MINUTES SENATE FINANCE COMMITTEE April 20, 2000 9:10 AM TAPES SFC-00 # 101, Side A & B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:10 AM PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator Al Adams, Senator Loren Leman, Senator Randy Phillips, Senator Gary Wilken, Senator P. Kelly, Senator Donley, Senator Green. Also Attending: PETER TORKELSON, Staff to Representative Dyson; REPRESENTATIVE DYSON; JOHN MANLY, Staff to Representative Harris; MELINDA HOFSTAD, Staff to Representative Hudson; GUY BELL, Director, Division of Retirement & Benefits, Department of Administration; BILL CHURCH, Retirement Supervisor, Division of Retirement & Benefits, Department of Administration; CHARLES HOSACK, Deputy Director, Division of Motor Vehicles, Department of Administration; JANET SEITZ, Staff to Representative Rokeberg; PAUL GROSSI, Director, Division of Workers' Compensation, Department of Labor and Workforce Development; DARROLL HARGRAVES, Executive Director, Alaska Council of School Administrators. Attending via Teleconference: From Matsu: SHEILA DICKMAN, President, Matsu Classified Employees Association. SUMMARY INFORMATION HB 58-OIL & GAS AUDITS This bill was scheduled but not heard. HB 325-MEDICAL ASSISTANCE: LIENS & CLAIMS The amended bill was reported from Committee. HB 372-CRIMINAL SENTENCING AND RESTITUTION The sponsor testified. The bill was reported from Committee. HB 206-FISH AND GAME LICENSES & TAGS The sponsor testified. The bill was held. HB 335-STATE RETIREMENT SYSTEMS AND BENEFITS The sponsor and the Division of Retirement & Benefits testified. The amended bill was reported from Committee. HB 324-PERSONAL INFO IN MOTOR VEH. RECORDS The Division of Motor Vehicle testified. The bill was reported from Committee. HB 419-WORKERS' COMPENSATION The sponsor and the Division of Workers' Compensation testified. The bill was held. HB 432-BOARD OF STORAGE TANK ASSISTANCE The amended bill was reported from Committee. HB 277-RETIREMENT BENEFITS FOR REHIRED TEACHERS The Division of Retirement & Benefits testified. The bill was held. CS FOR HOUSE BILL NO. 325(JUD) "An Act relating to priorities, claims, and liens for payment for certain medical services provided to medical assistance recipients; and providing for an effective date." Amendment #2: This amendment deletes old and inserts new language as follows: Page 2, line 1, following "has priority": Delete "over" Insert "immediately after" The sentence then reads, "A lien perfected by the Department of Health and Social Services under AS 47.05.075 has priority immediately after a lien perfected by a hospital, nurse, or physician under AS 34.35.450 - 34.35.480." Co-Chair Parnell made a motion to adopt Amendment #2. He explained that this amendment, grants a lien perfected by the Department of Health and Social Services on recoveries made by people provided medical assistance under Medicaid. He continued that this amendment still allows the State of Alaska to secure a lien, but not in priority to those ones perfected by a hospital, nurses or physicians. Co-Chair Torgerson hearing no objection, ADOPTED Amendment Senator Phillips requested that he refrain from voting due to a conflict of interest. There was an objection. Co-Chair Parnell made a motion to move HB 325, version "1- GH2058\I" from committee with individual recommendations and a fiscal note in the amount of $52,700.00 from the Department of Health and Social Services. Hearing no objection HB 325 was MOVED FROM COMMITTEE. CS FOR HOUSE BILL NO. 372(JUD) "An Act relating to criminal sentencing and restitution." PETER TORKELSON, Staff to Representative Dyson stated the goal of this legislation was for crimes involving an individual against another, bur rather for arson where a life is possibly threatened, or for property damage. He added that in these instances the court may permit a victim and offender to work out a sentence that meets the needs of the victim and in the courts opinion, serves the interest of justice. He continued that if for some reason the defendant did not follow through on the agreed terms, the standard, criminal penalty could be applied. He noted that in other states these programs have proven to be very effective. Senator Leman asked what the process was for approaching the community for input into a criminal's sentences, in other words, who would be participating in this process. Mr. Torkelson responded that in some cases a crime may not have one specific victim, for example, a public building is damaged in downtown Anchorage. He pointed out that the victim in this case might be the Downtown Merchant's Association and one of their representatives might suggest that in lieu of a fine, that the defendant help restore what damage has been inflicted on this piece of property. Senator Leman asked that in an instance such as this one, whether some type of advertisement might be appropriate so other citizens are aware that this option is available. Mr. Torkelson responded that as part of its intent, this legislation allows for announcements about the program. He remarked that literal advertisements would be up to a judge's discretion. REPRESENTATIVE DYSON stated that in essence, all justice systems throughout history have aimed at the restoration of the victim to a pre-offense condition. He pointed out that now, a criminal makes payment to governmental entities rather than to the victim. He noted that this legislation