Legislature(2019 - 2020)ADAMS ROOM 519

05/15/2019 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
-- Continued from 05/14/19 at 1:30 pm --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 43 EXTEND BIG GAME BOARD; OUTFITTER LICENSE TELECONFERENCED
Moved HCS SB 43(FIN) Out of Committee
+= SB 10 EXTEND SUICIDE PREVENTION COUNCIL TELECONFERENCED
Moved SB 10 Out of Committee
+= SB 16 ALCOHOL LIC:FAIRS,THEATRES,CONCERTS;BONDS TELECONFERENCED
Moved HCS SB 16(FIN) Out of Committee
+= HB 79 PEACE OFFICER/FIREFIGHTER RETIRE BENEFITS TELECONFERENCED
Heard & Held
HOUSE BILL NO. 79                                                                                                             
     "An  Act relating  to  participation  of certain  peace                                                                    
     officers and  firefighters in  the defined  benefit and                                                                    
     defined  contribution plans  of  the Public  Employees'                                                                    
     Retirement  System of  Alaska; relating  to eligibility                                                                    
     of  peace   officers  and  firefighters   for  medical,                                                                    
     disability, and  death benefits; relating  to liability                                                                    
     of the  Public Employees' Retirement System  of Alaska;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
9:41:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHUCK  KOPP,  BILL  SPONSOR,  indicated  the                                                                    
hearing  was the  second  for  HB 79  in  the House  Finance                                                                    
Committee. He explained that the  since the prior hearing he                                                                    
had  met with  individuals from  the Division  of Retirement                                                                    
and  Benefits  and  the  Attorney  Generals   office,  which                                                                    
resulted  in a  committee  substitute version.  He also  had                                                                    
received an  actuary report from  the state's  actuary, Buck                                                                    
Consultants.  In  addition,  the  states   Chief  Investment                                                                  
Officer, Bob Mitchell, Department  of Revenue, was available                                                                    
to  testify. He  indicated that  Mr. Mitchell  had performed                                                                    
modeling on  the current effectiveness  of the plan  for the                                                                    
peace  officers  and  firefighters. The  brief  presentation                                                                    
would  put into  perspective  why HB  79  was important.  He                                                                    
wanted to also hear from the states actuary.                                                                                    
                                                                                                                                
9:43:10 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:45:23 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 79                                                                                                             
                                                                                                                                
     "An  Act relating  to  participation  of certain  peace                                                                    
     officers and  firefighters in  the defined  benefit and                                                                    
     defined  contribution plans  of  the Public  Employees'                                                                    
     Retirement  System of  Alaska; relating  to eligibility                                                                    
     of  peace   officers  and  firefighters   for  medical,                                                                    
     disability, and  death benefits; relating  to liability                                                                    
     of the  Public Employees' Retirement System  of Alaska;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
Co-Chair Wilson invited Representative Kopp to the table.                                                                       
                                                                                                                                
10:02:10 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:04:16 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
BOB  MITCHELL,  CHIEF   INVESTMENT  OFFICER,  DEPARTMENT  OF                                                                    
REVENUE, began  the PowerPoint Presentation titled    Target                                                                  
Date Fund  Simulation Exercise.   He explained that  in July                                                                    
2006,  the state  moved from  a  defined benefit  plan to  a                                                                    
defined  contribution  plan. He  turned  to  slide 2  titled                                                                    
 Background:                                                                                                                    
                                                                                                                                
      In  2017, the  Department of  Administration requested                                                                    
     that  the  Department  of Revenue  build  a  stochastic                                                                    
     model   that  simulates   the  experience   of  defined                                                                    
     contribution  employees enrolled  in the  Alaska Target                                                                    
     Date Retirement Trusts.                                                                                                    
      The purpose  of the model  was to test  the likelihood                                                                    
     that 30-year  employees will have sufficient  assets to                                                                    
     last 30 years into retirement.                                                                                             
      Four  cases were  tested: PERS  with SBS,  Police/Fire                                                                    
     with   SBS,   TRS,   and  TRS   with   6.13%   deferred                                                                    
     compensation contributions.                                                                                                
      In  2019,  the  ARMB  requested   an  update  to  this                                                                    
     analysis  at  the  upcoming June  defined  contribution                                                                    
     committee meeting.                                                                                                         
      Also in 2019, Representative  Kopp requested an update                                                                    
     to    this     analysis,    incorporating    additional                                                                    
     occupational  scenarios, including  Police/Fire without                                                                    
     SBS,  25-Year  Career  Police/Fire  with  SBS,  25-Year                                                                    
     Career Police/Fire without SBS.                                                                                            
                                                                                                                                
