Legislature(1997 - 1998)
05/07/1997 02:15 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL 150
"An Act relating to moving expenses of state employees,
to compensatory time for state employees, and to
calculation of compensation for the public employees'
retirement system."
ART CHANCE, COUNSEL TO THE SENATE FINANCE COMMITTEE, LABOR
ISSUES, JUNEAU, provided a sectional analysis of the
proposed legislation. Section #1 would remove certain
provisions for coverage under the collective bargaining act
and the Public Employment Relations Act (PERA). Section #2
would require an employee who voluntarily transfers to
another location commit to five years at the location or pay
the State all costs incurred with that move. He noted that
Section 39.24.60 of the bill was intended to eliminate any
informal compensatory retirement arrangements between
employees and supervisors. Mr. Chance continued, Section #3
would remove overtime compensation from the definition of
compensation for the purpose of calculating Public Employees
Retirement System (PERS) benefits as a cost savings measure.
This section would only effect new employees. Any change to
PERS eligibility must be prospective because of the
relationship that PERS has with employees based on the time
they entered into the system.
Representative J. Davies inquired if adoption of Section #3
would create an additional tier within the system. Mr.
Chance stated that there would be an additional kind of
calculation of eligibility for PERS.
Representative Grussendorf referenced the moving expense
component regarding "voluntary" transfer. Mr. Chance
replied that there are provisions in both the labor
agreement and personnel rules regarding an employee making
their self available to transfer for another position.
There are other provisions for an "involuntary" transfer.
If a person voluntarily offers to move to a new location, at
that time they must commit to five years or be financially
responsible for paying the moving costs. Discussion
7
followed regarding moving expenses. Mr. Chance spoke to the
pay scale differential provided in moving to certain
locations in the State. He added that the State is not
obligated to pay the moving expenses on a new hire.
Representative J. Davies observed that the proposed changes
would not save the State money, but instead would prevent
people who currently work for the State to be able to apply
for the positions that are opening. Consequently, two
classes of people would be created; those that work for the
State and those that do not. Those that work for the State
would be penalized for applying for the new positions.
Representative Martin asked if the proposition would apply
to teachers also. Mr. Chance replied that it would apply
only to the PERS employees. Any teaching employees would be
in the Teacher's Retirement System (TERS).
MIKE MCMULLEN, PERSONNEL MANAGER, DIVISION OF PERSONNEL,
DEPARTMENT OF ADMINISTRATION, noted that Section #2 of the
proposed legislation would add two new provisions. Section
39.24.50 would require employees to repay with interest if
they leave within five years. He noted that Tier 2, passed
in 1986, addresses that issue. Since 1986, the employees in
Tier 2 must have a geographic differential covering half of
the credited service in order for the geographical
differential to count towards retirement. That issue has
been solved.
The new provisions in PERS would apply only to new hires.
People in PERS before 1986 have the opportunity to be phased
out. He stressed that this section applies only to State
employees. It would create a significant difference between
the travel for a new hire and the travel for a current
employee. Current regulations provide that a new hire is
required to pay-back the full amount without interest if
they leave within two years. For each six months of service
which they complete, 25% of the charge would be forgiven.
The proposed legislation would create a five year required
commitment for those people already in the system.
Section #2 also adds section 39.24.60 which would require
that compound payments be in writing. He believed that
those problems would continue to exist. The employees who
currently violate, will continue to violate if the proposed
law passes.
Mr. McMullen spoke to Section #3 which would stipulate that
the employee not be covered in the contribution on overtime
or the calculation of benefits from the overtime, except
those employees who are part of PERS. He spoke to the
number of PERS employees where overtime is normal; snow-
8
removal, fire-fighting, fisheries and forestry. Tier #4
will require that the State decide whether the employee and
employer will contribute into over-time compensation.
Representative Martin questioned the compensation of
overtime hours. Mr. McMullen explained that at this time,
the employee and employer contribute based on total
compensation. Mr. McMullen thought that it would be
complicated to try to adjust service instead of earnings. A
full time employee receives credit for the actual years
service.
