SENATE COMMUNITY & REGIONAL AFFAIRS January 27, 1994 9:03 a.m. MEMBERS PRESENT Senator Randy Phillips, Chairman Senator Loren Leman MEMBERS ABSENT Senator Robin Taylor, Vice Chairman Senator Al Adams Senator Fred Zharoff COMMITTEE CALENDAR SENATE BILL NO. 39 "An Act relating to credited service and retirement benefits." SENATE BILL NO. 2 "An Act requiring pay equity for certain public employees and requiring the compensation of certain public employees based on the value of work performed." PREVIOUS SENATE COMMITTEE ACTION SB 39 - No previous action to record. SB 2 - See Community & Regional Affairs minutes dated 11/3/93, 1/11/94, 1/18/94, 1/20/94. WITNESS REGISTER Senator Jim Duncan State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Prime Sponsor of SB 39 Al Kimker P.O. Box 4303 Homer, AK 99603 POSITION STATEMENT: Supports SB 39 Pete Velsco Box 1205 Nome, AK 99762 POSITION STATEMENT: Supports SB 39 Mike Ward Dutch Harbor, AK POSITION STATEMENT: Supports SB 39 Bob Zorich Box 1311 Petersburg, AK 99833 POSITION STATEMENT: Supports SB 39 Barry Bracken Box 1201 Petersburg, AK 99833 POSITION STATEMENT: Supports SB 39 Charles Lean Box 1716 Nome, AK 99762 POSITION STATEMENT: Supports SB 39 Earl Clark 9163 Parkwood Drive Juneau, AK 99801 POSITION STATEMENT: Supports SB 39 Ken Griffin Juneau, AK POSITION STATEMENT: Supports SB 39 Mary Lou Spartz Juneau, AK POSITION STATEMENT: Supports SB 39 Dr. Clark Damon 1101 First St. Douglas, AK POSITION STATEMENT: Supports SB 39 Mike Dean 4318 Connifer Lane Juneau, AK POSITION STATEMENT: Supports SB 39 Karen Crandall 11466 N. Douglas Highway Juneau, AK POSITION STATEMENT: Supports SB 39 Bob Stalnaker, Director Division of Retirement & Benefits Department of Administration P.O. Box 110203 Juneau, AK 99811-0203 POSITION STATEMENT: Offered information on SB 39 Mike McMullen, Manager, System Services Division of Personnel/EEO Department of Administration P.O. Box 110201 Juneau, AK 99811-0201 POSITION STATEMENT: Present to respond to questions on SB 2 ACTION NARRATIVE TAPE 94-7, SIDE A Number 001 The Senate Community & Regional Affairs Committee was called to order by Chairman Randy Phillips at 9:03 a.m. Due to the lack of a quorum, it was stated that only action to be taken on the legislation to be considered would be the taking of public testimony. SENATOR RANDY PHILLIPS introduced SB 39 (RETIREMENT CREDITED SERVICE & BENEFITS) as the first order of business. Number 023 SENATOR JIM DUNCAN, prime sponsor of SB 39, explained the legislation amends a number of different sections in the retirement statutes. Sections 1 and 6 create a Public Service Benefits, which will allow individuals with service in both public retirement systems who do not have enough service to vest in either to consolidate their public service in PERS and receive a limited benefit. Sections 2, 3 and 7 allow a vested member of PERS to claim credited service for active duty in a unit of the National Guard or National Guard Reserve. Sections 4 and 8 allow an individual with temporary service credit to choose whether to claim that service as years of service credit towards "twenty and out" or "thirty and out" retirement or only for calculating benefits as is currently allowed. Section 5 allows individuals with service as temporary legislative employees to claim that service at any time provided the individual pays the full actuarial cost of the service claimed. It also allows former employees of the Alaska State Development Corporation to claim service credit under PERS provided they pay the full actuarial cost of claiming that service. Senator Duncan said the legislation was designed to address several very specific problems which he thinks will provide fairer treatment to current and former employees. Number 125 SENATOR RANDY PHILLIPS stated the committee would begin taking testimony over the teleconference network. AL KIMKER, an Alaska Department of Fish and Game employee for over 18 years and testifying from Homer, said the legislation will allow state employees with temporary service to buy the time and apply it to their credited retirement service years. He said old-time temporary employees simply fell through the cracks and whatever ancillary costs there may be, they would be willing to help reduce those costs or reduce those costs entirely themselves. They are asking for fair and equitable treatment and support for the bill. Number 160 PETE VELSKO, an Alaska Department of Fish and Game employee testifying from Nome, stated he has over a year of temporary time and 16 years of full-time employment. He believes that as a fairness issue this time should be credited to the older employees who have earned this temporary time because it will equalize them with everybody else in the retirement system. Number 180 MIKE WARD, an Alaska Department of Fish and Game employee testifying from Dutch Harbor, echoed the comments made by the two previous speakers. He said it will provide a benefit to a group of people that they will pay for themselves. Number 195 BOB ZORICH, an Alaska Department of Fish and Game employee for 17 years testifying from Petersburg in support of SB 39, stated he has two years of temporary time, and if he could get credit for those two years, he would be eligible for retirement in about eight months. Number 210 BARRY BRACKEN, an Alaska Department of Fish and Game biologist testifying from Petersburg, said he feels that the people that supported the department in its early years should be credited for their temporary service at that time. He pointed out that the people who worked for the Territorial department prior to statehood were given credit for their service, but the people who worked as temporary employees for the department after statehood did not. Number 228 CHARLES LEAN, an Alaska Department of Fish and Game biologist testifying from Nome, said