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Contact Information:
Toll Free:(800) 665-2689
In the Homer Area:(907) 235-2921
Via Mail or in Person: 345 W. Sterling Hwy., Suite 102B
Homer, Alaska 99603
Fax:(907) 235-4008
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Greetings from Juneau on this 99th day of the legislative session. Things are moving rapidly with the approach of the ending gavel. Tina and I will be leaving for a few days next weekend to participate in my mother’s memorial but will be back next Wednesday. There is still promise for the large education/University package in . However, using the Earnings Reserve Account as the funding source is a problem for many. I anticipate that retirement system reform and workers compensation reform may be competing issues through the end of session. Spring is definitely in the air and I look forward to some personal visits with you.
Several constituents, including Dave Stutzer and John Faris of Homer, were in town for the annual Folk Fest and stopped by the office to discuss policy issues.
State Affairs Committee
Last week we heard eight bills in addition to our work on PERS/TRS. allows the Permanent Fund Corporation a wider range of investment options by eliminating the statutory list restricting investments. allows law enforcement agents to pull a person over for not wearing a seatbelt. provides death certificates for deceased veterans without cost to next of kin. HB 215, SB 87 and HB 167 passed from committee. restricts the state, municipalities, and the University system from using public money to influence the outcome of a statewide ballot proposition. This bill was held in committee. creates an "Alaska Territorial Guard Day" and was moved from committee with unanimous support. eliminates the record on cases that have been set aside by a court with suspended imposition of sentence. This bill is being held for more work.
This week we will be working primarily on PERS/TRS. We will also be hearing , which would convert the Constitutional Budget Reserve into a new Capital Construction Permanent Fund. is nearly identical to the Alaska Coastal Management Program bill sponsored by the House State Affairs Committee. HB 146 would give both the state and the districts more time to work on their coastal management plans. is an attempt to enable voters to decide on any state cost that might be incurred with the moving of the legislature out of its current building.
SB 141 Testimony
Public testimony will be taken on PUBLIC EMPLOYEE/ TEACHER RETIREMENT/BOARDS beginning at 6:00 p.m. I encourage anyone interested in participating in the discussion of this bill to testify at your local Legislative Information Office. If you are unable to reach an LIO but would like to comment, there is a 1-800 number that you may dial in on. To access this number, please contact my Committee Aide, Louie Flora.
Resources Committee
Last week we heard and moved three bills. requires genetically modified fish or fish products to be labeled as such if they are sold at the retail level. names a yet-to-be-built hatchery in Fairbanks. would create a funding mechanism for the maintenance of sport fish hatcheries throughout Alaska by adding a surcharge on top of the sport fishing license fee.
On Monday we will hear , , and . HCR 7 is a resolution asking the Governor to direct the Department of Natural Resources to undertake a comprehensive review of Cook Inlet oil and gas platform abandonment. This is part of an effort to utilize abandoned platforms for further oil and gas exploration/production activities in Cook Inlet. HB 9 creates an agency within the Department of Commerce, Community and Economic Development to facilitate the development of a hydrogen fuel industry in Alaska. Members will be appointed to this agency to represent the federal and state governments, the university system, tribal organizations, the electric utility industry, the fossil fuel industry, the non-fossil fuel energy industry and private environmental conservation groups. HB 241 loosens the conflict of interest policy governing the actions of Board of Fish members and requires members with a financial stake in fisheries – because they are fishermen – to participate in the discussion. I am proposing an amendment to this bill that would exclude participation by lobbyists, or individuals paid to represent others.
On Wednesday, pending referral, we will hear PRIVATE HATCHERY COST RECOVERY FISHERIES. This bill gives hatchery operators the option of opening special harvest areas as common property fisheries with assessments up to 40% as a replacement for traditional cost recovery fishing.
