SB 79-MED BENEFITS OF DISABLED PEACE OFFICERS  9:29:51 AM CHAIR MENARD announced the consideration of SB 79. SENATOR LESIL MCGUIRE, Alaska State Legislature, sponsor, said SB 79 addresses an odd situation that has been in statute since 1986 and was recently identified. People in the Tier II retirement system have just begun the retirement process and an irregularity was found. If public safety employees are disabled during their first 20 years of service, they receive major medical coverage for the disability. The state will provide permanent disability for life to a person who is severely injured fighting a fire or serving the community in the area of public safety. Persons who are injured after 25 years of service go immediately into the retirement system and have medical coverage. SB 79 is for those who become disabled between their 21st year and 25th year. It is a small, inadvertent gap in benefits. She has found no record or any public policy statement that was intended to exclude this group of public safety employees who become permanently disabled in the line of duty. The bill restores what she believes is the original intent of lawmakers in 1986. "If you are out there serving us, our communities, in the area of public safety and you become disabled, ... certainly it would be our intent that you receive permanent disability coverage for your life." Fiscally, it may be $570,000, but there is no way to know. It corrects a serious problem in the statute. 9:32:59 AM SENATOR PASKVAN asked if anyone has been denied those benefits and if the bill needs to be retroactive. Are we dealing with an unfortunate person who was disabled in the 21st year of service? SENATOR MEYER said this is just an oversight. SENATOR MCGUIRE said there are other bills [in the legislature] that are more comprehensive and will change the defined contribution plan to a defined benefit plan, but this bill is just correcting an oversight. 9:34:21 AM SENATOR KOOKESH asked if there are other overlooked issues, because it is a lot of money. SENATOR MCGUIRE said other issues may have been created as the tiers changed over the years in an effort to reduce the state's liability, including the wholesale change from a defined benefit program to a defined contribution program. "But at this time I haven't identified any." 9:35:32 AM JEFF BRIGGS, Legislative Director, Alaska Professional Firefighters Association, Anchorage, said there are no firefighters that have been injured and denied benefits, but there is a corrections officer in Fairbanks. Senator Olson said he met someone while campaigning. SENATOR PASKVAN said that an employee who was disabled after 17 years of work would qualify for medical coverage. It would seem that a person disabled in the 21st year has given more to this state. If there is someone out there that was disabled in those gap years, the bill should be made retroactive "so this oversight doesn't land on just a few people." MR. BRIGGS said he agrees. His group just found out about the problem last winter, and it tried going through the Department of Administration and found out that the statute would need to change. It only affects Tier II and Tier III public safety employees, and since Tier II was created in 1986, it is just now impacting employees that are reaching that gap. His hope is that the legislation would take effect from that 20-year point. "We are the only workgroup that this happens to." All other work groups are covered for occupational injuries. The plan allows vesting at 10 years, so a person with 10 years and a day of service has more benefits than a person with 20 to 25 years. 9:39:06 AM SENATOR FRENCH asked that legislative legal staff answer Senator Paskvan's question about the bill being retroactive. DAN WAYNE, Attorney, Legislative Legal Services, Juneau, said if there is a peace officer that was denied benefits, it won't fix that. "It would fix it prospectively." He doesn't believe correctional officers will be affected by this bill. "Under the definitions of peace officers that we have in statute, they don't appear in any of those definitions." He said the staff in retirements and benefits should know if someone has been denied [benefits]. SENATOR FRENCH asked for that definition of who is a peace officer under state law. MR. WAYNE said that in AS 01.10.060 a peace officer is "an officer of the state troopers; a member of the police force of a municipality; a village public safety officer; a regional public safety officer; a United States marshal or deputy marshal; or an officer whose duty it is to enforce and preserve the public peace." That's the general definition. Under criminal statutes, peace officer means a public servant vested by law with the duty to maintain public order or make arrests. He doesn't think a correctional officer is a peace officer. SENATOR FRENCH asked if the bill will fix the problem for firefighters. 