Legislature(2015 - 2016)BUTROVICH 205

04/07/2015 03:30 PM Senate EDUCATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 79(EDC) Out of Committee
Heard & Held
Scheduled but Not Heard
         SB 79-REEMPLOYMENT OF RETIRED TEACHERS & ADMIN                                                                     
3:33:42 PM                                                                                                                    
CHAIR DUNLEAVY  announced the  consideration of  SB 79.  The bill                                                               
will allow  school districts to  hire retired educators.  He said                                                               
this  is  the third  hearing  and  a committee  substitute  (CS),                                                               
labeled 29-LS0444\E was adopted on 3/31/15.                                                                                     
SENATOR  HUGGINS   moved  to  adopt  Amendment   1,  labeled  29-                                                               
                          AMENDMENT 1                                                                                       
     Page 1, following line 13:                                                                                                 
     Insert a new subsection to read:                                                                                           
          "(c) A school district that reemploys a member                                                                        
     under  this section  who is  retired under  the defined                                                                    
     benefit retirement  plan established in  AS 14.25.009 -                                                                    
     14.25.220  is  required  to  make  contributions  under                                                                    
     AS 14.25.070."                                                                                                             
     Page 3, following line 2:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Sec. 5. AS 14.25.070(a) is amended to read:                                                                      
          (a) Each employer shall contribute to the system                                                                      
     every payroll  period an amount calculated  by applying                                                                    
     a  rate of  12.56  percent  to the  total  of all  base                                                                    
     salaries paid by the employer  to active members of the                                                                    
     system and  to members  who are  retired from  the plan                                                                
     and  reemployed   under  AS 14.20.136,   including  any                                                                
     adjustments     to     contributions    required     by                                                                    
     AS 14.25.173(a)."                                                                                                          
     Renumber the following bill section accordingly.                                                                           
     Page 3, line 6:                                                                                                            
          Delete "and"                                                                                                          
     Page 3, line 7, following "Act,":                                                                                          
          Insert "and AS 14.25.070(a), as amended by sec. 5                                                                     
     of this Act,"                                                                                                              
CHAIR DUNLEAVY objected for discussion.                                                                                         
SHEILA  PETERSON,  Staff,  Senator Mike  Dunleavy,  Alaska  State                                                               
Legislature, explained  that Amendment  1 came as  a result  of a                                                               
discussion   between   the   sponsor  and   the   Department   of                                                               
Administration. It  requires school  districts, when they  hire a                                                               
retired educator,  to continue to  pay the 12.56 rate  toward the                                                               
teacher  retirement system,  as  if the  educator  was an  active                                                               
employee. This  will prevent  a drain  on the  Teacher Retirement                                                               
System funds.                                                                                                                   
She noted that Amendment 1 is found in two sections in the bill:                                                                
     Page 1, following line 13:                                                                                                 
     Insert a new subsection to read:                                                                                           
     • Requires a school district that reemploys a retired                                                                      
     educator to contribute to the Teacher Retirement                                                                           
     System at a rate of 12.56 percent of the educator's                                                                        
     Page 3, following line 2:                                                                                                  
     Insert a new bill section to read:                                                                                         
     • Adds to current statutory language that an employer                                                                      
     shall contribute to the Teacher Retirement System an                                                                       
     amount of 12.56 percent of a retired and re-employed                                                                       
     educator's salary.                                                                                                         
     • The contribution rate is the same as applied to                                                                          
     active members of the system.                                                                                              
     Page 3, line 6 and Page 3, line 7:                                                                                         
     • Conforming language                                                                                                      
3:37:12 PM                                                                                                                    
CHAIR  DUNLEAVY explained  that the  bill adds  tools for  school                                                               
districts  to expand  a pool  of  educators and  save costs.  The                                                               
discussion was about who pays  into retirement. There was concern                                                               
about the  number of teachers who  might want to retire  and then                                                               
get rehired under a special contract.                                                                                           
