Legislature(2017 - 2018)BARNES 124

02/17/2018 01:00 PM LABOR & COMMERCE

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01:02:57 PM Start
01:03:46 PM HB83
02:59:33 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
-- Public Testimony --
        HB  83-TEACHERS & PUB EMPLOYEE RETIREMENT PLANS                                                                     
1:03:46 PM                                                                                                                    
CHAIR KITO  announced that  the only order  of business  would be                                                               
HOUSE BILL NO. 83, "An Act  relating to new defined benefit tiers                                                               
in  the public  employees'  retirement system  and the  teachers'                                                               
retirement system; providing certain  employees an opportunity to                                                               
choose  between  the  defined benefit  and  defined  contribution                                                               
plans  of  the  public  employees'   retirement  system  and  the                                                               
teachers'  retirement  system;  and providing  for  an  effective                                                               
1:04:20 PM                                                                                                                    
CHAIR KITO opened public testimony on HB 83.                                                                                    
1:04:53 PM                                                                                                                    
TIM   PARKER,  National   Education  Association   (NEA)  Alaska,                                                               
testified  in the  hearing  on  HB 83.    He  stated the  teacher                                                               
retirement  plan was  the worst  in the  country.   He gave  some                                                               
history  of  the  plan.     He  stated  most  financial  advisors                                                               
recommend budgeting for 70 percent  of income for retirement, but                                                               
Alaska  public  education  employees  are  making  half  of  that                                                               
amount.   He added  large numbers [of  teachers] are  leaving the                                                               
state.  He  underlined 50 percent or more  of Teachers Retirement                                                               
System  (TRS)  educators  hired after  2006  will  outlive  their                                                               
retirement savings.                                                                                                             
1:10:56 PM                                                                                                                    
JAKE  METCALFE,   Executive  Director,  Alaska   State  Employees                                                               
Association (ASEA)  Local 52, testified  in support of HB83.   He                                                               
said the three  reasons ASEA supports HB 83 are  that it provides                                                               
security and  dignity in retirement;  helps recruit the  best and                                                               
brightest of  employees; and  lessens Alaska  "brain drain."   He                                                               
mentioned testimony  from the Department  of Public  Safety (DPS)                                                               
regarding difficulty  in recruiting.   He  said those  people who                                                               
Alaska needs to provide services,  such as nurses, engineers, and                                                               
teachers  are not  staying.   He gave  some family  background to                                                               
illustrate  the difficulty  of working  in later  life without  a                                                               
1:16:54 PM                                                                                                                    
SCOTT EICKHOLT,  Laborers Local 942,  testified in support  of HB
83.     He  spoke  to   defined  benefits  plans  and   said  his                                                               
organization urged the  state to ensure that  their members could                                                               
retire at  a reasonable age  and not have  to come back  into the                                                               
workforce.   He highlighted that  the older age group  staying in                                                               
work longer prevents younger folks from getting a start.                                                                        
1:19:21 PM                                                                                                                    
JANICE BAPTISTE, Driver, Local 942  Transit, testified in support                                                               
of HB 83.   She said she is 66 and still working  and that she is                                                               
hoping to have  a decent retirement.  She added  that many of her                                                               
colleagues have  left the state.   She said younger  drivers know                                                               
they  may not  have social  security.   She underlined  that many                                                               
could not afford  to stay in the state on  the current retirement                                                               
1:21:37 PM                                                                                                                    
ROBERT  GROVE,  Director,  Retired Public  Employees  of  Alaska,                                                               
testified in the hearing on HB 83.   He said he had formerly been                                                               
involved in similar  hearings on Senate Bill 88 He  referred to a                                                               
state  wildlife trooper  who  had  been offered  a  job in  North                                                               
Dakota making  $30,000 more per  year, not including  the benefit                                                               
package.   He spoke  to the difficulty  in Fairbanks,  Alaska, in                                                               
retaining  firefighters  and  state  troopers.   He  said  if  he                                                               
weren't a Tier I employee, he  would have to leave the state, and                                                               
the reality  is that people are  making that choice.   There is a                                                               
feeling among some  retirees that the state is  "waiting for Tier                                                               
I retirees to die off," and  the legislature will be dealing with                                                               
the problem in 10 or 20 years, he opined.                                                                                       
1:26:28 PM                                                                                                                    
LEON KOTSCH, 942 Transit, testified in  the hearing on HB 83.  He                                                               
said he  thought it was  discriminatory to offer  different types                                                               
of retirement  benefits to different groups  of public employees.                                                               
He said he thought the state  would retain employees if a planned                                                               
benefit program was offered.  He  stated he contributes to a Roth                                                               