9:42:20 AM MR. WAYNE said it will certainly fix it prospectively. SENATOR FRENCH said, "For firefighters?" The committee took an at-ease. 9:44:11 AM SENATOR MCGUIRE said lines 15-18 on page 2 of the bill references 20 years of credited service as a peace officer under AS 39.35.360 and 39.35.370. That statute refers to a peace officer or a firefighter, "so that's where the definition comes from and that's where the firefighters come in." She has no objection to including correctional officers. There is no retroactivity clause, but the bill clarifies a law that was put in place in 1986. It is her intent that the new statute would work from that moment. "This would have been the rule. This would've been what was intended." If a retroactivity clause is needed to make it clear, she welcomes that from the committee. SENATOR FRENCH said it may save some poor guy a lawsuit. "An injured worker will face a lawsuit and there'll be some good- natured Department of Law attorney saying the statute doesn't cover you, and the legislature had their opportunity to do it." SENATOR PASKVAN asked if [this conversation] of the committee will influence it. SENATOR FRENCH said, a little, but it is better to be explicit. 9:46:29 AM MR. WAYNE said it is better to be explicit. SENATOR FRENCH said in 2006 the first Tier II employees got 20 years of service and could get injured and not have coverage, unlike if it had happened the year before. The gap to be fixed starts there. It is now 2009, so the gap has been there for three years, so there may be people that have been injured and are fighting for major medical disability payments. This bill could cure their problem if the bill is explicit in covering everyone who has 20 years of service in Tier II. So the committee should make it retroactive to 2006 or "just say that we mean to make it cover all those employees." MR. WAYNE said he agrees. SENATOR FRENCH said he thinks a CS [committee substitute] is needed. SENATOR MCGUIRE said a conceptual amendment on making the law retroactive would be acceptable, and then Mr. Wayne could tackle the language. 9:48:46 AM SENATOR PASKVAN said his concern is that there may be individuals that have already been denied. It is important to make it explicit through a CS. SENATOR MEYER said it is the chair's prerogative to get a CS or use a conceptual amendment, but he would like to hear from Kevin Brooks because there may be other overlooked classifications. CHAIR MENARD said it will affect the fiscal note if there are others, so she prefers a CS. 9:50:44 AM KEVIN BROOKS, Deputy Commissioner, Department of Administration, Juneau, said it is his understanding that p-retirement is differentiated from police officers defined in statute. P- retirement includes peace officers, firefighters, and correctional officers, but he will confirm that later. SENATOR FRENCH said Senator Meyer's issue may be resolved because it may be only that narrow class of employees that have access to a 20-year retirement. So other employees won't fall into this gap. MR. BROOKS said he thinks that is correct, and those benefits have been changed from 20 to 25 [years] for Tier IV. He has a handy matrix comparing the tiers that he will give to the committee. He believes there are no other oversights that are similar. He knows of no one who has applied for benefits that may have been denied [because of this gap], but he will check into that. He said his department attached the fiscal note of about $570,000. There is a lot of proposed legislation relating to pension benefits this year. This bill is a very narrow piece, but the retirement management board is meeting today and will provide the status of the funds. At the last report there was a $7.4 billion unfunded status with PERS and TRS retirement funds. That doesn't include the dramatic recent losses. He expects that the unfunded liability has grown, and it may be in the $9 billion range. This bill adds a $570,000 present value to the liability, and he is concerned about adding anything. But the bill does recognize a gap in benefits. He is trying to figure out the intent of the gap, and he hasn't gotten a definitive answer. "We had a small amount in our operating budget, as well, to do some programming changes -- $12,800 in the current year; $12,400 in FY10, but that's just some computer programming changes that we would need to make to accommodate the changes in the plan if the bill becomes law." 9:55:50 AM SENATOR MEYER said the confusion was defining peace officers for retirement purposes which is different than the definition in statute. Does the administration support this bill? He believes it was an oversight, but it will add to the unfunded liability. MR. BROOKS said he has no word from the governor, but the department is neutral because of the additional cost. He apologized for the "cop out." CHAIR MENARD suggested that if it is the right thing to do, it "trumps what the department's going to have to look at and get creative to find this money, because if we truly did err, then this is our opportunity to correct it." 9:57:50 AM CHAIR MENARD closed public testimony and asked Mr. Wayne if he had further comments. MR. WAYNE said it is a good idea to name correctional officers and firefighters explicitly, which means changing the title. It would be changing the law as it is now because only peace officers are eligible ... There are a couple of paragraphs that refer to peace officers in the bill on page 2. If the committee intends to include correctional officers and firefighters, they should be added. CHAIR MENARD said that is a good suggestion and held SB 79 in committee.