would rectify this situation. He added that this legislation would require an offender to work to repay the community or the victim for their crime. Co-Chair Parnell referred to Section 3 of the bill, which allows for the court's ability to set aside a proposed amount, unless the defendant at sentencing establishes by clear and convincing evidence the inability to pay the amount proposed. He pointed out that presently, a defendant is required to show by a preponderance of the evidence his or her inability to pay. He wondered why this standard with this legislation would be changed from preponderance, to clear and convincing. Mr. Torkelson responded that the Department of Law felt as though the proposed draft language was crafted in a double negative manner and difficult to apply. He continued that the language was then crafted to reflect the clear and convincing standard that now exists. Co-Chair Parnell made a motion to move HB 372 with individual recommendations and a Department of Corrections zero fiscal note from Committee. Hearing no objection, HB 372 was MOVED FROM COMMITTEE. CS FOR HOUSE BILL NO. 206(RES) "An Act relating to migratory game bird hunting; to a nonresident combined sport fishing and hunting license, to the nonresident military small game and sport fishing license, to applications for certain licenses, tags, registrations, and permits issued by the Department of Fish and Game, and to duplicate crewmember licenses." JOHN MANLY, Staff to Representative John Harris stated that this legislation was presented at the request of the Department of Fish and Game, consisting of a general cleanup of existing statutes. He pointed out that in six sections of the current statute, the word "water fowl" was changed to "migratory game bird," in order to bring this designated species (more specifically Snipes and Cranes) into a federal reporting program. He continued that Section 3 of the bill allows disabled Veterans and five dollar license holders to register in the National Migratory Game Bird harvest program by one of two different methods. He gave the specifics of these. He noted that Section 4 of the bill created a new combination of seven- day nonresident hunting and fishing license, which are currently is issued separately. He cited that this legislation sets a fee for special non-resident military small game licenses. He remarked that a provision was added allowing residents of the Yukon Territory to obtain a non-resident sport-fishing license at a resident fee. He noted that these individuals would be governed under the non-resident seasons and bag limits. He added that this would not go into affect until a reciprocal courtesy was extended. He concluded that in Sections 9 and 10, the protocol for administering an oath regarding residency would be replaced by language on the application for licensure. He outlined a general technical change regarding the addition of the word "registration." He summed up that Section 17 authorizes the department to issue replacement commercial fishing, crew licenses for five dollars. Co-Chair Torgerson stated that the bill would be HELD and brought up at the next scheduled meeting. CS FOR HOUSE BILL NO. 335(STA) "An Act relating to information contained in retirement system records; relating to retirement boards; relating to procedures and hearings under state retirement systems; relating to benefits for reemployed retired members of retirement systems; relating to eligibility for normal retirement for members of the teachers' retirement system who have Alaska BIA credited service; relating to disability benefits for members of state retirement systems; relating to deduction of premiums from retirement benefits; relating to protection of, and assignment and transfer of, amounts held in retirement systems; relating to retirement benefits for certain employees earning high salaries; relating to qualified domestic relations orders in state retirement systems; relating to the definition of 'retirement fund' in the teachers' retirement system; relating to membership of state employees in the teachers' retirement system; relating to refund of contributions made to the judicial retirement system or to the former elected public officers retirement system and repayment of refunded contributions in those systems; relating to self-insurance and excess loss insurance for persons receiving benefits from a state retirement system; relating to participation of elected officials in the public employees' retirement system; relating to the level income option benefit under the public employees' retirement system; relating to participation of employees of political subdivisions and public organizations in the public employees' retirement system; relating to crimes for defrauding a state retirement system; relating to the definition of 'pension fund' in the public employees' retirement system; relating to calculation of years of service and of benefits under the public employees' retirement system for noncertificated employees of certain educational employers; and relating to individual accounts maintained for members of the former elected public officers retirement system." MELINDA HOFSTAD, Staff to Representative Bill Hudson, explained that this legislation was a retirement and benefits cleanup effort and it was introduced at the request of Division of Retirement and Benefits. She noted that this legislation would bring