Representative Grussendorf asked if the proposed legislation
would save the State money.
BILL CHURCH, SUPERVISOR, DIVISION OF RETIREMENT AND
BENEFITS, DEPARTMENT OF ADMINISTRATION, responded that the
Division has estimated that the bill will save approximately
a $6 million dollar decrease from required employee
contributions at the end of twenty-five years. He agreed
that there would be some savings resulting from the portion
contributed and now paid on overtime by the employer which
would not be made in the future.
Representative Grussendorf pointed out that the
Administration is currently reviewing concerns of over-time
compensation. He suggested that considering the proposed
savings, it would be in the State's best interest to address
the concerns. Mr. Church explained that there are many
considerations to be made regarding the question of
overtime. One would be voluntary over-time; the other would
be required overtime and the added costs associated with
additional employees hired. He believed that overtime could
end in saving the employer money and could be used as a
management tool. The bill does not adequately address the
overtime concern; people will continue to work over-time.
(Tape Change HFC 97-128, Side 1).
In response to Representative J. Davies, Mr. McMullen
explained that there are many departmental seasonal
operations. The State overtime level is under 3%. The
retirement system estimate is slightly over 4% in overtime
pay. For those persons who get paid for overtime, their
work is beyond their control and that work can not be
managed in terms of more bodies; overtime will continue to
be needed and paid.
Mr. McMullen noted that the SBS contributions were
calculated on the total earnings were based on the social
security cap. Employees currently receive credit up to the
cap.
9
JOHN CYR, PRESIDENT, NATIONAL EDUCATION ASSOCIATION (NEA),
JUNEAU, spoke to Page 3, Section #3, Lines 22-23. He
explained that the bill originally addressed State
employees, then the PERS section was added. In the school
districts, there are some non-certified employees who are
under the PERS retirement system. Over the course of the
last eight years, many of the employees have found their
salary and their work year reduced. These people do not get
a full year's credit toward the PERS system. They are
required by their supervisors to be available for overtime.
He suggested that the proposed legislation was designed to
trap these employees particularly in the rural areas. They
are not eligible for unemployment.
GERON BRUCE, LEGISLATIVE LIAISON, OFFICE OF THE
COMMISSIONER, DEPARTMENT OF FISH AND GAME, spoke to the
Department's concerns with Section #2 of the proposed
legislation. The Department maintains forty-eight offices
throughout the State. Not all of them are manned year
round. Section #2 would impact placing employees into those
communities and could act as a deterrent to someone willing
to accept an assignment to a remote community. These people
often work without supervision and the Department is not
inclined to send new State workers to those locations.
Mr. Bruce added that a number of situations could occur
within a persons family which could affect their five year
commitment to a rural area. Currently, it is required that
a person make a two year commitment when moving to a bush
area. An additional concern, would be placing a person in
an place which was not working out for either themselves or
the community. In that instance, it would be better to
reassign them. The Department is not comfortable with the
five year recommended stay requirement.
Mr. Bruce added that the Department uses many seasonal
employees in fishery management. Many of these employees
are people who have some training in biology and are
permanent seasonal employees and make valuable contributions
to the Department. They are required to work overtime. He
stressed that it would be more expensive to replace those
people with a permanent employee than paying them overtime.
Representative Mulder commented that the overtime
compensation was most likely not the reason that a person
signed onto a job, but rather, because the job was one they
wanted to do. He agreed that overtime should be
compensated, although, for purposes of retirement, it should
not be calculated. Mr. Bruce replied that some of these
workers look at the work they do as their career. They do
10
not plan to move into a different position, making the
retirement aspect an important consideration. Their
experience is a valuable asset.
Representative J. Davies understood that the time of service
was calculated by the number of days worked, not the number
of hours. The consideration is whether your overtime
compensation would be used in determining your three years
of highest compensation.
