Sponsor Statement for HB 188

Exemption of Overtime from Public Employee's Retirement System

HB 188 was introduced at the request of Anchorage Mayor Rick Mystrom.

The current definition of compensation for the Public Employees Retirement System allows for the use of overtime in the calculation of pension benefits.

This definition invites abuse of the system through the use of overtime loading to inflate an employee's high three years. Salaries have been inflated by as much as $40,000 to $50,000 per year in extreme cases through the use of overtime. This increases the long term liability to the State in its retirement systems.

HB 188 amends AS 39.35.680(8) to exclude overtime from the definition of "Compensation" for all new employees.