02/14/2024 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB147 | |
| SB206 | |
| SB135 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 147 | TELECONFERENCED | |
| *+ | SB 206 | TELECONFERENCED | |
| *+ | SB 135 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 14, 2024
1:32 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Elvi Gray-Jackson
Senator Forrest Dunbar
Senator Kelly Merrick
MEMBERS ABSENT
Senator Click Bishop, Vice Chair
COMMITTEE CALENDAR
SENATE BILL NO. 147
"An Act relating to reemployment rights and benefits."
- HEARD AND HELD
SENATE BILL NO. 206
"An Act relating to workers' compensation reemployment benefits;
establishing a workers' compensation stay-at-work program; and
providing for an effective date."
- HEARD AND HELD
SENATE BILL NO. 135
"An Act establishing the Alaska Work and Save Program;
establishing the Alaska Retirement Savings Board; and providing
for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 147
SHORT TITLE: REEMPLOYMENT BENEFITS
SPONSOR(s): SENATOR(s) KAUFMAN
05/11/23 (S) READ THE FIRST TIME - REFERRALS
05/11/23 (S) L&C, FIN
02/14/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 206
SHORT TITLE: WORKERS' COMP. STAY-AT-WORK PROGRAM
SPONSOR(s): SENATOR(s) GRAY-JACKSON
01/24/24 (S) READ THE FIRST TIME - REFERRALS
01/24/24 (S) L&C, FIN
02/14/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 135
SHORT TITLE: AK WORK & SAVE PROGRM; RETIRE. SAVINGS BD
SPONSOR(s): SENATOR(s) WIELECHOWSKI
04/24/23 (S) READ THE FIRST TIME - REFERRALS
04/24/23 (S) L&C, FIN
02/14/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR JAMES KAUFMAN, District F
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 147.
DOMINICK HARNETT, Staff
Senator James Kaufman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Read the sectional analysis for SB 147.
CHARLES COLLINS, Director
Division of Workers' Compensation
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Testified by invitation on SB 147.
STACY NIWA, Reemployment Benefits Administrator
Division of Workers' Compensation
Department of Labor and Workforce Development (DOLWD)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 147.
LUMA DIAZ, Staff
Senator Elvi Gray-Jackson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Read the sectional analysis for SB 206.
CHARLES COLLINS, Director
Division of Workers' Compensation
Department of Labor and Workforce Development (DOLWD)
POSITION STATEMENT: Testified by invitation on SB 206.
SENATOR BILL WIELECHOWSKI, District K
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 135.
HUNTER LOTTSFELDT, Staff
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Gave a presentation on SB 135.
JENNIFER SAUER, Senior Research Advisor
Financial Resilience Research
American Association of Retired Persons (AARP)
Washington, D.C.
POSITION STATEMENT: Gave a presentation on SB 135.
HUNTER RAILEY, Director
Colorado Secure Savings Program
Colorado Department of the Treasury
Denver, Colorado
POSITION STATEMENT: Testified by invitation on SB 135.
PAM LEARY, Director
Treasury Division
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 135.
LOUIS THEISS, representing self
Girdwood, Alaska
POSITION STATEMENT: Testified in support of SB 135.
MARGE STONEKING
American Association of Retired Persons (AARP)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 135.
ACTION NARRATIVE
1:32:33 PM
CHAIR JESSE BJORKMAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Gray-Jackson, Dunbar, and Chair
Bjorkman. Senator Merrick arrived during the meeting.
SB 147-REEMPLOYMENT BENEFITS
1:33:47 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO.
147 "An Act relating to reemployment rights and benefits."
1:34:03 PM
SENATOR JAMES KAUFMAN, District F, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 147. He read gave the following
overview of SB 147:
[Original punctuation provided.]
• SB 147, Reemployment Benefits, seeks to address
some shortcomings in Alaska's Workers'
Compensation system.
• Alaska can be a tough place to work, and injuries
do occur. It is important we as a state help
these injured workers rehabilitate with fair and
predictable compensation. That way, we can keep
more workers in our state.
• But Alaska's current system has not been working.
• In recent years, an average of 140 out of 550
evaluations performed each year were found
eligible for the current systems rehabilitation
plan, yet only an average of 13 workers fully
finished the plan.
• SB 147 improves the workers' compensation system
by fixing unnecessary administrative burdens and
clarifying the role of stakeholders in the
process.
• SB 147 also updates the reemployment plan cost to
adjust for inflation. The amount currently in the
statute was set in the year 2000 and has not been
updated since.
• The primary objective of this legislation is to
ensure that injured workers receive swift and
fair access to indemnity and medical benefits
while also promoting efficient return-to-work
programs.
• By updating the system to better align with
modern realities, we can reduce the economic
burden of workplace injuries and illnesses on
Alaskans, improve employment retention, and get
more Alaskans back to work in our communities.
• Thank you for your consideration.