HESS
extends the definition of qualified municipalities to include a consortium of cities, unified municipalities and boroughs, in the same geographic region whose population exceeds 35,000. This would create two new eligible regions for Human Services Community Matching Grants: the South East region and the Gulf Coast Region (Kenai Peninsula, Kodiak, Valdez and Cordova). Currently the only eligible regions are Fairbanks, Anchorage and Mat-Su. The Human Services Community Matching Grant program awards funds (1.2 million in FY2006) to local programs such as Big Brothers Big Sisters, Salvation Army, etc, who can provide a 30% match. The Kenai Peninsula Borough would receive $50,980 for eligible programs under this bill, which passed out of HESS.
allows optometrists to prescribe oral medication in a manner similarly allowed in 45 other states. Currently optometrists in the state of Alaska may only prescribe topical medication. Supporters of the bill say this will allow patients in rural Alaska greater access to medical treatment. Opponents believe it extends the purview of optometrists too far and that prescribing medication should be reserved for ophthalmologists and other medical doctors. The bill was held in committee.
On Thursday we took a tour of the Johnson Youth Center, a juvenile probation center outside of Juneau.
We moved , which allows school districts, the state, and other PERS or TRS employers to rehire retired employees for hard-to-fill positions. The bill allows a rehired employee to collect both their retirement pension and a paycheck without making contributions to the retirement system. We amended the bill to require employers to pay the percentage of the employee’s salary that goes toward paying off the unfunded liability of the retirement system and to require active employee medical insurance. HB 161 also requires the employer to demonstrate that they searched adequately for a qualified non-retiree to fill the position, and that once the retiree is rehired they must implement a program to find or train a replacement. These were abuses to the previous system.
extends the sunset on school bond debt reimbursement. This allows the state to reimburse a municipality or borough for up to 70% of the expense of building a new school. In Thursday’s meeting the bill was amended to give rural communities, which have a hard time coming up with the initial capital for such a project, 100 million dollars for building new schools. I believe we now have agreement to move some on the cost differential program so I voted "no recommendation" to allow the bill to move.
The retirement system rewrite is potentially the most important legislative package of the year. This issue directly affects roughly 180,000 retirees, dependents and employees, as well as everyone else in the form of a major fiscal issue. The following may provide too much detail, but I want to make everyone aware of this fast-moving legislation.
House State Affairs will dedicate all of next week to hearing , "The Retirement Security Act," which overhauls the Public Employees Retirement System (PERS) and the Teachers Retirement System (TRS). It is important to note that although SB 141 is similar to the House State Affairs retirement bill discussed in this newsletter, , there are substantial differences.
SB 141 has three major components: changes to the existing system, the creation of a defined contribution plan, and medical coverage.
The changes to the existing system apply to all current tiers and employees, and in some cases, retirees. The first significant change is increasing the employee contribution rate to one-half the Normal Cost Rate. The Normal Cost Rate is the percentage of salary that must be set aside on behalf of an employee to pay for their future benefits. The employee contribution rate would increase gradually, no more that one-half a percentage point per year, until the employer and employee contribution become equivalent. It would then fluctuate slightly depending on the Normal Cost Rate each year.
SB 141 would allow ad-hoc post retirement pension adjustments (an additional benefit beyond the automatic COLA), to be paid to retirees who live in an area where there is an increased cost of living, only when the system is over 110% funded.
This bill makes significant changes to the boards that manage and oversee the current PERS/TRS system. SB 141 eliminates the PERS board, the TRS board and the Alaska State Pension Investment Board. In its place, the Alaska Retirement Management Board (ARM) is established, whose responsibilities include managing the assets of the fund, analyzing the actuarial assumptions on which the projected costs are based, setting the employee and employer contribution rates, and auditing the actuary. The responsibilities of the PERS and TRS boards for hearing appeals and adopting regulations to govern the systems will be transferred to the Office of Administrative Hearings and the Commissioner of Administration, respectively.
Other changes to the current system include repealing the ability for prior members who have cashed out of the system to buy back their service time and subsequently retire from the system. SB 141 has a fiscal note of 69.5 million dollars to pay for the increase in PERS employer costs from FY2005 to FY2006.
The bill also includes language for the University of Alaska to broaden their Optional Retirement Program (ORP), which faculty and administration currently have access to, in order to make a mandatory defined contribution program for all new entrants.
The creation of a new defined contribution (DC) tier will apply to all employees hired after the first day this legislation becomes effective. The elements of the proposed DC plan include an employee contribution of 8% into an individual's DC account and an employer contribution of 4.5%. Members are fully vested in both the employee and employer contributions after five years. This means that when an employee leaves employment after four years, they may take the entire amount of their account with them and roll it over into another employer's qualified plan. This portability is especially attractive to young employees who will probably change jobs many times before retiring. Each employee will have the option of investing their account in a range of different investment options.
