HB 224-REEMPLOYMENT OF RETIRED TEACHERS & ADMIN    3:42:21 PM CHAIR KREISS-TOMKINS announced that the next order of business would be HOUSE BILL NO. 224, "An Act relating to reemployment of persons who retire under the teachers' retirement system." 3:43:03 PM REPRESENTATIVE JENNIFER JOHNSTON, Alaska State Legislature, relayed that HB 224 is an act relating to reemployment of persons retired under the Teachers' Retirement System (TRS). 3:43:23 PM LIZ REXFORD, Staff, Representative Jennifer Johnston, Alaska State Legislature, on behalf of Representative Johnston, prime sponsor of HB 224, relayed that the proposed legislation would reinstate the retire rehire provision adopted in 2005 under House Bill 161 [during the Twenty-Fourth Alaska State Legislature, 2005-2006], which had a sunset date of 2009. She stated that Alaska is experiencing a severe shortage of teachers, specialists, and administrators in its school districts throughout every region of Alaska. Attracting and retaining quality teachers has become a critical issue facing school districts as they work to improve education in Alaska's public schools. MS. REXFORD relayed that the proposed legislation would give school districts the flexibility to rehire a retired teacher; it would expand the pool of qualified teachers to temporarily fill a position until a permanent teacher can be hired. She said that currently school districts are struggling to fill vacant positions with qualified teachers, sometimes relying on long- term substitutes and other replacements. The proposed legislation would provide another tool for school districts to address this problem in the short-term, while long-term solutions continue to be considered. 3:44:50 PM REPRESENTATIVE JOHNSON commented that the proposed legislation is practical and sorely needed. 3:45:21 PM LISA PARADY, Executive Director, Alaska Council of School Administrators (ACSA), testified that she represents Alaska superintendents, elementary school principals, secondary school principals, school business officials, and other school administrators. She mentioned that her testimony has the full support of Norm Wooten [Executive Director, Association of Alaska School Boards (AASB)] and noted that AASB has offered two resolutions from its membership in support of the proposed legislation. She stated that ACSA strongly supports HB 224 as one tool that could help school districts at a time in which they need immediate assistance to attract leadership talent to the education profession. She maintained that ACSA recognizes that this is not "a silver bullet" but could provide some relief. MS. PARADY relayed that HB 224 would allow for the reemployment of retired educators to help districts fill vacancies; it is a necessary tool to help meet school district personnel needs both in urban and rural districts. She thanked Kathy Lea, Chief Pension Officer for the Division of Retirement and Benefits (DRB), Department of Administration (DOA), with whom the sponsor's staff has worked to ensure that what is proposed complies with the U.S. Internal Revenue Service (IRS) Treasury Regulations that are supported by the Department of Administration (DOA). She mentioned that ACSA has also worked with the National Education Association (NEA)-Alaska, which supports the proposed legislation but has suggested two minor changes: that the districts show that they have tried, but were unable, to hire a qualified teacher; and that the contract be for one year at a time. She said that both changes can be easily incorporated into the proposed legislation. MS. PARADY suggested that it is a rare opportunity when all the education partners collaborate and ask for legislative assistance. She maintained that the issue is a basic "supply and demand" issue, and the legislation is vital because the shortage is critical. She said that ACSA members make the hiring decisions in each district and deal directly with the increasing difficulty of doing so currently. She referred to the letters from districts, included in the committee packet. She pointed out the "2018 Joint Position Statements" from the organizations she represents, included in the committee packet, and emphasized that members are very focused on preparing, attracting, and retaining qualified educators and specifically looking at areas of innovation and alternative pathways to attracting teaching and leadership talent. She stated that every one of ACSA's members voted to explore the retire rehire provision. 