• My staff is ready go to through the Sectional if
it is the will of the committee
1:36:15 PM
DOMINICK HARNETT, Staff, Senator James Kaufman, Alaska State
Legislature, Juneau, Alaska, read the sectional analysis for SB
147:
[Original punctuation provided.]
Sectional Analysis for SB 147 Bill Version A
"An Act relating to reemployment rights and benefits;
and providing for an effective date."
Section 1: Amends AS 23.30.041(b) to change the
required date of submittal of a report of reemployment
benefits for the previous calendar year. The original
date of May 1st is changed to October 1st.
Section 2:
• Adds language to AS 23.30.041(c) stating that the
administrator may order an eligibility evaluation
if the employee is totally unable to return to
the employee's employment for 90 consecutive days
as a result of the injury. Currently these are
required, without regard for whether an
evaluation is warranted at that time.
• Increases the 90-day mandatory reemployment
evaluation under AS 23.30.041 to 120 days.
Section 3:
• Increases eligibility evaluation time from 30
days to 60 days. This built-in 30-day extension
allows us to remove language granting the
administrator authority to provide a 30-day
extension for the eligibility evaluation, which
removes excessive reviews and extra unnecessary
work for the administrator.
• Also, clarifies a usage of the word "it" by
referring directly to "the hearing."
1:37:48 PM
MR. HARNETT continued with the sectional analysis for SB 147:
[Original punctuation provided.]
Section 4: Adds reference to training and employment
services offered by the Department of Labor and
Workforce Development, highlighting possible use of
cross-departmental collaboration.
Section 5: Makes changes to AS 23.30.041(j)
• A reemployment plan must ensure remunerative
employability (employability for a job in which
an employee will be paid).
• Technical changes are made by changing "of" to
"after" as well as splitting a paragraph into
subsections.
Section 6: Increases the benefit under AS 23.30.041(l)
from $13,300 to $22,150 and allows the department to
adjust the cost limit for inflation through
regulation.
Section 7: Includes changes to AS 39.25.158(b) which
prioritize returning an employee to their former
position rather than focusing on retraining an
employee for another employment opportunity.
Section 8: Ensures that a relevant professional (a
physician) certifies that the employee is able to
perform the tasks assigned in their former position.
Section 9: This section specifies the applicability of
the amendments in sections 7 and 8 to contracts or
collective bargaining agreements that become legally
binding on or after the effective date of these
amendments. This Act is aimed at regulating and
improving the reemployment benefits and rights of
injured employees in the State of Alaska, with a focus
on rehabilitation plans and the responsibilities of
the administrator.
1:39:33 PM
SENATOR DUNBAR asked for additional explanation for the switch
to a physician in Section 8 and asked if other medical
professionals - e.g. a nurse practitioner - would be able to
fill this requirement.
1:40:03 PM
SENATOR KAUFMAN replied that due to the technical nature of this
question, he would defer to Mr. Collins.
1:41:05 PM
CHARLES COLLINS, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), Juneau,
Alaska, testified by invitation on SB 147. He explained that the
Alaska Worker's Compensation Board has been seeking changes for
many years due to shortfalls in the process that hold injured
workers back from returning to work. He said that the board is
updated often because workers' compensation impacts many people.
He acknowledged that some work in the state is inherently
dangerous, and injured employees may be out of work for an
extended period. He explained that that, under current statute,
if an injured worker is out of work for 90 days, they must/shall
have an evaluation done by a private rehabilitation specialist.
1:42:56 PM
MR. COLLINS reviewed slide 2 (6), depicting a bar graph
detailing the following data for 2019-2022: evaluation
referrals; injured workers found eligible; injured workers
electing job dislocation; injured workers electing plan; plans
approved; and plans completed. He pointed out that in 2022, 498
individuals received evaluation referrals and of these, only 67
were found eligible. He explained that sometimes, the worker is
already back at work and still needs to submit to evaluation -
which is an average cost of $3 thousand for employers. At other
times, the employee is still going through the medical process
and the evaluation is not timely - these employees must still
submit to evaluation. He stated that the intention is to change
the statute so that the evaluation is timely by allowing the
Reemployment Benefits Administrator (RBA) to communicate with
the employee and their physician and make this determination. He
clarified that "timely" could mean an employee is ready for
evaluation anywhere from 60 days to 120 days.
1:46:04 PM
MR. COLLINS referred to the graph and explained that some
employees dislocate and therefore do not complete a program. He
noted that very few employees do complete their approved plan.
He said that one reason for this is that plans are limited to
$13,300 and he emphasized that this is not much money when
considering the cost to train in a new field. He said that this
amount has not been changed for 24 years and SB 147 adjusts this
amount.
1:47:41 PM
MR. COLLINS reviewed slide 3 (10), depicting reemployment totals
from 2020, 2021, and 2022. He brought attention to the
evaluation costs and reiterated that avoiding untimely
evaluations will save employers money. He acknowledged that
there is an increase in retraining costs. However, the outcome
for the state is that these employees are returned to the
workforce. He referred to an unnamed study from the Northeast
that stated that an employee who is out of work for one year has
an 11 percent chance of ever returning to the workforce. He
surmised that many on the committee have dealt with employees
and commented that having gaps in employment lowers employee
marketability.