the State of Alaska in compliance with federal laws, court settlements and other technical issues addressed in updated laws. She added that efficiency measures requested by the various retirement boards, was also included. She declared that there was nothing in this legislation that enhances or diminishes retirement benefits currently available to any state employees or retirees. Senator Phillips asked if the word "interpret" was included in this legislation, with regard to allowing the Administration the authority to make arbitrary interpretations of the statutes. GUY BELL, Director, Division of Retirement & Benefits, Department of Administration stated that he did not think that this word was included anywhere in the bill. He reiterated that this bill outlined technical clean up to existing statutes. He noted that this legislation clarifies the hearing process available to members, which usually center around disability appeals. He advised that this legislation addressed confidentiality of member records and more specifically it makes needed changes to a law enacted last session, SB 9, based on a settlement with National Education Association (NEA) Alaska. He specified that it addresses physician board member appointments and reporting issues. He continued that this bill separates the Public Employees Retirement (PERS) Board from the Personnel Board. He added that currently three of the five members on the PERS Board serve by virtue of being appointed to the Personnel Board. He asserted that because of the volume of work involved for each of these boards, it was decided that these board appointments should be made separate. He then outlined general changes to related board election rules. Mr. Bell outlined technical issues relating to the ability to roll member contributions directly into individual retirement accounts. He noted that this specifically addressed previous problems regarding the division of these accounts under qualified domestic relation orders. He addressed the small, related fiscal note for $29,000, which allows for a $150 honorarium for members who serve on the PERS Board. Senator Phillips referred to Sections 58 and 59. He asked for an explanation regarding each. He wondered if these sections were in place before the bill passed out of the House. Mr. Bell responded that, yes, they were. He pointed out that the Elected Public Officers Retirement System (EPORS) language was added to the Public Employees and Teachers Retirement Statute for simple and technical clarification related to payment of indebtedness. He noted that this language would only affect 62 individuals eligible for EPORS benefits and of this, quite a number of them are still living and not receiving retirement benefits. Senator Phillips pointed out that these individuals withdrew their money, and they are now given the ability to opt back into the system. He then referred to lines 21 - 23, on page 29. He read the following language: ".who has withdrawn the balance of the officer's individual account, who returns to service as the governor, lieutenant governor, or as a member of the legislature." He commented that this was a very exclusive group of people and pointed out that this measure was repealed by the voters in 1976. He pointed out that if someone has withdrawn his or her money, this should be a final decision. Mr. Bell responded that the idea of this clause supports an individual who has chosen to withdraw their membership contribution accounts. He continued that if this same individual needs to return to work, they must pay this refund back, the employers contribution has already been made to the system for this individual. He noted that this clause would create a consistency situation with all other state public employees. Senator Phillips responded that these particular individuals are elected, this being the main difference, and he wondered if these individuals were really state employees. Mr. Bell countered that from the perspective of the Public Employees Retirement System, yes. Senator Phillips stated that he had a problem with this provision. SHEILA DICKMAN, President, Matsu Classified Employees Association testified via teleconference from Matsu. She explained that she was speaking on the behalf of the Matsu School District employees. She stated that this legislation makes many changes to the retirement system, more specifically Sections 37 through 40. She added that there are a number of employees in Matsu with work hours reduced from 12 months to 10 or 11 months beginning in August of 2000. She noted that these employees have two options under current law, they can do nothing and receive a partial year's credit for the rest of their work life or they can participate in the alternative option under SB 9. She advised that if they choose the latter, they must pay for the year 1999-2000 even though they will not receive any benefit for this school year. She pointed out this was an oversight, which occurred in SB 9, and HB 335 will fix this problem. She added that this change would also allow for members who are paying for this service to revoke their choice under some very strict guidelines if their job status changes in the future. Ms. Dickman read a written statement by an employee named Gloria Lee as follows: "Public Employee's Retirement system confirms that if HB 335 does not pass, all current employees must choose to participate in