HOUSE BILL NO. 277 "An Act relating to payment of retirement benefits for subsequently reemployed retired members of the teachers' retirement system." DARROLL HARGRAVES, Executive Director, Alaska Council of School Administrators commended the Committee for considering the serious teacher shortage developing in Alaska. He added that field reports indicate that it is becoming more difficult to find qualified and certifiable teachers to enter classrooms, as well as Administrator slots. He commended the Committee on subsection (b) on page two as well. Senator P. Kelly stated that Alaska should seriously consider alternatives to certification in order to fill these teaching positions. Co-Chair Torgerson asked for an explanation related to this legislation's fiscal note, especially the associated benefits, which might go up an additional ten percent. He asked what section of the bill this increase referred to. GUY BELL, Director, Division of Retirement and Benefits, Department of Administration responded that actuaries had looked at the state's cost for a person who, after 20 years retires and then is rehired. He noted that this reference reflected a ten-percent increase in the net present value of the expected life line value of this individual's benefits. He continued that if half the members decided to participate the cost to the system would be about .75 percent of Teachers' Retirement System (TRS) payroll, which would be about $3.6 million. He gave an example of a teacher with 20 years of service at a high salary of $50,000 per year. He explained that if a teacher was rehired back into the system, the second retirement would be calculated on the teacher's higher salary, while not affecting their original benefits. BILL CHURCH, Retirement Supervisor, Division of Retirement & Benefits, Department of Administration added that an individual who had participated in a Retirement Incentive Plan (RIP) and who was rehired would lose the incentive credit given at their original retirement. He continued with the example of a teacher first hired under the Tier 1 level of benefits, who retires at age 43 after 17 years of service. He noted that this individual would not be eligible to commence this first benefit until they reached age 55 for a normal benefit or age 50 for an early benefit. He noted that this would be the penalty for returning to employment, although this does not prevent anyone who has retired from being eligible for rehire under this scenario. Co-Chair Parnell referred to the teacher shortage as previously noted and asked how many new teachers are presently needed in the state. He wondered what the annual gross on average was in Alaska and if this was not enough, he asked what it should be. Mr. Guy responded that the state must consider how many teachers are quitting and how many are retiring. He noted that about 500 teachers retire each year and guessed that the same amount of teachers leave for various other reasons. He added that about the same number of teachers come into the system for any given year. He generally stated that there are 10,000 teachers in the system statewide, with roughly a 10 percent annual turnover. Co-Chair Parnell stated that it seemed the numbers were staying level, along with a population decrease statewide. He wondered if there was a need for this legislation with these types of projections. Mr. Church responded that districts were reporting shortages in some disciplines, something that has been on going for many years. Co-Chair Parnell declared that he thought this legislation was a short-term fix and that it does not look towards the future, as to recruit and keep teachers. Tape: SFC - 00 #102, Side A, 10:49 AM Senator Green stated that this shortage of teachers was cyclical, just the same as overages. She noted that this was not an unusual phenomenon. Co-Chair Torgerson inquired about the advantage or disadvantage of a teacher who works twenty years and retires, as versus a teacher that stays on for the same period of time. Mr. Bell responded that he could not think of any advantage one way or the other. Mr. Church added that either way, after twenty years, an individual would receive the same multiplier, which increases after twenty years from two percent per year to two and a half percent per year. Co-Chair Torgerson stated that HB 277 would be HELD in Committee.