HB 224-REEMPLOYMENT OF RETIRED TEACHERS & ADMIN    4:06:58 PM CHAIR KREISS-TOMKINS announced that the final order of business would be HOUSE BILL NO. 224, "An Act relating to reemployment of persons who retire under the teachers' retirement system." 4:07:40 PM REPRESENTATIVE JENNIFER JOHNSTON, Alaska State Legislature, as prime sponsor of HB 224, stated that Alaska has many budget challenges and has challenges in recruiting and retaining qualified teachers in the rural areas. She said that even with the University of Alaska Anchorage (UAA) graduating qualified teachers, there is still a teacher shortage; and districts are struggling every year to fill the positions. REPRESENTATIVE JOHNSTON relayed that HB 224 would allow school districts to rehire retired educators to work as contractors, which would offer savings to the district. Under HB 224, educators younger than age 62 may be rehired after one year of retirement; educators age 62 and older may be rehired after three months of retirement. If the school district uses this tool, it must contribute [12.6] percent salary base rate toward paying down the unfunded liability of the pension fund of the Teachers' Retirement System (TRS) but won't be required to contribute other costs beyond the salary. REPRESENTATIVE JOHNSTON maintained that the two benefits of the proposed legislation are cost savings and expanding the pool of qualified teachers. She added that it also might provide some mentorship within school districts. 4:09:18 PM ROBERT ERVINE, Staff, Representative Jennifer Johnston, Alaska State Legislature, on behalf of Representative Johnston, prime sponsor of HB 224, stated that Section 1 of HB 224 would modify the terms of the teacher employment and tenure to allow school districts to rehire educators who have retired under the defined benefit plan or the defined contribution plan - Tier II or Tier III. Section 1 clarifies that if an educator is younger than age 62, he/she must be retired for a year before being rehired, or if age 62 or older, must be retired for three months before being rehired. Section 1 also would require employers to contribute to TRS for reemployed educators. MR. ERVINE relayed that Section 2 would allow for retirees who are rehired, as permitted by Section 1, to continue to receive their retirement benefits during the period of reemployment. MR. ERVINE said that Section 3 would ensure that retired teachers who are rehired don't accrue more benefits. He relayed that Section 4 would clarify in the TRS statutes that members will continue to receive benefits, and deductions for TRS will not come from their salaries but from the school district in a separate payment. Section 4 also states that reemployed educators will not receive credited time during their reemployment. MR. ERVINE stated that Section 5 would further clarify that school districts will have to contribute to TRS. He said that Section 6 would apply the provision of HB 224 to the contracts that are made. 4:11:12 PM REPRESENTATIVE WOOL summarized: a retired teacher goes back to work; he/she still collects retirement; and the school district pays into the TRS fund, but the rehired teacher does not. He asked if normally a teacher pays into the fund. REPRESENTATIVE JOHNSTON responded that with both TRS and the Public Employees' Retirement System (PERS), the public agency employer pays an assessed fee. The fee for teachers is [12.6] percent of the salary base, which is both defined contributions and contributing contributions. She said that the rehired teacher would be part of that salary base. The fee for PERS employees is 22 percent of the salary base. REPRESENTATIVE WOOL asked if there would be any difference between the contribution levels of the rehired retired teacher and the regular teacher. He stated that he would like to know what the difference would be between the two teachers as far as TRS is concerned. MR. ERVINE answered that there would be no difference; it would be the same contribution level. 4:12:57 PM REPRESENTATIVE LEDOUX referred to the "cost savings" mentioned in the sponsor statement [included in the committee packet]. She asked, if the contributions are at the same level, "where are the cost savings coming from?" REPRESENTATIVE JOHNSTON replied that the retired employee would continue to receive health care and other benefits from the retirement system. She maintained that the school district might not have to pay as much to hire the retired teacher as it would a teacher without health care benefits or other retirement benefits. REPRESENTATIVE LEDOUX asked if the school district would have to pay into TRS for the rehired retired teacher. REPRESENTATIVE JOHNSTON explained that when PERS and TRS were changed in 2008, the whole base salary for the hiring entity, such as a municipality or a school district, was assessed for the amount that the entity must pay towards the retirement system - 22 percent [for PERS, 12.6 percent for TRS]. The rehired retired teacher would be part of that salary base; therefore, the entity would be paying for the teacher's salary as it's "prorated out towards the pension." REPRESENTATIVE LEDOUX asked for the source of savings if the school district is paying