Legislature(2003 - 2004)

02/19/2004 08:02 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 329-RETIREMENT INCENTIVE PROGRAM                                                                                           
Number 0536                                                                                                                     
CHAIR WEYHRAUCH  announced that  the last  order of  business was                                                               
HOUSE  BILL NO.  329, "An  Act relating  to retirement  incentive                                                               
programs  for  the  public   employees'  retirement  system,  the                                                               
judicial retirement system, and  the teachers' retirement system;                                                               
relating to  separation incentives  for certain  state employees;                                                               
and providing for an effective date."                                                                                           
[Before the committee was the  proposed committee substitute (CS)                                                               
for HB  329, Version 23-LS1109\H,  Craver, 1/28/04, adopted  as a                                                               
work draft on 1/29/04.]                                                                                                         
[The committee took an at-ease from 9:38 a.m. to 9:42 a.m.]                                                                     
Number 0623                                                                                                                     
CHAIR  WEYHRAUCH  moved  to  adopt  Amendment  1,  a  handwritten                                                               
amendment that  read as  follows [original  punctuation provided,                                                               
with some formatting changed]:                                                                                                  
     Pg 8.                                                                                                                      
     Delete Sec. 8 & renumber accordingly                                                                                       
         Amend title to delete "the judicial retirement                                                                         
REPRESENTATIVE HOLM objected [for discussion purposes].                                                                         
CHAIR WEYHRAUCH  stated that there  was previous testimony  [at a                                                               
prior  hearing] that  "the judiciary  was put  in because  it was                                                               
based on  a previous version of  the bill."  He  said, "There was                                                               
no testimony  before the committee  that that was necessary.   It                                                               
seemed to  adjust one  person, and  I'm not  sure if  the sponsor                                                               
objected to  deleting that one  person.   It just dealt  with the                                                               
administrative director of the court system."                                                                                   
Number 0690                                                                                                                     
REPRESENTATIVE  LESIL  McGUIRE,   Alaska  State  Legislature,  as                                                               
sponsor of HB 329, stated that she has no objection.                                                                            
CHAIR WEYHRAUCH  noted that  "that" would  also require  that the                                                               
title  be  changed  to delete  the  judicial  retirement  system,                                                               
because  that  would no  longer  be  affected by  the  Retirement                                                               
Incentive Plan (RIP) bill.                                                                                                      
MS. McGUIRE answered correct.                                                                                                   
Number 0695                                                                                                                     
REPRESENTATIVE HOLM removed his objection.                                                                                      
CHAIR  WEYHRAUCH asked  if  there was  any  further objection  to                                                               
Amendment 1.   There  being none,  Amendment 1  was adopted.   In                                                               
response to  a question from Representative  Seaton, he clarified                                                               
the adopted Amendment 1.                                                                                                        
Number 0740                                                                                                                     
CHAIR  WEYHRAUCH  moved  to  adopt  Amendment  2,  a  handwritten                                                               
amendment that  read as  follows [original  punctuation provided,                                                               
with some formatting changed]:                                                                                                  
     Pg 2 line 16                                                                                                               
          after system, "and"                                                                                                   
     line 18                                                                                                                    
          after section, "and"                                                                                                  
CHAIR WEYHRAUCH  noted that  during the last  hearing on  HB 329,                                                               
there  was  testimony that  [paragraphs  (1),  (2), and  (3),  in                                                               
subsection  (b), page  2] were  to  be cumulative  as opposed  to                                                               
alternative requirements.  Amendment 2 would make that change.                                                                  
Number 0770                                                                                                                     
REPRESENTATIVE  BERKOWITZ stated  that he  wants to  make certain                                                               
that [Amendment 2] comports with the legislative style manual.                                                                  
CHAIR  WEYHRAUCH replied,  "To the  extent  that it  needs to  be                                                               
tinkered with by legislative drafting, they have my permission."                                                                
Number 0800                                                                                                                     
CHAIR  WEYHRAUCH   asked  if  there  was   further  objection  to                                                               