IRA  457 deferred  compensation  plan in  addition  to his  state                                                               
retirement.   He said that  managing his retirement funds  on his                                                               
own was difficult.                                                                                                              
1:29:02 PM                                                                                                                    
SANDY  GUY, Local  942 Transit,  testified in  support of  HB 83.                                                               
She said she is a lifelong  Alaska resident and would not want to                                                               
be forced to leave the state because she cannot afford to stay.                                                                 
1:30:09 PM                                                                                                                    
BOB MURPHY  testified in  support of HB  83.  He  stated he  is a                                                               
Tier II  employee with  28 years  of service.   He  expressed his                                                               
concern that many hired under TRS III  or PERS IV in the last ten                                                               
years have no reason to work  for the state until retirement.  He                                                               
added turnover is  difficult and costly to the state.   He stated                                                               
defined contribution employees do not  have the same incentive to                                                               
stay in the state that defined benefit employees did.                                                                           
1:31:45 PM                                                                                                                    
VALERIE  BROOKS, Teacher,  testified in  support of  HB 83.   She                                                               
said the pension option addresses  the fact that public employees                                                               
do  not earn  social  security  benefits.   She  added that  many                                                               
public  education  employees have  not  been  working beyond  the                                                               
five-year vested service point.                                                                                                 
1:34:12 PM                                                                                                                    
RICHARD SEWELL  testified in the  hearing on HB  83.  He  said he                                                               
has an MBA  and works for the Department  of Transportation (DOT)                                                               
in statewide aviation.   He said he  is a Tier I  employee and he                                                               
came  back to  work for  a PERS  participating organization  even                                                               
though he will  have social security benefit penalized.   He said                                                               
he wonders  why participating in  social security isn't  a choice                                                               
for employees.   He stated  the turnover rate of  state employees                                                               
is about  25 percent each year,  which results in a  workforce of                                                               
"newbies" that  have on-the-job training  and after 5  years they                                                               
leave.  He  wonders if there any people left  in his building who                                                               
know  where  the  light  switches  are.    He  stated  DOT  needs                                                               
experienced  and  well-trained  people  to deal  with  the  state                                                               
capital budget of  $800 million per year, which is  "a big nut to                                                               
crack  to  deliver every  year."    He referenced  a  legislative                                                               
research  study comparing  Tier  III  and Tier  IV  costs to  the                                                               
state.   He said  the study  found that  long-term costs  for the                                                               
state  are  nearly  equal,  but  to  get  a  true  fiscal  impact                                                               
statement, the state  must consider the high  cost of recruitment                                                               
and training.  He said  those ancillary costs are significant and                                                               
must be considered.                                                                                                             
1:37:38 PM                                                                                                                    
MR. SEWELL  gave the example  of a University of  Alaska graduate                                                               
who  taught for  three years  and then  who had  to move  to Iowa                                                               
because the retirement plan was  more beneficial.  He pointed out                                                               
that  a  "difficult-to-recruit,  Alaska-trained teacher  is  gone                                                               
1:38:53 PM                                                                                                                    
EDWARD GRAFF, Laborers Local 942,  testified in support of HB 83.                                                               
He said  the proposed  bill would  help his  group with  the high                                                               
turnover rate.                                                                                                                  
1:39:25 PM                                                                                                                    
TAMMY SMITH testified in  the hearing on HB 83.   She said she is                                                               
a teacher  and officer with NEA  Alaska but was testifying  as an                                                               
individual.   She gave some  family background to  illustrate the                                                               
difference between  Tier I and  more recent  retirement offerings                                                               
for state  employees.  She  said her  daughter does not  have the                                                               
same  secure  retirement  as  a  state  employee,  and  that  her                                                               
daughter  would find  comparable retirement  security outside  of                                                               
1:43:01 PM                                                                                                                    
PAUL KELLY,  Analyst Programmer  II, testified  in support  of HB
83.  He  indicated he was secretary to the  Alaska State Employee                                                               
Association (ASEA) but was testifying  as an individual.  He said                                                               
he had  graduated from the  University of Alaska and  had decided                                                               
to  stay in  the state.   He  said he  feels it  is important  to                                                               
attract and retain the best  employees, so he asked the committee                                                               
to pass HB 83 as is.                                                                                                            
1:45:33 PM                                                                                                                    
