Legislature(1995 - 1996)
1995-04-07 Senate Journal
Full Journal pdf1995-04-07 Senate Journal Page 0918 SB 152 SENATE BILL NO. 152 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: "An Act relating to geographic differentials for the salaries of certain state employees who are not members of a collective bargaining unit; relating to periodic salary surveys and preparation of an annual pay schedule regarding certain state employees; relating to certain state aid calculations based on geographic differentials for state employee salaries; and providing for an effective date." was read the first time and referred to the Finance Committee. Fiscal notes published today from Department of Administration, Office of the Governor. Governor's transmittal letter dated April 7: Dear President Pearce: Under the authority of art. III, sec. 18, of the Alaska Constitution, I am transmitting a bill that revises geographic pay differentials for executive branch partially exempt employees and classified service employees not covered by a collective bargaining agreement, and for employees of the legislature. Upon passage of this or similar legislation, I also will issue an administrative order making the same adjustments to executive branch exempt personnel. The bill also amends statutes that relate to certain state aid to municipalities and other eligible recipients that is calculated based on the geographic pay differentials, and changes or deletes statutory requirements regarding salary surveys. In the mid-1980's, the state conducted a comprehensive cost-of-living study for the different areas of Alaska. That study showed that the geographic pay differentials contained in AS39.27.020(a) did not accurately reflect the actual differences in the cost-of-living in cities 1995-04-07 Senate Journal Page 0919 SB 152 and towns around the state. As a result of this study, the collective bargaining agreements between the state and the various unions representing state employees, which had differentials based on those in AS39.27.020(a), were changed to reflect the actual differences. However, because AS39.27.020(a) was not amended, state employees not covered by collective bargaining agreements continued to be paid using outdated differentials. Some were underpaid, but more were overpaid, costing the state several hundred thousand dollars each year. Since the mid-1980's, cost-of-living differences within Alaska have been reduced even further. This bill repeals AS39.27.020 and sets out new provisions in a proposed AS39.27.021, to make long overdue changes to the geographic pay differentials. The bill makes certain conforming technical amendments to statutes relating to magistrate salaries and to the Public Employees' Retirement System, to acknowledge the repeal and the new provisions. The bill also provides, as did the various collective bargaining agreements, that no employee will have his or her salary immediately reduced as a result of the new differentials. However, I am not proposing that incumbent employee salaries be frozen forever. Instead, the salary of an employee who remains working in an area where the differential is lowered would not be reduced until one year after the effective date of the bill. One significant difference between this bill and previous approaches to geographic pay differentials is that this bill limits, to $30,000 per year, the amount of an employee's gross pay that would be subject to a differential adjustment. This acknowledges the basic purpose of geographic differentials: compensating for higher basic living expenses. This approach removes the aspect of raising overall pay levels through differentials. Statutes relating to state aid to municipalities and other eligible recipients for roads, health facilities and hospitals, and volunteer fire departments, contain a provision increasing aid to areas with a higher cost of living, and tying the increases to the differentials in existing AS39.27.020(a). Because many municipalities and other recipients have relied on the current differentials in their planning, this bill provides that the differentials in existing law will continue to apply for this purpose. 1995-04-07 Senate Journal Page 0920 SB 152 The bill also requires the director of the division of personnel to conduct a study every five years, starting in 1999, to review geographic differentials. This requirement replaces the current statutory requirement that an annual survey be done both of cost-of- living around the state and of the relationship between state salaries and salaries of other employers. In addition, the bill repeals the requirement that the director conduct an annual survey for purposes of making university employee salary recommendations to the Board of Regents of the University of Alaska. Because of budgetary constraints, none of these annual surveys have been done. I urge your prompt consideration and passage of this bill. Sincerely, /s/ Tony Knowles Governor