Legislature(2017 - 2018)SENATE FINANCE 532
04/09/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB273 | |
| HB278 | |
| HB279 | |
| SB38 | |
| SB185 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 38 | TELECONFERENCED | |
| + | SB 185 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 273 | TELECONFERENCED | |
| += | HB 278 | TELECONFERENCED | |
| += | HB 279 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 9, 2018
9:13 a.m.
9:13:32 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:13 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Donny Olson
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Representative Sam Kito, Sponsor; Sara Chambers, Deputy
Director, Division of Corporations, Business and
Professional Licensing, Department of Commerce, Community
and Economic Development; Representative Andy Josephson,
Sponsor; Senator Cathy Giessel, Sponsor; Jane Conway,
Staff, Senator Cathy Giessel; Lori Wing-Heier, Director,
Division of Insurance, Department of Commerce, Community
and Economic Development; Emily Ricci, Chief Policy
Administrator, Division of Retirement and Benefits,
Department of Administration; Rachel Hanke, Staff, Senator
Peter Micciche; Lisa Parady, Executive Director, Alaska
Council of School Administrators; Dr. Karen Gaborik,
President, Alaska Superintendents Association; Norm Wooten,
Executive Director, Association of Alaska School Boards;
Mark Miller, Superintendent, Juneau School District; Mary
Wegner, Superintendent, Sitka School District; Sean Dusek,
Superintendent, Kenai Peninsula Borough School District;
Bobby Bolen, Superintendent, Bering Strait School District;
Monica Goyette, Superintendent, Matsu Borough School
District; Kathy Lea, Chief Pension Officer Division of
Retirement and Benefits, Department of Administration.
PRESENT VIA TELECONFERENCE
Deena Bishop, Superintendent, Anchorage School District.
SUMMARY
SB 38 PHARMACY BENEFITS MANAGERS
SB 38 was HEARD and HELD in committee for further
consideration.
SB 185 REEMPLOYMENT OF RETIRED TEACHERS and ADMIN
SB 185 was HEARD and HELD in committee for
further consideration.
HB 273 EXTEND: MARIJUANA CONTROL BOARD
HB 273 was REPORTED out of committee with a "do
pass" recommendation and with the previously
published fiscal impact note: FN 2(DEC).
HB 278 EXTEND:CERT. REAL ESTATE APPRAISERS BOARD
HB 278 was REPORTED out of committee with a "do
pass" recommendation and with one new fiscal note
from the Department of Commerce, Community and
Economic Development.
HB 279 EXTEND: REAL ESTATE COMMISSION
HB 279 was REPORTED out of committee with a "do
pass" recommendation and with one new fiscal note
from the Department of Commerce, Community and
Economic Development.
HOUSE BILL NO. 273
"An Act extending the termination date of the
Marijuana Control Board; and providing for an
effective date."
9:15:11 AM
REPRESENTATIVE SAM KITO, SPONSOR, introduced himself.
Vice-Chair Bishop MOVED to REPORT HB 273 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HB 273 was REPORTED out of committee with a "do pass"
recommendation and with the previously published fiscal
impact note: FN 2(DEC).
9:15:51 AM
AT EASE
9:16:42 AM
RECONVENED
HOUSE BILL NO. 278
"An Act extending the termination date of the Board of
Certified Real Estate Appraisers; and providing for an
effective date."
9:16:49 AM
Co-Chair MacKinnon discussed the history of the bill.
9:17:08 AM
AT EASE
9:18:40 AM
RECONVENED
9:18:58 AM
Senator Micciche stated that he had a question for the
department. He stated that he was looking at the chain of
custody issues in the fee analysis. He wondered why the fee
analysis was higher than the board's fee analysis.
9:19:53 AM
SARA CHAMBERS, DEPUTY DIRECTOR, DIVISION OF CORPORATIONS,
BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, stated that
she would be addressing the Real Estate Appraisers, rather
than Real Estate Commission, therefore she missed a portion
of the question.