into the retirement system. She conceded that savings are not necessarily needed for the proposed legislation to make sense. REPRESENTATIVE JOHNSTON responded that the principle savings would be derived from the teacher not requiring the health care benefits that other teachers would require. She agreed that satisfying the need for teachers may be more important than saving money under the proposed legislation. She maintained that the intent of HB 224 is to enlarge the pool of teachers. REPRESENTATIVE LEDOUX offered a scenario: Two teachers are being considered for hire; each would be paid $50,000 per year. One teacher is a retired teacher wanting to be rehired; the other teacher is a new teacher. Representative LeDoux asked, "Can you explain to me how it would work for each one?" REPRESENTATIVE JOHNSTON replied that for the new hire, there would be encumbered costs - a health care plan, payments into the retirement system, and continuing education incentives. 4:17:20 PM REPRESENTATIVE LEDOUX asked what Representative Johnston means by "encumbered costs." REPRESENTATIVE JOHNSTON replied that the benefits that a person receives along with his/her salary is what she is referring to as encumbered costs. REPRESENTATIVE JOHNSTON explained that the rehired teacher would not necessarily need the health care benefits or the continuing education incentives; the only additional expense would be the salary base formula going into the pension fund. REPRESENTATIVE LEDOUX summarized by saying the rehire doesn't have as many encumbered costs. REPRESENTATIVE JOHNSTON concurred, but reminded the committee that the most important aspect of the proposed legislation is not cost savings but addressing the teacher shortage by allowing school districts access to a larger teacher pool. 4:19:26 PM LISA PARADY, PhD, Executive Director, Alaska Council of School Administrators (ACSA), testified that she is representing superintendents, secondary and elementary school principals, school business officials, and other school district administrators. In response to Representative LeDoux, she stated that the proposed legislation is focused on "supply and demand" - trying to increase the teacher pool. She relayed that the retiree would be rehired in an "at-will" situation. She maintained that one can be retired from any state in the country, come to Alaska, and be employed as an educator; Alaska's own retired teachers are prohibited from doing so. DR. PARADY maintained that the intent of HB 224 is to allow retired teachers to be employed under an at-will contract without impacting their retirement benefits. She stated that in a compromise with the Department of Administration (DOA), included in the proposed legislation is the requirement that the districts pay the 12.6 percent employer contribution to TRS, as they would with a non-retired employee. She relayed that the rehired retiree would be under contract with the school district, and the legislature would not be involved with that contract. DR. PARADY suggested there may be cost savings if a school district negotiated a lower salary with the employee than he/she received before retirement. She reiterated that the employee would not be availing themselves of the benefits offered through the school district, because his/her [retirement] benefits would be intact. She offered that the school district would be willing to pay the additional amount to TRS because it needed the employee; the employee would not pay into TRS because they would be an independent at-will employee under contract with the district. She added that the district might decide to pay a greater salary for a "high need" position - such as a special education teacher - but less for a teacher in a position that the school district decided was of lesser value to them. She reiterated that the intent of the proposed legislation is not cost savings but the teacher shortage crisis. REPRESENTATIVE LEDOUX asked why a teacher would retire, then go back to work. 4:23:42 PM DR. PARADY replied that the proposed legislation does not address the retiree's intent. HB 224 would allow a school district to avail itself of the services of a retired person if, in fact, there is someone available who is willing to work; currently a retired teacher is prohibited from doing so. She maintained that the proposed legislation would provide an additional tool to school districts; it is not about incentivizing someone to retire or not to retire. If a community has retired educators and the school district has trouble filling a teaching position, HB 224 would allow the school district to hire a retired educator who is familiar with both Alaska students and the state and is willing to teach. DR. PARADY reviewed for the committee the history of the provision under the proposed legislation. Previous legislation with this provision was in existence starting in 2001 and sunsetting in 2009. At the point of sunset, the teacher shortage was reaching a crisis level. She relayed that DOA reported that 325 retired teachers were rehired from 2001 to 2010, and because the teachers were counted each year, the actual number of teachers rehired may have been much lower. She relayed that the average