Legislature(1999 - 2000)
03/21/2000 01:37 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
March 21, 2000
1:37 p.m.
MEMBERS PRESENT
Senator Jerry Mackie, Chairman
Senator Tim Kelly, Vice Chairman
Senator Dave Donley
Senator Loren Leman
Senator Lyman Hoffman
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
SENATE BILL NO. 272
"An Act eliminating certain taxes under AS 21.09 on premiums from
the sale of workers' compensation insurance; relating to the
establishment, assessment, collection, and accounting for service
fees for state administration of workers' compensation and worker
safety programs; establishing civil penalties and sanctions for
late payment or nonpayment of the service fee; and providing for an
effective date."
-HEARD AND HELD
CS FOR HOUSE BILL NO. 230(FIN)
"An Act permitting certain dispatchers in police or fire
departments or for the state troopers to convert their credited
service under the public employees' retirement system to credited
service as peace officers; and providing for an effective date."
-MOVED SCS FOR CS FOR HB 230(L&C) OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
HB 230 - No previous Senate action
SB 272 - See Community & Regional Affairs minutes dated 3/1/00.
See Labor and Commerce minutes dated 3/7/00.
WITNESS REGISTER
Mr. Paul Grossi
Director, Division of Workers' Compensation
Department of Labor & Workforce Development
P.O. Box 25512
Juneau, AK 99802-5512
POSITION STATEMENT: Commented on SB 272.
Mr. Michael Hinchen
General Manager
Alaska Timber Insurance Exchange
2555 First Ave.
Ketchikan, AK 99901
POSITION STATEMENT: Opposed to SB 272.
Mr. Don Shannon
Alaska Safety Advisory Council
232 Bentley Dr.
Fairbanks, AK 99701
POSITION STATEMENT: Support for SB 272.
Mr. Dwight Perkins
Deputy Commissioner
Department of Labor
P.O. Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Commented on SB 272.
Mr. Patrick Harman
Legislative staff for Representative Pete Kott
Alaska State Capitol
Juneau, AK 99802
POSITION STATEMENT: Commented on HB 230.
Mr. Al Tamagni Jr.
Dispatcher, Anchorage Fire Department
6940 Burlwood
Anchorage, AK 99507
POSITION STATEMENT: Supports HB 230.
Ms. Tonya Kurtz
Dispatcher for the Juneau Police Department
P.O. Box 32146
Juneau, AK 99803
POSITION STATEMENT: Supports HB 230.
Mr. Bill Church
Retirement Supervisor
Division of Retirement & Benefits
Department of Administration
P.O. Box 110203
Juneau, AK 99811-0203
POSITION STATEMENT: Commented on HB 230.
Mr. Pablo Paiz
Police Officer
Anchorage Police Department
6600 Donna Drive
Anchorage, AK 99504
POSITION STATEMENT: Supports HB 230.
Ms. Karen Childers
Communications Supervisor
Juneau Police Department
4103 Blackerby St.
Juneau, AK 99801
POSITION STATEMENT: Supports HB 230.
Mr. Duane Udland
Chief of the Anchorage Police Department
4501 S. Bragaw
Anchorage, AK 99504
POSITION STATEMENT: Supports HB 230.
Mr. Del Smith
Deputy Commissioner
P.O. Box 111200
Juneau, AK 99811-1200
POSITION STATEMENT: Supports HB 230.
ACTION NARRATIVE
TAPE 00-10, SIDE A
Number 001
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee
meeting to order at 1:37 p.m. Present were Senators Mackie, Leman,
Donley, Hoffman, and T. Kelly. The first order of business to come
before the committee was SB 272.
SB 272-WORKERS COMP AND WORKER SAFETY
MR. PAUL GROSSI, Director of the Division of Workers' Compensation,
stated changes have been made to address concerns of the industry.
CHAIRMAN MACKIE stated the intent was not to move SB 272 out of
committee, but to have a hearing and let the House version come
over to the Senate. Chairman Mackie expressed concerns about
municipalities and timber industry self-insured groups.
MR. GROSSI said SB 272 will eliminate the premium tax on workers'
compensation insurance, enact the user fee, and establish a special
account for funding workers' compensation and Occupational Safety &
Health Administration (OSHA). Employers must cover workers with
workers' compensation in three ways; purchase a workers'
compensation insurance policy, certify they are self-insured, or
become a member of the Joint Insurance Association (JIA).