3:49:12 PM MS. PARADY relayed that Alaska reflects the national shortage of teachers and educators but has even greater struggles due to its remoteness coupled with its loss of competitiveness. She continued by saying that against the backdrop of the national educator shortage, Alaska's retirement system and wages for an Alaska cost of living (COL) does not draw teachers from the Lower 48 as it once did. She said that Alaska recruits most of its teachers from the Lower 48; therefore, Alaska's problem is worse. She mentioned that in the past, the Alaska Teacher Placement (ATP) Job Fair held every year in Anchorage would attract hundreds of educators from across the country; at last year's ATP Job Fair, there were more hiring personnel than applicants. There were 211 registrants with 172 of them from Alaska and 39 from out of state. She reported that there were 36 districts represented at the job fair. MS. PARADY offered the following statistics: In the 2016-2017 school year, 24 percent of districts had a new superintendent; from 2013-2017, 72 percent of districts experienced at least one change of superintendent during the five years. There are about 400 school principals in the state; in the 2016-2017 school year, 26 percent of principals were new to their schools. In the 2016-2017 school year, there were 8,010 teachers; 22 percent were new to their schools. 3:51:40 PM MS. PARADY delivered statistics on educator retention, as follows: the average retention rate for teachers in Alaska schools was 72 percent; in urban areas - Anchorage, Fairbanks, and Juneau - the average retention rate was 83 percent; in urban fringe areas, such as Palmer and Sitka, the average retention rate was 76 percent; in the rural fringe, such as Healy and Bethel, the average retention rate was 71 percent; and in rural remote Alaska, such as Arctic Village and Yakatat, with 72 percent of the schools in the state, the average retention rate was 57 percent. Retention is an issue in all areas of Alaska; the remote schools, where it is the most difficult to attract teachers, are where Alaska has its most severe retention problems. She mentioned the letter from Deena Bishop, Ed.D., superintendent of the Anchorage School District, included in the committee packet, sharing the importance of the proposed legislation to her school district. MS. PARADY concluded by referring to the testimony of James Johnsen, PhD, President, University of Alaska (UA) during the 2/7/18 Joint Meeting of the House Education Standing Committee and the Senate Education Standing Committee, because UA recognizes this as an emergent issue and is taking specific action to work with the school districts to create more teachers in Alaska; he set an ambition goal of preparing 90 percent of the annual hired teachers by 2025. Ms. Parady offered that ACSA supports this goal, but Alaska needs the educators now, and it will take time for Alaska to "grow its own." MS. PARADY relayed that the most pressing issue is unfilled vacancies at the start of the school year. She maintained that the direct intent of the proposed legislation to help districts that have advertised positions but are unable to fill them. She directed the committee's attention to the document from the UA Alaska Teacher Placement (ATP) website, included in the committee packet, and pointed out that as of 2/7/18, there were 486 openings. She mentioned that last December, ACSA worked with UA on an emergency special education support piece, because Alaska had 93 vacancies in special education. She pointed out the category, "Student Support Services," which is further broken down to clarify the need for special education support personnel. 3:54:44 PM MS. PARADY stated that the [ATP] Job Bank is a "live" system on the website; as Alaska moves into recruitment season in the next couple months, about 800 positions will be posted. She relayed that an individual can retire in any other state in the country, come to Alaska, and be employed as a teacher; however, Alaska's retired educators, who committed their careers to Alaska's children, are currently blocked from doing the same. MS. PARADY relayed that House Bill 161 sunset in 2009. The DOA provided a summary of the program, as follows: In the years 2001-2010, total utilization was 325 retired rehired individuals; average time reemployed was 18.7 months; the shortest period of reemployment was 3 months; the longest period of reemployment was 46 months. The employer employing the largest number of rehires was the Lower Kuskokwim School District (LKSD), which is the largest rural district, and the highest number employed in one year was 181. The highest use [of the program] was by teachers with 149 teachers rehired; 45 special education teachers were rehired; 18 superintendents were rehired; and 22 principals were rehired. MS. PARADAY emphasized, "This isn't opening the floodgates, this is targeting specific positions that we are not able to fill with potentially a retired teacher who might be in the community, who might be willing to come in and do a one year contract, and preserve that quality in the classroom, which I think we're all really focused on." She concluded by saying that the proposed legislation may help to alleviate some of the pressure felt by districts in recruiting teachers, particularly in high poverty and rural areas. Alaska's students benefit by experienced leadership, experienced Alaska teachers, and educators working with new teachers to achieve a comprehensive learning program for all Alaska students. She asked for committee support of HB 224. 