period of reemployment was 18.7 months; the shortest period 3 months; and the longest period 46 months. The employer employing the largest number of retired teachers was the Lower Kuskokwim School District (LKSD); and the most employed in one year was 181. She reported that the position with the highest number of rehires was "teacher" at 149; 18 superintendents; 22 principals; 45 special education teachers; and 12 psychologists. DR. PARADY referred to Slide 3 of the ACSA PowerPoint presentation handout and relayed that Alaska is "working against a backdrop of a teacher shortage nationally." She offered that the Alaska Teacher Placement (ATP) center [University of Alaska Fairbanks (UAF)] currently lists 602 openings; there were about 700 vacancies at the start of the year. At last year's ATP job fair, 35 school districts participated with 185 school district personnel in attendance, and there were 265 candidates; this year there were 212 candidates at the job fair. She said that historically the ATP job fair attracts hundreds of people from all over the country, but now the applicant pools are shrinking. She mentioned that currently there are 250 teaching jobs listed and given that school districts have been actively recruiting for the past three months, the number of vacancies is staggeringly high for Alaska. She stated that in Alaska, many of the school districts have started the school year unstaffed and remain so. She added that this is common in rural school districts where the turnover is high but historically has not been common in the urban school districts. DR. PARADY relayed that there are about 100 positions that were not filled, which means they are being filled with anyone - substitutes and paraprofessionals - just to fill the gaps. She referred to Slide 4 and mentioned that the University of Alaska [UA] pipelines teachers into Alaska teaching positions, but there are not enough teachers to fill the void. She said that the UA Colleges and Schools of Education produce about 200 to 250 new teachers per year, which is not enough to fill the existing gap. She relayed that UA President [Jim] Johnsen has a goal of UA preparing 90 percent of the annual hired teachers by 2025. It is an ambitious goal which ACSA supports, but she maintained that the shortage needs to be addressed now, and the proposed legislation may help to alleviate the gap until the UA Strategic Pathways initiative produces results. 4:29:56 PM REPRESENTATIVE LEDOUX asked what the rationale was for not allowing the school districts to hire retired teachers. DR. PARADY responded that she did not know the specific reasons; she conjectured it was related to the state not wanting to interfere with the retirement system. She maintained that under the current staffing crisis, putting Alaska's retired teachers on equal footing with all other retired teachers in the country and allowing Alaska's retired teachers to be in the pool of applicants balances out that concern. She maintained that there are safeguards included in the proposed legislation: the delay period before rehiring and the age consideration. She referred to Slide 12, which states that rural and remote schools have the highest turnover rate of principals and teachers. The slide illustrates the urban rural comparisons: urban principal turnover is 21 percent; urban teacher turnover is 14 percent; rural remote principal turnover is 32 percent; and rural remote teacher turnover is 31 percent. She said that student achievement depends on hiring high quality teachers. 4:33:40 PM REPRESENTATIVE WOOL asked how long an educator must work and what age an educator must be to retire with benefits. He relayed that Alaska is having a hard time filling trooper and Village Public Safety Officer (VPSA) positions, and Alaska has the highest unemployment rate in the country. He asked, "What gives?" He asked if it is just in salary and benefits that Alaska is unable to compete with other states. He mentioned that Alaska historically "outperformed" other states in the salary and benefits it offered. DR. PARADY answered, "That absolutely is a consideration. She related that there is a national shortage of teachers because people are not choosing education as a profession. Alaska has lost competitiveness; it used to lead the country with its salary and benefit package; and it has lost that momentum. 4:35:41 PM NORM WOOTEN, Executive Director, Alaska Association of School Boards (AASB), stated that the previous retire rehire bill [House Bill 161, passed into law during the Twenty-Fourth Alaska State Legislature, 2005-2006] was for employees working under a waiver for hard to fill positions, which included special education teachers and secondary education mathematics and science teachers. Generally elementary positions are easier to fill because there are more elementary teachers. MR. WOOTEN maintained that when the sunset clause of House Bill 161 went into effect in 2009, AASB adopted a resolution in support of continuing the program and continues to support retire rehire to this day. He relayed that the retire rehire program was initiated for good reasons, and the primary reason was to fill the positions that are difficult to fill. The