HB 323 - PERS CREDIT FOR NONCERTIFICATED EMPLOYEES Number 0186 REPRESENTATIVE BUNDE noted the next bill before the committee was HB 323, "An Act relating to the calculation of credited service in the public employees' retirement system for noncertificated employees of school districts, regional educational attendance areas, and state boarding schools; and providing for an effective date." Number 0195 REPRESENTATIVE TOM BRICE made a motion to adopt proposed committee substitute 0-LS1350\F, Cramer, 4/29/98, as the working draft. Number 0218 CHAIRMAN BUNDE objected for discussion purposes. REPRESENTATIVE BRICE explained, "What we we're doing with the committee substitute is allowing individuals who are noncertificated employees the ability to opt into the program which would frankly, give them an increase in their benefits. For that increase, they get a full year of benefits for the length of work they might participate in. Some employees work nine months and only get nine months credit towards retirement. The problem with that is they end up working 40 years for a 30 year retirement. This would just give them the ability to increase their contribution rate to cover the months that they're not working so for a 30-year retirement, they get 30-year ...." CHAIRMAN BUNDE asked if it would be comparable to the retirement program for certificated employees. REPRESENTATIVE BRICE said it would be very close to what a certificated employee would have, with possibly the difference being that certificated employees have the option to have their retirement benefits spread over a 12-month period versus a 9-month period. This legislation does not deal with that issue. Number 0344 CHAIRMAN BUNDE asked what the minimum would be that an individual would have to work for a year of retirement benefit. REPRESENTATIVE BRICE deferred that question to the representative from the Division of Retirement and Benefits. Number 0398 GUY BELL, Director, Division of Retirement and Benefits, Department of Administration, introduced Bill Church from the division. Number 0414 BILL CHURCH, Retirement Supervisor, Division of Retirement and Benefits, Department of Administration, responded the minimum would be 172 days for a full year of service. CHAIRMAN BUNDE understood there would no negative actuarial impact on the retirement system if HB 323 is passed. MR. CHURCH said that was correct. CHAIRMAN BUNDE asked if the new contribution rate be mandatory or optional if HB 323 were to pass? Number 0450 MR. CHURCH replied it is an option under 0-LS1350\F. He added that individuals currently employed would have 180 days to opt up to the alternate calculation of service and obviously the higher rate of contributions and new employees would have 90 days from the date of employment to opt up to the higher coverage. CHAIRMAN BUNDE said, "And the purpose of the option, I'm just guessing, would be people who view that profession as temporary versus those that might view that work as a career." MR. CHURCH replied certainly those individuals who elect the option will view it as being more favorable to them. He explained, "Someone just starting off, they can look at it and say 'I can work 30 years and retire' whatever age that may be. If someone's right out of high school, 30 years might put them at 48 years old with the ability to retire at that point in time as opposed to currently, the tiers for normal retirement age, not service based, is age 60, so to them certainly that would be a clear advantage." Number 0512 REPRESENTATIVE JOE GREEN noted the department had a fiscal note of $116,000 for updating computers. He asked if the division would be getting a system that would allow this to happen and would the division derive other benefits from updating their system. MR. CHURCH said the division is currently running two different systems; the existing system and a new system that's coming on line. He explained the new system would not be on line in time, so the division would only have to update one system. He said the division would have to create the ability of the system to be able to recognize a different group of employees, to be able to credit their service properly and be able to apply the right contribution value that comes in. Based on all these changes, it has to be for both systems and the fiscal note reflects the costs estimated by the data processing staff. Number 0600 CHAIRMAN BUNDE verified that funds to upgrade the computer system wouldn't come out of the general fund, but instead out of the earnings of the retirement system. MR. BELL confirmed the funding source is the public employees' retirement account. CHAIRMAN BUNDE asked if there were further questions for the division? Hearing none, he asked Mr. Cyr to come before the committee to present his remarks. Number 0635 JOHN CYR, President, NEA-Alaska, testified in support of CSHB 323. He said the classified employees in the 53 or 54 school districts across the state represented by NEA-Alaska have worked long and hard and view this as an equity issue. He said NEA-Alaska has looked at a number of different ways to help provide a type of retirement system that would secure benefits for them at the end of their career. He explained that many of the employees have been put in the position of having had at one point year-round jobs and their jobs have been cut back and scaled back as the district's ability to provide that resource lessened. He stated this is of critical importance to the employees represented by NEA-Alaska and in his opinion, the language in the proposed committee substitute is fair by placing the burden on those employees who opt into it to pay for that added benefit. He urged the committee to pass the proposed committee substitute from committee. Number 0740 CHAIRMAN BUNDE closed public testimony and asked the wishes of the committee. Number 0750 REPRESENTATIVE DYSON made a motion to move HB 323, version 0- LS1350\F, Cramer, 4/2998, with individual recommendations from committee. There being no objection, CSHB 323(HES) passed out of the House Health, Education and Social Services Standing Committee. CHAIRMAN BUNDE noted that even though CSHB 323(HES) had passed from committee, Mary Biss wished to present her remarks from Anchorage on HB 323. Number 0769 MARY BISE, President, Totem Association of Educational Support Personnel, testified via teleconference from Anchorage, and urged the committee to vote for equality in the state law and the PERS retirement system for noncertificated school district personnel. She said this bill will reinstate the equity enjoyed by these employees prior to July 1, 1976 when they did receive a full year credit. She said these employees should receive the same one year of retirement benefits for one year of work as do the teachers. Number 0840 BARBARA TUCK HUFFNESS, Director, Governmental and Legislative Affairs, Teamsters Local 959, testified via teleconference from Anchorage. She said the Teamsters Local 959 represents the Anchorage School District's approximately 400 noncertificated employees, who strongly support this legislation.