To become eligible for medical coverage in SB 141 you must be Medicare eligible with at least 10 years of service, or be of any age with 25 years of service for police/fire and 30 for all others. If you terminate employment before Medicare eligible age but have fulfilled the minimum service requirement, you will only receive access to the medical plan while being required to pay the full premium. At Medicare eligible age the member receives a percentage subsidy of the premium based on the years of service, ranging from 70% for 10 years of service, to 90% for 30+ years of service. Retirees and their dependents are eligible, however, a different premium will be established for a single member from that for a member with dependents.
SB 141 also establishes a Health Reimbursement Arrangement (HRA), to assist members in paying their premiums or any other qualified medical expense. Two percent of the employer’s annual average group compensation will be set aside in an individual’s account to collect interest until they become eligible for medical benefits. However, if an individual terminates employment before reaching the 10-year requirement for medical eligibility and does not come back to work within 5 years, they forfeit the accumulated balance of their HRA.
SB 141 is a 109-page bill that makes extensive changes to the public employee and teacher retirement systems. The Senate Finance committee spent three weeks going over the bill in detail. You can find information they were provided with, along with a host of back up material on .
Ways and Means
The committee discussed two bills this week, which would institute taxes in the case of a budget shortfall. would provide for an income tax to be scaled in relation to the shortfall amount. If, for instance, state expenditures exceeded revenues by between 80 and 100 million dollars, the tax would be two percent of an individual’s taxable federal income. If expenditures did not exceed revenues, there would be no tax. proposes a 10-dollar employment tax on anyone receiving greater than 1000 dollars in compensation. Both of these bills were heard and held.
HB 238
This week in House State Affairs we concentrated on the medical portion of the State Affairs retirement bill. I would like to see assistance for medical benefits provided to retirees 60 months before they become Medicare eligible (currently age 60). In the retiree and the system share the rising cost of health care. A member becomes eligible for medical benefits with 30 years of total service, or with 10 years of service, 60 months before they would otherwise be eligible for Medicare. A member must retire directly from the system to become eligible. If they retire before reaching the 60 months pre-Medicare eligibility age, and have fulfilled the minimum service requirement, they have access only to major medical coverage until they reach the 60 months pre-Medicare eligible age. The percentage of assistance applied to the premium is based on years of service; a 30% subsidy for 10 years of service with a 3% increase for every additional year of service, up to 30 years with a 90% subsidy.
Because HB 238 and SB 141 are substantially similar bills, the committee will be working this week to incorporate elements of HB 238 (such as providing medical assistance before Medicare eligible age and increasing contribution rates), into SB 141 and moving forward with that bill. We are scheduling a special hearing at 6 pm on Tuesday night to take public testimony.
Please send any comments you have on SB 141 or HB 238 to Katie Shows, or call my office.
Following Bills
All bills can be found on the State's Bill Action and Status Inquiry System (BASIS). You can see what committee a bill is in, when it will be heard, how committee members voted, and much more. Don't forget that you can view all bills relating to your areas of interest by selecting "Subject Summary" from the menu on the right. You can access BASIS through the link below.
Live on the Web
Most committee hearings can be seen and heard on Gavel to Gavel, which is broadcast on both local access TV and on the internet. You can also access online archives from their website. .
Contact Us
If you would like to speak to me regarding a specific issue, it is helpful to first get in touch with the member of my staff handling related issues. You can click on their email addresses to send them a note, or just give us a call at the office. Please provide your full name, address and phone number on any correspondence with the office. Your time and effort are much appreciated.
Louie Flora
State Affairs, Resources, Fisheries, HB 25
(907) 465-4963
louie_flora ''@'' legis.state.ak.us
Katie Shows
Health Education and Social Services, HB 20, HB 24
(907) 465-2028
katie_shows ''@'' legis.state.ak.us
Ian Laing
Ways and Means, HB 50
(907) 465-2689
ian_laing ''@'' legis.state.ak.us
Rep. Paul Seaton
House District 35
(800) 665-2689
representative_paul_seaton ''@'' legis.state.ak.us # # # |