they are all career biologists and they are planning to retire in the state. Crediting the temporary service would accelerate the retirement of some long-time employees who are more costly than short-time employees. Number 260 EARL CLARK, Southeast Alaska Independent Living Center, testifying in Juneau, stated he has over years five years service with the University of Alaska, Southeast, as well as over two years with the state. He said he has accrued service in both the TERS and PERS, but does not have enough time in either system to be vested. Passage of SB 39 would allow him to consolidate his public service in PERS and receive a limited benefit. Number 307 KEN GRIFFIN, an Alaska Department of Fish and Game employee testifying in Juneau, said temporary employees, such as himself, that worked for the state prior to 1980 received none of the benefits currently enjoyed by seasonal or nonpermanent employees hired after 1980. He said that with no fiscal impact to the state associated with this legislation, there is an opportunity to correct the inequity created between the pre and post 1980 temporary/nonpermanent employees. Number 368 MARY LOU SPARTZ of Juneau urged the committee's support for SB 39. Ms. Spartz was an employee of the Legislature in 1978, but was not aware that there was a deadline for claiming that service and therefore has been unable to claim that temporary time. Number 385 DR. CLARK DAMON of Juneau also spoke in support of SB 39. He, too, has time in the TERS and PERS, but not enough in either system to be vested. He has paid into both systems and passage of SB 39 would help to rectify his situation. Number 415 MIKE DEAN, an Alaska Department of Fish and Game employee testifying in Juneau said of his 17 years of total credited service, he has approximately two years of temporary time that he has bought back. Passage of SB 39 would provide him the option to use that claimed temporary service towards the 20 years and out program. Number 431 KAREN CRANDALL, an Alaska Department of Fish and Game Employee testifying in Juneau, started working for the department in 1974. From 1974 through 1977, she worked in field camps along side people who were at the same risk she was at, who were receiving benefits and are now closer to retirement than she is. She believes it is only fair that the time be credited towards her retirement service. Number 450 BOB STALNAKER, Director, Division of Retirement & Benefits, Department of Administration, said there has been testimony by the Fish & Game people for service that they had in the seventies until the change in law that made them nonpermanent employees. He said he is not aware of any disparity; they can claim that service. Anybody who worked temporary service can claim that service if they are vested to increase the benefit that they receive when they retire. The other thresholds are there for permanent service served for a covered employer under the system. Mr. Stalnaker said there was a group of people who were grandfathered into the 20 years and out program. New employees to Fish & Game working the field, working on the boats, etc., are covered under the PERS non peace officer service. Mr. Stalnaker said all the employees wanting to claim their temporary service are all willing to pay the cost, and the bill proposes that everybody pay the full actuarial cost. The problem is that whenever there is an actuarial cost, there are people with all kinds of differing circumstances, such as differing lengths of service, differing salaries. In determining an actuarial cost, the actuary has to determine what the average cost would be for that group of people. Whenever dealing with an average, half of the people will be benefited and half of the people will not. The people who will be disadvantaged won't take advantage of the program, therefore there will always be some residual cost to the state. Number 523 Responding to questions from Senator Leman, Mr. Stalnaker briefly discussed the pros and cons of a defined benefit plan versus a defined contribution plan. With the exception of West Virginia, every other state has a defined benefit plan. TAPE 94-7, SIDE B Number 001 SENATOR RANDY PHILLIPS asked if the department has a position paper on SB 39. Mr. Stalnaker answered that the department is not supportive of expanding benefits, especially when there is a cost. The department believes that the retirement plans are very generous plans and serve the purpose, at this point, of attracting and retaining employees. He said the department would provide a position paper on the legislation by the next meeting. Senator Randy Phillips asked what other groups other than Fish and Game employees would be affected by this legislation. Mr. Stalnaker replied that the issue of the temporary service to be used for threshold qualifications is predominantly a Fish and Game issue, because it was the normal practice back in those times to hire people as temporaries for a number of years and then as permanent positions would open, they would move them in. He didn't think there would be many others impacted by the legislation. Number 040 SENATOR RANDY PHILLIPS closed the public hearing on SB 39, stating that it would be back before the committee the following week. Number 045 SENATOR RANDY PHILLIPS brought SB 2 (PAY EQUITY BASED ON VALUE OF WORK) before the committee as the final order of business. MIKE MCMULLEN, Division of Personnel/EEO, Department of Administration, stated he was present to respond to questions. There being no questions and because the committee had lost its quorum, SENATOR RANDY PHILLIPS said the bill would be back before the committee the following week at which time he would entertain a motion on the Administration's version of SB 2. There being no further business to come before the committee, the meeting was adjourned at 9:55 a.m.