3:57:12 PM REPRESENTATIVE LEDOUX asked whether Alaska passed a law forbidding teachers from being rehired. MS. PARADY replied that Alaska has a prohibition for a rehired retired person working for the state more than .49 of a day. REPRESENTATIVE LEDOUX asked for the rationale of the prohibition. 3:58:29 PM KATHY LEA, Chief Pension Officer, Division of Retirement and Benefits (DRB), Department of Administration (DOA), responded that there is a statute prohibiting a retired member from coming back into fulltime service or part-time service over 50 percent of the normal work week; the statute is AS 14.25.043. She explained that it is a standard provision in retirement plans that once a person initiates his/her retirement benefit, he/she does not work and receive an active salary from an employer in the same plan from which the person retired. REPRESENTATIVE LEDOUX asked, "Besides it being standard, why do we do it?" She asked for when the statute was enacted and the rationale behind it. MS. LEA replied that the statute has been in existence since the 1950s and is due to the perception of "double-dipping." She stated that for someone who has earned a retirement but is still working, there are IRS rules that require a bona fide termination of employment before coming back to work for the same employer. She relayed that mostly the reason is to protect the retirement plan. If you have provisions for retirees to come back into service, then there is a potential for contribution to that plan to be lost; it precludes new enrollees in the plan who would be paying contributions. She maintained that in the proposed legislation, contributions would be required; therefore, the plan would be kept whole. 4:01:12 PM REPRESENTATIVE LEDOUX pointed out the lack of a fiscal note and asked whether the proposed legislation would have no fiscal impact on the state. MS. LEA answered that there is no fiscal note at this time because it has not been ordered by the House and Senate leadership; she conceded that a fiscal analysis is needed. The proposed legislation would require the employer to pay the employer contributions for the rehires and to offer active employee health insurance. She maintained that these are the two areas that would create cost. She stated that she did not know what the fiscal note would be but offered that there are elements in the proposed legislation addressing those cost concerns. REPRESENTATIVE LEDOUX asked for clarification that fiscal notes are not prepared unless requested by the leadership of the House or Senate. MS. LEA said that this procedure has been in effect for a couple years; the reason is that the actuarial analysis is very costly; it cannot be paid from the [retirement] trusts but must be paid from the general fund (GF). She relayed that DRB gets a GF budget every year, which is managed by the House and Senate leadership. 4:03:06 PM The committee took a brief at-ease at 4:03 p.m. 4:03:42 PM CHAIR KREISS-TOMKINS directed the committee's attention to the fiscal note, included in the committee packet. 4:03:58 PM REPRESENTATIVE BIRCH referred to the forthcoming committee substitute (CS) for HB 224 [labeled 30-LS0759\J, Wayne, 2/6/18], included in the committee packet, and cited page 1, lines 12-14, which read in part: "certifies that the member and the school district did not arrange before the member retired from the school district for the member to be reemployed by the school district". He asked whether the provision has a basis in the plan. MS. LEA replied that the provision is a requirement of IRS to prevent what is referred to as an "in-service distribution." She said that IRS want to ensure that when a person draws his/her retirement benefit, that person has had a bona fide termination of employment. REPRESENTATIVE BIRCH asked whether the proposed legislation would impact the current Public Employees' Retirement System (PERS)/TRS liability. MS. LEA clarified her answer to Representative LeDoux's question by saying that there is a fiscal note on HB 224 but not an actuarial analysis. She stated that it is the actuarial analysis which needs to be ordered by the leadership of the House or Senate. She explained that until that analysis is performed, the impact on the [retirement plan] fund is unknown. She added that the analyses are performed by DRB's consulting actuary, Conduent Inc. She said that once DRB gets an order for a fiscal analysis, Conduent Inc. will perform the analysis to determine the future impact of the proposed legislation on the fund. 4:06:39 PM REPRESENTATIVE BIRCH offered that typically there is a requirement for union membership and dues for hires and asked if that would apply to rehires. MS. LEA stated that the question was outside of her purview. 