Senator Micciche stated that he was confused, and would
save his question for a later bill.
Vice-Chair Bishop MOVED to REPORT HB 278 out of Committee
with individual recommendations and accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HB 278 was REPORTED out of committee with a "do pass"
recommendation and with one new fiscal note from the
Department of Commerce, Community and Economic Development.
9:20:42 AM
AT EASE
9:24:13 AM
RECONVENED
HOUSE BILL NO. 279
"An Act extending the termination date of the Real
Estate Commission; and providing for an effective
date."
9:24:55 AM
AT EASE
9:25:08 AM
RECONVENED
9:25:14 AM
REPRESENTATIVE ANDY JOSEPHSON, SPONSOR, stated that the
Senate Labor and Commerce Committee did its due diligence,
and made the recommendation to extend the commission.
Senator Micciche wondered why the division's proposal was
higher than the board's proposal. He noted that the
explanation did not give a reason for the agreement. He
asked for further information about the board numbers.
9:26:03 AM
SARA CHAMBERS, DEPUTY DIRECTOR, DIVISION OF CORPORATIONS,
BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, explained
that AS 08.01.065 required the division and the board to
work together. She stated that it was required that those
decisions were not made independently. She stressed that
those efforts occurred with each new fee analysis. She
stated that the board offered observations that had not
been taken into consideration with the fee analysis,
including the desire to reduce the surplus. She stated that
the director opted to take the board's recommendation,
rather than the analysis. She stated that it was not
unusual, and a sign of a healthy process.
Senator Micciche wondered whether the case was properly
served during the investigation. Ms. Chambers replied that
the investigator reviewed the facts provided in the
complaint, and it was determined that it was non-
jurisdictional. The senior investigator reviewed it, and
agreed with the determination. She stated that the case was
reopened, with the stipulation that all parties provided
timely information. She stated that the Department of Law
would work with the division to determine whether the
process was working or whether there would be a required
change to the system.
Vice-Chair Bishop MOVED to REPORT HB 279 out of Committee
with individual recommendations and accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HB 279 was REPORTED out of committee with a "do pass"
recommendation and with one new fiscal note from the
Department of Commerce, Community and Economic Development.
9:29:27 AM
AT EASE
9:30:58 AM
RECONVENED
SENATE BILL NO. 38
"An Act relating to the registration and duties of
pharmacy benefits managers; relating to procedures,
guidelines, and enforcement mechanisms for pharmacy
audits; relating to the cost of multi-source generic
drugs and insurance reimbursement procedures; relating
to the duties of the director of the division of
insurance; and providing for an effective date."
9:32:05 AM
SENATOR CATHY GIESSEL, SPONSOR, introduced the legislation.
She stated that Alaska had the highest health care costs in
the country, and furthered that the United States had the
highest health care costs in the world. She announced that
it was not utilization that drove the cost of health,
rather the cost of that health care. She announced that
pharmaceutical costs made up of approximately 20 percent of
health care costs. She stated that administrative costs
were another large cost driver. She remarked that the bill
addressed both of those items. She felt that it was
imperative that Alaska addressed those costs. The bill was
a consumer protection bill. She explained that pharmacy
benefit managers (PBMs) served as middlemen for health
insurance plans between pharmaceutical manufactures and
retailers. She announced that PBMs were designed to perform
administrative duties for insurers; validate patient
eligibility; administer plan benefits; and negotiate costs
between pharmacies and health care plans. She added that
PBMs also audited for fraud. She felt that creating
networks of multiple pharmacies, the PBMs had leveraged
their size and power to negotiate contracts between drug
manufacturers and retail outlets. The PBMs could secure
rebates or kickbacks on certain drugs, and were responsible
for determining which drugs were covered by different
health care plans. She stated that the PBM market had
become highly consolidated. The focus seemed to be less
about serving consumers and more about increasing company
profits. She felt that there was egregious and anticipative
behavior by PBMs that had harmed consumers and community
pharmacist with increased cost and unreasonable business
practices.
