SENATE BILL NO. 100 "An Act relating to employer contributions to the Public Employees' Retirement System of Alaska; relating to requirements that employers who terminate some or all participation in the Public Employees' Retirement System of Alaska pay termination costs; and making the changes retroactive." 9:07:29 AM Co-Chair Hoffman MOVED to ADOPT the proposed committee substitute for SB 100, Work Draft 27-LS0272\E (Wayne, 4/3/12.) 9:07:48 AM Co-Chair Stedman OBJECTED for the purpose of discussion. 9:07:55 AM SENATOR JOE PASKVAN, explained that the CS was introduced in response to concerns raised by committee members. He related that the most important change was found in Section 1, of the CS that related to AS 39.35.255a, which established a "floor" for base salaries, as of June 30, 2008. He noted that the provision was left unchanged. He reported that Section 2 and Section 5 allowed a municipal employer to exclude up to 20 percent of its employees [participation in the retirement plan] without triggering termination costs. He shared that the Alaska Municipal League felt the changes in the CS were a "reasonable" compromise. He concluded that the intent of the CS was to include the "20 percent rule", [20 percent partial termination rule] and maintain the salary base. 9:10:44 AM Co-Chair Stedman REMOVED his OBJECTION. There being NO FURTHER OBJECTION, Work Draft 27-LS0272\E was ADOPTED. Senator Paskvan summarized SB 100. He explained that the legislature passed a law [SB 125 enacted in 2008] which attempted to pay off the unfunded liability in the retirement system [Public Employees' Retirement System (PERS)] over time. The law required that municipal employers paid a 22 percent contribution rate on the greater amount of either a combined defined contribution and defined benefit salary base or total payroll beginning on June 30, 2008. The established floor addressed a concern that employers might convert PERS positions to contacted positions in order to reduce their PERS costs and transfer an unfair burden of the unfunded liability to the employees who remained in the system. The legislation allowed municipalities to transfer up to 20 percent of its employees to a different plan without the statutorily induced consequences of paying the costs of a termination study and the potential assessment of double the 22 percent for the terminated employees. Senator Egan wondered if the provisions in the CS would still alleviate the concerns of small communities like Anderson. Senator Paskvan could not remember the details but thought the CS would provide relief. Co-Chair Stedman noted that the fiscal note (FN 2 ADM) from the Department of Administration in the amount of $86.6 thousand in FY 3013, reimbursed the department for cost related to the retroactivity clause in Section 9 and Section 10 of the legislation. Co-Chair Hoffman MOVED to report CSSB 100(FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. 9:15:38 AM CSSB 100(FIN) was REPORTED out of committee with a "do pass" recommendation and with a new fiscal impact note from the Department of Administration.