4:07:23 PM REPRESENTATIVE KNOPP suggested that double dipping might be the reason behind the IRS provision. He relayed his experience with local government; some administrative positions were exempted from PERS to allow people to retire and still receive paychecks as employees. He relayed that under the proposed legislation, the school district would be required to make PERS contributions for the temporary rehire, but that person would no longer be eligible for additional benefits under PERS. He suggested that the result of this would be a net gain for the retirement system. MS. LEA responded that there would not necessarily be a net gain because if there had been a permanent teacher hired in that position, those contributions would have been made as well. She relayed that it is more of "a wash." REPRESENTATIVE KNOPP offered that with a permanent hire, those contributions would be distributed in the future, but for a temporary rehire, they would not be distributed, therefore, would constitute a net gain to the system. MS. LEA replied that it would be a de minimis amount. 4:09:20 PM ANNMARIE O'BRIEN, PhD, Superintendent, Northwest Arctic Borough School District (NWABSD), testified that there are 2,136 students in 12 schools in the 11 villages in the district; none of the villages are accessible by road; and supplies are delivered via air carrier. She relayed that she has been employed by NWABSD for 18 years - 6 as director of curriculum and instruction, 8 as assistant superintendent, and she is in her fourth year as superintendent. She stated that she urges legislators to pass HB 224. She declared that rural Alaska, especially Western Alaska, is in a crisis due to the shortage of qualified staff to teach its students; for the first time in her years at NWABSD, school opened without full staffing. As the district recruits for the 2018-2019 school year, the situation is predicted to be worse. She offered that as parents and grandparents, legislators would find this situation unacceptable. DR. O'BRIEN relayed that the UA System graduates a fraction of the teachers needed to fill open positions throughout the state. The in-state candidates are in high demand and mainly seek positions on the road system; this further decreases the number of candidates for rural Alaska. She said that as a result, her district recruits in the Lower 48 at great expense. She offered that with the entire country facing a teacher shortage, her district must continually seek out new areas in which to recruit. She relayed that Utah, for example, no longer allows out-of-state recruiters to attend its major education career fairs. Other states, such as Montana, allow in-state recruiters to speak with their candidates first to gently discourage out- of-state recruiting. DR. O'BRIEN stated that in an environment of ever-shrinking resources, her district is asking for assistance. She said that the district is taking advantage of the technology available to grow and expand its programs; it is trying to use staffing as effectively as possible during this time of teacher shortage. Using a video teleconferencing system, the district has been able to offer electives to remote sites that do not have the staff to support the additional courses. Currently in the district, there are eight sites and 61 students taking these classes. She added that there are three students from two villages outside the school district who are involved in Introduction to Education I, along with the students. The education focus is the result of an active Educators Rising program. She said that currently there are 14 students enrolled in internships in four of the district's schools. This class uses Canvas [Learning Management System (LMS)] as a lesson management platform. There are 35 students enrolled in the Introduction to Education I course this year; the course is only offered via Bellingham Technical College (BTC) and is available to all district sites. She maintained that the district is doing its best to grow its own and offer its support; these are dual credit classes. DR. O'BRIEN relayed that the district also maintains a 40-bed high school dormitory available to 11th and 12th grade students, locally and statewide. She said that NWABSD houses both fulltime students and students who come to Kotzebue for the variable length programs. These programs, offered through the magnet school, are designed to introduce students to careers in health care, education, process technology, and culinary arts. This efficiently allows the district to fill the need for classes in these areas by offering them to students in schools outside of Kotzebue that do not have the staffing or students to make these courses viable. She said that NWABSD maintains quality instruction by offering its distance delivery and magnet school boarding program; she maintained that it is not enough. 4:13:34 PM DR. O'BRIEN offered that HB 224 would favorably impact district finances by reducing costs associated with recruitment efforts in the Lower 48 and would favorably impact students by having fulltime temporary teachers for their classes. She urged all legislators to assist school districts struggling with maintaining qualified staff for students in rural Alaska; she asked for passage of HB 224. 4:14:52 PM CHAIR KREISS-TOMKINS announced that HB 224 would be held over.