1:49:21 PM
MR. COLLINS reviewed slide 4 (11):
[Original punctuation provided.]
Reemployment Benefits in Settlements
Impact of settlements on reemployment benefits in 2022
• 47 injured workers exited the reemployment
benefits process through Compromise and Release
agreements during the reemployment benefits
process.
• 62 injured workers had funds designated for
reemployment benefits included in settlements
approved in 2022, increasing reemployment benefit
costs.
• 45 of these injured workers had never been
determined eligible for reemployment
benefits, many had never entered the
reemployment process or had been found not
eligible for reemployment benefits.
• 22 injured workers exited the reemployment
process through a settlement after a
determination of eligibility, significantly
reducing the number of injured workers available
for plan completion.
1:50:42 PM
MR. COLLINS reviewed slide 5 (12):
[Original punctuation provided.]
Rehabilitation Specialists
• 15 Alaska Rehabilitation Specialists accepted 372
referrals for eligibility evaluations; 126
evaluations were referred to 43 specialists out
of state.
• 1 Alaska specialist retired
• For Alaska Based Specialists:
• 306 or 82 percent of the first reports were
submitted within 60 days of the referral.
• 141 or 38 percent of the evaluations were
completed on the first report submission.
• 223 or 60 percent of the evaluations were
completed prior to a suspension letter from
a Reemployment Benefits Administrator
Designee.
• 159 reports did not meet
statutory/regulatory requirements.
• Continued improvements in our process are being
made to ensure work is in compliance with
statutory and regulatory requirements through
suspension letters, discussions, plans of
correction and disqualification from providing
services under AS 23.30.041.
1:52:02 PM
MR. COLLINS answered Senator Dunbar's question regarding medical
practitioners. He said that while he believes that other medical
practitioners would be able to make this determination, he is
not qualified to say with certainty. He offered his
understanding that the statute in question only applies to State
of Alaska employees. He referred additional questions to the
Risk Management department.
1:52:31 PM
SENATOR DUNBAR noted that currently, a benefits administrator or
director of vocational rehabilitation could seek out a medical
opinion from any number of medical providers. He pointed out
that SB 147 removes this and specifies that a physician must
provide this information. He questioned the reasoning behind
this and inquired as to the necessity of Section 8.
1:53:03 PM
MR. COLLINS answered that he is not qualified to answer this
question.
1:53:28 PM
SENATOR DUNBAR asked if anyone else would be able to answer this
question.
1:53:37 PM
CHAIR BJORKMAN invited Stacy Niwa to answer.
1:53:53 PM
STACY NIWA, Reemployment Benefits Administrator, Division of
Workers' Compensation, Department of Labor and Workforce
Development (DOLWD), Anchorage, Alaska, answered that this
section of statute deals directly with state of Alaska employees
and is through Risk Management. She said that currently, the
determination can be made by herself or the Director of the
Division of Vocational Rehabilitation. Both positions have
experience with disability and its impacts (and potential
impacts) on employment. She surmised that the change proposed by
SB 147 would need to be vetted by Risk Management.
1:55:13 PM
SENATOR DUNBAR asked where section 8 originated and commented
that sometimes language that is too specific can be problematic.
He questioned why "physician" wasn't added to the current
language rather than replacing it and pointed out that this
would increase the number of people who could potentially sign
off on something, rather than decreasing it. He questioned
whether the intention was to expand the field of individuals who
can make this determination or if there is some reason to narrow
it to physicians specifically.
1:56:07 PM
SENATOR KAUFMAN replied that his office would look at Section 8
to ensure that this language is on track with the goal of SB
147. He added that amendments would be made if needed.
1:56:38 PM
SENATOR GRAY-JACKSON opined that the language in Section 8 makes
sense, because injured employees need to see a doctor before
they can return to work. Therefore, it makes sense for a
physician to be the one to make the final determination.
1:57:20 PM
SENATOR KAUFMAN expressed appreciation for Senator Gray-
Jackson's comments and pointed out that from the State of
Alaska's perspective, it is risk management - but from the
employee's perspective, it is a health matter and an employment
matter. He surmised that the language in Section 8 was chosen in
an attempt to be careful with how the evaluations are performed.
1:58:10 PM
CHAIR BJORKMAN asked if increasing the timeline from 90 days to
120 days is enough.
1:58:28 PM
MS. NIWA replied yes. She explained that currently, 90 days is
often sufficient. She said that an additional 30 days gives more
room to ensure that the correct decisions are made on behalf of
both employee and employer. She suggested that more than 120
days would go against the intent of the statute to ensure "fast,
fair, and efficient delivery of benefits." She reiterated that
120 days makes sense.
1:59:34 PM
SENATOR GRAY-JACKSON expressed appreciation for SB 147 and for
the work done by the Division of Worker's Compensation.
