District C - Republican
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Session: State Capitol, Room 427 Juneau, AK 99801-1182 Phone: (907) 465-4925 Fax: (907) 465-3517 Send E-Mail Interim: 112 Mill Bay Road Kodiak, AK 99615 Phone: (907) 486-4925 Fax: (907) 486-5264 PO Box 795 Craig, AK 99921-0795 Phone:(907) 826-3008 Fax: (907) 826-4020 Home Phone: (907) 826-2930 |
Sponsor Statement for SB 85
Credited Service in PERS
An Act relating to credited service in the public employees' retirement system for temporary employment.
Updated: March 8, 1999
This legislation amends AS 39.35.345(d) to allow employees covered by the Public Employee Retirement System (PERS) to buy up any temporary time and have it credited toward the minimum service time for retirement. Employees in this system can currently buy back their temporary time, however their temporary time is not credited toward the minimum service time needed for retirement.
SB 85 would allow employees to choose whether the credited service granted is used for normal retirement under the "20 and out" and the "30 and out" retirement options cited below:
AS 39.35.370(a) Retirement benefits. Subject to AS 39.35.450, a terminated employee is eligible for a normal retirement benefit
- with at least 20 years of credited service as a peace officer or fire fighter; or
- with at least 30 years of credited service for all other employees
Temporary service as recognized under the retirement system under AS 39.35.345, provides that the full actuarial cost of using the temporary service be paid by the employee. The provisions of this bill will not result in any additional costs to the State of Alaska Retirement System. It is, however, more likely for the state to realize cost savings; the employees prone to use this for retirement credit are employees with higher service totals, thus they are on the higher end of the pay scale. I believe SB 85 is an option that provides us with a reasonable and fair remedy in minimizing the impact of current and future budget reductions.
This legislation provides equity to all state employees in temporary positions by enabling them to count their temporary time towards retirement eligibility. The passage of SB 85 is not only an opportunity to send a positive message to Alaska's State employees during a critical economic period within our state, it is the right thing to do.
History
To provide a historical background, the Blue Ribbon Commission Report on the State Personnel Act to the Eleventh Alaska State Legislature concluded that temporary employees received none of the benefits provided to permanent employees by the state. As a result of the Commission's findings, Senate Bill 198 passed in 1980 to redefine the term "temporary" to "nonpermanent" and eliminate the inconsistencies and abuses in hiring of "temporary" employees.
Temporary employees throughout the State of Alaska elected to "buy back" their service time (increases benefit amount). As cited in AS 39.35.345 (a) Benefits are not payable on this credited service unless the employee makes retroactive contributions to the system for the period of time that credited service is claimed. The retroactive contribution is the full actuarial cost of providing benefits for the credited service claimed. Therefore, there were no additional costs to the State of Alaska Retirement System.
During this period of reclassification of employees, the issue of time spent as a "temporary" employee being counted towards service based retirement was not addressed.