CS FOR SENATE BILL NO. 125(FIN) "An Act relating to the accounting and payment of contributions under the retirement plans of the Public Employees' Retirement System of Alaska and the Teachers' Retirement System, to calculations of contributions under those retirement plans, and to participation in, and termination of and amendments to participation in, the defined benefit plans of those systems; relating to employer contributions to the health reimbursement arrangement plan; making conforming amendments; and providing for an effective date." Co-Chair Meyer MOVED to ADOPT Amendment #1: Page 1, line 6, following "plan;" Insert "relating to participation in the public employees' defined contribution retirement plan by certain elected officials;" Page 14, following line 1: Insert a new bill section to read: "* Sec. 22. The uncodified law of the State of Alaska is amended by adding a new section to read: PARTICIPATION IN THE DEFINED CONTRIBUTION PLAN OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM BY CERTAIN ELECTED OFFICIALS. (a) If HCS CSSB 123(FIN), passed by the first session of the Twenty-Fifth Alaska State Legislature, is enacted into law, contributions must be deducted under AS 39.35.730 and contributions must be made under AS 39.35.750 by the (1) state on behalf of an Alaska State Legislator who becomes a member of the Public Employees' Retirement System defined contribution plan established by AS 39.35.700 - 39.35.990 as a result of the enactment of the amendment to AS 39.35.990(16) by sec. 111 of HCS CSSB 123(FIN); contributions must be based on the compensation paid by the state to the member from the date that the member was sworn into office as an elected official until the effective date of this Act; (2) political subdivision on behalf of the political subdivision's elected official who becomes eligible for membership in the Public Employees' Retirement System defined contribution plan established by AS 39.35.700 - 39.35.990 as a result of the enactment of AS 39.35.725 made by sec. 83 of HCS CSSB 123(FIN), and who has not filed a waiver of participation in that plan or a waiver of participation under AS 39.35.125(a) for service as an elected official of the political subdivision; contributions must be based on the compensation paid by the political subdivision to the elected official for service as an elected official from the date that the elected official was sworn into office until the effective date of this Act. (b) The period of time covered by contributions made under (a) of this section constitutes membership service for the purposes of determining eligibility for medical benefits under AS 39.35.300 - 39.30.495 and AS 39.36.700 - 39.35.990. (c) In this section, "compensation" has the meaning given in AS 39.35.990. " Vice Chair Stoltze OBJECTED. PAT SHIER, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION, explained that the amendment rectifies an issue regarding certain elected officials who, because they were not previously members of PERS, were left out of the new defined contribution (DC) retirement plan. There is no fiscal note accompanying the amendment. Those individuals would have to make up past service cost, as well. Co-Chair Meyer asked how many people were affected. Mr. Shier said four. 8:58:44 AM Representative Hawker questioned what the amendment would do for state legislators. VIRGINIA RAGLE, ASSISTANT ATTORNEY GENERAL, LABOR AND STATE AFFAIRS, DEPARTMENT OF LAW, reported that a couple new legislators were not covered by the DC plan under SB 123. Representative Hawker concluded that SB 125 would benefit seated legislators. Representative Hawker asked if SB 123 has provisions for future legislators and elected officials to participate in the DC plan. Ms. Ragle replied that is correct. Representative Hawker asked if this is uncodified law. Ms. Ragle said yes. 9:01:57 AM KEVIN BROOKS, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION, added that HB 141 inadvertently omitted several categories. Two individuals will benefit, but will have to catch up "out of pocket". Representative Gara asked if anyone else has been inadvertently excluded. Mr. Brooks explained that only a small group of people were affected. Vice Chair Stoltze WITHDREW his objection. There being NO OBJECTION, it was so ordered. Co-Chair Meyer asked if Amendment #2, which will come up at a later time, would impact the fiscal note. Mr. Brooks said it would not. 9:04:46 AM Mr. Brooks addressed fiscal note #2 by the Department of Administration. He explained that $193,113.2 is the total appropriation for FY 08. There is currently $180 million in HB 95, which would require an additional appropriation of $13.1 million. The bill provides a "hold harmless" provision for PERS employers currently paying below the 22 percent level, which comes to $5.4 million. The bill also provides a "rebate" provision for employers who have made additional contributions, which totals $7.2 million. Those two combined equal $12.6 million, and the actuarially determined rate at 22 percent, required $180.5 million. There is $180 million in the appropriation bill, so the differential of $500,000 with the other two pieces, brings it up to $13.1 million. It contemplates a rate of 32.5 percent, which the Alaska Retirement Management Board (ARM) supports. If the legislation passes, there will always be a blended rate for PERS employers. 9:07:41 AM Co-Chair Meyer asked if fiscal note #1 is dated 3/16 and fiscal note #2 is dated 5/3. Mr. Brooks said yes. Mr. Brooks explained that fiscal note #1 shows no cost to the Division of Retirement and Benefits; however, an appropriation would be required to comply with the cost share provisions of the bill. Co-Chair Meyer noted that fiscal note #2 does not show the $180 million already in the operating budget. Mr. Brooks pointed to the information on page 2 of the fiscal note that addresses that amount. Co-Chair Meyer requested an explanation of Amendment #2. Mr. Shier explained that Amendment #2 would prevent prejudicing of possible recovery in a suit about the previous actuary. There is language that states any contributions of the state should not be considered as an offset for any future recovery. The purpose is to protect the state's interest. Representative Crawford asked for clarification. Mr. Shier explained that if there is a court action and one party recovers from another party, but they have also "recovered" from another source, that can diminish the court award. The amendment would prevent that from happening. Co-Chair Meyer set CSSB 125 (FIN) aside. CSSB 125 (FIN) was heard and HELD in Committee for further consideration. 9:11:23 AM