Chairman Leman called the Senate State Affairs Committee meeting to order at 9:03 a.m. He announced the following teleconference sites would be participating in the public hearing on SB 1 (RETIREMENT INCENTIVE PROGRAM): Valdez, Barrow, Fairbanks, Ketchikan, Mat-Su, Kotzebue, Homer, Soldotna and Anchorage. Number 045 FRANK PRICE, Regional Director, Inland Boatmen's Union of the Pacific, Alaska Region, testifying in Juneau, said that in Alaska, they primarily represent the unlicensed members of the Alaska Marine Highway System. He voiced their union's support for SB 1, which he said will be a means for the state to save money. He criticized the Office of Management and Budget's position that they don't believe they should support the bill because they don't believe that it will save the state money. He pointed out that the legislation provides that the organizational units that want to implement the plan, if it is passed, basically have to prove that agency's implementation of the plan will save the state money. Number 108 FRED GAFFNEY, a senior level staff member with the Alaska Department of Fish & Game testifying in Juneau, stated he was testifying on his own behalf in support of SB 1 and the reinstituting of the RIP program. Mr. Gaffney related that two divisions within the Department of Fish & Game, the Division of Commercial Fisheries and the FRED Division, are in the process of being merged. He stated his concern with proceeding with this type of merger as a cost savings device, while, at the same time, not being able to take advantage of a program and planned reduction amongst the staff. His principal concern is for the biologists who are among the longest employees within the state government. Should these people be laid off, they have no other opportunity for employment. He said a lot of problems can be avoided by providing a planned reduction and taking advantage of savings, which have been documented through the RIP programs in the past. Number 150 SENATOR TAYLOR asked how many positions would be lost by the consolidation. FRED GAFFNEY responded that he didn't have the specific numbers, but he knows that the principal reason for merging the divisions is to reduce upper level management. Number 160 SENATOR LEMAN said there is some difference of opinion about the impact of retirement incentive programs. He asked Mr. Gaffney what he thought the true savings to the state were the last two times such a program was offered. FRED GAFFNEY answered that he couldn't speak for the department, but he is aware that there have been savings which have been documented. He knows many people that did take advantage of the RIP, which provided them an opportunity to retire early. He noted that many of the these people are still in Juneau and in other areas of the state. Number 195 DAVE SOULAK, City Manager, City of Palmer, stated support for SB 1, which will allow his city to humanely downsize without disrupting the lives of their younger employees. He pointed out that the City of Palmer participated in the two previous retirement incentive programs at a considerable savings to their fiscal year budget. Number 207 SENATOR LEMAN asked how much money the City of Palmer actually saved during the last two RIP programs. DAVE SOULAK responded that during the three-year window, the City of Palmer's savings amounted to approximately $120,000. Number 215 BILL MONROE, testifying from the Mat-Su LIO, said he was representing approximately 450 employees of the classified employee's association, and he related that in the Mat-Su school district as much as five percent of their overall staff may lose their jobs. The passage of SB 1 will help prevent this. Number 224 SENATOR TAYLOR asked why they would be losing five percent of their teaching staff. BILL MONROE answered that they are facing fairly stiff budget constraints locally, and with funding set at the state level at $61,000 per instructional unit, these are very real cuts they are facing. Number 235 CAROLE ANDERSON, testifying from Ketchikan, said her husband has taught in the Ketchikan School District for 18 years. She stated their support for SB 1, because they believe that it is financially a sound plan to save the State of Alaska money, and that it is a creative, effective alternative to layoffs. Number 250 MIKE SALAMANCHUK, a 45-year resident of Alaska, testifying from Ketchikan, questioned why retirement programs work in other states and why the program worked in Alaska in its early inception. Number 270 RON WEST, testifying from Anchorage, stated the Anchorage School District currently faces a $10 million deficit this year, so Anchorage is going to face real bugetary problems, which will mean layoffs and absolute reductions in personnel. He said the objections of the Administration with regards to the early retirement bill don't seem to be honest objections, because even if the bill passes, it is still voluntary as to which agencies of the state will decide whether or not to participate. He suggested that if there is not support for a retirement incentive program for state employees, that as an alternative, it be offered to teachers and local governments only. Number 330 WAYNE HEIMER, a Department of Fish & Game employee testifying from Fairbanks, said he and his co-workers support public employee inclusion in SB 1. They believe the money savings would be good for the state and for themselves. He urged passage of SB 1 so that long-time employees, like himself, who aren't so well adapted to work there anymore, may leave and lead to a more productive youth-oriented assemblage of employees that are better adapted to work in today's system. Number 352 VERN HIRSCH, Secretary-Treasurer of the Alaska Public Employee's Association, Alaska Federation of Teachers, testifying from Juneau, stated their support for SB 1 as a sensible, cost effective and humane tool to deal with the conflict between the need to perform public services and dwindling revenues to support these services. The program is discretionary and employers have the latitude to deny participation to employees who possess unique or specialized knowledge in their field which cause a "brain drain." Mr. Hirsch said the savings to employers in earlier retirement incentive programs is well documents in past audits. However, what hasn't been documented is the positive effect that the prior two programs have had on Alaska's economy. Number 400 SENATOR LEMAN noted that in the previous RIP, it appears that in the