CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 24(STA) "An Act relating to reemployment of and benefits for retired teachers and public employees and to teachers or employees who participated in retirement incentive programs and are subsequently reemployed as a commissioner; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. Amendment #1: This amendment deletes all material in Sections 14 and 15 beginning on page seven line 13 through page eight line seven and inserts the following language. Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to read: APPLICABILITY OF SECS. 2, 4, AND 5 OF THIS ACT TO RETIRED TEACHERS MAKING AN ELECTION UNDER AS 14.25.043(b) OR (e) BEFORE JULY 1, 2005. (a) A retired teacher who was rehired and made an election under AS 14.25.043(b) or (e) before November 3, 2004, may continue to receive retirement benefits and medical benefits under AS 14.25.043(b) or (e) from July 1, 2005, through December 31, 2006, if that teacher continues to serve in the same position. However, on January 1, 2007, the period of reemployment to which the teacher's original election under AS 14.25.043(b) or (e) applied is considered terminated. If the teacher continues as an active teacher, that teacher may not continue to receive benefit payments while working as an active teacher unless the employer rehires the teacher under AS 14.25.043(b) or (e), as amended by secs. 4 and 5 of this Act, on or after January 1, 2007. (b) A retired teacher who was rehired and made an election under AS 14.25.043(b) or (e) on or after November 3, 2004, may not continue to receive retirement benefits and medical benefits under AS 14.25.043(b) or (e) after June 30, 2005. On July 1, 2005, the period of reemployment to which the teacher's original election under AS 14.25.043(b) or (e) applied is considered terminated. If the teacher continues as an active teacher, that teacher may not continue to receive benefit payments while working as an active teacher unless the employer rehires the teacher under AS 14.25.043(b) or (e), as amended by secs. 4 and 5 of this Act, on or after July 1, 2005. (c) This section does not apply to an employer who may be required to provide health and medical benefits under AS 14.25.043(b), as amended by sec. 4 of this Act, regardless of whether a teacher receives retirement medical benefits under this section.  Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to read: APPLICABILITY OF SEC. 7 OF THIS ACT FOR RETIRED EMPLOYEES MAKING AN ELECTION UNDER AS 39.35.150(b) OR (e) BEFORE JULY 1, 2005. (a) A retired employee who was rehired and made an election under AS 39.35.150(b) or (e) before November 3, 2004, may continue to receive retirement benefits and medical benefits under AS 39.35.150(b) or (e) from July 1, 2005, through December 31, 2006, if that employee continues to serve in the same position. However, on January 1, 2007, the period of reemployment to which the employee's original election under AS 39.35.150(b) or (e) applied is considered terminated, and, as to that employee, (1) AS 39.35.150(b), as amended by sec. 7 of this Act, or AS 39.35.150(e) applies; and (2) if the employee continues as an active member, that employee may not continue to receive benefit payments unless the employer hires the employee as a result of the competitive hiring process required by the applicable subsection of AS 39.35.150(f), (g), and (h), added by sec. 8 of this Act, on or after January 1, 2007. (b) A retired employee who was rehired and made an election under AS 39.35.150(b) or (e) on or after November 3, 2004, may not continue to receive retirement benefits and medical benefits under AS 39.35.150(b) or (e) after June 30, 2005. On July 1, 2005, the period of reemployment to which the employee's original election under AS 39.35.150(b) or (e) applied is considered terminated, and, as to that employee, (1) AS 39.35.150(b), as amended by sec. 7 of this Act, or AS 39.35.150(e) applies; and (2) if the employee continues as an active member, that employee may not continue to receive benefit payments while an active member unless the employer hires the employee as a result of the competitive hiring process required by the applicable subsection of AS 39.35.150(f), (g), and (h), added by sec. 8 of this Act, on or after January 1, 2007. (c) This section does not apply to an employer who may be required to provide health and medical benefits under AS 39.35.150(b), as amended by sec. 7 of this Act, regardless of whether a member receives retirement medical benefits under this section." In addition, the amendment inserts a new bill section on page eight, following line 15 as follows. Sec. 20. Sections 2, 4, 5, and 7 of this Act take effect July 1, 2005." Furthermore, " sec. 19" is deleted in Sec. 20 page eight line 16 and replaced with "secs. 19 and 20". Co-Chair Wilken moved Amendment #1. Co-Chair Green objected for explanation. MIKE TIBBLES, Deputy Commissioner, Department of Administration explained that the amendment would modify Sections 14 and 15 of the bill. Those sections would "establish three different groups of individuals that have three separate termination dates for the period going forward for their rehire." The previous committee substitute, Version 24-LS0211\X, "did not clearly identify those three different