F7887CC8A2C8FD0E8725846A005EAB12 Hearing Summary

Mr. Alfredo Kemm, Joint Budget Committee (JBC), distributed a handout (Attachment D) and presented to the committee regarding contributions to PERA in the state budget through the Amortization Equalization Disbursement (AED) and the Supplemental Amortization Equaliation Disbursement (SAED) contributions. He noted that as JBC staff he looks at these contributions through his work analyzing the statewide compensation plan for the JBC. He noted that AED and SAED were created to pay down the unfunded liability, but are complicated because the calculation is based on individual employee payroll. He also noted that by putting these payments in the common policies, these contributions are paid with cash funds and federal funds in addition to General Fund. He discussed the concept of the SAED and how it was set up as an employee contribution from foregone wage increases. He discussed the normal cost of the PERA benefit and how contributions currently outsize an employee's normal cost, which is the cost to cover their individual retirement. Finally he discussed the dynamics of a leaner benefit and a higher contribution rate.

Mr. Kemm responded to committee members questions. Mr. Johnson asked about the timing of AED and SAED contributions and beneficiaries. Mr. Valore-Caplan asked about policy objectives underlying the AED and SAED contributions.

The committee recessed for lunch.