SB 24-REEMPLOYMENT OF RETIREES  1:54:25 PM. CHAIR DYSON announced SB 24 to be up for consideration. MIKE TIBBLES, Deputy Commissioner of the Department of Administration (DOA), addressed some concerns raised during the last meeting. While the concerns address issues that are very serious for the department, there are also serious recruitment problems in various organizations throughout the state. He was aware of cases in which organizations have had recruitment failure for as long as six months. SB 24 could be a valuable tool for assisting such organizations when other recruitment efforts have been exhausted. MR. TIBBLES said he would like to walk through an administrative order signed by the Governor on March 8, 2005. The department believes the order addresses some of the issues raised. He said: 1:57:00 PM This administrative order, signed by the Governor, will require all agencies to go through a thorough recruitment process before an employee is eligible to come back under a 242 waiver. A recruitment notice must be placed on Workplace Alaska for a minimum of 15 days. The agency must consider all applicants and if a retiree is selected, that applicant must separate from service for a minimum of 30 days. In addition, the recruitment must result in fewer than five qualified applicants. The hiring authority must demonstrate why no other individual has the knowledge, skills, and abilities to perform the duties. The Division of Personnel, Department of Administration, must sign off on the hire of the 242 to insure that all of these policies and procedures have been met. MR. TIBBLES said even these requirements are not enough; they are simply some requirements that must be followed by the division and other agencies. Since 242 hires and waivers are, in the department's opinion, a short-term solution to a long term problem, the department wants to be very proactive in working with other state agencies to develop workforce plans to deal with these shortages so that the state is not in this situation in the future. The department would like to require the hiring authorities utilizing 242 waivers to work with the Department of Administration to understand why recruitment efforts failed and to develop a plan to transfer the knowledge required in these positions to other employees. The administrative order clearly indicates that all of the personnel rules and statutes shall apply as far as advance step placements. The department also encourages agencies to develop a strategic view of human resource needs so they can anticipate and proactively address future shortages. His department is confident the procedures established in the administrative order will prevent abuses in the program and the original intention of the bill will be met. 2:00:24 PM SENATOR ELTON asked whether the administrative order would apply only to state agencies. MR. TIBBLES responded the administrative order would only apply to state agencies and not other PERS employees. SENATOR ELTON asked whether the administrative order would allow municipalities to set their own standards. MR. TIBBLES responded his department would encourage municipalities to adopt standards that are similar to those of the state, but the main issue with PERS employers is to make sure they don't accrue additional liability to the system. SENATOR ELTON asked whether the administrative order creates regulations or if it stands in the place of regulations. MR. TIBBLES responded: It would be in the place of regulation. We would have policies, I believe through the administration manual, to implement. I know that those are being developed and sent out to all departments. We will have policies that must be followed to implement this administrative order. SENATOR ELTON remarked Section 2A of the administrative order says the recruitment must be conducted from an applicant pool of less than five qualified eligible and available applicants. He asked whether employers are having problems getting desirable applicants or if they are having problems simply getting applicants. Employers are reluctant to hire people who have graduated at the bottom ten percent of their class. MR. TIBBLES responded the state government develops job class specifications for every position in state government. Within these job classifications there are minimum qualifications (MQs) that must be met before someone is eligible for consideration. The department, to ensure they meet the MQs for their prospective positions, reviews all of the applicants. 2:04:39 PM SENATOR ELTON asked whether the administrative order would require an employer to give preference to a less qualified recent graduate over a more qualified retired applicant. MR. TIBBLES responded: We did not require, for the reason that you are pointing out, if one had a qualified non-retired applicant, one would have to hire that applicant. We required that one must demonstrate recruitment difficulty resulting in fewer than five qualified applicants. There still would be an applicant pool and the candidates would have to be considered prior to considering the retired employee. SENATOR OLSON said 15 days might not be an adequate length of time for employers to post their positions on the Workplace Alaska Website. He asked the normal length of time for jobs to be posted for normal recruitment. MR. TIBBLES responded the standard is a minimum of ten days and a maximum of 30 days. CHAIR DYSON asked the liability the state has for retirees who have already been rehired and led to believe their participation in the program would not be terminated at the sunset of the program. MR. TIBBLES could not answer the question at the present time. CHAIR DYSON remarked he is open to the possibility of delaying an inquiry into the matter given the concern that lawsuits may be developing. SENATOR ELTON remembered the last committee meeting where Mr. Tibbles mentioned he would prefer not to put the sideboards into state law. He asked how the administration felt about adopting the elements of the administrative order into law. MR. TIBBLES responded: Mr. Chairman, Senator Elton, I believe that we made our best effort to try and determine what the policy should be if this program were to continue. In fact, this was effective immediately March 8. It will be in place now and I want to point out that it has been effective. We had a department already request an individual to return for rehiring and we asked how many applicants that they had received in their recruitment and the number was 15, so we denied it. So it is in place now and will be until the sunset of the original program, if it is not extended. Going forward, I believed that we developed what we thought would be the 'right recipe' as you termed it. We may find out that it is something different. We may find that the time requirement should be more or less. We may find out that we should consider all applicants, which may require recruiting out of state. So there may be modifications needed and I believe that it would be nice to have the flexibility to amend without having to come back to the legislature and seek a statutory change for a small thing that might otherwise be more helpful and efficient to do administratively. 