Amendment 2.   Hearing no objection, he  announced that Amendment                                                               
2 was adopted.                                                                                                                  
Number 0850                                                                                                                     
CHAIR  WEYHRAUCH  moved  to  adopt  Amendment  3,  a  handwritten                                                               
amendment that  read as  follows [original  punctuation provided,                                                               
with some formatting changed]:                                                                                                  
     Add New Sec. 13 & renumber accordingly.                                                                                    
     13.  Implementation of  this RIP  shall not  impair any                                                                    
     existing  beneficiary  of  PERS   or  TERS  [sic],  nor                                                                    
     diminish any  benefit any  current beneficiary  of PERS                                                                    
     and TERS [sic] expects to receive as a beneficiary.                                                                        
Number 0859                                                                                                                     
REPRESENTATIVE HOLM objected.                                                                                                   
CHAIR  WEYHRAUCH noted  that Amendment  3  addresses the  concern                                                               
that those  who are presently  in the system wouldn't  have their                                                               
benefits diminished if a RIP bill is adopted.                                                                                   
Number 0929                                                                                                                     
REPRESENTATIVE GRUENBERG [moved to  adopt] a conceptual amendment                                                               
to  Amendment 3,  which read  as  follows, [original  punctuation                                                               
     The boards  of the  public employees  retirement system                                                                    
     and  the  teachers  retirement system  shall  have  the                                                                    
     authority   to  suspend   further  enrollment   in  the                                                                    
     retirement  incentive programs  authorized by  this act                                                                    
     upon  a  determination  that further  enrollment  would                                                                    
     have  a significant  negative effect  on the  actuarial                                                                    
     soundness of the system.                                                                                                   
REPRESENTATIVE  GRUENBERG  mentioned  he   wants  to  ensure  the                                                               
integrity of  the existing  [Public Employees'  Retirement System                                                               
(PERS)]  and [Teachers'  Retirement System  (TRS)], and  also the                                                               
university [retirement system].                                                                                                 
CHAIR WEYHRAUCH objected for discussion purposes.                                                                               
Number 0958                                                                                                                     
REPRESENTATIVE GRUENBERG  said he would  like to add a  couple of                                                               
words to the conceptual amendment to Amendment 3 as follows:                                                                    
     After the words "public employees retirement system"                                                                       
     Insert ", university retirement system,"                                                                                   
Number 1062                                                                                                                     
REPRESENTATIVE  McGUIRE  stated  that  she  is  not  aware  of  a                                                               
separate retirement system for the university.                                                                                  
CHAIR  WEYHRAUCH  opined that  the  university  is covered  under                                                               
"this program the board of  regents adopted, beginning on Section                                                               
4, on page 5."                                                                                                                  
REPRESENTATIVE  McGUIRE offered  her understanding  that "they're                                                               
covered under TRS or PERS."                                                                                                     
CHAIR WEYHRAUCH concurred.                                                                                                      
Number 1073                                                                                                                     
REPRESENTATIVE  SEATON related  his  belief  that the  university                                                               
does  have a  separate  retirement system  that  it has  adopted,                                                               
which is  an "opt pay"  that is "paid in  and paid out  when they                                                               
leave."   He  compared it  to a  401(K) retirement  system.   The                                                               
employees have one  month after employment to opt in  to the PERS                                                               
system  or to  the university  retirement system.   He  clarified                                                               
that it's a  defined contribution program, rather  than a defined                                                               
benefit program.                                                                                                                
Number 1109                                                                                                                     
REPRESENTATIVE BERKOWITZ stated, "It seems  to me if you're going                                                               
do  this,  then   you  need  to  make  a   ...  conforming  title                                                               
REPRESENTATIVE GRUENBERG  said, "Absolutely.   He  suggested that                                                               
could be "a second amendment to the amendment."                                                                                 
Number 1142                                                                                                                     
CHAIR   WEYHRAUCH   asked  if   there   was   any  objection   to                                                               
