Alaska runs new PERS disability law by hand as a vendor quotes $790,000 to reprogram

Alaska's Division of Retirement and Benefits is running the state's new public employee disability law mostly by hand. A vendor, Sagitec, has estimated $790,000 and a 10-week implementation delay to reprogram the division's system, according to draft minutes of an Oct. 23 meeting of the Alaska Retirement Management Board's Strategic Review and Action Committee.

Director Kathy Lea told the committee the law has been carried out primarily through manual processes, and that health eligibility will keep being reported by hand until the system is reprogrammed. The division is reviewing the gap between an estimated $70,000 to reprogram the legacy system and Sagitec's $790,000 figure. The minutes do not say which system each estimate covers or which route the division will take.

The minutes count 36 occupational disability recipients, with added costs of about $82,232 a month. Defined contribution medical premiums run $9,306 a month, and premiums for disability recipients come to about $112,000 a year. The minutes do not say whether those figures overlap. All 36 are being reported as eligible for health coverage.

The law, which became law without the governor's signature July 13, raised the Public Employees' Retirement System occupational disability benefit from 40 percent to 75 percent of a worker's gross monthly pay at termination. The board's actuarial materials say the change applies to current and future disabilities. The law also made defined contribution members on disability eligible for retiree major medical coverage, with no premium for those not on Medicare. The disability sections took effect immediately.

At the committee's Aug. 3 meeting, Lea said the division had consulted the Department of Law because the bill passed without actuarial or fiscal analysis, which raised questions about its validity. Legislative legal staff advised treating it as valid. Benefits were recalculated effective Aug. 1. Members were to get a letter inviting them to enroll in coverage and, until programming was done, keep receipts and seek reimbursement.

The bill provided no added funding, and the board was unlikely to have enough information this year to adjust contribution rates, the minutes say.

On Sept. 14, Lea reported the recalculation finished in time for the August payroll.

The disability provisions were not in the bill as introduced. Sen. Giessel added them on the Senate floor May 20, and the amendment was adopted without objection. The bill passed the Senate 19-1, with Myers the only no vote. The bill's two fiscal notes, both from the Department of Health and both showing no cost, were published before the amendment. The Department of Administration filed none.

The committee will hear the division's next update Monday, Nov. 16, at 1 pm. It will also vote on approving the Oct. 23 minutes, which are still a draft and could change.