Co-Chair MacKinnon wondered whether there would be a
sectional analysis or an overview of the bill.
9:34:53 AM
JANE CONWAY, STAFF, SENATOR CATHY GIESSEL, stated that she
would provide an overview.
Ms. Conway discussed, "Pharmacy Benefit Managers" (copy on
file).
Ms. Conway looked at slide 2, "SB 38 is a":
? consumer protection bill shines a light on PBM
opaque auditing and MAC pricing practices to help
drive prescription costs down
? small-business protection bill components of this
bill helps ensure viability of critical small-town
Alaska pharmacies and access to health care
Ms. Conway highlighted slide 3, "What's a PBM?":
PBMs are multi-billion dollar middlemen
Started in1970 as claims processers, now intertwined
in almost every aspect of the pharmaceutical/pharmacy
supply chain
Virtually unregulated, state or federal level
Today, the top PBMs represent some of the most
profitable companies in the nation
Ms. Conway addressed slide 4, "Examples of PBM's Market
Power/Influence":
CVS/Caremark (AK State Plan Pharmacy Benefit Manager)
2017 - 7th most profitable U.S. company in
Fortune 500
2017 Revenue: $177.5 Billion
Express Scripts Holding
ESH generated $100.3 billion in revenue in 2017
Number 22 ranking
Ms. Conway discussed slide 5, "State of Alaska Health Care
Plan." She stated that the picture was a State of Alaska
health care plan card. She noted that AETNA was the health
care plan, and contracted with CVS Caremark to handle the
prescriptions.
Ms. Conway highlighted slide 6, "PBMs were designed to:"
reduce administrative costs for insurers
validate patient eligibility
administer plan benefits
negotiate costs between pharmacies and health plans
audit pharmacies for fraud
Ms. Conway discussed slide 7, "PBM's Impact on Pharmacy and
Patients":
PBMs develop pharmacy provider networks with contracts
Pharmacies must accept a PBM contract
Many contracts truly are "take it or leave it."
If they don't sign it, they lose all the customers
covered by that plan
PBMs influence what drugs are dispensed regardless of
what a physician prescribes by using a list of PBM-
approved drugs known as "formularies"
PBMs receive rebates from drug manufacturers for
putting their drugs on a given formulary
Ms. Conway looked at slide 8, "PBM's Impact on Pharmacy and
Patients":
PBMs dictate how much pharmacies will be paid for the
drugs they dispense regardless of the pharmacies'
acquisition costs
PBMs have free reign to dictate what pharmacies are
permitted to do in a given network thereby driving
patients to particular pharmacy options
PBMs operate their own mail-order pharmacies and can
incentivize or mandate that customers obtain their
medications only through the mail-order option
9:38:59 AM
Ms. Conway addressed slide 9. She noted that there were
three aspects to the scenario in terms of the transactions.
She explained how the drug was priced out.
Ms. Conway highlighted slide 10, "National Academy of State
Health Policy:"
? 80 pieces of legislation currently introduced in
state legislatures across the country to regulate PBM
practices. Even the White House is paying attention.
? The fair audit provisions of SB 38 are consistent
with legislation in other states
? The PBM requirements for setting pharmacy drug
reimbursement rates, including appeals, are similar to
other states
Ms. Conway looked at slide 11, "Fair Pharmacy Audit
Legislation in the States." She noted that Alaska was one
of the few states that had not adopted fair pharmacy
legislation.
Ms. Conway highlighted slide 12, "States With Generic Drug
Pricing Transparency Legislation Enacted." She stated that
the blue dots had enacted generic drug pricing
transparency, and noted that Alaska was in the minority on
that map.