Mr.  Mitchell  delineated  that   he  built  a  Monte  Carlo                                                                    
simulation  model.  The  model   calculated,  based  on  the                                                                    
participants  income  each  month,  what  the  employee  and                                                                    
employer  contributions were  and how  the investments  grew                                                                    
over  time.  The  department  used   the  target  date  fund                                                                    
simulation exercise,  which took  a default  investment fund                                                                    
based  on participants  age and  retirement  date where  the                                                                    
asset allocation adjusted  automatically. The division built                                                                    
the  model and  ran it  10,000 times,  called  trials.   The                                                                    
trials were ranked  from the lowest terminal  asset value to                                                                    
the  highest. He  indicated  that if  there  was a  positive                                                                    
number, the  trial was a  success. The analysis  occurred in                                                                    
2017.                                                                                                                           
                                                                                                                                
10:08:50 AM                                                                                                                   
                                                                                                                                
He moved  to slide 3  titled  Target Date Fund  Glide Path.                                                                     
He elucidated that  the slide showed a  graphic depiction of                                                                    
the  target  date   glide  path  and  was   what  the  asset                                                                    
allocation  would look  like over  time  beginning 30  years                                                                    
prior to  retirement. He noted  that it began as  90 percent                                                                    
equity and  10 percent  fixed income allocation  that became                                                                    
more  conservative as  retirement approached;  at retirement                                                                    
equity  was  30  percent.  He  highlighted  slide  4  titled                                                                    
 Callan  2019  Return  and   Risk  Assumptions.   The  slide                                                                    
contained a chart of capital  market assumptions, which were                                                                    
estimates   of  returns   and  their   volatility  and   the                                                                    
correlation  of  the  performance   of  each  of  the  asset                                                                    
classes. The  information compiled by Callan  and Associates                                                                    
was used as the engine of investment performance.                                                                               
                                                                                                                                
Mr. Mitchell outlined slide 5 titled "Assumptions."                                                                             
                                                                                                                                
      A blend  of Callan's 2019 10-year  & long-term capital                                                                    
     market  assumptions  were  used.   10-year  assumptions                                                                    
     were  assumed during  the first  10 years,  were scaled                                                                    
     linearly to  the long-term assumptions during  the next                                                                    
     10 years,  and the  long-term assumptions  were assumed                                                                    
     thereafter.   Callan's generic fixed  income assumption                                                                    
     was  used in  place of  the specific  fixed income  mix                                                                    
     employed by the target date funds.                                                                                         
      Inflation  was   set  at  2.25%/year,   with  employee                                                                    
     salaries  assumed  to  grow  at  2.75%/year.    Initial                                                                    
     consumption in  retirement was set  at 70%  of earnings                                                                    
     at retirement.   Consumption was  assumed to  grow with                                                                    
     inflation thereafter.                                                                                                      
      10,000  trials were  used for  each  simulation.   The                                                                    
     trials  were  rank-ordered,  and the  simulations  that                                                                    
     represented  the  25th-, 50th-and  75th-percentiles  of                                                                    
     the distribution of outcomes are displayed.                                                                                
      A summary of the scenarios examined can be found in                                                                       
     the table below.                                                                                                           
                                                                                                                                
Mr.  Mitchell  explained that  given  the  model focused  on                                                                    
replacement  income,  the  model   results  was  not  overly                                                                    
sensitive to the salary assumption.                                                                                             
                                                                                                                                
10:10:38 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Ortiz asked  how important  the accuracy  of the                                                                    
2.5  percent estimated  inflation rate  was and  its impact.                                                                    
Mr.  Mitchell  answered that  2.5  percent  had been  chosen                                                                    
because  it was  the  inflation number  used  by Callan.  He                                                                    
delineated that the  rate was important because  it made the                                                                    
model internally  consistent. He expected that  if inflation                                                                    
was  materially  different,  asset class  performance  would                                                                    
move in a similar direction over  a long period of time. The                                                                    
actual number should not overly impact the results.                                                                             
                                                                                                                                