ALICIA HUGHES-SKANDJIS testified  in support of HB 83.   She said                                                               
she is Tier IV grants  administrator for Department of Health and                                                               
Social Services (DHSS)  and serves on the board  as treasurer for                                                               
ASEA/AFSCME Local  52 but was  testifying as an individual.   She                                                               
highlighted the  importance of security  for state  employees and                                                               
retirees.   She  gave  the  example of  West  Virginia which  had                                                               
switched  away  from  defined  benefit  to  defined  contribution                                                               
retirement  plan  and said  that  the  state  had returned  to  a                                                               
defined  benefit  retirement  system.   She  described  the  high                                                               
turnover in her state office.                                                                                                   
1:49:28 PM                                                                                                                    
KENNETH  SOUTHERLAND, Tlingit-Haida  Regional Housing  Authority,                                                               
testified in support of HB 83.   He stated he has 50 employees in                                                               
the PERS system, of  which 14 are in Tiers I  through III, and 36                                                               
are Tier  IV employees.   He  said the  company was  paying about                                                               
$733 thousand per  year in PERS costs, of which  $450,000 was for                                                               
Tier  IV employees,  meaning  22 percent  of  Tier IV  employees'                                                               
salaries was  for them  to participate in  the state's  DCR plan.                                                               
He said the  organization could do a matching  plan and employees                                                               
could participate in  social security and the  company would save                                                               
$136 thousand  per year.   He said $360,000  could pay for  a few                                                               
houses in  each of the small  communities.  He spoke  of a letter                                                               
he had sent  to the Southeast legislators  requesting some relief                                                               
for Tier IV  employees.  He stated he would  rather see a defined                                                               
benefit plan than a deferred compensation plan.                                                                                 
1:52:38 PM                                                                                                                    
TOM BRICE,  Alaska Laborers, testified  in the hearing on  HB 83.                                                               
He said  he had been involved  in the original debate  on defined                                                               
benefits and  said he feels there  needs to be a  choice of plan.                                                               
He described  his membership and  explained they were  not making                                                               
the  highest  salaries.   He  said  they  are making  $25,000  to                                                               
$30,000.    He said  retirement  experts  advised 70  percent  of                                                               
income for  retirement and added  that "70 percent of  $30,000 is                                                               
not a lot."                                                                                                                     
1:55:17 PM                                                                                                                    
MR. BRICE related a story of  a 55-year-old man newly hired at in                                                               
a maintenance  position at Mr.  Edgecombe.  He said  the employee                                                               
had no  idea how to  work with deferred  compensation retirement.                                                               
He said he feels that the  level of attention that employees have                                                               
to pay  to investments and  options created difficulty,  and that                                                               
at least with defined benefits  people can make elections and not                                                               
have to review it every few months.                                                                                             
1:58:03 PM                                                                                                                    
NANCY PETERSEN,  Local 942  Transit, testified  in support  of HB
83.    She  said  she  was  in  her  sixth  year  with  Van  Tran                                                               
paratransit  service  in  the Fairbanks  North  Star  Borough  as                                                               
driver.   She stated she  is a lifelong  Alaskan and hopes  to be                                                               
able to stay in  the state, but that it is  difficult not to have                                                               
retirement to look forward to.                                                                                                  
1:59:14 PM                                                                                                                    
RACHEL  ALINSUNURN  stated she  was  representing  herself and  a                                                               
group of Tier  III and Tier IV employees testified  in support of                                                               
HB 83.   She stated she  works for Alaska Department  of Fish and                                                               
Game (DF&G) as a Tier III  fisheries biologist.  She said she was                                                               
testifying on  behalf of  herself and  MEGAN FANEUF,  ERIKA AYES,                                                               
MYRA SCHOLZE,  and ASIA BECER, who  were Tier IV employees.   She                                                               
said  HB  83 help  with  recruitment  and retainment  of  trained                                                               
employees  and  would  give  stability   and  continuity  to  the                                                               
2:00:48 PM                                                                                                                    
MIRANDA WESTFALL testified  in support of HB 83.   She stated she                                                               
was a  Tier IV  employee for  DF&G and that  she had  started her                                                               
state service  in her  mid-30s.   She said  that coming  in later                                                               
made her worry about her retirement.                                                                                            
2:01:34 PM                                                                                                                    
BRIANNA MCDRATH testified in support of  HB 83.  She said she was                                                               
a new Tier  IV state employee and was surprised  by high employee                                                               
turnover.   She spoke to the  effects on the economy  of the lack                                                               
of security in retirement.                                                                                                      
2:02:47 PM                                                                                                                    