2:00:08 PM
CHAIR BJORKMAN opened public testimony on SB 147; finding none,
he held public testimony open and held SB 147 in committee.
2:00:42 PM
At ease
SB 206-WORKERS' COMP. STAY-AT-WORK PROGRAM
2:02:46 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 206 "An Act relating to
workers' compensation reemployment benefits; establishing a
workers' compensation stay-at-work program; and providing for an
effective date."
2:03:11 PM
SENATOR ELVI GRAY-JACKSON, District G, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 206, introduced SB 206. She said
she learned about stay-at-work/return-to-work (SAW/RTW)
initiatives while attending a forum sponsored by the Council of
State Governments and the United States Department of Labor
State Exchange on Employment and Disabilities (SEED). She
explained that SEED and its partners help states develop and
implement inclusive workforce development policies. She detailed
the forum's myriad learning opportunities and meaningful
interactions related to SAW/RTW programs. She said that the
final forum project was to draft SAW/RTW legislation, and the
result was SB 206. She then read the following sponsor
statement:
[Original punctuation provided.]
Sponsor Statement for SB 206
Each year, countless workers face the challenges of
injuries, illnesses, or changes in their disability
status, often leading to significant time away from
work. This not only affects their livelihoods but also
impacts the workforce and economy at large. Senate
Bill 206 seeks to restore Alaska's once strong and
healthy workforce. Through the creation of this
program, an injured worker may elect assistance to
return-to-work with their employer at the time of
injury. The Program is optional and can be declined by
a worker or an employer.
These programs focus on strategies that retain or
reengage workers experiencing such changes, aiming to
swiftly reintegrate them into the workforce. By
providing necessary support and resources, SAW/RTW
programs ensure that workers can continue their
careers despite new health challenges, thereby
maintaining a robust and resilient workforce.
The goal of the program is to return the worker to the
same position with the same employer or to a modified
position with the same employer after an injury or an
occupational disease occurs. Furthermore, services
provided as part of the assistance program are
provided in lieu of reemployment services. Changes
under this bill would be optimized by the ability of
the insurer, rehabilitation specialist, and the
Department of Labor and Workforce Development to
provide one another necessary information. The
services offered as part of the Program are available
as a service apart from a determination regarding
indemnity benefits.
2:07:12 PM
SENATOR GRAY-JACKSON continued reading the sponsor statement:
[Original punctuation provided.]
Across the United States, states like Oregon and
Montana, have made significant strides in implementing
SAW/RTW initiatives. These programs have demonstrated
success in reducing the time employees spend away from
work due to disabilities or injuries, offering
financial incentives, and facilitating necessary
workplace adjustments. The adoption of similar
legislation in Alaska promises substantial benefits.
It can enhance our state's workforce stability, reduce
the economic impact of prolonged employee absence, and
promote a more inclusive and supportive work
environment. By passing this legislation, Alaska can
join other states in leading the way towards a more
adaptable and supportive workforce, ultimately
benefiting both our economy and the wellbeing of
Alaskan workers.
2:08:16 PM
LUMA DIAZ, Staff, Senator Elvi Gray-Jackson, Alaska State
Legislature, Juneau, Alaska, read the sectional analysis for SB
206:
[Original punctuation provided.]
Sectional Analysis for SB 206
Section 1: Amends AS 23.30.005 (h) by adding a
reference to new stay at work program under AS
23.30.043.
Section 2: Amends existing statute, AS 23.30.041 (b)
by moving the annual reporting of reemployment
benefits from May until October to match the other
annual reports due. Includes each specific reporting
criteria.
Section 3: Makes changes to AS 23.30.041 (c) adding
thirty days to the time of required reemployment
evaluations to allow for the medical stability of
claimants. The amendment requires the Workers'
Compensation Division to notify injured employees of
rights under this section within 25 days of inability
to return to the employee's employment at the time of
injury, including the option of participation in the
Stay At Work Program.
2:09:24 PM
MS. DIAZ continued with the sectional analysis:
[Original punctuation provided.]
Section 4: Amends AS 23.30.041 (f) by adding that an
employee is not eligible for reemployment benefits if
a selection under AS 23.30.041(c) is not made. Or if
an employee has completed a stay at work program
previously or has been found noncooperative in the
stay at work process under AS 23.30.043(l).
Section 5: A new section (Sec. 23.30.043) is added to
establish a stay at work benefits program. A new
position is added as a subject matter expert to
oversee the program. A rehabilitation specialist is
assigned to develop a stay at work plan requiring
participation and approval from the employee,
employer, and attending physician and a timeline for
submission of plan. Costs are the responsibility of
the employer and shall not exceed $3,000. The maximum
time frame is two years. Noncooperation is defined.
Participation is voluntary. The employee may pursue
reemployment benefits under AS 23.30.041 as an
alternative if the employer chooses not to
participate. An appeal process is outlined.
Section 6: Amends existing statute AS 23.30.100 (a) by
adjusting the timeframe by 15 days for notification of
a work-related injury or death.
