SENATE BILL NO. 185 "An Act relating to reemployment of persons who retire under the teachers' retirement system." 10:01:38 AM AT EASE 10:02:11 AM RECONVENED 10:02:21 AM SENATOR PETER MICCICHE, SPONSOR discussed the bill. He stated that the bill allowed teacher's to be paid normal retirement, while not accruing additional benefits in the system. There would be no additional cost to school district. Senator Stevens thought the bill was good in many ways. He asked about the bill provision related to the age of the teacher. Senator Micciche stated that the provision had to do with a ruling of the IRS. He deferred to those who could address the specifics of that issue. 10:06:16 AM RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, discussed the Sectional Analysis (copy on file): Section 1 Adds new section to AS 14.20: AS 14.20.136(a) allows school districts to rehire educators that have retired under the defined benefit plan or the defined contribution plan when; AS 14.20.136(b)(1) the retired member certifies that there was no prearrangement of reemployment made prior to retirement; AS 14.20.136(b)(2) the member has been retired at least 60 days if they are 62 years of age or older or six months if the member is younger than 62 years of age; AS 14.20.136(c) the school district has adopted a rehire policy by resolution and has publicly advertised the position for 10 business days and is actively recruiting to fill the position with a person other than a retired member. AS 14.20.136(d) reemployment contracts may not exceed 12 consecutive months. AS 14.20.136(e) the school district that hires a retiree must provide the administrator with a copy of the resolution and policy required by (e) as well as a report stating the retiree's name, description of circumstances, and actions taken to comply with the policy. The school district is also required to make contributions to AS 14.25.070. AS 14.20.136(f) certain requirements of the section don't apply to a rehire member that's eligible for restoration of tenure rights. Section 2 Allows retirees who are rehired, as permitted by section 1, to continue to receive retirement benefits during the period of reemployment unless they become an active member. Sections 3 Makes retirees who are reemployed, as permitted by section 1, ineligible to receive additional retirement benefits based on their service and salary during the period of reemployment. Section 4 Clarifies that a member who is reemployed does not become an active member, the member will continue to receive retirement benefits, deductions under TRS will not be made to their salary and reemployed educators will not receive credited time for service during reemployment. This section also ensures that a retired and rehired teacher will be eligible to receive the group health plan coverage that is provided to active members employed by the school district if they so choose. Section 5 Inserts reference to section 1 which will require the employer to make TRS contribution for reemployed retirees at a rate of 12.56 percent. Section 6 Applies the bill's provisions to contracts made on or after the effective date. 10:09:32 AM Co-Chair MacKinnon looked at page 2, lines 12 and 13, and noted that the intent was twelve months. She wondered whether a retired teacher could move between districts, begin a new contract, and continue to accrue benefits. Senator Micciche replied that all teachers' contracts were for twelve months or less. Those teachers could have other contracts, but the districts would go through the same process. The intent was not to replace existing teachers. He remarked that the bill was about filling a position. Co-Chair MacKinnon wondered what would happen when a retired teacher exited at $50,000 per year, and a new teacher was hired at $35,000 a year. She asked whether the new teacher that would be rehired and receiving benefits received $35,000 or $50,000. Senator Micciche replied that each instructor was hired on an individual basis, so the negotiation would occur with the districts. He stated that he had managed large organizations, so he asserted that the position with the smaller salary would be the first choice. Co-Chair MacKinnon noted that there were specific provisions in statute that would not allow to come back with the retirement wage. Senator Stevens felt that the negotiation was between the district and the individual teacher; therefore the salary could not be at a specific commitment. Senator Micciche agreed, and stated that there would be no additional benefit beyond the pay of the position. He announced that there was a hope that all positions be filled with new teachers, but districts were struggling to fill those positions. Co-Chair MacKinnon shared that the state paid what the districts negotiate. She remarked that it was the committee's job to appropriately understand the impact. Senator Stevens understood that the state paid that bill. He wondered why the University of Alaska was not included in the legislation. Co-Chair MacKinnon shared that she had not planned to bring the university into the discussion, and encouraged Senator Stevens to communicate with the bill sponsor. 10:16:16 AM LISA PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL ADMINISTRATORS, (ACSA) spoke in support of the bill. She felt that it was a tool to help school districts in a time to fill vacancies with high quality staff. She felt that it was not a "silver bullet", but could provide some relief as a stop gap. She remarked that SB 185 would allow for the reemployment retired educators to help districts fill vacancies; and was a necessary tool to help meet district personnel needs in both urban and rural districts. She thanked Kathy Lee for work to ensure that the bill envelopes the necessary IRS Treasury regulations and other important issues in the bill. She felt that the legislation was vital because of the shortage of staff in the state. She recalled that preparing, attracting, and retaining teachers. Co-Chair MacKinnon wondered when the previous legislation had concluded. Ms. Parady replied that the bill sunset was 2009. 