Co-Chair  Wilson cited  the 2.75  percent salary  assumption                                                                    
amount  and wondered  whether it  reflected the  contractual                                                                    
amount  or  were the  steps  incurred  over the  years.  Mr.                                                                    
Mitchell  explained that  the 2.75  percent  was the  number                                                                    
discussed with  the Division of Retirement  and Benefits and                                                                    
was not connected  to salary schedules. He  noted that given                                                                    
that  retirement  consumption  was  a  percentage  of  final                                                                    
salary,  if changes  were made  over  time it  would not  be                                                                    
 directionally  different   than  what was  experienced.  He                                                                    
stated that  the definition of  success was a  percentage of                                                                    
final  salary.  He did  not  think  there  would be  a  very                                                                    
different result using different numbers.                                                                                       
                                                                                                                                
Co-Chair Wilson  surmised that unlike  the prior  tiers, the                                                                    
outcome was accumulated over years  and was not based on the                                                                    
earnings of the participants top  3 or 4 years. Mr. Mitchell                                                                    
responded that she was correct.                                                                                                 
                                                                                                                                
10:13:27 AM                                                                                                                   
                                                                                                                                
Representative Carpenter  suggested that if a  random number                                                                    
was used such  as 2.75 percent and an  employee's salary was                                                                    
much  higher  than  what  their rate  had  been  over  their                                                                    
lifetime of employment, a spike  in liability would occur at                                                                    
the time of retirement. He  deduced the 2.75 percent was not                                                                    
reflective  of  what  would happen  at  retirement  for  the                                                                    
employee.                                                                                                                       
                                                                                                                                
Co-Chair  Wilson   asked  Mr.  Mitchell   if  Representative                                                                    
Carpenter's statement was accurate.                                                                                             
                                                                                                                                
Mr.  Mitchell responded  in  the  affirmative. He  indicated                                                                    
that a model  was simplification of reality.  He provided an                                                                    
example  of an  employee with  compensation higher  than the                                                                    
assumption  over  the  several   years  of  employment.  The                                                                    
question became whether the 70  percent was still a relevant                                                                    
number of  the much  higher income. He  voiced that  a model                                                                    
had difficulty  with the scenarios.  The utility of  a model                                                                    
was to provide  a directional sense of  the effectiveness of                                                                    
the program.                                                                                                                    
                                                                                                                                
Representative  Carpenter  ascertained  that that  the  plan                                                                    
incentivized maximizing  earnings in the final  years before                                                                    
retirement  in  order  to  gain   the  most  amount  out  of                                                                    
retirement.  He   thought  it  was   counterproductive  when                                                                    
forecasting costs and risks from the state's perspective.                                                                       
                                                                                                                                
10:15:39 AM                                                                                                                   
                                                                                                                                
Representative   Kopp   did   not   believe   Representative                                                                    
Carpenter  was  correct. He  clarified  that  the model  was                                                                    
based on Tier 4 and compared  it to what a new program would                                                                    
look like.  He suggested that  the new model  would disallow                                                                    
the spiking that occurred in  Tier 4. The model was designed                                                                    
to prevent income  spiking because it was spread  out over a                                                                    
longer time  period and had  to be  averaged. Representative                                                                    
Carpenter was  only referring to  the slide  and information                                                                    
presented  to the  committee presently.  He wanted  to point                                                                    
out the fallacy to the thinking.                                                                                                
                                                                                                                                
Mr. Mitchell pointed to the table  at the bottom of slide 5.                                                                    
He noted that the  table reflected the information requested                                                                    
by Representative  Kopp. He pointed  out that for  each case                                                                    
the  information   portrayed  the  level  of   employee  and                                                                    
employer contribution  as a  percentage of  the participants                                                                    
salary that  was summed  on the bottom  line. He  viewed the                                                                    
data as a reference to  determine the percent of salary that                                                                    
was invested  for retirement ranging  from 25 percent  to 13                                                                    
percent.                                                                                                                        
                                                                                                                                