Section 7: Amends AS 23.30.105 (a) by adding a
reference to a new stay at work program established
under AS 23.30.043
Section 8: Sets an effective date.
2:11:51 PM
CHARLES COLLINS, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), testified
by invitation on SB 206. He explained that currently, workers'
compensation has a rehabilitation process that provides for
benefits when a worker is injured. He said workers' compensation
provides medical benefits for injured workers as needed;
however, there are times when employees just need a little
incentive to get back to work. Sometimes, this means returning
to a modified job - which employers worry will cost them money.
He stated that the average cost of a modified job is a few
hundred dollars. He pointed out that technological advances have
made it easier to make the necessary modifications. He explained
that the goal with the SAW/RTW program is to shorten the time it
takes for people to return to work. He surmised that, for many
people, their job is a large part of their identity and keeping
them in the workforce is a win for the employee, employee, and
for society. He explained that the current process of returning
to work after injury takes 205 days; the SAW/RTW program would
cut this to 49 days.
2:15:36 PM
MR. COLLINS said that currently, the biggest problem is
communication. He shared an example of what happens when an
employee is injured and communication between employer and
employee breaks down over time. He noted that the employee will
also hear from the insurance adjuster; however, they are
primarily on their own. He explained that SB 206 would enable
the department to step in - about 20 days after the injury - and
be the primary communication hub for the employee, communicating
with their doctor, employer, etc. This would allow the
department to work with the employee to determine when they can
return to work - and what they are able to do once they return.
He said that SB 206 creates a voluntary process that employers
and employees can take advantage of. He noted that the cost to
the employer is minimal. He stated that this would not replace
the current rehabilitation program, because there will still be
employees who are not able to return to work due to the severity
of their injuries and/or the type of job they have (and
potential modifications). He suggested that even helping a small
number of people return to work more quickly would be of great
value to all.
2:20:53 PM
CHAIR BJORKMAN opened public testimony on SB 206; finding none,
he held public testimony open.
2:21:25 PM
CHAIR BJORKMAN commented that the forum meetings that he
attended with Senator Gray-Jackson, Director Collins, among
others, were highly valuable. He shared his belief that passage
of SB 206 would result in many Alaskans returning to work sooner
- or staying on the job after being injured (with
modifications). He said that this might seem like a non-issue to
those who have not been injured on the job and missed work as a
result; however, he said it was clear from the forum meetings
that Alaska needs to make changes to improve in this area. He
opined that SB 206 would enable the state to do better.
2:22:54 PM
CHAIR BJORKMAN held SB 206 in committee.
2:23:00 PM
At ease
SB 135-AK WORK & SAVE PROGRM; RETIRE. SAVINGS BD
2:24:47 PM
Chair Bjorkman reconvened the meeting and announced the
consideration of SENATE BILL NO. 135 "An Act establishing the
Alaska Work and Save Program; establishing the Alaska Retirement
Savings Board; and providing for an effective date."
2:25:11 PM
SENATOR BILL WIELECHOWSKI, District K, Alaska State Legislature,
Juneau, Alaska, spoke as the sponsor of SB 135. He said that SB
135 seeks to address the retirement crisis. He explained that a
large percentage of people have no retirement savings and others
who are at retirement age do not have enough retirement savings.
He noted that recruitment and retention are issues. He said SB
135 is aimed at small businesses with fewer than 500 employees,
which make up 99 percent of Alaskan businesses. He pointed out
that more than 52 percent of Alaskans work for small businesses
and 64 percent of small businesses do not offer a retirement
plan. He said that 16 states have passed similar legislation.
SENATOR WIELECHOWSKI shared his belief that many small
businesses would like to offer retirement plans to their
employees; however, the process is complex. He explained that
other states have addressed this by creating a retirement
savings board and having small businesses administer a savings
program. He opined that this removes the roadblocks for small
businesses and sets up a state board to administer the process.
He said that, while some states do things differently, the
programs have been effective.
2:27:56 PM
HUNTER LOTTSFELDT, Staff, Senator Bill Wielechowski, Alaska
State Legislature, Juneau, Alaska, gave a presentation on SB
135. He reviewed slide 2:
[Original punctuation provided.]
What is Alaska Work & Save
• Establishes an auto-IRA program for all Alaskan
employees who qualify.
• Establishes a state board to administrate the
program.
• Creates an option to allow PFD checks to go
toward retirement.
2:28:59 PM
MR. LOTTSFELDT reviewed slide 3:
[Original punctuation provided.]
Retirement in Alaska
• 54 percent of households have no retirement
savings (4)
• Alaskans aged 60+ account for 20 percent of the
population and growing (3)
• Median retirement savings for ages 65-74 is
$200,000, age 75+ is $130,000 (5)
2:29:30 PM
MR. LOTTSFELDT reviewed slide 4:
[Original punctuation provided.]