JOHN BOUCHER,  Deputy Commissioner,  Office of  the Commissioner,                                                               
Department of  Administration, answered  questions related  to SB
79. He  explained that the concern  was that when there  is a new                                                               
large  pool of  retired workers  who are  not subject  to regular                                                               
contributions,  the  overall   contributions  to  the  retirement                                                               
system would  go down proportionately.  It would end  up shifting                                                               
costs  to the  state.  He  said having  the  districts pay  12.56                                                               
percent into retirement is a solution.                                                                                          
3:39:48 PM                                                                                                                    
SENATOR STEVENS requested clarification. He  gave an example of a                                                               
person who  retires and goes  back to  teaching and is  no longer                                                               
drawing  more  from  the retirement  system.  He  suggested  that                                                               
having the  district pay  the 12.56  percent into  the retirement                                                               
fund is an additional burden for the district.                                                                                  
MR. BOUCHER clarified  that educators who would  have had covered                                                               
wages are being  replaced by educators with  uncovered wages. The                                                               
overall pool of retirement contributions  is diminished and could                                                               
shift costs to the unfunded liability.                                                                                          
SENATOR STEVENS  understood the situation,  but saw it  as unfair                                                               
to districts.                                                                                                                   
SENATOR GARDNER summarized that there  is no direct impact to the                                                               
employee, nor  department, nor  student, but there  is a  cost to                                                               
the district in  order to help with the  underfunded liability of                                                               
the retirement system.                                                                                                          
MR.  BOUCHER agreed  and added  that  the districts  save by  not                                                               
having to pay insurance benefits.                                                                                               
SENATOR GARDNER concluded  that it also reduces  the eagerness of                                                               
the district  to look for retirees  that they can rehire,  but it                                                               
keeps open the option of  hiring a qualified, experienced retired                                                               
educator at some savings.                                                                                                       
CHAIR  DUNLEAVY  added  that  the  savings  is  less  than  12.56                                                               
3:43:12 PM                                                                                                                    
SENATOR HUGGINS  spoke of the  various retirement tiers  that may                                                               
retire soon.                                                                                                                    
MR. BOUCHER  said when  you remove  long-time teachers,  there is                                                               
more of an impact on payroll savings.                                                                                           
SENATOR HUGGINS  what is true today  is less true every  year due                                                               
to fewer Tier I and Tier II retirees.                                                                                           
He asked if a retiree  receives any longevity benefits from being                                                               
MR. BOUCHER said no.                                                                                                            
SENATOR HUGGINS asked if the  retirement benefits remain the same                                                               
for rehirees.                                                                                                                   
MR. BOUCHER said yes.                                                                                                           
SENATOR  HUGGINS mentioned  retirement  incentives  and this  new                                                               
CHAIR DUNLEAVY provided  an example of a teacher  who retired and                                                               
then was offered a contract  by Department of Education and Early                                                               
Development (DEED).  There have  been district incentives  in the                                                               
past that  have been offered,  but there are no  incentives under                                                               
SB 79.                                                                                                                          
3:48:13 PM                                                                                                                    
MR. BOUCHER confirmed that it is not a factor in this bill.                                                                     
CHAIR DUNLEAVY stated  that the state gets a 12.5  percent cut to                                                               
go along with this plan. It  is much less expensive for districts                                                               
to hire a retiree.                                                                                                              
SENATOR  GARDNER  asked  if  the  teacher  continues  to  receive                                                               
retirement benefits  during the  time they  are on  contract. She                                                               
asked  if  it  makes  for  a larger  imbalance  in  the  unfunded                                                               
liability  if they  have  retired sooner  than  planned, had  the                                                               
contract not been an option.                                                                                                    
MR. BOUCHER  said it  would if  that becomes  a trend.  He opined                                                               
that the  12.5 percent  will offset that  situation. He  said you                                                               
are  replacing  wages  with  benefits, with  wages  that  do  not                                                               
receive benefits.                                                                                                               