10:24:28 AM Co-Chair Hoffman queried the hiring provisions between 2001 and 2010, and whether those differed from the proposed legislation. Ms. Parady responded that the bill was structured based on the previous legislation. She furthered that the current regulations were included by the IRS letter ruling that included the waiting periods. She stressed that there were sufficient requirements to greatly reduce the likelihood that the bill would impact a current TRS member's decision to retire, because of the bona fide separation of employment. 10:26:12 AM DR. KAREN GABORIK, PRESIDENT, ALASKA SUPERINTENDENTS ASSOCIATION, spoke in support of the bill. She felt that the bill would positively impact every public school student in the state. She remarked that Fairbanks had experienced teacher shortages in positions that had previously been filled. She remarked that there were frequently unfilled vacancies in special education positions, and were constantly recruiting and traveling for those positions. She stressed that, recently, there were regular education teacher vacancies in areas such as high school math, science, physics, calculus, music, etc. She remarked that it was not good for students to face a revolving door of substitute teachers to fill that gap. Senator Stevens surmised that the rules currently restricted the hiring of a retired Alaska school teacher. He remarked, however, that a retired teacher could be hired from another state. He felt that was unfair. Ms. Gaborik replied that there were people who had taught in the community to fill those positions. Senator Stevens stressed that the issue was unfair. Ms. Gaborik agreed. 10:30:06 AM DEENA BISHOP, SUPERINTENDENT, ANCHORAGE SCHOOL DISTRICT (via teleconference), spoke in support of the bill. She stressed that her district had accessed the experience of retired educators by allowing for temporary or part time employee. Nevertheless, the efforts to access the workforce was limited without a full-time provision of reemployment of retirees. She assured the committee that the reemployment of retired teachers was not intended to avoid the hire of new teachers. She stressed that retirees filled gaps when properly certified staff could not be hired in those hard to fill areas. Co-Chair MacKinnon requested a telephone conversation with her office. Ms. Bishop agreed. 10:32:29 AM NORM WOOTEN, EXECUTIVE DIRECTOR, ASSOCIATION OF ALASKA SCHOOL BOARDS, testified in support of the bill. He stated that his organization had a resolution in place to support retire rehire of teachers and administrators since 2008, which the previous provision was scheduled to sunset. He stressed that there was a nationwide shortage of teachers and administrators. He remarked that it was especially the case with hard to fill positions. Senator Stevens stressed that administrators were included in the bill. Mr. Wooten agreed. 10:35:23 AM MARK MILLER, SUPERINTENDENT, JUNEAU SCHOOL DISTRICT, spoke in support of the legislation. He shared that he only had two options when he had an open position: attempt to fill that position with a substitute or fill with a new teacher. He stated that on any given day there would be students supervised by someone, because there was no teacher to substitute during that period. He stated that he could also contact a company in the lower 48 to contract to send someone to fill services that could not be filled internally. He stressed that the Alaskan tax dollars would be spent outside of Alaska. He felt that it was a resource issue. 10:38:08 AM MARY WEGNER, SUPERINTENDENT, SITKA SCHOOL DISTRICT, spoke in support of the bill. 10:41:01 AM SEAN DUSEK, SUPERINTENDENT, KENAI PENINSULA BOROUGH SCHOOL DISTRICT, testified in support of the legislation. 10:43:26 AM BOBBY BOLEN, SUPERINTENDENT, BERING STRAIT SCHOOL DISTRICT, spoke in support of the bill. Senator Olson wondered what would occur when the qualified positions were lost. Mr. Bolen replied there was much time spent in the lower 48 looking for teachers. He stated that there were teachers that needed to fill those empty spaces. Senator Olson noted that Golovan had some substitute teachers who were recently graduated, because of the teacher shortage. Senator von Imhof wondered how much teacher housing a contributing factor was to hire and maintaining a workforce. Mr. Bolen replied that there was not a current problem of housing, because there were no teachers to fill that housing. 10:47:45 AM MONICA GOYETTE, SUPERINTENDENT, MATSU BOROUGH SCHOOL DISTRICT, spoke in support of the bill. Co-Chair MacKinnon noted that the statement of the three year educational certification was an individual district policy. Ms. Goyette agreed. Co-Chair MacKinnon CLOSED public testimony. 10:49:39 AM KATHY LEA, CHIEF PENSION OFFICER DIVISION OF RETIREMENT AND BENEFITS, DEPARTMENT OF ADMINISTRATION, stated that she was available for questions. She also stated that the Department of Administration's position on the bill was neutral. Co-Chair MacKinnon queried the fiscal note. 10:50:17 AM Ms. Lea explained the fiscal note. Senator Stevens requested the point of the IRS regulation of the difference between six months and sixty days. Ms. Lea replied that in any plan, because of the tax qualified plan, there must be a mark at which it would be considered a "normal retirement" for any time of government or private sector plan. She explained that it was because the contributions made to the plan were made on a pre-tax basis. The IRS would then examine when it could receive the tax for the pre-tax contributions. Vice-Chair Bishop requested a meeting with his office. 10:55:06 AM Co-Chair MacKinnon asked for an explanation of the indeterminate fiscal note. Ms. Lea replied that the fiscal note was indeterminate, because it was not known how many people would participate in the program, nor was it known which group they might participate. 11:00:48 AM Senator Stevens noted that some districts were hiring retired teachers at 24.9 percent or less, which was acceptable under the rules of the retirement system. Ms. Lea replied that under the existing rules, a teacher or administrator was mandated to be in TRS if they had at least a 50 percent contract. Co-Chair MacKinnon wondered whether there was additional cost to the state, if there was not an effect on insurance. Ms. Lea replied that she had not analyzed it, because it occurred on an ad hoc basis. Co-Chair MacKinnon announced that amendments were due on Wednesday. She discussed the agenda for the afternoon meeting. SB 185 was HEARD and HELD in committee for further consideration.