[Representative   Gruenberg's   amendment   to   the   conceptual                                                               
amendment  to  Amendment  3,  adding  the  university  retirement                                                               
system].  There being no objection, it was so ordered.                                                                          
Number 1168                                                                                                                     
CHAIR  WEYHRAUCH  asked  if  there   was  any  objection  to  the                                                               
conforming    conceptual    title   amendment    [suggested    by                                                               
Representative Berkowitz].  There being none, it was so ordered.                                                                
Number 1185                                                                                                                     
REPRESENTATIVE  SEATON commented  that the  committee is  running                                                               
fast.   He said,  "A defined contribution  program does  not have                                                               
any of the actuarial significance  that a defined benefit program                                                               
has, and  so, including this  in here  is going to  be confusing,                                                               
because they don't apply."  He requested that that be removed.                                                                  
Number 1213                                                                                                                     
REPRESENTATIVE  GRUENBERG  [moved]  to   rescind  the  action  to                                                               
include  the  university  retirement  system.    There  being  no                                                               
objection, it was so ordered.                                                                                                   
REPRESENTATIVE  BERKOWITZ  indicated  that the  conforming  title                                                               
amendment be stricken, because [it's no longer necessary].                                                                      
REPRESENTATIVE  GRUENBERG  [moved]  to  rescind  the  committee's                                                               
action [in adopting the conforming title].                                                                                      
CHAIR WEYHRAUCH said, "So rescinded."                                                                                           
Number 1232                                                                                                                     
REPRESENTATIVE  GRUENBERG  [renewed  his  motion]  to  adopt  his                                                               
conceptual amendment [to Amendment 3, text provided previously].                                                                
Number 1249                                                                                                                     
CHAIR  WEYHRAUCH  asked,  "If  I  removed  my  objection  to  the                                                               
amendment to  the amendment,  is there  further objection?"   [No                                                               
objection was  stated, and the conceptual  amendment to Amendment                                                               
3 was treated as adopted.]                                                                                                      
Number 1270                                                                                                                     
REPRESENTATIVE  HOLM removed  his  objection to  Amendment 3  [as                                                               
CHAIR  WEYHRAUCH asked  if  there was  any  further objection  to                                                               
Amendment  3, as  amended.   There  being none,  Amendment 3  [as                                                               
amended] was adopted.                                                                                                           
Number 1300                                                                                                                     
CHAIR  WEYHRAUCH  moved  to  adopt  Amendment  4,  a  handwritten                                                               
amendment that  read as  follows [original  punctuation provided,                                                               
with some formatting changed]:                                                                                                  
     Page 2, line 4                                                                                                             
     After "appropriate"                                                                                                        
     add "and subject to the requirements of section 13,"                                                                       
Number 1315                                                                                                                     
REPRESENTATIVE HOLM objected.                                                                                                   
CHAIR WEYHRAUCH explained that Amendment  4 refers to the adopted                                                               
Amendment 3.   He said it  "brings it back into  the beginning of                                                               
the bill."                                                                                                                      
REPRESENTATIVE  HOLM  offered  his  recollection  that  the  word                                                               
"should" was used at one time.                                                                                                  
Number 1399                                                                                                                     
REPRESENTATIVE GRUENBERG proffered that  that was "something that                                                               
Fate  Putman suggested,"  but it  was not  actually amended.   He                                                               
said he  would be prepared  to address that after  finishing with                                                               
Amendment 4.                                                                                                                    
Number 1421                                                                                                                     
REPRESENTATIVE HOLM removed his objection to Amendment 4.                                                                       
Number 1430                                                                                                                     
CHAIR  WEYHRAUCH asked  if  there was  any  further objection  to                                                               
Amendment 4.  There being none, Amendment 4 was adopted.                                                                        
Number 1500                                                                                                                     