Ms. Conway discussed slide 13, "Maximum Allowable Cost
(MAC)":
A "maximum allowable cost" or "MAC" list refers to a
payer or PBM -generated list of products that includes
the upper limit or maximum amount that a plan will pay
for generic drugs and brand-name drugs that have
generic versions available ("multi-source brands").
A PBM may have several different MAC lists, depending
on the plan
Essentially, no two MAC lists are alike and each PBM
has free reign to pick and choose products for their
MAC lists.
Sometimes the MAC list is confused with the
"formulary."
A Formulary is a list of all the drugs that are
covered by a particular insurance plan. Generally it
has no pricing attached to it. A formulary will usual
contain both Brand and Generic Drugs.
9:44:19 AM
Ms. Conway highlighted slide 14, "PBM Use of MAC as Revenue
Stream":
Because of this lack of clarity, PBMs can use their
MAC lists to generate significant revenue
Typically, they utilize an aggressively low MAC price
list to reimburse their contracted pharmacies and a
different, higher list of prices when they negotiate
prices with their clients or plan sponsors
Essentially, the PBMs reimburse low and charge high
with their MAC price lists, pocketing the significant
spread between the two prices
Most plan sponsors are unaware that multiple MAC lists
are being used and have no real concept of how much
revenue the PBM retains
Ms. Conway looked at slide 15, "MAC Pricing":
When the PBMs fail to update MAC lists in a timely
manner, pharmacies are often forced to dispense at a
loss, sometimes as high as $100 or more on a single
prescription, or not dispense at all
(The MAC lists can be updated at any time usually
decreased- so real time prices are often obsolete and
less than what the pharmacist expected)
When prices increase, PBMs often wait weeks or even
months before updating MAC lists and rarely, if ever,
reimburse pharmacies retroactively, yet the PBMs act
swiftly to update MAC list when drug costs decrease
This significantly jeopardizes financial viability of
community pharmacies
In fact, 84 percent of pharmacists said the
acquisition price spike/lagging reimbursement trend is
a "very significant" impact on their ability to remain
in business and to continue serving patients
Ms. Conway looked at slide 16, "MAC Pricing":
MAC legislation is designed to reasonably address
concerns by:
Providing clarity to plan sponsors and pharmacies
with/regard to how MAC pricing is determined and
updated
Establishing an appeals process by which a
dispensing pharmacist can contest a listed MAC
price
Providing standardization for how products are
selected for inclusion on a MAC list
The MAC process provides no transparency for plan
sponsors or contracted retail network pharmacies.
They are required to blindly agree to contracts.
Ms. Conway skipped slide 17, "MAC Pricing."
Ms. Conway discussed slide 18, "SB 38: What Does A MAC
Transparency Bill Do?"
Sets reasonable standards
Requires regular reporting of MACs to a pharmacy in
useable format
Provides for a defined MAC appeals process
A MAC Transparency Bill Does NOT:
Mandate that a PBM reimburse a pharmacy at a
higher amount
Represent an administrative burden on the PBM
Mandate that a PBM approve a pharmacy's MAC
appeal
Result in increased costs to the healthcare
system
There is no documented evidence or analysis nationally
that MAC pricing legislation has increased healthcare
costs.
Ms. Conway looked at slide 19, "SB 38 What Does a Fair
Audit Bill Do?
Brings fairness to the unregulated and expanding
practice of pharmacy audits
Does not allow audits during the first seven calendar
days of each month because of the high patient volume,
unless the pharmacy and auditor agree otherwise
Prevents the targeting of minor clerical or
administrative errors here no fraud, patient harm, or
financial loss has occurred
Establishes submission of data/medical record
standards to allow for clarification where
discrepancies are identified
Establishes a reasonable time frame for the
announcement of an audit to allow proper retrieval of
records under review
Ms. Conway highlighted slide 20, "What Does a Fair Audit
Bill Do?"