3:51:58 PM                                                                                                                    
SENATOR STEVENS  liked the idea behind  the bill. He did  not see                                                               
the plan as  someone working as a full-time  teacher retiring and                                                               
then working  full time.  He provided  as an  example one  of his                                                               
favorite professors. He  saw the plan as  part-time or short-term                                                               
teaching positions. He  opined that school boards  lose under the                                                               
12.56 percent scenario and the "system"  wins; he did not see the                                                               
equity there.                                                                                                                   
CHAIR  DUNLEAVY  provided an  extreme  example.  He restated  the                                                               
intent  to provide  a tool  that does  work for  the district  to                                                               
provide economic  relief. He  said the  bill is  a result  of his                                                               
experience  with the  mentor project  where experienced  teachers                                                               
give back to education.                                                                                                         
SENATOR GARDNER  said that is a  new way of looking  at the bill.                                                               
She thought  it was a  tool to provide teachers  for hard-to-fill                                                               
positions, not a cost savings measure.                                                                                          
CHAIR DUNLEAVY said it is for both.                                                                                             
SENATOR GARDNER  asked if the wage  scale would be the  same in a                                                               
rehire contract as it would be in a regular teaching contract.                                                                  
CHAIR DUNLEAVY  said the mentor program  had a set amount  of pay                                                               
that had no relationship to a district's pay scale.                                                                             
3:57:01 PM                                                                                                                    
SENATOR GARDNER asked if districts  are taking up 12.5 percent of                                                               
the costs, whether they are coming out even.                                                                                    
CHAIR DUNLEAVY provided an example  to show that a district would                                                               
save money  and get  the benefit of  a teacher's  experience, and                                                               
teachers would also  benefit by teaching in a place  they want to                                                               
SENATOR GARDNER asked if school  districts would be commenting on                                                               
Amendment  1 to  SB 79.  She  gave an  example of  a teacher  who                                                               
currently teaches,  retires, and continues  to teach in  the same                                                               
CHAIR DUNLEAVY said the bill would not prohibit that.                                                                           
SENATOR STEVENS  stated if there  was a sound  retirement system,                                                               
Alaska  would not  have this  problem. If  the retirement  system                                                               
would have been well-managed, this bill would not be needed.                                                                    
MR. BOUCHER  thought it was  a reasonable statement. He  said the                                                               
department  is  doing  its  best  not  to  add  to  the  unfunded                                                               
4:00:29 PM                                                                                                                    
SENATOR HUGGINS recalled a .49 limitation for rehires.                                                                          
CHAIR  DUNLEAVY  explained  that currently,  an  individual  that                                                               
retires can  come back  and work  at a  .49 position  and collect                                                               
retirement benefits. They can work  full time on contract without                                                               
SENATOR HUGGINS commented on the advantages proposed in SB 79.                                                                  
CHAIR DUNLEAVY agreed.                                                                                                          
CHAIR  DUNLEAVY  removed  his   objection  and  Amendment  1  was                                                               
He opened public testimony.                                                                                                     
4:02:16 PM                                                                                                                    
LISA SKILES PARADY, Executive Director,  Alaska Council of School                                                               
Administrators and Alaska  Superintendents Association, testified                                                               
in support  of SB 79, but  not Amendment 1. She  commented on the                                                               
staggering  shortage of  teachers and  administrators in  Alaska.                                                               
She maintained that it would be  better to have the bill with the                                                               
amendment than for the bill to not pass at all.                                                                                 
SENATOR  GARDNER asked  whether the  amendment provides  any cost                                                               
savings  to districts.  She also  asked if  there is  any concern                                                               
about  unanticipated  consequences  from people  retiring  early,                                                               
when  they otherwise  wouldn't have,  to take  advantage of  this                                                               
MS.   SKILES   PARADY   said  the   concern   for   unanticipated                                                               
consequences was  part of the  discussion with the  Department of                                                               
Administration. It  is educators' perspective that  retirement is                                                               
a  very  serious  decision.  Also,  there  is  a  one-year  break                                                               
requirement before rehiring takes place.                                                                                        
Regarding  cost savings,  she noted  that each  district will  be                                                               
different and have  different needs. She termed  the retirees "at                                                               