REPRESENTATIVE  GRUENBERG  turned  to   the  amendment  to  which                                                               
Representative  Holm had  previously referred.   As  suggested by                                                               
Mr. Putman during a previous  hearing of the bill, Representative                                                               
Gruenberg offered Amendment 5 as follows:                                                                                       
     On page 2, line 5                                                                                                          
     After "employer"                                                                                                           
     Delete "need not"                                                                                                          
     Insert "should"                                                                                                            
     On page 2, line 6                                                                                                          
     Between "would" and "be"                                                                                                   
     Delete "otherwise"                                                                                                         
Number 1545                                                                                                                     
CHAIR WEYHRAUCH objected.                                                                                                       
Number 1553                                                                                                                     
REPRESENTATIVE HOLM asked if there would  be a fiscal impact.  He                                                               
stated, "I'm  concerned that we take  an employer - in  this case                                                               
the  school districts  and  whatever  - and  we  say they  should                                                               
extend  the incentive  plan without  knowing what  the impact  of                                                               
that's going to be."                                                                                                            
Number 1560                                                                                                                     
REPRESENTATIVE BERKOWITZ opined that  the decision that the House                                                               
State  Affairs  Standing Committee  has  to  make is  whether  it                                                               
believes  that  Representative  Gruenberg's  proposal  is  better                                                               
policy; the  House Finance Committee will  determine whether [the                                                               
state] can afford that better policy.                                                                                           
Number 1580                                                                                                                     
REPRESENTATIVE  SEATON   said  he  thinks  [Amendment   5]  would                                                               
significantly change  the character  of the  bill.   He indicated                                                               
that  it would  be a  change  from gaining  efficiencies for  the                                                               
system  by  allowing  some  rehires, for  example,  to  almost  a                                                               
legislative  mandate  to  [extend  the  incentive  plan]  to  all                                                               
employees, by  using the  word "should".   He  said he  thinks it                                                               
would  created   legal  challenges   because  of   the  uncertain                                                               
interpretation of  the word "should".   He stated  his opposition                                                               
to Amendment 5.                                                                                                                 
Number 1666                                                                                                                     
REPRESENTATIVE McGUIRE  said she  also opposes [Amendment  5] for                                                               
many of the reasons that  Representative Seaton just stated.  She                                                               
emphasized that  one of  the important  aspects of  crafting [the                                                               
bill] was in ensuring that  the RIP would be completely voluntary                                                               
and could be  used as a managerial tool to  help save money where                                                               
appropriate.     She  reminded  the  committee   that  "any  plan                                                               
ultimately has  to go through the  Department of Administration."                                                               
If  the plan  doesn't meet  savings  criteria, it  will never  go                                                               
through,  she  warned.    She  said,  "In  point  of  fact,  I've                                                               
maintained  from the  beginning [that]  this ought  to be  a zero                                                               
fiscal note, especially with your amendments now."                                                                              
Number 1720                                                                                                                     
REPRESENTATIVE  BERKOWITZ   stated  that   "it's  just   all  ...                                                               
instructive  language,  so  we're  arguing about  nothing."    He                                                               
encouraged the committee to bring the bill to a vote.                                                                           
Number 1773                                                                                                                     
A  roll  call vote  was  taken.   Representatives  Berkowitz  and                                                               
Gruenberg voted in  favor of Amendment 5.   Representatives Lynn,                                                               
Holm,   Seaton,  Coghill,   and  Weyhrauch   voted  against   it.                                                               
Therefore, Amendment 5 failed by a vote of 2-5.                                                                                 
Number 1800                                                                                                                     
REPRESENTATIVE GRUENBERG  moved to report [CSHB  329, as amended,                                                               
out  of   committee  with  individual  recommendations   and  the                                                               
accompanying  fiscal  notes].   There  being  no objection,  CSHB
329(STA) was  reported out  of the  House State  Affairs Standing                                                               

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