SB 272 is an attempt to establish that all employers pay the same
rate based on the number of claims filed. The more claims
submitted, the more employers will pay, and less claims will mean
lower payments. SB 272 will promote safer working environments,
allow all employers to pay at the same rate, and will eventually
eliminate reliance on the general fund. Mr. Grossi stated 16
states use an approach similar to that in SB 272. OSHA needs to be
ruled by the State and not be taken over by the federal government.
CHAIRMAN MACKIE asked if Mr. Grossi had seen correspondence from
the Alaska Forest Association and Sealaska regarding self-insured
agencies that are concerned about SB 272.
MR. GROSSI said no.
MR. MICHAEL HINCHEN, General Manager of the Alaska Timber Insurance
Exchange (ATIE), stated ATIE was founded in 1980 by members of the
Alaska Loggers Association and is owned by its policy holders.
Workers' compensation insurance costs have been reduced and
improved workplace safety has resulted for workers. ATIE has
concerns about SB 272 and HB 378, the companion bill to SB 272.
The new user fee results in double taxation. Workers' compensation
insurance premiums pay for losses, claims administration costs, and
other administrative expenses.
Lost payments make up 50-70 percent of the premiums that are
collected for any given policy year. ATIE and other insurers would
be taxed on lost payments that have already been subject to a
premium tax. Mr. Hinchen referred to AS 21.09.210. The double
taxation will have an adverse financial impact on ATIE and other
insurance companies.
If SB 272 does pass, ATIE will need to accrue an expense and a
liability for future user fee payments that are based on lost
reserves that relate to 1999 and prior policy lost reserves. ATIE
policy holder surplus will be reduced by $417,000. The policy
holder surplus is the owners' equity portion that these employers
in the State and the timber companies have put up to fund the
exchange. This would reduce the surplus by eight percent. The
projected net income for the year 2000 would be reduced by 13
percent, and the substitution of user fees for premium taxes for
claims occurring during 2000 would reduce the projected net income
by 15 percent.
SB 272 is bad public policy because the control of the funding for
OSHA and the Division of Workers' Compensation will be taken away
from the legislature. Funding for the Division of Workers'
Compensation (DWC) would be spent on workers' compensation and
benefit payments. Pressure for the Alaska Workers' Compensation
Board to rule against an employer when a claim is heard before the
board would increase.
Number 844
MR. DWIGHT PERKINS, Deputy Commissioner of the Department of Labor
(DOL), stated the legislature does have power over appropriations,
and that will not change. No input about double taxation has been
received from companies.
MR. DON SHANNON, Alaska Safety Advisory Council, stated if SB 272
will force companies to "beef up" safety programs, that is a good
thing. Mr. Shannon stated support for SB 272.
HB 230-PERS BENEFITS FOR POLICE/FIRE DISPATCHERS
Number 1053
MR. PATRICK HARMAN, staff for Representative Pete Kott, explained
the proposed amendment for HB 230. The amendment will calculate
the retirement of dispatchers as peace officers and not in another
category. On page 1, line 1, following "dispatchers," the phrase
"and certain emergency medical personnel" would be inserted. On
page 1, line 7, following "dispatcher," the words "or as an
emergency medical service officer or an emergency medical
technician" would be inserted.
SENATOR LEMAN moved amendment number 1. Without objection, the
motion carried.
SENATOR LEMAN moved to adopt SCSCSHB 230 (1-LS0958\I) as the
working version of the Labor & Commerce committee. Without
objection, the motion carried.
MR. HARMAN stated SCS CSHB 230(L&C) recognizes the stress and burn-
out the dispatchers experience from the job. SCS CSHB 230 (L&C)
allows dispatchers to convert the normal 30 year retirement plan to
a 20 year retirement plan. Because the legislation will only
impact the dispatchers, no fiscal note is required.
CHAIRMAN MACKIE asked if Mr. Harman had received the letter from
David Hull in Ketchikan asking to include Emergency Medical
Technicians (EMT's) in the amendment.
MR. HARMAN stated the purpose of the amendment is not for other
people to use this as a Christmas tree vehicle. It would not harm
dispatchers if EMT's were expanded in the legislation.
CHAIRMAN MACKIE stated support for HB 230 and for expanding it to
cover EMT's.
SENATOR HOFFMAN asked how the change in statute would affect a
person just entering the profession as a dispatcher, and whether
the new people have to pay the difference also.
MR. HARMAN stated the people just starting would pay at the same
rate as a 30 year retirement plan. The 20 year option is only
available at retirement.
SENATOR HOFFMAN asked how these people were going to pay a
difference of $100,000 at the end of 20 years.
