code to exempt the Alaska
children's trust and the Alaska Children's Trust
Board."
6:01:10 PM
Co-Chair Stedman addressed three zero fiscal notes from the
Department of Health and Social Services, the Department of
Revenue, and Department of Commerce, Community and Economic
Development.
Co-Chair Hoffman MOVED to report CS HB 190 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
CS HB 190 was REPORTED out of Committee with a "do pass"
recommendation and with three previously published fiscal
notes: FN 2 (CED), FN 3 (DHS), FN 4 (REV).
^RECENT PERS-TRS TIMELINE
KEVIN BROOKS, DEPUTY COMMISSIONER, DEPARTMENT OF
ADMINISTRATION began with a general discussion about the
recent Public Employees Retirement System (PERS) and
Teachers' Retirement System (TRS) timeline. He drew
attention to the issue of unfunded liability and the
significant impacts since 2002 when Mercer changed several
actuarial assumptions following an audit by a separate
firm, Milliman. The change resulted in a dramatic increase
in unfunded liability and decrease in funding ratio, which
continued in a general upward trend. The most recent
evaluation of June 30, 2008 showed the unfunded liability
equaled $7.5 billion dollars. Since then, significant
losses occurred in the market.
Mr. Brooks highlighted the passage of SB 141 which
constructed the hybrid Defined Contribution Retirement
(DCR) plan and passage of SB 125 which constructed the
shared cost, blended rate system among public employers. He
noted that SB 125 set the PERS contribution cap at 22
percent for employers and the TRS contribution cap at 12.56
percent for school districts. The state contributes the
amount greater than these percentages by direct
appropriation to the funds.
6:06:36 PM
JERRY BURNETT, DEPUTY COMMISSIONER, DIVISION OF TREASURY,
DEPARTMENT OF REVENUE, referred to Slide 20: "Long-term
return Relative to Target 7.33 percent versus 7.41 percent
over 18 and 1/4 years". He explained that PERS and TRS have
similar returns. He noted that the line in the graph's
center exhibits the actuarial expected return at 8 and 1/4
percent. The purple and blue lines represent the actual
returns. He pointed out the rise in returns in 2008 and the
subsequent fall in 2009. As of February 28, 2010 PERS had a
total cash asset value of $9,554,000,000 and TRS had an
asset value of 4,167,000,000. The 2009 calendar year earned
13.28 percent on PERS and TRS. Returns were 3.19 percent
over the past five years. Returns were 6.65 percent for the
past 7 years. The past 18 years showed returns of 7.33
percent.
Co-Chair Stedman asked about the liability spread for the
end of June. Mr. Brooks responded that a draft report from
the June 30, 2009 evaluation will be released to the Alaska
Retirement Management (ARM) board in the near future. He
stated that the draft exhibited an unfunded liability for
TRS at $3,370,000,000 and $6,330,000,000 for PERS. He
pointed out the rebound in the market during the last
calendar year.
6:10:07 PM AT EASE
6:11:17 PM RECONVENE
Mr. Brooks continued that scenarios were run by Buck
Consultants for the expected payroll assessment of PERS and
TRS. He explained that the charts included in the packet
exhibited "slow recovery". Some might argue that eight and
one quarter is not necessarily a slow return. He explained
that the charts reflect the cost to the state as a
percentage and in dollars. The first chart includes PERS
contribution rates with a thirty year horizon. The yellow
bars reflect those appropriations required in excess of 22
percent for PERS. The actuarial determined rates rise to
over 40 percent by 2016 and remain there until 2029.
6:13:17 PM
Mr. Brooks Slide 31: "PERS Contribution Amounts Slow
Recovery" He explained that with TRS, the employer rate is
set at 12.56 percent. The yellow bar represents the amount
above 12.56 that the state contributes on behalf of school
districts and other public employers employing members of
the TRS retirement system.
Mr. Brooks Slide: 37 "TRS" Contribution Rates Slow
Recovery" exemplifies the dollar amounts connected to the
prior slide's information. A requirement exists for
significant appropriations to the PERS and TRS fund to pay
down the liability.