10:18:00 AM                                                                                                                   
Mr.  Mitchell  moved  to slide  6  titled   Illustration  of                                                                    
Simulated Outcomes.  The slide  showed the simulated initial                                                                    
retirement  balance  and  the balances  over  time  for  250                                                                    
cases. He pointed to the very  high cases and viewed them as                                                                    
 unrealistic.   He offered  that for  that reason  he ranked                                                                    
the outcomes  at the  fiftieth percentile,  the twenty-fifth                                                                    
percentile, and seventy-fifth percentile as guiding data.                                                                       
                                                                                                                                
10:19:02 AM                                                                                                                   
                                                                                                                                
Mr. Mitchell  addressed slide 7 titled   Results.  The graph                                                                    
reflected a PERS and SBS  retirement 30-year retirement. The                                                                    
participant  had an  estimated $1.86  million in  retirement                                                                    
assets, which grew  to about $2.5 million over  30 years and                                                                    
was  the  median  case.  The lower  green  line  showed  the                                                                    
twenty-fifth   percentile   and   the  higher   green   line                                                                    
represented the seventy-fifth percentile.  He noted that not                                                                    
all  the  trial  outcomes  were successful.  The  amount  of                                                                    
contribution based  on percentage  of income and  the number                                                                    
of years were the variables of all the plans.                                                                                   
                                                                                                                                
Vice-Chair Ortiz asked Mr. Mitchell  to define what it meant                                                                    
to be unsuccessful. Mr. Mitchell  responded that success was                                                                    
defined as  a participant consuming  at 70 percent  of their                                                                    
final  income  that  grew  with inflation  over  a  30  year                                                                    
period.                                                                                                                         
                                                                                                                                
Vice-Chair  Ortiz  asked  whether "unsuccessful"  meant  the                                                                    
money ran out. Mr. Mitchell replied in the affirmative.                                                                         
                                                                                                                                
10:21:38 AM                                                                                                                   
                                                                                                                                
Mr.  Mitchell  described  slide  7  that  showed  the  total                                                                    
contributions  at  25 percent.  He  moved  to slide  8  that                                                                    
depicted  the   30-Year  Police/Fire   Plan  with   SBS.  He                                                                    
explained that the success rate  was similar, but the dollar                                                                    
figures were  slightly different.  Directionally it  was the                                                                    
same from a  success perspective. He discussed  slide 9 that                                                                    
showed  the   30-Year  Police/Fire  Plan  without   SBS.  He                                                                    
recalled  that PRS  plus SBS  comprised 25  percent and  SBS                                                                    
represented  12 percent  of the  amount. The  slide depicted                                                                    
the  contributions at  13 percent  resulting  in the  assets                                                                    
being depleted over time in  the median case depicted by the                                                                    
dark  blue line.  He  added that  even  the 75th  percentile                                                                    
showed a declining trend.                                                                                                       
                                                                                                                                
Co-Chair  Wilson  was  concerned  that if  a  new  tier  was                                                                    
introduced what guaranteed  that the state would  not end up                                                                    
with a huge unfunded  liability. She mentioned concerns with                                                                    
negative effects on  bonding if the state  implemented a new                                                                    
tier. Mr. Mitchell thought it  would be better to direct her                                                                    
question to the  ARM board and the states   actuary. The key                                                                    
distinction of  the defined benefit  plan was that  the risk                                                                    
for paying the benefits rested  with the employers. The risk                                                                    
in the defined contribution plan  was born by the employees.                                                                    
There was  no additional unfunded  liability as a  result of                                                                    
the  defined  contribution  component. He  deferred  to  the                                                                    
actuary for detailed data.                                                                                                      
                                                                                                                                
10:25:10 AM                                                                                                                   
                                                                                                                                
Co-Chair Wilson  understood that the state  placed a certain                                                                    
amount of  funds to  offset the  prior Tiers  liability. She                                                                    
asked  if the  obligation  was the  same  with the  proposed                                                                    
plan.  Mr.   Mitchell  could  not  directly   speak  to  the                                                                    
question.  He offered  that the  proposed plan  contained an                                                                    
assessment  on  employers  that  was  a  function  of  total                                                                    
payroll, which was comprised of  defined benefit and defined                                                                    
contribution  employees   and  was  an  assessment   on  the                                                                    
employer and  the total number  of employees. He  noted that                                                                    
the defined contribution employees  were not subsidizing the                                                                    
defined benefit employees.                                                                                                      
                                                                                                                                