groups and did not clearly identify when their period of reemployment would be terminated". This amendment would clarify the issues pertinent to those three groups. The first group would consist of retired individuals rehired prior to November 3, 2004. That was the date upon which the Department had notified Public Employees Retirement System (PERS) and Teachers Retirement System (TRS) employers in the State that the program would terminate July 1, 2005. Co-Chair Green asked for further discussion in regards to the notification date, as she understood that an earlier notice had been sent to PERS/TRS employers in September 2004. Mr. Tibbles clarified that the Department's first notification had been provided in November 2004. However, he noted that the Department had received a Department of Law legal memorandum [copy not provided] previous to that. Co-Chair Green ascertained therefore, that the Department of Law memorandum might have been received in September. However, the Department of Administration notification letter had been distributed in November. Mr. Tibbles concurred. 2:48:47 PM Co-Chair Green recapped the amendment discussion to this point. Mr. Tibbles clarified that a retired rehiree hired prior to November 3, 2004, could continue to receive retirement and medical benefits from July 1, 2005 through December 31, 2006. Co-Chair Green understood that that person would then be terminated. Mr. Tibbles affirmed that as of December 31, 2006 "the period of employment for the purposes of the rehire program would be terminated". Mr. Tibbles communicated that that person would then have the option to remain an employee and be subject to the status they held before the rehire program began: they would contribute to the system and accrue additional benefits for their retirement; however, their retirement benefits would be suspended. Or, they could terminate their employment and "continue to receive their retirement benefits". Co-Chair Green asked regarding the terms of the second group of retired rehirees. Mr. Tibbles explained that the second group of retired individuals would have been rehired after November 3, 2004. Co-Chair Green understood that this groups' participation in the rehire program would be terminated on June 30, 2005. Thereafter, they could continue as an active employee but would be unable to continue to receive retirement benefit payments unless they were rehired under AS 14.25.043(b). 2:50:45 PM Mr. Tibbles stated that the period of re-employment for the second group of individuals would end on June 30, 2005. Mr. Tibbles stated that the third group of rehired retirees would consist of those rehired after July 1, 2005. Those individuals would be required to apply for their position through the "sideboards" established in this bill. Those sideboards would include such things as requiring the employer to document that specific recruitment efforts had been made. In addition, the employer would be required to contribute to the unfunded liability for that employee at the same rate paid for all other employees and they would be required to provide active health care for those employees working full time. 2:52:45 PM In response to a question from Co-Chair Green, Mr. Tibbles explained that TERS employees are addressed in Sec. 14 and PERS employees are addressed in Sec. 15 of the amendment. While the conditions in both sections mirror each other, there is a different set of recruitment standards for PERS employers. Co-Chair Green asked the reason that PERS employees rehired prior to November 3, 2004 would continue to receive their retirement benefits until December 31, 2006. Mr. Tibbles explained that, "those individuals were told in many cases that they could continue to receive their benefit for the period of their reemployment." That was a liability issue. Co-Chair Green acknowledged. 2:54:01 PM Co-Chair Wilken commented that while the concept of this bill is good; it is a confusing bill to understand, as attested by the fact that the Committee is continuing to struggle with the sequences of the dates. Therefore, he suggested that a visual timeline be developed that would specify the benchmark dates and other pertinent information. This would assist other Legislators in understanding the terms of the bill "as it marches ahead." Co-Chair Green concurred. Senator Stedman concluded that, as of January 1 2007, regardless of whether an individual were a PERS or TRS member, the rehire benefit program as currently defined, would end. At that point, any retired rehiree must be subject to the proposed "new screening process". Provisions in this bill would provide transition time to existing rehired retirees. 2:55:53 PM Mr. Tibbles agreed. Senator Stedman communicated that he had initially understood that the program would end earlier than currently proposed; however, he accepted the "compromise" that has been reached. Co-Chair Green removed her objection to the Amendment. There being no further objection, Amendment #1 was ADOPTED. Co-Chair Wilken moved to report the bill, as amended, from Committee with individual recommendations and accompanying fiscal notes. There being no objection CS SS SB 24(FIN) was REPORTED from Committee with new zero fiscal note dated March 2, 2005 from the Department of Administration. 2:58:41 PM