alternative retirements or they will not be eligible next year. That means current twelve-month employees will be required to pay for the 1999-2000 school year, even though they do not receive any benefits. PERS states that the division has no choice due to the way the bill was drafted last year. I thank Senator Green for her assistance on this bill and I support to move this bill from the Committee for the benefit of classified employees." Amendment #2: This conceptual amendment removes Sections 58 & 59 from page 29, line 14 through page 31, line 21 of HB 335. Senator Adams objected. He stated that these state employees should be treated fairly. He continued that these 62 individuals have completed their public service to the state. Senator Phillips countered that this was a special arrangement passed a previous legislature, which changed from a two percent to a five percent standing per year up to 15 years or 75 percent of a person's salary. He added that after this action was taken, in 1976, voters repealed this section. He commented that at this same time, if an employee withdrew their money from EPORS and then wanted to come back into the system, the employee [indiscernible.] A roll call was taken on the motion. IN FAVOR: Senator Leman, Senator Donley, Senator Phillips, Co-Chair Torgerson. OPPOSED: Senator Adams, Senator Wilken, Senator P. Kelly. PASS: Senator Green. The roll was voided to allow Senator Green to amend her nonvoting status. BILL CHURCH, Retirement Supervisor, Division of Retirement & Benefits, Department of Administration clarified the issue raised by Senator Phillips regarding repayment of refunded contributions as noted in Section 58. He detailed the way in which this legislation presently reads. He continued that someone who has withdrawn his or her contribution and returns to work, has the opportunity to reinstate their credited service and repay the indebtedness of the reinstatement cost including interest within one year of the date of re-employment. He continued that this section treats this group of individuals like any other under various state retirement systems. Senator Phillips agreed with this illustration that most state employees are presently at two percent for the first ten years, but he pointed out that a special piece of legislation passed in 1975, set these 62 employees at a five- percent benefits advantage and to that he objected. Senator Donley stated that he agreed with Senator Phillips. He stated that these individuals are receiving an added benefit that no state employee has gotten since. He noted that going back retroactively in this instance, would not be the same thing. Mr. Bell referred to Section 59, which does not deal with indebtedness payments, but deals with distribution of member accounts under qualified domestic relation orders in the event of divorces. He pointed out that this section would bring the State of Alaska in compliance with federal law. Senator P. Kelly asked if these individuals would repurchase time under the old system or under the present two percent system. Mr. Bell responded that these individuals would repurchase as EPORS members at five percent. Senator Leman made a motion to move to divide the question between Section 58 and Section 59. Co-Chair Torgerson stated that Amendment #2A would be to delete Section 58 and Amendment #2B would be to delete Section 59. Senator Adams objected for discussion purposes. He asked how many of the 62 individuals would actually buy back their service time. He wondered how old these individuals were as well. Mr. Church responded that the majority of these individuals were between 40 to 60 years old. He added that he did not have the exact numbers of how many of them would participate, but that it would probably be a minority. A roll call vote was taken on the motion to adopt Amendment IN FAVOR: Senator P. Kelly, Senator Green, Senator Phillips, Senator Donley, Senator Leman, Co-Chair Torgerson. OPPOSED: Senator Wilken, Senator Adams. The MOTION PASSED (6-2) Senator Phillips made a motion to WITHDRAW Amendment #2B. Amendment #1: This amendment adds new and deletes old language as follow: The governor shall fill a [A] vacancy in an unexpired elective term [SHALL BE FILLED] by [ELECTION FOR A NEW SIX-YEAR] appointment for the remainder of the term. Senator Wilken made a motion to adopt Amendment #1, and referred to page 15, line 18 and 19, by reading the following language: "A vacancy and an unexpired elected term shall be filled by elections for a new year term." He explained that during the subcommittee budget process, this exact situation happened and the department was required to conduct an election, which cost $100,000. He then read the pertinent language of Amendment #1 as noted above. Co-Chair Torgerson asked if the terms of office were six years. Senator Wilken responded affirmatively and that they were six-year staggered terms. Co-Chair Torgerson suggested a conceptual change to fill the term until the next election. Senator Leman asked if Senator Wilken had considered another way to fill these vacancies, such as having the existing board fill this vacancy rather than the governor. Senator Wilken explained that the governor appoints three of these members and that two are elected. Senator Green suggested the addition of language, "by appointment until the next regularly scheduled election." Mr. Bell responded that this would create a