Representative   Knopp  wondered   what   aspects  had   the                                                                    
potential to  negatively impact the  model. He asked  if age                                                                    
or the  number of participants  were  risk factors  in terms                                                                    
of success.                                                                                                                     
                                                                                                                                
10:26:49 AM                                                                                                                   
                                                                                                                                
Representative Kopp responded  that the current presentation                                                                    
only looked at the effects of  Tier 4 and depicted that over                                                                    
time the result  was only slightly better  than a retirement                                                                    
based  solely  on  Social  Security.  He  advised  that  the                                                                    
state's actuary could  comment on the proposed  new tier and                                                                    
any  risk  for unfunded  liability.  He  indicated that  the                                                                    
presentation was  focused on the  current Tier 4 and  how it                                                                    
impacted the  class of  employees. He  was not  proposing to                                                                    
open  the  proposed  plan  to   other  employees.  The  bill                                                                    
proposed the  new plan for  a small number of  employees. He                                                                    
furthered  that the  plan  was a  hybrid and  had  a lot  of                                                                    
parallels with  the defined contribution plan  that kept the                                                                    
liability with  the employees and  contained self-correcting                                                                    
levers to ensure the fund would not go unfunded.                                                                                
                                                                                                                                
10:28:32 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Ortiz asked  what slide  9 showed.  Mr. Mitchell                                                                    
observed that the assets were  insufficient at retirement to                                                                    
sustain a participant for 30 years.                                                                                             
                                                                                                                                
Co-Chair Wilson  asked how the investments  were chosen. Mr.                                                                    
Mitchell  responded  that the  default  plan  was used,  and                                                                    
different investments would provide different outcomes.                                                                         
                                                                                                                                
Representative  LeBon  asked  how   self-correcting  levers                                                                     
would protect the  state with the proposed plan  and how had                                                                    
they failed the state in Tiers 1 to 3.                                                                                          
                                                                                                                                
10:29:57 AM                                                                                                                   
                                                                                                                                
Representative Kopp  replied that in the  proposed bill used                                                                    
annual   true-ups   to   determine  whether   the   employee                                                                    
contributions    should   increase,    and   the    employer                                                                    
contributions  could change.  In addition,  the post-pension                                                                    
retirement adjustments  and COLA would be  eliminated if the                                                                    
actuary  showed that  the plan  was not  maintaining a  high                                                                    
funding standard.  He noted that  the elements  were totally                                                                    
new and had never been  implemented in any plan. He recalled                                                                    
earlier testimony from Washington  state with a very similar                                                                    
program   that  was   currently  funded   at  110   percent.                                                                    
Representative  LeBon asked  whether the  employee bore  the                                                                    
brunt of the obligation to self-corrected the plan.                                                                             
                                                                                                                                
10:31:27 AM                                                                                                                   
                                                                                                                                
KENT  TRUITT, STAFF,  REPRESENTATIVE  CHUCK KOPP,  responded                                                                    
that  the employer  contribution  was a  variable lever.  He                                                                    
indicated  that if  the ARM  board found  that the  plan was                                                                    
accruing liability, they would  have the ability to increase                                                                    
the  employer contribution.  Currently,  the total  employer                                                                    
contribution  was  22  percent.  In  the  proposed  CS  [not                                                                    
introduced] the  total employer contribution was  22 percent                                                                    
and about 13  percent went to the plan,  while the remainder                                                                    
went to the unfunded liability of the prior unfunded tiers.                                                                     
                                                                                                                                
Mr. Mitchell  continued to slide  10. The slide  showed TERS                                                                    
for Tier 4  with similar conclusions as the  prior slide but                                                                    
at  approximately 15  percent (versus  13  percent in  prior                                                                    
slide) of the total contributions.                                                                                              
                                                                                                                                