Survey of Alaska Small Businesses
A recent survey of small businesses in Alaska shows:
• 64 percent don't offer retirement of any kind,
with cost being the biggest factor
• 70 percent support an Alaskan retirement savings
option
2:29:47 PM
MR. LOTTSFELDT REVIEWED slide 5:
[Original punctuation provided.]
What would SB 135 do?
SB 135 would create a board
• This board would be responsible for establishing
and running the program
• The board would work to create the appropriate
rules and investments to offer employees
• The board has the discretion to partner with
other states to lower costs even more for
participants
Program Participants
• Would be enrolled automatically upon hiring
• Can decide to opt-out or adjust rate
• May contribute PFD towards their retirement
2:30:46 PM
MR. LOTTSFELDT reviewed slide 6:
[Original punctuation provided.]
Current Costs for a 401k Plan
A survey of 121 plans with less than $2 million in
assets(2) found that:
• provider fees could vary from $4,800 to $17,000
per year (this figure does not include investment
fees)
2:31:25 PM
MR. LOTTSFELDT reviewed slide 7:
[Original punctuation provided.]
Setting up a retirement plan presently
• Adopt a written plan
• Create and distribute the rules for 401k plan to
all participants
• Arrange a trust fund for the plan's assets
• Acting as a fiduciary, a designated trustee will
handle contributions, investments, and
distributions
• Develop a recordkeeping system
• Records of the plan must be kept, and an annual
report and tax documents must be prepared
• Provide plan information to participants
• Employer must provide a plan summary to existing
and new participants, along with updates
2:33:06 PM
MR. LOTTSFELDT reviewed slide 8:
[Original punctuation provided.]
SB 135 Supports Small Businesses
• 11th year of out-migration of working aged
Alaskans (1)
• Work and Save eliminates the high costs and
bureaucracy for businesses
• Allows small businesses to:
• Better recruit and retain employees
• Stay competitive with larger businesses
2:33:43 PM
MR. LOTTSFELDT reviewed slide 9:
[Original punctuation provided.]
Other States have already started
• As of this year, 16 other states have enacted
their own auto-IRA programs
• Similar federal legislation has recently been
proposed
• Interstate partnerships allow for faster enaction
and possibly lower fees
2:34:30 PM
SENATOR GRAY-JACKSON asked if SB 135 creates a program for small
businesses that is similar to a deferred compensation program.
2:34:56 PM
SENATOR WIELECHOWSKI answered that the program created would
only apply to businesses that do not currently offer retirement
plans. He acknowledged that SB 135 would create a mandate;
however, the state is providing the infrastructure, fiduciary
responsibilities, and paying the costs. The employer simply
gives employees a form to fill out that enrolls them in the
program. He explained that a percentage would be deducted from
the employee's paycheck - there is no employer contribution. He
emphasized that this program would not cost the employer. He
said there are a variety of ways the program could be set up,
including a 401k, taxable or non-taxable - and added that this
would be determined by the board. He explained that employees
can opt out at any time - or can contribute more to their
savings fund. He said that SB 135 makes it easier for employers
to set up and offer retirement savings plans.
2:36:49 PM
SENATOR GRAY-JACKSON expressed gratitude and said that she is
now clear on what SB 135 would do.
2:37:02 PM
SENATOR DUNBAR asked for clarification on whether this would
only apply to small businesses. With respect to multi-state
pooling efforts, he asked if Alaska could join another state
without passing SB 135. He shared his understanding that the
board would decide if Alaska would join with another state and
asked if this is correct.
2:37:55 PM
SENATOR WIELECHOWSKI replied that while small businesses tend to
be the ones that do not offer retirement savings funds, HB 135
applies to all employers in the state. He pointed out that any
employer can set up a retirement plan for employees; however,
coordinating with other states to lower the associated fees
would require passage of legislation to create the necessary
structure.
2:39:15 PM
MR. LOTTSFELDT added that the interstate partnership would still
require a state board; however, the partnership would speed up
the implementation process. He said that programs in Maine and
Delaware took a year to get up and running and surmised that
joining Colorado and sharing resources would ease the burden on
the State of Alaska.
2:40:04 PM
CHAIR BJORKMAN opened invited testimony on SB 135.
2:40:17 PM
JENNIFER SAUER, Senior Research Advisor, Financial Resilience
Research, American Association of Retired Persons (AARP),
Washington, D.C., gave a presentation on SB 135 titled "Saving
for Retirement at Work: A Survey of Alaska Small Business
Owners." She reviewed slide 2, which showed a demographic
profile of small business owners surveyed. She explained that
the survey was conducted via phone, with the option of
completing the survey online. She said the survey's margin of
error was 4.85 percent.
2:41:27 PM
MS. SAUER reviewed slide 4 and said that over half of Alaska
small businesses are very concerned or somewhat concerned that
their employees will not have enough money to cover expenses
through retirement. She said that one in four respondents said
they were "very concerned" and one in four said they were "not
at all concerned."