will employees" that do not take  from, or add to, the retirement                                                               
system. She opined  that the amendment would  reduce cost savings                                                               
to districts.                                                                                                                   
4:08:08 PM                                                                                                                    
SENATOR STEVENS understood  that the bill is a  tool that appears                                                               
to be a great way for districts to save.                                                                                        
JACK WALSH,  Superintendent, Craig School District,  testified in                                                               
support of  SB 79. He  believed that  the bill has  many positive                                                               
benefits,  however, he  suggested that  the bill  would eliminate                                                               
some  of the  savings allowed  for  the .49  employees. The  cost                                                               
savings for  teachers would be  good for districts and  there are                                                               
advantages to hiring  retirees. He spoke of  hiring educators who                                                               
have expertise to fill gaps in the district.                                                                                    
4:11:54 PM                                                                                                                    
CHRIS  REITAN,  Superintendent,   Galena  City  School  District,                                                               
testified  in support  of SB  79, but  not of  the amendment.  He                                                               
concurred  with the  comments by  Ms. Skiles  Parady. He  said he                                                               
would  like  to see  retired  educators  with Alaskan  experience                                                               
working  in schools  during these  challenged economic  times. He                                                               
said  he would  rather not  see the  amendment, but  approves the                                                               
bill as a whole.                                                                                                                
4:14:01 PM                                                                                                                    
PATRICK MAYER,  Superintendent, Wrangell Public  School District,                                                               
testified  in  support  of  SB  79. He  concurred  with  the  two                                                               
previous  testifiers  that they  would  rather  have the  amended                                                               
version of  SB 79 than no  bill at all.  He saw the need  for the                                                               
bill due  to the  shortage of teachers  in Alaska,  especially in                                                               
rural Alaska.  He said  hiring from a  pool of  experienced staff                                                               
will be important to his district.  He also saw the incentive for                                                               
the retiree to be able to continue to work.                                                                                     
SENATOR  STEVENS  referred  to  the disadvantages  from  the  .49                                                               
provision  previously mentioned.  He  asked if  Wrangell has  any                                                               
experience with that.                                                                                                           
MR.  MAYER said  there  was  only one  instance  of  that in  his                                                               
district. He said  he wants to encourage new teachers  to come to                                                               
Wrangell.  He didn't  see it  as being  a huge  deterrent, noting                                                               
it's a case by case situation.                                                                                                  
4:18:07 PM                                                                                                                    
LINCOLN  SAITO,  Chief  Operating Officer,  North  Slope  Borough                                                               
School District, testified in support of  SB 79. He said the bill                                                               
is less attractive with the  amendment, but still attractive. Not                                                               
having  to  pay  health  insurance would  save  the  district  25                                                               
percent of a person's salary. He  said they want a larger pool to                                                               
select from because  they are having trouble  filling 9 positions                                                               
after  going to  5  job  fairs. He  stressed  the  need for  good                                                               
teachers for their students.                                                                                                    
CHAIR DUNLEAVY closed public testimony.                                                                                         
He noted  a fiscal  note is  forthcoming. He  wished to  move the                                                               
SENATOR  HUGGINS commented  that the  bill has  more merits  than                                                               
negatives and will provide a pool of educators for Alaska.                                                                      
4:21:59 PM                                                                                                                    
SENATOR HUGGINS  moved to report CS  for SB 79, as  amended, from                                                               
committee  with  individual  recommendations  and  a  forthcoming                                                               
fiscal note.                                                                                                                    
CHAIR DUNLEAVY announced that without  objection, CSSB 79(EDC) is                                                               
reported from the Senate Education Standing Committee.                                                                          

Document Name Date/Time Subjects
9. CS for SB 79 Amend re 12.56 percent.pdf SEDC 4/7/2015 3:30:00 PM
SB 79
10. CS for SB 79 Explanation of Amend.pdf SEDC 4/7/2015 3:30:00 PM
SB 79
CS for SB 89 Amendment #1.pdf SEDC 4/7/2015 3:30:00 PM
SEDC 4/9/2015 3:30:00 PM
SB 89
CS for SB 89 Explanation of Amend #1.pdf SEDC 4/7/2015 3:30:00 PM
SEDC 4/9/2015 3:30:00 PM
SB 89
CS for SB 89 Explanation of Amend #2.pdf SEDC 4/7/2015 3:30:00 PM
SEDC 4/9/2015 3:30:00 PM
SB 89
CS for SB 89 Amendment #2.pdf SEDC 4/7/2015 3:30:00 PM
SEDC 4/9/2015 3:30:00 PM
SB 89
14. SB 37 - School Curriculum.pdf SEDC 4/7/2015 3:30:00 PM
SEDC 4/9/2015 3:30:00 PM
SB 37
15. SB 37 - Anchorage Parent Information.pdf SEDC 4/7/2015 3:30:00 PM
SEDC 4/9/2015 3:30:00 PM
SB 37
16. SB 37 - Fairbanks Erin's Policy.pdf SEDC 4/7/2015 3:30:00 PM
SEDC 4/9/2015 3:30:00 PM
SB 37
17. SB 37 - OCS Child Sexual Abuse Stats FY14.pdf SEDC 4/7/2015 3:30:00 PM
SEDC 4/9/2015 3:30:00 PM
SB 37