Co-Chair Stedman requested an explanation of the acronyms
listed on the bottom of the page. Mr. Brooks answered that
DCR stands for Defined Contribution Retirement System and
ER is Employer Contribution. He noted that DB ER
contributions stand for Defined Benefit Employer
Contributions.
Co-Chair Stedman asked if the coming report will be
released in a few weeks. Mr. Brooks responded that the
reports presented were generated last fall.
Co-Chair Stedman asked when the next actuarial check was
scheduled.
6:16:01 PM
PAT SHIER, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS
stated that the consulting firm conducted a thorough
replication of the actuarial evaluation last year. He did
not expect another evaluation for three years. Mr. Burnett
added that a second actuary review is performed annually by
Buck Consultants.
Mr. Brooks continued with an analysis for the deferred
contribution plan.
Mr. Shrier pointed out that the comparison is made more
useful by calculating the percentages in the column. He
explained that 40 percent of individuals hired in FY03 for
the DB plan continue to be active.
6:18:35 PM
Senator Ellis assumed that separation interviews were
conducted to provide information regarding reasons for
leaving state employment.
Mr. Burnett responded that anecdotal information suggests
people are leaving because of the retirement system or
because the pay is substandard. He opined that a
comprehensive compensation package must be presented to
remain competitive with wages and provide a well rounded
benefit package. He stated that the numbers of retention
have not changed much since the passage of the defined
contribution plan. The plan is portable; allowing an
employee to leave once vested and carry the plan with them.
He explained that separation interviews are not conducted
in standardized ways.
Co-Chair Stedman commented that the information could be
presented with charts including data from 2010, which would
allow the legislature to track the data.
Senator Thomas asked about the current balance of the PERS
and TRS fund. Mr. Burnett responded that PERS was
$9,554,496 and TRS was $4,167,254 as of February 28, 2010.
He stressed that the numbers are not exactly the same as
those seen later because real estate evaluations and other
liquid assets lead to a delay in the evaluations.
Co-Chair Stedman asked for a liability estimate for PERS
and TRS as of January 2010. Mr. Burnett replied that the
draft evaluation is $9.7 billion in unfunded liability. He
estimated that the current estimation for the actuarial
value represents a higher value than the actual value at
the end of the last fiscal year. Co-Chair Stedman clarified
that the deficit is $9.7 billion. Mr. Burnett concurred.
Co-Chair Stedman agreed that the gap must close.
6:23:37 PM
Senator Ellis that a brief online exit survey would prove
helpful. Mr. Brooks concurred and offered to meet with the
division of personnel to determine the outreach occurring
with the hiring of managers and staff turnover.
Senator Ellis asked the status in the lawsuit against
Mercer, the people responsible for the poor advice given.
Mr. Burnett stated that the lawsuit is scheduled for a
court date in Juneau later this year. He admitted attending
confidential briefings. Co-Chair Stedman added that the
trial will receive much attention.
Senator Thomas understood that employees hired in 2003 were
studied through 2009 compiling the data for Defined Benefit
Plan. He understood that the Defined Contribution Plan
employees beginning in 2007 and ending in 2009 were also
studied. Mr. Brooks agreed that all PERS and TRS employers
were listed.
6:27:14 PM
Senator Thomas noted that in 2002, Mercer changed several
actuarial assumptions after Milliman's audit. Buck
Consultants replaced Mercer as the state's actuary in 2005.
He asked to know the reason the actuarial assumptions were
altered. Mr. Brooks responded that the audit in 2002 was
not unusual. The changes made were significant. He
understood the concern with Mercer and the contract.
Ultimately the contract was not honored and a new actuary
was hired.
Senator Thomas asked if a different arrangement with the
current consultants includes a shorter time frame with
"several actuarial assumptions." Mr. Brooks responded that
the passage of SB 141 led to many of the current checks and
balances. He noted that pension reform included an annual
review resulting in the implementation of safeguard to
ensure timely reaction.
6:30:33 PM
ADJOURNMENT
The meeting was adjourned at 12:40 AM.
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