Establishes an audit appeals process for pharmacies
Establishes guidelines for PBMs to follow regarding
patient confidentiality
Prohibits extrapolation in assessing fees/penalties
Allows Alaska pharmacists to provide mail-order
service to their customers without penalization
Local mail-order service keeps Alaska dollars in
Alaska
Legislation does not prevent the recoupment of funds
where fraud, waste, and abuse exist
9:50:06 AM
Ms. Conway discussed slide 21, "SB 38: Summary":
40 states have enacted fair audit legislation
34 states have enacted Maximum Allowable Cost (MAC)
transparency legislation
Bill will also include:
Registration of PBMs with the State of Alaska Division
of Insurance Set-up guidelines for generic drug
maximum allowable cost (MAC) pricing by PBMs
Establish a mechanism for a pharmacy to appeal MAC
pricing appeal denials
Don't audit local pharmacies out of business.
Their services are crucial in our rural areas.
Ms. Conway highlighted slide 22, "This legislation has been
the Alaska Pharmacists":
Association's Number 1 Priority bill for past 10
years.
Sponsored by Senator Kim Elton, Senator Dennis Egan,
and now, Senator Giessel
In your packets you will see numerous articles. Those
are just the tip of the iceberg.
Nationally, the opaque "black box" practices of PBMs
are now under intense scrutiny.
All one needs to do is Google "Pharmacy Benefit
Manager" and you will see countless articles on this
emerging concern. NCSL is now tracking these trends.
In a few states now, PBMs have sued states because of
their PBM legislation and have lost.
It is even more crucial to support this legislation in
Alaska because of the critical service that
independent pharmacies provide to its rural clientele.
? Rich Holt Chair, AK State Board of Pharmacy
? Barry Christensen - AK Pharmacist Association
Legislative Chair
? Emily Ricci Dept. of Administration,
Retirement and Benefits
? Lori Wing-Heier Director, Division of
Insurance
Senator von Imhof looked at slide 20, and looked to the
third bullet point, "prohibits extrapolation in assessing
fees and penalties." She explained that the extrapolation
was a federal issue with Medicaid. She felt that the PBMs
were not directing that issue. Ms. Conway replied that the
Medicaid plans and audits did not apply under the bill. She
shared that the Department of Health and Social Services
(DHSS) hired private contractors to conduct those audits.
Senator von Imhof surmised that there could technically be
two different audits for pharmacy: one for private insurers
that would not use extrapolating techniques; and one
auditor under Medicaid that would use extrapolation
techniques. Ms. Conway agreed, but deferred to the experts
available online.
Senator Stevens assumed that the native corporations were
also exempt in the bill. Ms. Conway replied in the
affirmative. She stated that they were more internal with
the clinics and hospitals that were regulated on a federal
level.
9:55:26 AM
LORI WING-HEIER, DIRECTOR, DIVISION OF INSURANCE,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
noted that the subject had been in legislation in many
different states. She stated that the organizations allowed
for little insights. She noted the concerns from the
pharmacists about the costs of what was reimbursed; the
extrapolations; and the costs of the audit. She stated that
PBMs initially saved money, but were initially mail-order
pharmacies. Eventually PBMs changed to community
pharmacists that adjusted the prices. She remarked that
there was no insight into the PBMs, and there was a desire
to control without inadvertently increasing the cost of
health care.
9:57:21 AM
EMILY RICCI, CHIEF POLICY ADMINISTRATOR, DIVISION OF
RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION,
Noted that the bill had been around for a significant
number of years. She shared that there was work with the
independent pharmacists, the contractor AETNA, and CVS
Caremark. She noted that the division had a relationship
with the PBM; and that PBM had contractual relationships
with different pharmacies. The pharmacies had additional
contractual relationships with wholesale distributors and
purchasing services administrative organizations. She
furthered that the PBMs had additional contractual
relationships with the drug manufacturers. She stressed
that none of those entities were privy to the relationships
of the other entities. Therefore there was a narrow
perspective of the drug claims paid on the state's side.