situation where there are no longer any staggered terms. He added that this was not necessarily a bad thing, but there could potentially be new people re-instated every six years. Co-Chair Torgerson disagreed and pointed out that municipalities do this type of thing all the time. He used the example of appointing someone to take a position until the next election, remaining in this capacity for the remainder of this term. Co-Chair Torgerson called an at ease at 10:05 AM and reconvened at 10:08 AM. Senator Wilken made a conceptual amendment that would essentially allow the Governor to fill a vacancy in an unexpired elected term for a new six-year term until the next regularly scheduled election, while giving the Department of Legal Services the ability to conform the language accordingly. Hearing no objection, the amendment to the amendment was adopted and Amendment #1 was AMENDED. Hearing no objection, Amendment #1 as amended, was ADOPTED. Tape: SFC - 00 #101, Side B, 9:59 AM Senator Wilken made a motion to move HB 335, version 1- LS1217\M as amended from committee with individual recommendations and a $29,200 fiscal note from the Department of Administration. Hearing no objection HB 335 was MOVED FROM COMMITTEE. HOUSE BILL NO. 324 "An Act requiring written consent by the person who is the subject of the information before releasing personal information contained in motor vehicle records, to comply with 18 U.S.C. 2721; and providing for an effective date." CHARLES HOSACK, Deputy Director, Division of Motor Vehicles, Department of Administration testified via teleconference from Anchorage. He stated that this legislation would bring Alaska into compliance with federal law regarding release of information. He noted that Alaska and federal law currently allows the release for 11 permitted uses and added that this bill, including the federal law change will affect two of these permitted uses. He added that one of these was for marketing and solicitation and the other for open release of vehicle records. He advised that these uses are currently permitted, unless a person specifically informs the division not to release this information. He asserted that the changes to these two uses will not be allowed unless the person specifically requests that their specific information be released or that they want to receive solicitations. Co-Chair Torgerson asked how the division would notify the public of these changes in law. Mr. Hosack responded that this would be accomplished through public releases and along with registration renewal notices. Senator Phillips asked if this legislation would restrict a person from researching the history of a vehicle. Mr. Hosack responded affirmatively and added that if an individual wishes to buy a used vehicle, the division would not be able to release this vehicle's history of use. He pointed out that this same provision is already signed into federal law and will go into effect June 1st. Senator Phillips asked what someone would do if they collected antique or classic cars. Mr. Hosack responded that the division would not be able to release this information unless the collector obtained a signed release from the vehicle owner. Co-Chair Torgerson asked if the state would be out of compliance by making an exception for historical antique vehicles and classics. Mr. Hosack responded that the state would be out of compliance with federal law. He noted that the state and the individuals who release this information could be fined $5000 per day by the U.S. Attorney General's office. Senator Donley added that his interpretation of this legislation was that it requires written consent from the person who is the subject of the requested information and he wondered why Mr. Hosack specified that permission must be granted by the vehicle's owner. Mr. Hosack responded that the owner information would be information such as name, address and vehicle type related to this individual. Senator Donley disagreed and added that this information could include a lot more, such as prior owners. He noted that this would solve the present problem with this legislation, because before an individual buys a classic car, the present owner could give permission for researching the vehicle's history. He stated that he thought this language went to the "subject of the information." He asked if the federal law specified. Mr. Hosack responded that the federal law reads exactly as the proposed language before the Committee, i.e., the subject of the information. Senator Leman referred to the definition of "personal information" in statute. He read the following excerpt: "Personal information includes name, address, telephone number and medical or disability information, but does not include information on vehicular accidents, driving or equipment related violations, drivers license or registration status or a zip code." He wondered why zip code would not be included if someone's address and telephone is included. Mr. Hosack responded this was set aside for statistical purposes in generating reports on where vehicles are located. Senator Donley stated this exemption could be a way for individuals who are interested in buying antique cars to get some of the pertinent information regarding the history of the vehicle. Senator Leman made a motion to move HB 324, version 1- GH2063.A from Committee with individual recommendations and a zero fiscal note from the