Mr. Chance clarified that many seasonal employees in the
general government unit already have an arrangement that
their overtime is often treated as compensatory time during
the period that they would overwise be laid off. Those
people are taking their overtime as comp-time. He
continued, under the Fair Labor Standards Act, it is not
"cast in stone" that the amount paid the seasonal people is
a low hourly wage and a great deal of overtime. For those
that are not overtime eligible, there are numerous ways to
arrange a schedule so that the work demands can be met.
Representative J. Davies MOVED to adopt Amendment #1. [Copy
on file]. Representative Mulder OBJECTED.
Representative J. Davies explained that Amendment #1 would
change the time period for the moving expense calculation
from five years to three years.
Mr. Chance stated there is an aging and stable work-force.
He agreed that anyone who had their initial PERS appointment
would be subsequent to the 1986 changes. A large percentage
of the State employees are Tier I employees, which will be
true for the next twenty years.
Co-Chair Therriault questioned if the proposed legislation
would impact past employees. Mr. Chance stated that it
would, although, it would not impact their retirement.
Representative J. Davies stated that inclusion of five year
stipulation would create a penalty clause to a few within
the system.
A roll call vote was taken on the MOTION.
IN FAVOR: J. Davies, Grussendorf
OPPOSED: G. Davis, Foster, Kohring, Martin,
Mulder, Therriault
Representatives Kelly, Moses and Hanley were not present for
the vote.
The MOTION FAILED (2-6).
11
Representative J. Davies MOVED to adopt Amendment #2. [Copy
on file]. Representative Mulder OBJECTED.
Representative J. Davies explained that Amendment #2 would
develop a pro rated reduction of the amount of moving
expenses that the employee would be responsible for
repaying. Representative Mulder stated that the point of
the legislation suggests that if a person accepts a position
in the remote areas of the State, they must be willing to
commit for a specified amount of time. He suggested that
"implants" were taking jobs away from local hire.
A roll call vote was taken on the MOTION.
IN FAVOR: G. Davis, Grussendorf, J. Davies,
Therriault
OPPOSED: Foster, Kohring, Martin, Mulder
Representatives Kelly, Moses, and Hanley were not present
for the vote.
The MOTION FAILED (4-4).
Representative J. Davies MOVED to adopt Amendment #3. [Copy
on file]. There being NO OBJECTION, it was adopted.
Representative J. Davies MOVED to adopt Amendment #4. [Copy
on file]. Representative Mulder OBJECTED.
Representative J. Davies explained that Amendment #4 would
eliminate the purpose of Section #3, defining overtime pay
as part of compensation and then eliminating it. He noted
that the seasonal workers expect that their annual
compensation will be an average calculated over all the
months.
Representative G. Davis disagreed, pointing out that these
employees have been rewarded for more than their base pay.
A roll call vote was taken on the MOTION.
IN FAVOR: Grussendorf, J. Davies
OPPOSED: Foster, Kohring, Martin, Mulder, G.
Davis, Hanley, Therriault
Representatives Kelly and Moses were not present for the
vote.
The MOTION FAILED (2-7).
Representative J. Davies MOVED to adopt Amendment #5. [Copy
12
on file]. Representative Mulder OBJECTED.
Representative J. Davies explained that Amendment #5 would
place a limit on the total amount of compensation that could
be credited for the retirement system.
(Tape Change HFC 97-128, Side 2).
A roll call vote was taken on the MOTION.
IN FAVOR: Grussendorf, J. Davies
OPPOSED: Kohring, Martin, Mulder, G. Davis,
Foster, Therriault, Hanley
Representatives Kelly and Moses were not present for the
vote.
The MOTION FAILED (2-7).
Representative Mulder MOVED to report HCS CSSB 150 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal note. Representative Grussendorf
OBJECTED to make a statement. He noted that the Committee
had not spent enough time in addressing major concerns of
the legislation. He WITHDREW the OBJECTION. There being NO
further OBJECTION, it was adopted.
HCS CSSB 150 (FIN) was reported out of Committee with
individual recommendations and with a zero fiscal note by
all departments dated 4/4/97.
| Document Name | Date/Time | Subjects |
|---|