State runs new disability law mostly by hand, with a $790,000 estimate to fix its system

Alaska's retirement division has been running most of a new disability law by hand, its director told a state retirement board committee last month. The law nearly doubled disability pay for public employees hurt on the job.

Getting its computer system to do the work could cost anywhere from an estimated $70,000 to $790,000, according to draft minutes of the Oct. 23 meeting. The lower figure is to reprogram the division's legacy system; the higher one comes from vendor Sagitec, which also projected a 10-week delay. The division is reviewing the gap.

The law raised the Public Employees' Retirement System's occupational disability benefit from 40% to 75% of a worker's gross monthly pay at the time they left the job. It also made disabled members in the defined contribution plan eligible for retiree health coverage, with no premium for those not yet on Medicare. It became law without the governor's signature July 13.

The Division of Retirement and Benefits recalculated benefits in time for the August payroll, Director Kathy Lea told the Alaska Retirement Management Board committee. Health coverage is still done by hand. Until the system is reprogrammed, eligibility is being reported manually, and members were to keep receipts and seek reimbursement, Lea said in August.

The minutes count 36 occupational disability recipients and put the added cost at about $82,232 a month, plus about $9,300 a month in medical premiums. The bill came with no added money, and the board is unlikely to have enough information this year to adjust contribution rates, Lea told the committee in August.

The disability changes weren't in the bill as introduced. Sen. Cathy Giessel added them in a floor amendment May 20, and the bill passed the Senate 19-1. Its only fiscal notes, both from the Department of Health and both showing no cost, came before the amendment.

Because the bill passed without actuarial or fiscal analysis, the division asked the Department of Law whether it was valid, Lea told the committee in August. After consulting legislative legal staff, it was told to treat the law as valid.

The committee gets its next update Monday.