MR. HARMAN stated they could consider a mutual fund, annuity plan,
or bank loan.
SENATOR KELLY asked if those people could have the money taken out
of retirement proceeds as they are received, to pay for the lump
sum difference.
CHAIRMAN MACKIE stated including EMT's would take a title
amendment. At this time the committee did not offer that
amendment.
SENATOR LEMAN stated there would be no impact on the PERS system
because there is no impact to the general fund.
MR. HARMAN stated that was correct.
SENATOR LEMAN stated people that leave before the 30 year
retirement still receive a retirement. It might benefit people to
have a separate retirement account available. The State should
research a defining contribution system. It would be an investment
system and at retirement people can draw from investments they have
made.
MR. HARMAN stated there is a more mobile workforce now, and people
generally don't stay in a position for 30 years.
Number 1732
MR. AL TAMAGNI JR., Dispatcher for the Anchorage Fire Department,
stated support for SCS CSHB 230 (L&C). A dispatcher's job is to
direct and coordinate a constant streak of activity, while
remaining seated at a radio console. Dispatchers are a life saving
link between the community and the public safety responders.
Overwhelming stress falls on dispatchers, as well as officers and
firemen.
Dispatchers must serve an additional 10 years past their peers
before being eligible to retire, and surpass their peers in
turnover rate. Critical decision making requires dispatchers to be
in control of their emotions. SCS CSHB 230 (L&C) will shorten the
unrealistic time period required for public safety dispatchers to
serve prior to being eligible for retirement.
MS. TONYA KURTZ, Dispatcher for the Juneau Police Department,
stated the Juneau Police Department has ongoing problems keeping
dispatchers and it is currently understaffed. 22 people have been
hired in the past five years. Only five of the 22 are still
employed as dispatchers. The demands are high and very few people
can meet those demands; a 30 year retirement is unrealistic. Ms.
Kurtz stated support for SCS CSHB 230(L&C), but is concerned about
the financial burden on the dispatcher at the end of 20 years.
SENATOR LEMAN stated he would like to see what the financial burden
will be at the end of 20 years. Maybe an investment portfolio can
be started so the terms aren't unrealistic. Dispatchers never make
the 30 year requirement for retirement, but maybe those people
could ask for a lateral move and go to another position under the
PERS system.
MS. KURTZ stated the lump sum is a concern. Something should be in
place to make the contributions ongoing so it is not such a burden
at the end of the 20 years.
CHAIRMAN MACKIE asked what the requirements were for early
retirement.
MR. BILL CHURCH, Retirement Supervisor for the Division of
Retirement & Benefits, stated normal retirement can be achieved by
age or service. If you were hired before July 1, 1986 the normal
retirement age is 55. If you were hired after July 1, 1986 the
normal retirement age is 60. At any age, someone who is in the all
other system and works 30 years can begin receiving a retirement
benefit.
SENATOR KELLY asked, if a person serves as a peace officer for 20
years and starts at age 20, at what age they start receiving
benefits.
MR. CHURCH replied at age 40 if they started before July 1, 1986.
Those benefits also include free major medical and health coverage.
SENATOR KELLY asked, if SCS CSHB 230(L&C) passes, whether there is
a way to increase deductions for retirement for people already in
the system.
MR. CHURCH answered no. There is no mechanism for a person to have
extra money taken out for retirement. Maybe they could be advised
to set money aside and have it invested.
SENATOR KELLY asked what percentage peace officers pay out to
retirement.
MR. CHURCH replied 7.5 percent v. 6.75 percent for all other
positions.
SENATOR KELLY asked once SCS CSHB 230(L&C) passes, why dispatchers
can't start paying out at 7.5 percent.
MR. CHURCH stated that would still not cover the costs, but it
would lessen the lump sum at the end of 20 years.
CHAIRMAN MACKIE used Ms. Kurtz as an example, and asked if a person
who had been employed for four years started paying at the higher
rate, whether at retirement the lump sum would consist of the
original four years that person did not pay the higher rate.
TAPE 00-10, SIDE B
MR. CHURCH stated no. The system only pays 4.5 percent interest on
money held in the system. Retirement benefits are based on
contributions from the employer and employee, and investment
returns. The retirement benefits people claim are paid out in the
first three years of retirement. Money after that comes from
employer income, and investment income those funds have earned.
SENATOR KELLY asked what will happen if a person retires at 20
years but does not have the money to pay the lump sum.
MR. CHURCH replied SCS CSHB 230(L&C) would allow the employee to
take a lifetime actuarial reduction to those benefits.
