HB 140-BENEFITS FOR CERTAIN RIP PARTICIPANTS  CHAIR GARY STEVENS explained the House removed the effective date clause for HB 140. He asked Mr. Guy Bell to comment on the legislation. MR. GUY BELL, Division of Retirement and Benefits Director, testified via teleconference and described the legislation as narrowly construed. It would allow a person who has participated in a state sponsored retirement incentive program to return to Public Employees Retirement System (PERS) or Teachers Employees Retirement System (TRS) employment as a State of Alaska commissioner without losing any benefits from the retirement incentive program (RIP). There would be no actuarial impact on the retirement systems because the employee and the employer paid the full cost of the RIP at retirement so the fiscal note is zero. The individual would also be able to participate in the waiver process enacted by the Legislature two years ago. This means the person could continue receiving his or her retirement benefits by agreeing not to accrue any additional retirement service during reemployment. CHAIR GARY STEVENS asked him to clarify that a retired person who took the RIP would not be eligible for additional PERS or TRS benefits. MR. BELL explained a person who has taken the RIP and wants to return to state employment is subject to substantial RIP penalties. The penalties are up to 110 percent of the benefits they received through the RIP. They lose the incentive credit they received by virtue of the RIP, the cost of the benefits already received, and they waive the benefits they earned as a result of the RIP. CHAIR GARY STEVENS asked if anyone had ever chosen to pay back the 110 percent. MR. BELL thought perhaps one or two had done so. He said he could get the exact numbers but it would be a very small percentage. CHAIR GARY STEVENS said that wasn't necessary, but it was interesting that so few had taken advantage of the option. SENATOR JOHN COWDERY asked for confirmation there would be no additional cost to the state beyond the earned salary and benefits. MR. BELL said that was correct. SENATOR FRED DYSON asked for an estimated individual amount for a 110 percent payback. MR. BELL said it could be tens of thousands of dollars depending on the individual circumstances. SENATOR DYSON then asked if it might be up to $100,000. MR. BELL thought the amounts would probably be less than $50,000, but individual circumstances vary tremendously. SENATOR GRETCHEN GUESS asked him why there were penalties at all if there was no fiscal impact. MR. BELL replied there were three different retirement incentive program bills and the last two in particular included RIP penalties. Typically, a person could claim up to three years credit in the retirement system and the individual and the employer each paid a percentage of the full actuarial costs of those additional three years of credit. The Legislature made a determination that if a person chose to return to public employment after taking the RIP, there should be some sort of penalty. Referring to this as a RIP penalty is his terminology. The payment is not to make the retirement system whole; rather it's a penalty that is paid to return to public employment after having participated in the RIP. SENATOR GUESS asked if the fiscal note would be zero if this were open to all teachers instead of just commissioners. MR. BELL replied it would. HB 20 would do the same for all TRS members who participated in a RIP and for the same reasons there would be no actuarial impact on the retirement system. CHAIR GARY STEVENS thanked Mr. Bell for his complete answers. There was no further testimony. SENATOR GUESS observed this is open to all commissioners but it's geared for the Commissioner of Education because this Administration is having difficulty finding commissioners. Since there would be no fiscal impact she was unclear why teachers weren't included as well since Alaska has a significant teacher shortage. She noted the previous Commissioner of Education took significant financial and retirement penalties to become commissioner and SB 38 would do nothing to rectify that situation. CHAIR GARY STEVENS advised HB 20 would allow all teachers to be hired back without having to pay the 110 percent penalty. Both bills are quite similar and if SB 140 passes it might give more credibility to the need to make it available to everyone. SENATOR LYMAN HOFFMAN asked what kind of message this sends to other commissioners who retired and participated in a RIP. He said this person "retired, he RIPed out early, he knew the consequences." CHAIR GARY STEVENS said it was reasonable to make the exception for the single position because the most likely candidates for the Commissioner of Education job would be current or retired superintendents. SENATOR HOFFMAN asked if the same argument couldn't be made for someone such as Commissioner of Public Safety William Tandeske. Making the one exception is unfair to Commissioner Tandeske and others returning under the same circumstance. He asked, "Why aren't we opening it up to all commissioners?" CHAIR GARY STEVENS asked Mr. Bell to comment on whether all commissioners could take advantage of the waiver. MR. BELL explained the bill would allow anyone who has participated in a public employees or teacher retirement incentive program to return as a commissioner of any state agency. If a person retired without participating in a state sponsored RIP and is returning as commissioner, they have the waiver option available to them. He said, "In some ways you could argue it's a level playing field." SENATOR HOFFMAN asked which other currently hired commissioners would be eligible. MR. BELL said he doesn't track the retirement status of commissioners so he wasn't aware of any others that were currently hired who participated in a state sponsored RIP. SENATOR GUESS commented there is an immediate effective date with the amendment so Senator Hoffman's point still stands. She asked when the RIP took place. MR. BELL advised there have been several; the last was enacted in 1996 and he thought it expired in 2000. His staff could give a complete history of RIPs if she so desired. SENATOR GUESS said that wasn't necessary. She asked him to confirm that a commissioner who would have been eligible but was hired previously could not take advantage of the waiver because they were already hired. MR. BELL thought she was correct because of the effective date. People in place today wouldn't benefit; only those hired after the bill is enacted would benefit. SENATOR HOFFMAN commented this isn't a level playing field. It's just level for those commissioners that are not yet hired. Previously hired commissioners wouldn't find the playing field level at all. MR. BELL explained he doesn't believe there are any commissioners hired under the current Administration who participated in a state sponsored retirement incentive program and therefore haven't been faced with the penalties associated with the RIP. There may be commissioners who have been hired and are participating in the waiver option, but he doesn't know that for sure. This would allow newly hired commissioners who participated in a state sponsored RIP to participate in the waiver option that is available to people who didn't participate in a state sponsored RIP. CHAIR GARY STEVENS announced there was an amendment before the committee and he would like a motion to adopt. SENATOR COWDERY made a motion to adopt amendment #1 for HB 140. SENATOR GUESS objected to ask a question. She asked if changing the title wouldn't require a concurrent resolution. SENATOR HOFFMAN replied, "If it gets to the floor you're going to need one." SENATOR GUESS asked whether a concurrent resolution was needed to move the bill from committee. She said she was looking to the senior member for an answer. SENATOR COWDERY replied, "I don't believe so." SENATOR HOFFMAN said a concurrent resolution would be needed when the bill passed from the Rules Committee. CHAIR GARY STEVENS agreed. He asked for objections to amendment #1. There being none, amendment #1 was adopted. He asked for further discussion. SENATOR GUESS said she wouldn't object to moving the bill from committee, but she implored the Administration and the majority to consider two points: · First, she thought this was the appropriate vehicle to take up HB 20. It's an important bill to take up now particularly if there is an immediate effective date for next year's hiring. This would be good for education today. · Second, the previous Commissioner of Education shouldered significant financial burden and lost years in retirement for public service. She asked them to consider making the bill retroactive to 1994. There was no further discussion. CHAIR GARY STEVENS asked for a motion to move the bill from committee. SENATOR COWDERY made a motion to move SCS HB 140(efd fld) (STA) from committee with individual recommendations and zero fiscal note. There being no objection, it was so ordered.