2:09:57 PM ALEX VITTERIE, retired state employee, said he supports the concept that the most qualified, most productive people should be allowed to work for the state, but questioned whether it is possible given the administrative order's five applicant rule. He said the bill violates the principle of the retirement program in which one gets what one put into it. He would support the retire-rehire program provided that it doesn't cause the retirement system a greater deficit by allowing retirees to enter a higher retirement category than the one that they retired under. He suggested the state place a cap on the length of time that rehired-retirees should be allowed to work. He commended the state for its efforts to promote mentorship. 2:13:54 PM SENATOR OLSON asked Mr. Vitterie whether or not he was in favor of SB 24. MR. VITTERIE said he would favor the bill if it was modified, but he opposed SB 24 as is. 2:15:20 PM ROBERT MCHATTIE, Fairbanks, said: Rehiring will set the system right for abuse, in my opinion. Keep in mind that most of the rehires are brought back to their old jobs because of someone's determination that they simply couldn't be replaced. After returning to hold down their old position, rehires don't pay another red cent to help support PERS or TRS. They are draining, but they're not putting anything back in and they are often holding a high position. I want to give you a couple of examples of abuse that have come up lately. In Fairbanks, eight Fairbanks police officers were involved in a just-failed lawsuit against the City of Fairbanks. The police rehires were collecting job paychecks plus retirement paychecks plus other retirement benefits plus additional city payment into social security or whatever their equivalent system is. They were suing to make the city fund an additional retirement plan for when they re-retire. The police can try again in a higher court and if the police eventually prevail, it can set a precedent for all other PERS-TRS rehires to sue towards a second retirement. Now, I will talk about a more subtle form of abuse. With all due respect to the DOA, I think this has to do with the DOA not really knowing the law and not setting rehiring rules until they sent the administrative order of March 8, four years after the program was initiated. They sat there with essentially no rules. The DOA expresses concerns about lawsuits from rehires, which are about 350 strong and growing, who claim the right to simultaneously collect a job paycheck plus a retirement paycheck plus other retirement benefits from government coffers forever. The DOA concern harkens to the fact that all of the hiring agencies were darned well responsible for knowing and divulging to rehires that HB 242 sunsets in 2005 and there was no provision for grandfathering. That was obvious. The DOA has no business attempting to prevent the HB 242 sunset based on the premise that nobody could properly interpret the law. The DOA did not even bother to get an attorney general's opinion on the meaning of the 2005 sunset until about November 2004. The DOA knows that it has created a monster and now it is worried that the monster is hungry. Does the state really do itself a favor by forming a cadre of older super-experienced employees? Well maybe, but consider that each year of reemployment means one less year of experience that could have been gained by a replacement. Even the most valuable rehire is finally gone after a few years; they just don't stay there forever. 2:19:42 PM JACK KAREN opposed SB 24. He said HB 242 has not been administered in a fair equitable manner. The state has adopted no credible procedures to define when a workforce shortage exits and it is common for upper level managers to be hired by their peers while others are denied opportunities for advancement. SCOTT WALDREN, former program member, testified in support of SB 24. He said by implementing the bill, the state could answer its concerns about employees that were lead to believe they would be able to remain in the program after its sunset date. CHAIR DYSON asked Mr. Waldren whether he would have retired if he had known he would not be allowed to participate in the program after the sunset date. MR. WALDEN advised he would have retired. 2:23:47 PM KAREN DORCUS, program member, testified in support of SB 24. She said her decision to retire was based on her understanding that she would be allowed to remain in the program after the sunset. 2:26:04 PM CHAIR DYSON asked Ms. Dorcus whether the university saved money by her retirement and subsequent rehire. MS. DORCUS responded the university saved about $25,000. JOE BEEDLE, Vice President of the University of Alaska Fairbanks, supported SB 24. He said: We find ourselves in the United States, and in Alaska, near full employment status, especially with regards to specific areas of employment and expertise. As far as the state in general, having a good benefit program, one that encourages retirement, we probably are a little less favorably perceived in terms of just salary alone. It is my observation that we probably over-incent people to retire. Looking forward to some of these new tiers, which are yet a new bill, I think they will probably provide some relief. Having said that, we are stuck with the current program that encourages retirement and doesn't retain the expertise that otherwise cannot be replaced. I speak in favor of keeping this tool available for the university, for the departments and for employers in the state so that we have that expertise that is so precious for us. I would just ask for your consideration in doing so. 2:28:59 PM SENATOR ELTON asked whether the program allows the university to rehire professors at a lower salary than they had at retirement. MR. BEEDLE responded the university certainly enjoys the flexibility that the bill allows it in its hiring practices. The university is blessed with an outstanding adjunct faculty and unlike the K-12 school system; it has been quite successful at attracting people on an adjunct basis. 2:31:09 PM RICHARD ROBERTS, resident, said the Alaska State Troopers in the Mat-Su Valley are so badly understaffed they are sending individual state troopers to respond to calls for which the Anchorage Police Department would send five or six police. The troopers have had several members participate in the retire- rehire program to enter positions for which there were no other applicants. CHAIR DYSON held SB 24 in committee.