SB 211-PERS CREDIT FOR MILITARY SERVICE  1:34:36 PM CHAIR EGAN announced consideration of SB 211. MICHAEL PAWLOWSKI, staff to Senator Lesil McGuire, sponsor of SB 211, said he would first like to explain the intent behind the bill and then answer questions. He said that Senator McGuire had worked with members of the peace officer and firefighter community and recognizes that these are individuals that come to the state to provide service to it in what are often very dangerous jobs, and that the state looks to them to protect life, health and safety. He said it is a natural transition from military service to public safety fields and under current Alaska statute a member who is a peace officer or a firefighter is able to purchase up to five years of credit towards retirement for their previous military service. The problem in current law is that the purchase of that credit doesn't include the medical benefits that are available to someone that retires between the point of their retirement and their Medicare eligibility. So the intent of the legislation is to allow a purchaser to use those up to five years' credit toward satisfying the requirement for medical benefits under AS 39.35.535. MR. PAWLOWSKI explained that section 1 of the current version of the bill provides an exception to the normal prohibition under this current purchase of retirement (that says subject to (j) of this section, the credited service created under this section may not be used to satisfy the credited service requirements for normal retirement). That essentially means that you can purchase the credit, but the credit does not apply to medical benefits because they are in a separate part of the statute. 1:36:51 PM The attempt in the original version, in section 2, was to provide an exemption for this. However in working with the department, they found this creates a significant financial unfunded liability to the state and that was not the intent of the sponsor or the people who brought the bill to the sponsor's attention. The intent is for the person purchasing the service to bear that extra cost. The goal is to get a fair deal for the purchaser while not putting an undue burden on the state. SENATOR GIESSEL asked him to clarify the age of retirement. MR. PAWLOWSKI answered that the age varies and someone from the Public Service Employees Association (PSEA) might be able to answer that better. The sponsor's intent was the issue in AS 39.35.535(c), specifically where it says 25 years of credited service as a peace officer, and passing this would allow a person to apply five years of previous military service making that 20 years. The rationale is benefiting someone who has gone through the physically demanding work of serving their country and then takes a physically demanding position to serve their state. Recognizing the unique situation they are under within the system, the sponsor wanted to create a win/win for both them and the state. SENATOR GIESSEL asked if this 25 years is also applicable to firefighters. MR. PAWLOWSKI replied he understood that the definition of peace officer includes firefighter. 1:40:13 PM SENATOR MENARD moved to adopt CSSB 211( ), version 27-LS1398\M. CHAIR EGAN objected for discussion purposes. MR. PAWLOWSKI explained that the CS refines the problem he talked about. Section 1 amends AS 39.35.340, the regular purchasing section, which the original bill was attempting to change by breaking it into two sections recognizing first the existing purchase of credit under 340, but adding a new subsection in section 2 that provides a different methodology for calculating the additional indebtedness that an employee would be accruing. Language on page 2, lines 2-22, indicates that it's an amount based on the increase, if any, in the present value of future benefits for that year as determined by the department. Here he explained that everyone is well used to the fact that the state's unfunded liabilities are a moving target and the goal for this language was to allow the department to capture the changing unfunded liability to keep it representative of the cost the state is incurring and limiting it to the medical benefit in AS 39.35.435(c). 1:43:20 PM JAMES SEARS, Western Vice President, Public Service Employees Association (PSEA), Nome, Alaska, said he had served in law th enforcement since 1985 and currently is serving his 14 year as an Alaska State Trooper; he also served in the U.S. Army. He supported the CS and explained that it will allow Tier 2 and Tier 3 law enforcement employees to purchase their medical time in conjunction with the military time that they are already allowed to purchase. He said they are not asking for any handouts and are willing to pay their fair share. He said this would save the state money and reasoned that law enforcement is a young man's game. Many law enforcement officers are the highest paid in the state but also most prone for injury when approaching 40 or 50 years of age needing the medical benefits. He said this bill would also increase morale, possibly enhance recruitment and provide an optional benefit for veterans. SENATOR MENARD said she looked forward to this bill being passed. SENATOR GIESSEL asked if multiplying the determined product by 6 percent on page 2, lines 3 and 4, was to cover the cost of the medical insurance. MR. PAWLOWSKI answered that is the calculation in existing statute for the existing military service purchase that is allowed (that does not qualify towards the medical benefit). The base level of military purchase that the employee is responsible for has not been modified, but if you want to purchase the medical benefit, there is a separate indebtedness that has to be calculated on top of it. And rather than going back and trying to fiddle with the base number - because individuals might elect to purchase their military credit as they do today, but not decide to purchase the medical benefit - the goal of the CS is to set up a choice to give employees as much flexibility as possible. It would be 6 percent plus interest, plus whatever the extra indebtedness would be as calculated by the department for the medical. CHAIR EGAN said he intended to hold SB 211 until the next meeting.