Vice-Chair   Ortiz   conveyed   that  teachers   no   longer                                                                    
participated  in Social  Security.  Mr. Mitchell  understood                                                                    
that many  members of the  TRS opted out of  Social Security                                                                    
and did  not participate  in SBS,  but most  state employees                                                                    
had  access to  SBS. Vice-Chair  Ortiz noted  that the  term                                                                    
 opt  out   presumed  that  a  teacher  had  a  choice,  but                                                                    
teachers did not have the option to choose Social Security.                                                                     
                                                                                                                                
Co-Chair  Wilson relayed  that Vice-Chair  Ortiz's statement                                                                    
was accurate.                                                                                                                   
                                                                                                                                
Representative Kopp  had worked for a  municipality for many                                                                    
years  that  offered neither  SBS  nor  Social Security.  He                                                                    
added that many municipalities operated in the same manner.                                                                     
                                                                                                                                
10:35:38 AM                                                                                                                   
                                                                                                                                
Co-Chair Wilson provided an example  of a teacher working in                                                                    
the  summer  and  receiving Social  Security.  Mr.  Mitchell                                                                    
responded that  the analysis did  not take  other employment                                                                    
into consideration. Co-Chair  Wilson wanted more information                                                                    
regarding how outside employment would affect the plan.                                                                         
                                                                                                                                
Representative Knopp  asked if most of  the public employees                                                                    
had bargaining  units. He wondered  if they  participated in                                                                    
retirement    plans    through   the    bargaining    units.                                                                    
Representative  Kopp  responded  that all  bargaining  units                                                                    
were   different,   it   depended   on   the   municipality.                                                                    
Representative Knopp  wondered the  extent of  who qualified                                                                    
for the  proposed plan.  Representative Kopp  responded that                                                                    
volunteer firefighters  would not  be included in  the plan.                                                                    
epresentative   Knopp    asked   about    militia   members.                                                                    
Representative Kopp  responded that militia members  did not                                                                    
fall under the definition of a peace officer.                                                                                   
                                                                                                                                
Representative  LeBon  asked  whether  a  participant  in  a                                                                    
defined   contribution   plan   who   subsequently   secured                                                                    
employment  accruing  social  security  could  receive  both                                                                    
benefits.  He  relayed  his  own  experience  where  he  was                                                                    
entitled to both benefits.  Representative Kopp responded in                                                                    
the affirmative. He added that  it was difficult to maintain                                                                    
outside  employment as  a police  officer and  at retirement                                                                    
age  many police  and firefighters  had  limitations due  to                                                                    
disabilities that limited other job opportunities.                                                                              
Mr.  Mitchell moved  to slide  11 that  graphically depicted                                                                    
 30-Year TRS + 6.13%  Deferred Compensation  teachers with a                                                                    
deferred  compensation   amount  that  the   employee  would                                                                    
otherwise pay if  they participated in SBS.  He relayed that                                                                    
there was  a match with SBS  from 15 percent to  21 percent.                                                                    
The  outcome was  materially better  than  slide 10  without                                                                    
SBS.                                                                                                                            
                                                                                                                                
10:42:12 AM                                                                                                                   
                                                                                                                                
Mr. Mitchell reported that the  following slides portrayed a                                                                    
variation; working 25 years with  or without SBS. He briefly                                                                    
continued to  slide 12 that  graphically depicted    25-Year                                                                    
Police/Fire  +  SBS   and  slide  13  illustrating   25-Year                                                                    
Police/Fire w/o SBS.   He noted that the  shorter career and                                                                    
lower contribution  as a  percentage of  income demonstrated                                                                    
unsuccessful outcomes.  He emphasized that length  of career                                                                    
and contribution  rate as  a percentage  of income  were the                                                                    
largest factors in the success of the plan.                                                                                     
                                                                                                                                
Co-Chair  Wilson  asked  where   the  25  years  came  from.                                                                    
Representative Kopp responded  that Tier 3 with  25 years of                                                                    
continuous   service  entitled   the  participant   to  full                                                                    
retirement  including  medical   benefits.  Co-Chair  Wilson                                                                    
asked whether  it was realistic  to expect that  most police                                                                    
officers  would   make  it  to   25  years   of  employment.                                                                    
Representative Kopp  replied that 25  years could be  a hard                                                                    
lift for  some officers. However,  the cost of the  plan had                                                                    
to remain manageable and affordable.                                                                                            
                                                                                                                                