SENATOR KELLY asked if that was a gamble to the system.
MR. CHURCH replied yes.
SENATOR KELLY stated the system estimates how long the person will
live, and if they die the following year the system gains that
money.
MR. CHURCH answered yes. The factors are based on interest
assumptions of the fund and mortality factors used in the insurance
industry.
SENATOR HOFFMAN asked if military time counted toward the 20 year
retirement.
MR. CHURCH replied no. The 20 years needs to be in membership
service, 20 years as a dispatcher or peace officer.
SENATOR KELLY asked if the employee is required to front a lump sum
of money at the end of 20 years, whether the employer is required
to do the same.
MR. CHURCH replied no. Mr. Church referred to an example submitted
by the system's actuary.
Number 2191
SENATOR LEMAN asked, after a person has invested 20 years, whether
it is factored into adverse selection with regards to poor health
and other possibilities.
MR. CHURCH replied he didn't recall discussing that issue with the
actuary. Normally an adverse selection would be factored into the
equation.
SENATOR LEMAN asked Mr. Church for statistics on typical employees
that work 20 years and 30 years, and how the retirement would be
calculated.
MR. CHURCH answered the calculations were made on 20 years of
service for an employee with an average salary of $50,000.
SENATOR LEMAN asked if it would change other benefits like medical,
dental, etc.
MR. CHURCH replied no. Other benefits are driven by when the
person is first employed in the retirement system.
Number 2045
MR. PABLO PAIZ, Police Officer with the Anchorage Police
Department, stated he has been employed by the Anchorage Police
Department for 10 years; four years of that time was as a police
dispatcher. The most stressful job he has encountered was
dispatching. Dispatchers monitor the lives of the people on the
phone and the police officers they send out on calls along with
firemen and EMT's. A major reason Mr. Paiz became a police officer
was because he knew he could not put in the 30 year requirement for
retirement. Mr. Paiz stated support for SCS CSHB 230(L&C).
MS. KAREN CHILDERS, Communication Supervisor for the Juneau Police
Department, stated public safety dispatching is a job like no
other. The nature of the job requires technical communications,
multi-tasking, and inter-personal skills. What separates the job
from others requiring the same skills is that a dispatcher must
have the ability to disengage their emotions in order to get the
job done.
MS. CHILDERS gave examples of horrifying 911 calls. On a daily
basis dispatchers deal with the worst of life's realities. The
possibility of a dispatcher dealing with an emergency involving
friends and family is highly probable in Alaska. 20 years of
cumulative stress is long enough, yet 20 years is short enough to
make it attractive as a career choice and rewarding to those who
have already dedicated many years of service. Ms. Childers stated
support for SCS CSHB 230(L&C).
MR. DUANE UDLAND, Chief of the Anchorage Police Department, stated
support for SCS CSHB 230(L&C). He will be encouraging people who
are hired, and are already employed to start saving toward their
retirement.
CHAIRMAN MACKIE asked if he knew of any dispatchers that had made
it to the 20 year mark or 30 year mark.
MR. UDLAND answered some make it to 20 years, not many make it past
that point, and no one has made it to 30 years.
CHAIRMAN MACKIE asked if the people that left their position could
have made the 20 year mark if the law had been in place.
MR. UDLAND replied yes.
SENATOR LEMAN stated people do have options available for
investing, and they could do better than the PERS system through
the investments they make.
MR. UDLAND agreed, and anyone could beat the PERS system if they
invested wisely.
CHAIRMAN MACKIE asked Mr. Udland if he would come up with a formula
for new hires and existing hires for them to start saving for
retirement.
MR. UDLAND stated yes, they would work on that formula.
MR. DEL SMITH, Deputy Commissioner of the Department of Public
Safety, stated support for SCS CSHB 230(L&C). No dispatcher has
ever made it to a 30 year retirement. A light at the end of the
tunnel is extremely important, dispatching is a high-stress job.
Number 1519
CHAIRMAN MACKIE spoke with Mr. David Hull, Ketchikan Fire
Department, and explained the sponsor of SCS CSHB 230(L&C) did not
want to pursue a title change at this time. Chairman Mackie
offered to work with him on another avenue to include EMT's for a
20 year retirement.
SENATOR DONLEY moved SCS CSHB 230(L&C) out of committee with do
pass recommendations. Without objection, the motion carried.
There being no further business to come before the committee
CHAIRMAN MACKIE adjourned the meeting at 2:52 p.m.
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