Division of Motor Vehicles. Hearing no objection the bill was MOVED FROM COMMITTEE. SENATE CS FOR CS FOR HOUSE BILL NO. 419(JUD) "An Act relating to the weekly rate of compensation and minimum and maximum compensation rates for workers' compensation; specifying components of a workers' compensation reemployment plan; adjusting workers' compensation benefits for permanent partial impairment, for reemployment plans, for rehabilitation benefits, for widows, widowers, and orphans, and for funerals; relating to permanent total disability of an employee receiving rehabilitation benefits; relating to calculation of gross weekly earnings for workers' compensation benefits for seasonal and temporary workers and for workers with overtime or premium pay; setting time limits for requesting a hearing on claims for workers' compensation, for selecting a rehabilitation specialist, and for payment of medical bills; relating to termination and to waiver of rehabilitation benefits, obtaining medical releases, and resolving discovery disputes relating to workers' compensation; setting an interest rate for late payments of workers' compensation; providing for updating the workers' compensation medical fee schedule; and providing for an effective date." JANET SEITZ, Staff to Representative Norman Rokeberg, stated that this legislation was introduced at the request of the Adhoc Committee on Workers Compensation and the Department of Labor and Workforce Development. She noted that this legislation updated the Workers Compensation law, which was last extensively revised in 1998. She added that this was a technical bill. PAUL GROSSI, Director, Division of Workers' Compensation, Department of Labor and Workforce Development stated that the department supports this bill. He added that this legislation provides needed increased benefits for injured workers and gave examples of how this was effectuated. He disclosed that these benefits have not been raised for 12 years taking into account inflation. He recited other specific examples of how this legislation was modified. Senator Phillips referred to a workers compensation audit and asked what recommendations generated from it were included in this legislation. Mr. Grossi responded that the parties who drafted this legislation did not have the advantage of this audit's recommendations. He referred to those same concerns addressed in the audit and this legislation as follows: increase in permanent and partial impairment benefit, increases in retraining, and overtime pay included in the calculation of compensation rate, etceteras. Senator Phillips noted that the audit came out in January. Ms. Seitz stated that the audit came out in March of 2000, which was after the introduction of this legislation. She added that this legislation did not bring the department into compliance with the audit and gave specific examples, such as employer penalties, or uninsured employees issues. Senator Wilken asked about problems with controverted claims and wondered if this legislation addressed this issue. Mr. Grossi responded that this area was not addressed in the bill. Senator Green voiced her concerns about the strong comments outlined in the audit regarding the administration of this program. She gave highlights of the deficiencies given in the audit. She asked if the "ten-year review" regarding workers rehab was addressed in this legislation. Mr. Grossi responded that this review process had not been addressed in this legislation. He pointed out that in order to qualify for retrain benefits, an individual must be able to show that they are unable to return to the type of work performed at the time of injury to any job held within the last ten years. He noted that there were problems inherent in this requirement. Co-Chair Torgerson stated that the Committee would HOLD this legislation. HOUSE BILL NO. 432 "An Act extending the termination date of the Board of Storage Tank Assistance; expanding the authority of the board to issue recommendations concerning cleanup decisions; and providing for an effective date." Amendment #1: This amendment reduces the extension date of four years to two years from June 30, 2003 to June 30, 2001. The amended language on page one, line seven of the bill would read, "(18) Board of Storage Tank Assistance (AS 46.03.360) -- June 30, 2001. Senator Leman made a motion to adopt Amendment #1. He stated that he supports the Board of Storage Tank Assistance and he had previously recommended a two-year extension. He then gave an overview of how this legislation had progressed since the House of Representatives had heard it. Senator Green stated that the legislature had basically gutted this whole bill and noted the amount of time it has taken for this negotiated time extension. She stated that she did not understand why, this two year requirement should be instituted, while at the same time the board could be negotiating with Department of Environmental Conservation. Co-Chair Torgerson responded that there would always be work for people regarding this issue. He noted that if the Committee wanted to offset the Department of Environmental Conservation's power with this, they might as well take out the termination dates. Senator Adams objected and noted that it takes four years to close out underground storage tank projects. A roll call was taken on the motion. IN FAVOR: Senator Phillips, Senator Leman, Co-Chair