10:45:33 AM                                                                                                                   
                                                                                                                                
Vice-Chair Johnston asked if retirement  was 25 years or the                                                                    
age 55  to receive the medical  benefits in tier 3  and tier                                                                    
4.  Representative  Kopp  answered  that 20  years  of  work                                                                    
qualified tier 2  for full retirement benefits  and the tier                                                                    
3 qualifier was 25 years or age 60.                                                                                             
                                                                                                                                
Mr. Mitchell  returned to slide  13 and highlighted  that in                                                                    
plans where a relatively  low proportion of the participants                                                                    
compensation  was invested  for  retirement the  probability                                                                    
that their assets  would last for 30  years after retirement                                                                    
was below 50 percent.                                                                                                           
                                                                                                                                
10:47:39 AM                                                                                                                   
                                                                                                                                
Mr.  Mitchell  turned to  slide  14  titled  Probability  of                                                                    
Success:                                                                                                                        
                                                                                                                                
           30-Year PERS + SBS = 69%                                                                                             
           30-Year Police/Fire + SBS = 69%                                                                                      
           30-Year Police/Fire w/o SBS = 22%                                                                                    
           30-Year TRS w/o SBS = 31%                                                                                            
         30-Year TRS + 6.13% Deferred Comp. = 56%                                                                               
           25-Year Police/Fire + SBS = 43%                                                                                      
           25-Year Police/Fire w/o SBS = 6%                                                                                     
                                                                                                                                
     Success = retirement assets surviving 30 years into                                                                        
     retirement, assuming initial consumption level of 70%                                                                      
    of final take-home pay, increasing with inflation.                                                                          
                                                                                                                                
Representative Josephson  referred to  the top 2  bullets on                                                                    
the slide. He  surmised that the employee would  not be able                                                                    
to  draw down   their plan in order to  achieve the results.                                                                    
Mr.  Mitchell answered  in the  affirmative.  He added  that                                                                    
adjustments were not made for personal circumstances.                                                                           
                                                                                                                                
10:49:39 AM                                                                                                                   
                                                                                                                                
Representative Carpenter asked why 70 percent of final take-                                                                    
home pay was  used in the model. Mr.  Mitchell indicated the                                                                    
number had been  provided by the Division  of Retirement and                                                                    
Benefits as a reasonable goal.                                                                                                  
                                                                                                                                
HB  79  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
HB079 Letter of Support Adam Lust 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Concern Baxter 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Adams 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Alaska Fire Chiefs Association Styers 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Albright 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Badalich 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Barbeau 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Barnes 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bell 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bender 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Biederman 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bird 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Blackburn 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support BMolle 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Booher 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bowey 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support CKiewik 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support BPierson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Buchta 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Bundy 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Buness 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support CHanson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Davies 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Dennis 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support DGregg 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support DJones 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Duffy 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Farrel 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fellman 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fenton 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fifer 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Forth 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Foster 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fraize 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Fuchs 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Glorioso 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Gunderson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Hanson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Harvey 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Harley 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Hawbaker 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Head 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Hendricks 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support HGallien 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Holeman 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Huf 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Jeffers 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Jensen 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Jones 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support JWolcott 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Joyner 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Karlberg 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Keene 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Kiewik 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Kneaper 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Kopplin 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Kroenig 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Lamphier 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Lewis 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Lex 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Marcini 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Mayes 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support McConnel 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support McDonald 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Meinhardt 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Molle 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support O'Connor 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Ohms 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Pereira 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Peterson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support PGregg 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Pierson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Potter 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Presser 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Quinton 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Robertson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Rojas-Villarreal 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Romero 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Schneider 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support SGallien 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Simonds 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Smith 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Spohn 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Stage-Harvey 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Stiler 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Strahan 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Thompson 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Upchurch 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Vierra 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Wagner 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Winn 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Wallace 5.12.2019 (2).pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Wallace 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Walters 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Wells 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Whitney 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB079 Letter of Support Winegarner 5.12.2019.pdf HFIN 5/15/2019 9:00:00 AM
HB 79
HB 79 PERS Plan Comparison.pdf HFIN 5/15/2019 9:00:00 AM
HB 79