2:41:51 PM
MS. SAUER reviewed slide 5 and explained that 3 out of 4 small
business owners are concerned that employees may turn to state
funded assistance programs if they are not able to save enough
for retirement. She noted that 4 in 10 say they are "very
concerned."
2:42:08 PM
MS. SAUER reviewed slide 6 and said that 75 percent of small
business owners believe more should be done to help Alaskans
save for retirement. 50 percent of respondents said "a lot more
needs to be done."
2:42:25 PM
MS. SAUER reviewed slides 8 and 9, showing the importance of
workplace retirement savings plans to small business owners in
Alaska. She explained that the survey showed that 1 in 3 small
businesses offer a retirement savings plan. She said that when
asked why they offer a retirement savings plan to employees, the
top reasons were attracting and retaining quality employees and
the belief that it is the right thing to do.
2:43:14 PM
MS. SAUER reviewed slide 10 and explained nearly two-thirds of
Alaska small business owners do not offer a retirement savings
plan. 71 percent of these businesses said it is "too costly"
followed by "too complicated" (38 percent) and "too time
consuming" (29 percent).
2:43:42 PM
MS. SAUER reviewed slide 11 and explained that, while the
majority of survey respondents do not offer retirement plans, 78
percent of respondents did agree that offering a retirement plan
helps business hire and retain quality employees and remain
competitive.
2:44:05 PM
MS. SAUER reviewed slides 12-14. She explained that 70 percent
of business owners support a public-private partnership to
develop an easy, no-cost retirement savings program for small
businesses. She said that, after learning the details of this
option - such as no employer fees, no employer match, and no
employer fiduciary responsibility - support increased to 79
percent.
2:44:51 PM
MS. SAUER reviewed slide 15 and stated that the research shows a
strong interest among small business owners for state
legislators to act. She noted that nearly 8 in 10 business
owners agree that Alaska legislators should support a bill to
make it easier for small business owners to access a retirement
savings option for their employees.
2:45:34 PM
HUNTER RAILEY, Director, Colorado Secure Savings Program,
Colorado Department of the Treasury, Denver, Colorado, testified
by invitation on SB 135. He highlighted some of the benefits of
state auto IRA programs similar to what is proposed by SB 135.
He explained that, as director of the Colorado Secure Savings
Program, his job is to ensure that Colorado employees achieve a
dignified and sustainable retirement. He noted that it is
difficult for employees to access retirement plans at work - and
retirement plans lead to better employee retention. He explained
that in Colorado, nearly 1 million employees lacked access to
workplace retirement. He said that retirement plans like the
Secure Savings Program make it possible for small businesses to
offer retirement benefits, thereby making them more competitive
against other, larger businesses. In addition, retirement
benefits improve employee wellbeing. He stated that prior to
passing the secure savings program, a study was conducted to
determine the impact of the retirement savings gap. He explained
that the study showed that doing nothing to address the gap
would cost taxpayers an estimated $18 billion over the next 15
years. He noted that federal studies have estimated the cost to
be $1.3 trillion. He stated that the biggest barriers to
offering retirement savings programs are cost and administrative
complexities and the Colorado program was designed to meet these
needs. He explained that the onboarding process for employers
takes around 15 minutes and the ongoing admin requirements are
around five minutes per month. He added that there is no cost
for this program. He opined that this design allows the program
to be an asset rather than a burden for employers.
2:47:38 PM
MR. RAILEY stated that nationally, employees in these retirement
savings programs have accumulated close to $1.5 billion in
assets in six states. In Colorado, more than 14 thousand
employers have helped their employees save nearly $40 million on
the first year of operation. He highlighted the ways that
savings programs support private actors in this market. In
addition, Colorado has created access to a multi-state
partnership model - making the program more accessible to states
with smaller populations, reducing expenses and shortening the
timeline for implementation. He noted that Colorado is currently
the only state offering a multi-state partnership. He emphasized
that this program model prioritizes collaboration in the economy
of partner states to meet saver needs.
2:49:43 PM
CHAIR BJORKMAN noted that the Department of Revenue (DOR) has
delivered indeterminant fiscal note for SB 135 and asked if
joining a system of other states would impact the fiscal note
from DOR.
2:50:25 PM
PAM LEARY, Director, Treasury Division, Department of Revenue
(DOR), Juneau, Alaska, replied yes. She explained that it was
difficult to identify what the costs might be for a program of
this kind. She said she is familiar with several different types
of programs and listed these. She detailed several ways programs
have deferred costs. She commented that these programs give an
idea of the ways a retirement savings program could be
implemented - and what the associated costs would be. She stated
that the actual cost would depend on how the program was
structured and implemented.
2:52:47 PM
CHAIR BJORKMAN asked if DOR could provide an estimated cost for
a program like the one in Colorado.
2:53:07 PM
MS. LEARY replied that she would reach out to Colorado and
provide the committee with this information.
2:53:21 PM
CHAIR BJORKMAN concluded invited testimony and opened public
testimony on SB 135.