first year of that offering there is actually a higher cost to the state, and he wondered if the program can be designed so that there will actually be a savings to the state even in that first year. Number 415 GERRY TULLOS, testifying from Soldotna, said he has discussed SB 1 with the superintendent at the school where he teaches, who has indicated the minimum savings in their district alone would be from $600,000 to $700,000. He said passage of the bill would definitely impact their area to an advantage. Number 400 LOWELL PURCELL, Deputy Mayor of Fairbanks, said their city has suffered a great deal over the last five to six years, basically at the hands of municipal assistance, revenue and being unable to pass any taxes at the referendum level. He said the City of Fairbanks doesn't know how it is going to fund its city fire department for the last six months of 1993, so anything they can do to save money or help eliminate some of these problems is going to assist the city. He noted that the Fairbanks City Council passed a resolution on February 8 urging enactment of the RIP bill. Number 445 CLAUDIA DOUGLAS, President of NEA-Alaska, testifying from Juneau, stated their support for the utilization of a retirement incentive program as a cost effective means to reduce school district personnel costs, thus reducing the cost of school district operation during a time when the student population is increasing, but additional funding is difficult. She also said that if it is the intent of the legislature and the Administration to reduce the cost of state government, this is an excellent opportunity to achieve that goal without harming any employees at the upper or lower end of the salary schedule. Number 495 BERNARD JOHNSON, testifying from Anchorage, asked if someone could summarize the differences between the current legislation and the legislation vetoed by the Governor last year. ROXANNE STEWART, staff to Senator Jim Duncan, explained that last year's legislation, SB 337, had one major difference, which was an amendment that was added in the House. It would have put the program in permanent law and it could have been implemented by the Commissioner of Administration when economic conditions warranted. Governor Hickel stated that provision was the reason he vetoed SB 337, and that provision is not contained in SB 1. In response to Senator Taylor's question earlier in the meeting on the number of employees that would be affected by the merger of the two divisions in the Department of Fish and Game, Ms. Stewart said there will be 35 permanent full- time positions eliminated and 50 seasonal positions eliminated in the FRED division alone. Number 540 BOB WATTS, testifying from Fairbanks, said the "brain drain" argument is not legitimate because the program is discretionary. It is going to impact every citizen if the program is not passed. With an adequate incentive, employees will retire, and if they retire in the State of Alaska, they are going to spend their money in the State of Alaska. In addition, the position will be filled by another person which will put more funds into the local economy. The true beneficiaries will be the citizens of the state. Number 575 JOHN VINETTE, from the Mat-Su School District, testifying from the Mat-Su LIO, said their school district is facing some drastic monetary cuts for the next fiscal year. According to their school board, they will be eliminating approximately 30 teaching positions, and fiscal year 1993 looks even gloomier. Their school district views the early retirement incentive bill as a mens of avoiding job layoffs. During the 1989-90 retirement incentive program the Mat-Su School District had 22 teachers retire and, in every case, they saved money over the course of three years. The minimum amount saved was $3,128 and the maximum amount saved was $36,643, which worked out to an average of $21,276, and the approximate grand total that they saved over three years was a half million dollars. He stated their support for SB 1. TAPE 93-14, SIDE B Number 012 BOB COLLINS, a state employee testifying from Kotzebue, stated he was interested in passage of SB 1 for himself. He said it would save the state a lot money because he works at a Range 18 L and someone could take his place at a Range 18 A or B and save at least $30,000 a year on his position alone. He said with the declining oil revenues, it is more fair to let people retire early instead of laying people off, as long as it saves the state money, and he can't understand the Administration's failure to support the legislation. Number 555 CAROLE ANDERSON from Ketchikan asked what has been the effect of the Administration's opposition to the bill. SENATOR LEMAN answered that his office is working with the Administration and members of the committee to formulate an approach that may be acceptable to the parties involved. Number 055 PAM CONRAD, President of the Mat-Su Education Association, testifying from the Mat-Su LIO, spoke to the cuts their school district is facing, and she said the implementation of SB 1 will ensure that current employees will not be laid off, thereby crushing their ability to provide services to children even further. She stated the Association's support for passage of the legislation. Number 070 JOHN CYR, a teacher at Wasilla High School testifying from the Mat-Su LIO, spoke to the effect layoffs have had on employees in the past. He said it is a sad situation when school districts all over the state are forced to lay off employees when SB 1 would alleviate the problem. He urged the committee's favorable consideration of the legislation. Number 080 KATHLEEN MANGELSDORF, a teacher in the Mat-Su School District testifying from the Mat-Su School District stated her support for SB 1. She believes the advantages of the legislation outweight the disadvantages of the legislation. Number 112 KARIN HOLSEN, testifying from the Mat-Su LIO, said she was just a concerned citizen and passage of SB 1 would not affect her insofar as retirement is concerned, but it does affect her as a citizen because of the money it could save the state. She said the bill makes sense, and she urged its passage. There being no other witnesses wishing to testify on SB 1, SENATOR LEMAN closed the public hearing and announced that work would be done on a potentional committee substitute and that the bill would be back before the committee on March 12. SENATOR LEMAN adjourned the meeting of the State Affairs Committee at 10:03 a.m.