She stressed that there was a fiduciary responsibility to
the plan.
Senator von Imhof noted that PBMs and pharmacists had
recently attempted to come to an agreement, and wondered
whether there was success in that effort. Ms. Ricci replied
that she was aware of an effort two or three years prior,
and did not know the content of those discussions. She
assumed that the effort was not successful.
SB 38 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 185
"An Act relating to reemployment of persons who retire
under the teachers' retirement system."
10:01:38 AM
AT EASE
10:02:11 AM
RECONVENED
10:02:21 AM
SENATOR PETER MICCICHE, SPONSOR discussed the bill. He
stated that the bill allowed teacher's to be paid normal
retirement, while not accruing additional benefits in the
system. There would be no additional cost to school
district.
Senator Stevens thought the bill was good in many ways. He
asked about the bill provision related to the age of the
teacher.
Senator Micciche stated that the provision had to do with a
ruling of the IRS. He deferred to those who could address
the specifics of that issue.
10:06:16 AM
RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, discussed the
Sectional Analysis (copy on file):
Section 1
Adds new section to AS 14.20:
AS 14.20.136(a) allows school districts to rehire
educators that have retired under the defined benefit
plan or the defined contribution plan when;
AS 14.20.136(b)(1) the retired member certifies that
there was no prearrangement of reemployment made prior
to retirement;
AS 14.20.136(b)(2) the member has been retired at
least 60 days if they are 62 years of age or older or
six months if the member is younger than 62 years of
age;
AS 14.20.136(c) the school district has adopted a
rehire policy by resolution and has publicly
advertised the position for 10 business days and is
actively recruiting to fill the position with a person
other than a retired member.
AS 14.20.136(d) reemployment contracts may not exceed
12 consecutive months.
AS 14.20.136(e) the school district that hires a
retiree must provide the administrator with a copy of
the resolution and policy required by (e) as well as a
report stating the retiree's name, description of
circumstances, and actions taken to comply with the
policy. The school district is also required to make
contributions to AS 14.25.070.
AS 14.20.136(f) certain requirements of the section
don't apply to a rehire member that's eligible for
restoration of tenure rights.
Section 2
Allows retirees who are rehired, as permitted by
section 1, to continue to receive retirement benefits
during the period of reemployment unless they become
an active member.
Sections 3
Makes retirees who are reemployed, as permitted by
section 1, ineligible to receive additional retirement
benefits based on their service and salary during the
period of reemployment.
Section 4
Clarifies that a member who is reemployed does not
become an active member, the member will continue to
receive retirement benefits, deductions under TRS will
not be made to their salary and reemployed educators
will not receive credited time for service during
reemployment. This section also ensures that a retired
and rehired teacher will be eligible to receive the
group health plan coverage that is provided to active
members employed by the school district if they so
choose.
Section 5
Inserts reference to section 1 which will require the
employer to make TRS contribution for reemployed
retirees at a rate of 12.56 percent.
Section 6
Applies the bill's provisions to contracts made on or
after the effective date.
10:09:32 AM
Co-Chair MacKinnon looked at page 2, lines 12 and 13, and
noted that the intent was twelve months. She wondered
whether a retired teacher could move between districts,
begin a new contract, and continue to accrue benefits.
Senator Micciche replied that all teachers' contracts were
for twelve months or less. Those teachers could have other
contracts, but the districts would go through the same
process. The intent was not to replace existing teachers.
He remarked that the bill was about filling a position.
Co-Chair MacKinnon wondered what would happen when a
retired teacher exited at $50,000 per year, and a new
teacher was hired at $35,000 a year. She asked whether the
new teacher that would be rehired and receiving benefits
received $35,000 or $50,000.
Senator Micciche replied that each instructor was hired on
an individual basis, so the negotiation would occur with
the districts. He stated that he had managed large
organizations, so he asserted that the position with the
smaller salary would be the first choice.