2:53:36 PM
LOUIS THEISS, representing self, Girdwood, Alaska, testified in
support of SB 135. He said he has been retired for 11 years and
has decades of liquidity ahead of him thanks to automatic
payroll deductions, social security, a pension, and a 401k. He
noted that during his career, he had two employers. However,
times have changed and some of these options are no longer
available. He said that his son works in tourism and has
multiple W-2s each year. In the decade that he has been working,
no one has offered him retirement savings. He shared his belief
that Work and Save would be perfect for his son. He acknowledged
that there is concern about making this mandatory; however, he
shared his understanding that for those who have multiple
employers, the mandate is necessary. He opined that Work and
Save has the most important elements for successful retirement
savings: portability and payroll deduction. He stated that most
retirement advice emphasizes the importance of regular savings
and shared his belief that SB 135 achieves this.
2:55:21 PM
SENATOR MERRICK joined the meeting.
2:55:38 PM
MARGE STONEKING, American Association of Retired Persons (AARP),
Anchorage, Alaska, testified in support of SB 135. She said she
is the Director of Advocacy for AARP Alaska. She explained the
purpose of AARP and noted that retirement readiness is a big
part of being able to choose how retirement years are spent.
However, she stated that nearly 60 percent of American
households have no assets saved for retirement. She said that
protecting social security is a critical piece of the puzzle;
however, it does not ensure retirement readiness on its own. She
explained that people are 15 times more likely to save for
retirement if they are offered a plan through their employer and
20 times more likely to save if they are automatically enrolled.
She said that many Alaskan workers do not have access to
retirement savings plans through their employer. She noted that
small businesses are less likely to offer these plans due to the
hurdles. She said that SB 135 could change the landscape of
retirement readiness in Alaska by giving businesses an easy, no-
cost retirement option for employees. She briefly detailed the
way the program would be run and emphasized how simple it would
be for employers. She pointed out that these savings programs
would follow employees when they change jobs and are optional.
She said that a work and save program would help small
businesses compete with larger employers' benefits packages
while allowing employees to become financially self-sufficient
in retirement.
2:59:38 PM
CHAIR BJORKMAN noted that Senator Merrick joined the meeting at
2:55 pm.
2:59:52 PM
CHAIR BJORKMAN asked for clarification that all W-2 employees
would be eligible for the retirement plan - and this is part of
the mandate - but they would receive a form to opt out if they
choose to.
SENATOR WIELECHOWSKI replied yes.
CHAIR BJORKMAN noted that there are several options for
implementation and asked if one is more preferrable.
SENATOR WIELECHOWSKI replied that he would like to see it be low
to no cost for the State. He explained that, ideally, the State
would evaluate the costs of running the plan and charge a fee to
cover the cost. He shared his understanding that these fees vary
by state. He said that if the program is run in partnership with
another state, these costs will be lowered. He opined that
working in partnership with another state would be the most
beneficial.
CHAIR BJORKMAN asked if Alaska would need its own board if the
program was run in partnership with another state.
SENATOR WIELECHOWSKI answered that, while the details could be
set by the legislature, having a board would allow these details
to be worked out by professionals. He commented that he would
like to keep the program as small and low-cost to government as
possible.
3:02:28 PM
CHAIR BJORKMAN held SB 135 in committee.
3:02:32 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:02 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB147 ver A.PDF |
SL&C 2/14/2024 1:30:00 PM |
SB 147 |
| SB147 Sponsor Statement Version A 1.24.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 147 |
| SB147 Sectional Analysis Version A 1.24.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 147 |
| SB147 Fiscal Note-DOLWD-WC-01.04.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 147 |
| SB206 ver A.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 206 |
| SB206 Sponsor Statement.pdf |
SFIN 3/20/2024 9:00:00 AM SL&C 2/14/2024 1:30:00 PM |
SB 206 |
| SB206 Sectional Analysis.pdf |
SFIN 3/20/2024 9:00:00 AM SL&C 2/14/2024 1:30:00 PM |
SB 206 |
| SB206 Fiscal Note-DOLWD-WC-02.09.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 206 |
| SB206 Supporting Document-Stay at Work_Return to Work _ U.S. Dept of Labor.pdf |
SFIN 3/20/2024 9:00:00 AM SL&C 2/14/2024 1:30:00 PM |
SB 206 |
| SB135 ver S.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB135 Sponsor Statement 01.31.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB135 Sectional Anaylsis 01.31.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB135 Fiscal Note-DOR-TRS-01.18.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB135 Fiscal Note-DOR-PFD-01.18.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB135 Public Testimony-Lanet Spence_NAIFA 02.12.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB135 Supporting Documents-AARP Research-Executive Summary 01.25.24.pdf |
SFIN 5/10/2024 9:00:00 AM SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB135 Supporting Documents-AARP Research 01.25.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB135 Supporting Documents-Sponsor Presentation 02.14.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 135 |
| SB147 Presentation 2.14.24.pdf |
SL&C 2/14/2024 1:30:00 PM |
SB 147 |