Torgerson. OPPOSED: Senator Green, Senator Adams, Senator Wilken, Senator P. Kelly. PASS: Senator Donley. The MOTION FAILED: (3-3) Co-Chair Torgerson announced an at ease at 10:32 AM and reconvened the meeting at 10:35 AM. Senator Leman made a motion to RESCIND the previous action for failure to adopt Amendment #1. Hearing no objection, Amendment #1 was once again before the Committee. Senator Adams again objected to the adoption of this amendment. A roll call vote was taken on whether to adopt Amendment #1. IN FAVOR: Senator Phillips, Senator Donley, Senator Leman, Senator Wilken, Senator P. Kelly, Co-Chair Parnell, Co- Chair Torgerson. OPPOSED: Senator Adams, Senator Green. The MOTION PASSED: (7 - 2) Senator Leman made a motion to move HB 432, version 1- LS1539\G from Committee as amended with individual recommendations and a $51,400 fiscal note from the Department of Environmental Conservation. Hearing no objection HB 432 was MOVED FROM COMMITTEE. HOUSE BILL NO. 277 "An Act relating to payment of retirement benefits for subsequently reemployed retired members of the teachers' retirement system." DARROLL HARGRAVES, Executive Director, Alaska Council of School Administrators commended the Committee for considering the serious teacher shortage developing in Alaska. He added that field reports indicate that it is becoming more difficult to find qualified and certifiable teachers to enter classrooms, as well as Administrator slots. He commended the Committee on subsection (b) on page two as well. Senator P. Kelly stated that Alaska should seriously consider alternatives to certification in order to fill these teaching positions. Co-Chair Torgerson asked for an explanation related to this legislation's fiscal note, especially the associated benefits, which might go up an additional ten percent. He asked what section of the bill this increase referred to. GUY BELL, Director, Division of Retirement and Benefits, Department of Administration responded that actuaries had looked at the state's cost for a person who, after 20 years retires and then is rehired. He noted that this reference reflected a ten-percent increase in the net present value of the expected life line value of this individual's benefits. He continued that if half the members decided to participate the cost to the system would be about .75 percent of Teachers' Retirement System (TRS) payroll, which would be about $3.6 million. He gave an example of a teacher with 20 years of service at a high salary of $50,000 per year. He explained that if a teacher was rehired back into the system, the second retirement would be calculated on the teacher's higher salary, while not affecting their original benefits. BILL CHURCH, Retirement Supervisor, Division of Retirement & Benefits, Department of Administration added that an individual who had participated in a Retirement Incentive Plan (RIP) and who was rehired would lose the incentive credit given at their original retirement. He continued with the example of a teacher first hired under the Tier 1 level of benefits, who retires at age 43 after 17 years of service. He noted that this individual would not be eligible to commence this first benefit until they reached age 55 for a normal benefit or age 50 for an early benefit. He noted that this would be the penalty for returning to employment, although this does not prevent anyone who has retired from being eligible for rehire under this scenario. Co-Chair Parnell referred to the teacher shortage as previously noted and asked how many new teachers are presently needed in the state. He wondered what the annual gross on average was in Alaska and if this was not enough, he asked what it should be. Mr. Guy responded that the state must consider how many teachers are quitting and how many are retiring. He noted that about 500 teachers retire each year and guessed that the same amount of teachers leave for various other reasons. He added that about the same number of teachers come into the system for any given year. He generally stated that there are 10,000 teachers in the system statewide, with roughly a 10 percent annual turnover. Co-Chair Parnell stated that it seemed the numbers were staying level, along with a population decrease statewide. He wondered if there was a need for this legislation with these types of projections. Mr. Church responded that districts were reporting shortages in some disciplines, something that has been on going for many years. Co-Chair Parnell declared that he thought this legislation was a short-term fix and that it does not look towards the future, as to recruit and keep teachers. Tape: SFC - 00 #102, Side A, 10:49 AM Senator Green stated that this shortage of teachers was cyclical, just the same as overages. She noted that this was not an unusual phenomenon. Co-Chair Torgerson inquired about the advantage or disadvantage of a teacher who works twenty years and retires, as versus a teacher that stays on for the same period of time. Mr. Bell responded that he could not think of any advantage one way or the other. Mr. Church added that either way, after twenty years, an individual would receive the same multiplier, which increases after twenty years from two percent per year to two and a half percent per year. Co-Chair Torgerson stated that HB 277 would be HELD in Committee. ADJOURNED Senator Torgerson recessed the meeting at 10:54 AM to the call of the chair. SFC-00 (1) 04/20/00