Co-Chair MacKinnon noted that there were specific
provisions in statute that would not allow to come back
with the retirement wage.
Senator Stevens felt that the negotiation was between the
district and the individual teacher; therefore the salary
could not be at a specific commitment.
Senator Micciche agreed, and stated that there would be no
additional benefit beyond the pay of the position. He
announced that there was a hope that all positions be
filled with new teachers, but districts were struggling to
fill those positions.
Co-Chair MacKinnon shared that the state paid what the
districts negotiate. She remarked that it was the
committee's job to appropriately understand the impact.
Senator Stevens understood that the state paid that bill.
He wondered why the University of Alaska was not included
in the legislation.
Co-Chair MacKinnon shared that she had not planned to bring
the university into the discussion, and encouraged Senator
Stevens to communicate with the bill sponsor.
10:16:16 AM
LISA PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL
ADMINISTRATORS, (ACSA) spoke in support of the bill. She
felt that it was a tool to help school districts in a time
to fill vacancies with high quality staff. She felt that it
was not a "silver bullet", but could provide some relief as
a stop gap. She remarked that SB 185 would allow for the
reemployment retired educators to help districts fill
vacancies; and was a necessary tool to help meet district
personnel needs in both urban and rural districts. She
thanked Kathy Lee for work to ensure that the bill
envelopes the necessary IRS Treasury regulations and other
important issues in the bill. She felt that the legislation
was vital because of the shortage of staff in the state.
She recalled that preparing, attracting, and retaining
teachers.
Co-Chair MacKinnon wondered when the previous legislation
had concluded. Ms. Parady replied that the bill sunset was
2009.
10:24:28 AM
Co-Chair Hoffman queried the hiring provisions between 2001
and 2010, and whether those differed from the proposed
legislation. Ms. Parady responded that the bill was
structured based on the previous legislation. She furthered
that the current regulations were included by the IRS
letter ruling that included the waiting periods. She
stressed that there were sufficient requirements to greatly
reduce the likelihood that the bill would impact a current
TRS member's decision to retire, because of the bona fide
separation of employment.
10:26:12 AM
DR. KAREN GABORIK, PRESIDENT, ALASKA SUPERINTENDENTS
ASSOCIATION, spoke in support of the bill. She felt that
the bill would positively impact every public school
student in the state. She remarked that Fairbanks had
experienced teacher shortages in positions that had
previously been filled. She remarked that there were
frequently unfilled vacancies in special education
positions, and were constantly recruiting and traveling for
those positions. She stressed that, recently, there were
regular education teacher vacancies in areas such as high
school math, science, physics, calculus, music, etc. She
remarked that it was not good for students to face a
revolving door of substitute teachers to fill that gap.
Senator Stevens surmised that the rules currently
restricted the hiring of a retired Alaska school teacher.
He remarked, however, that a retired teacher could be hired
from another state. He felt that was unfair. Ms. Gaborik
replied that there were people who had taught in the
community to fill those positions.
Senator Stevens stressed that the issue was unfair. Ms.
Gaborik agreed.
10:30:06 AM
DEENA BISHOP, SUPERINTENDENT, ANCHORAGE SCHOOL DISTRICT
(via teleconference), spoke in support of the bill. She
stressed that her district had accessed the experience of
retired educators by allowing for temporary or part time
employee. Nevertheless, the efforts to access the workforce
was limited without a full-time provision of reemployment
of retirees. She assured the committee that the
reemployment of retired teachers was not intended to avoid
the hire of new teachers. She stressed that retirees filled
gaps when properly certified staff could not be hired in
those hard to fill areas.
Co-Chair MacKinnon requested a telephone conversation with
her office. Ms. Bishop agreed.
10:32:29 AM
NORM WOOTEN, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA
SCHOOL BOARDS, testified in support of the bill. He stated
that his organization had a resolution in place to support
retire rehire of teachers and administrators since 2008,
which the previous provision was scheduled to sunset. He
stressed that there was a nationwide shortage of teachers
and administrators. He remarked that it was especially the
case with hard to fill positions.