conditions of teacher shortage in Alaska still exist despite the arbitrary deadline of the sunset clause. MR. WOOTEN testified that the irony of Alaska's prohibition is that a teacher can retire in any other state, come to Alaska, and be hired as a teacher; however, Alaska retired teachers wanting to teach again in Alaska cannot do so. Some people "fail" at retirement; and he is an example of that. He maintained that many people go back to work after retirement, because they feel like they made a mistake by retiring. He reiterated that Alaska school districts need the services of these retired teachers. REPRESENTATIVE LEDOUX pointed out that the provisions under House Bill 161 expired in 2009, and it is now 2017. She asked if there have been efforts made in previous legislatures to reinstitute the retire rehire program. MR. WOOTEN responded yes. The AASB has worked hard to get this accomplished, and "this is the first time we've gotten it this far ...." 4:38:53 PM REPRESENTATIVE WOOL presented a scenario: A teacher retires at the time he/she is eligible to retire; the teacher decides he/she wants to go back to teaching after being retired six months; he/she negotiates a contract with the school district possibly at a lower pay level; he/she receives a teacher salary and a retirement check, therefore, makes more money than another teacher. He asked if that would be a problem and if the additional teaching time would increase the retirement payments when the teacher retires fully. MR. WOOTEN replied that the decision to retire is a personal choice. He maintained that when he retired from his first job, he was hired back as a contractor; therefore, he was getting two salaries - a contractor salary and a retirement salary - and other workers were not getting two salaries. He maintained that it is a decision that everyone faces - to stay at his/her job or retire. REPRESENTATIVE WOOL conceded that as a contractor, one is not getting all the benefits that employees receive. MR. WOOTEN answered, that's correct. He said that he received no benefits when he returned to work as a contractor. REPRESENTATIVE WOOL asked if a returning teacher would get benefits, since he/she would come back as an employee. He also asked if that additional work would enhance his/her retirement amount. MR. WOODEN expressed that he is not qualified to answer that question. 4:42:13 PM REPRESENTATIVE TUCK pointed out that a returning retiree would be exempt from any collective bargaining agreements. Someone coming from another state would not be exempt but would be under a collective bargaining agreement. He asked if there is any reason Alaska would not want employees working under collective bargaining agreements. MR. WOOTEN responded that when school districts have a choice, they prefer long-term employees; the current proposed legislation is a stopgap measure to employ people in hard to fill positions. He said a school district is not going to staff its entire school with contracted retired teachers, because these teachers are temporary; they are not permanent employees with long-term teaching aspirations. REPRESENTATIVE TUCK suggested that it is "cheaper" for the school district to hire the temporary employee than a long-term employee receiving benefits under collective bargaining. He suggested that it is illogical to hire temporary employees if the school district wants long-term employees. REPRESENTATIVE TUCK stated that with the Senate's cuts to education, there will be an estimated 700 teachers terminated. He maintained if that occurs, Alaska may have teachers to fill the shortage. 4:44:56 PM REPRESENTATIVE LEDOUX referred to the statement: Some people realize after retirement that they want to go back to work. She asked if there is a way that a person could re-enter the school system, not take retirement benefits, and become a regular employee again, or if once the person has retired, "there's no going back." MR. WOOTEN answered that a retired teacher can come off retirement and go back into the system. REPRESENTATIVE LEDOUX maintained if that is the case, the proposed legislation is unnecessary. MR. WOOTEN stated that the magnitude of the problem of being unable to fill positions is great. He relayed his experience at Kodiak: when he served on the school board 30 years ago, school administrators were able to fill every position from the job fair in Anchorage; when he got off the school board 25 years later, the administrators needed to attend eight to ten job fairs across the country to find teachers. He maintained that the teacher shortage in Alaska is huge, and it is a nationwide shortage as well. He said that he doubts very seriously that a retired teacher receiving retirement pay would be willing to give up the retirement pay to re-enter the system if he/she had the opportunity to draw both retirement and a contracted salary. REPRESENTATIVE LEDOUX maintained that was the point she was making. The proposed legislation would incentivize retirement, because the teacher could retire, take some time off, and come back and receive both a salary and retirement. She said without HB 224, the teacher would need to decide to stay or not stay. [HB 224 was held over.]