MICHAEL  RISINGER,   Anchorage  School  District,   testified  in                                                               
support  of HB  83.   He said  he is  a member  of the  Anchorage                                                               
Education Association and  a Tier III teacher  for the Anchorage,                                                               
Alaska, school district.   He said he is in support  of HB 83 but                                                               
that it  was just a  first step.   He stated that  without paying                                                               
into social  security at  6.2 percent, teachers  in Tier  III are                                                               
receiving 7 percent,  so just 0.8 percent  above social security.                                                               
He said it seems to be  better to have social security where "you                                                               
do  have  that  flexibility  to  walk away."    He  said  Alaska,                                                               
especially given education funding cuts,  was starting to be seen                                                               
as an unstable place to work.  He  said he hasn't seen a year yet                                                               
without cuts at his workplace.                                                                                                  
2:05:03 PM                                                                                                                    
DANIEL TUTTLE  testified in support of  HB 83.  He  said he works                                                               
for  the Anchorage,  Alaska, school  district.   He spoke  to the                                                               
brain drain in the schools and  the need for defined benefits for                                                               
workers who wish to remain in the state.                                                                                        
2:07:16 PM                                                                                                                    
The committee took an at-ease from 2:07 p.m. to 2:26 p.m.                                                                       
2:26:53 PM                                                                                                                    
NADINE LEFEBVRE  testified in  support of  HB 83.   She  spoke to                                                               
recruitment  and retention  in  the state  troopers, police,  and                                                               
fire fighters,  engineers, and bridge  and ferry operators.   She                                                               
stated her  view that the  difficulty was due to  those employees                                                               
not  having a  future to  look forward  to.   She said  the state                                                               
needs to  be competitive to  avoid losing  well-trained employees                                                               
to  other states  or private  industry.   She shared  her concern                                                               
that Tier IV folks are trained and then lost within five years.                                                                 
2:30:13 PM                                                                                                                    
ERIC HOFFMAN testified in  the hearing on HB 83.   He said he was                                                               
born in  Alaska, has  strong ties  with the  state, and  wants to                                                               
remain in  the state.   He said  Alaska is experiencing  a public                                                               
safety staffing crisis.  He spoke  to a Palm Beach, Florida, case                                                               
study showing  that the city did  away with pensions in  favor of                                                               
401K plans  and returned to pensions  after four years.   He said                                                               
it was  not uncommon for  state troopers  to be trained  and then                                                               
leave  after  two  or  three  years.     He  said  he  hopes  the                                                               
legislature sees that drastic action needs to be taken.                                                                         
2:34:11 PM                                                                                                                    
REPRESENTATIVE PARISH asked about  vacancies in the Juneau Police                                                               
MR.  HOFFMAN   answered  that  there   are  vacancies   in  every                                                               
department in Alaska.                                                                                                           
REPRESENTATIVE PARISH  asked how much Mr.  Hoffman attributed the                                                               
vacancies to the lack of a defined benefits option.                                                                             
MR. HOFFMAN  referred to a  study that  found that 96  percent of                                                               
public  employees remain  in their  jobs  in large  part for  the                                                               
pension plan.  He said he  has recently become a five-year vested                                                               
employee and there  was nothing keeping him except  that he loves                                                               
his job.   He said  he was questioning if  it is worth  the risk;                                                               
friends had been murdered on the job and crime was increasing.                                                                  
2:36:51 PM                                                                                                                    
The committee took an at-ease from 2:36 p.m. to 2:51 p.m.                                                                       
2:51:18 PM                                                                                                                    
TENNETH KRAMER  testified in support  of HB 83.   He said  he has                                                               
been  a state  employee  for 17  years and  that  he arrived  [in                                                               
Alaska] with  the United  States Air  Force in  1991.   He stated                                                               
that  his  military  experience  taught  him  the  importance  of                                                               
training and retaining  people.  There is an  enormous expense in                                                               
training.   He said he is  Tier III and on  his "downhill slope."                                                               
He shared  his concern  about those  in lower  tiers.   He stated                                                               
that  he  thought the  most  important  expense saved  is  having                                                               
people stick around.                                                                                                            
2:55:45 PM                                                                                                                    
The committee took an at-ease from 2:55 p.m. to 2:59 p.m.                                                                       
2:59:24 PM                                                                                                                    
CHAIR KITO announced that HB 83 was held over.                                                                                  

Document Name Date/Time Subjects
HB083 Letters of Support 2.15.18.pdf HL&C 2/17/2018 1:00:00 PM
HB 83
HB083 Letters of Support 2.16.18 packet 2.pdf HL&C 2/17/2018 1:00:00 PM
HB 83