Senator Stevens stressed that administrators were included
in the bill. Mr. Wooten agreed.
10:35:23 AM
MARK MILLER, SUPERINTENDENT, JUNEAU SCHOOL DISTRICT, spoke
in support of the legislation. He shared that he only had
two options when he had an open position: attempt to fill
that position with a substitute or fill with a new teacher.
He stated that on any given day there would be students
supervised by someone, because there was no teacher to
substitute during that period. He stated that he could also
contact a company in the lower 48 to contract to send
someone to fill services that could not be filled
internally. He stressed that the Alaskan tax dollars would
be spent outside of Alaska. He felt that it was a resource
issue.
10:38:08 AM
MARY WEGNER, SUPERINTENDENT, SITKA SCHOOL DISTRICT, spoke
in support of the bill.
10:41:01 AM
SEAN DUSEK, SUPERINTENDENT, KENAI PENINSULA BOROUGH SCHOOL
DISTRICT, testified in support of the legislation.
10:43:26 AM
BOBBY BOLEN, SUPERINTENDENT, BERING STRAIT SCHOOL DISTRICT,
spoke in support of the bill.
Senator Olson wondered what would occur when the qualified
positions were lost. Mr. Bolen replied there was much time
spent in the lower 48 looking for teachers. He stated that
there were teachers that needed to fill those empty spaces.
Senator Olson noted that Golovan had some substitute
teachers who were recently graduated, because of the
teacher shortage.
Senator von Imhof wondered how much teacher housing a
contributing factor was to hire and maintaining a
workforce. Mr. Bolen replied that there was not a current
problem of housing, because there were no teachers to fill
that housing.
10:47:45 AM
MONICA GOYETTE, SUPERINTENDENT, MATSU BOROUGH SCHOOL
DISTRICT, spoke in support of the bill.
Co-Chair MacKinnon noted that the statement of the three
year educational certification was an individual district
policy. Ms. Goyette agreed.
Co-Chair MacKinnon CLOSED public testimony.
10:49:39 AM
KATHY LEA, CHIEF PENSION OFFICER DIVISION OF RETIREMENT AND
BENEFITS, DEPARTMENT OF ADMINISTRATION, stated that she was
available for questions. She also stated that the
Department of Administration's position on the bill was
neutral.
Co-Chair MacKinnon queried the fiscal note.
10:50:17 AM
Ms. Lea explained the fiscal note.
Senator Stevens requested the point of the IRS regulation
of the difference between six months and sixty days. Ms.
Lea replied that in any plan, because of the tax qualified
plan, there must be a mark at which it would be considered
a "normal retirement" for any time of government or private
sector plan. She explained that it was because the
contributions made to the plan were made on a pre-tax
basis. The IRS would then examine when it could receive the
tax for the pre-tax contributions.
Vice-Chair Bishop requested a meeting with his office.
10:55:06 AM
Co-Chair MacKinnon asked for an explanation of the
indeterminate fiscal note. Ms. Lea replied that the fiscal
note was indeterminate, because it was not known how many
people would participate in the program, nor was it known
which group they might participate.
11:00:48 AM
Senator Stevens noted that some districts were hiring
retired teachers at 24.9 percent or less, which was
acceptable under the rules of the retirement system. Ms.
Lea replied that under the existing rules, a teacher or
administrator was mandated to be in TRS if they had at
least a 50 percent contract.
Co-Chair MacKinnon wondered whether there was additional
cost to the state, if there was not an effect on insurance.
Ms. Lea replied that she had not analyzed it, because it
occurred on an ad hoc basis.
Co-Chair MacKinnon announced that amendments were due on
Wednesday. She discussed the agenda for the afternoon
meeting.
SB 185 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
11:02:39 AM
The meeting was adjourned at 11:02 a.m.