Legislature(2019 - 2020)ADAMS ROOM 519

03/26/2019 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 48                                                                                                             
     "An Act removing  from the exempt service  of the state                                                                    
     persons who are employed  in a professional capacity to                                                                    
     make  a   temporary  or  special  inquiry,   study,  or                                                                    
     examination   as  authorized   by   the  governor   and                                                                    
     including  those   persons  in  the   partially  exempt                                                                    
     service of the state."                                                                                                     
9:17:55 AM                                                                                                                    
LYNN   GATTIS,   STAFF,    REPRESENTATIVE   TAMMIE   WILSON,                                                                    
introduced the bill by reading the bill title:                                                                                  
     An Act  removing from the  exempt service of  the state                                                                    
     persons who are employed  in a professional capacity to                                                                    
     make  a   temporary  or  special  inquiry,   study,  or                                                                    
     examination   as  authorized   by   the  governor   and                                                                    
     including  those   persons  in  the   partially  exempt                                                                    
     service of the state.                                                                                                      
Ms. Gattis reviewed the sponsor statement (copy on file):                                                                       
     AS 39.25.110(9)  was supposed to allow  the governor to                                                                    
     appoint  someone   for  some  "temporary   and  special                                                                    
     inquiry". Because  they are  temporary, exempts  do not                                                                    
     get PERS  or regular  State leave, health  insurance or                                                                    
     other  State benefits.  However,  the  statute has  not                                                                    
     been used in  that manner. It has instead  been used to                                                                    
     establish   positions  without   the   intent  of   the                                                                    
     positions  being temporary,  which  would then  entitle                                                                    
     employees to PERS and all other benefits.                                                                                  
     The purpose of  HB 48 is to  discontinue the historical                                                                    
     practice   by  the   Executive  Branch   of  using   AS                                                                    
     39.25.110(9)  to  unilaterally  establish  highly  paid                                                                    
     executive  level temporary  exempt positions  that have                                                                    
     no salary limits. There  are positions established many                                                                    
     years ago  using this statute  that still  exist today.                                                                    
     Some  are  unbudgeted  and  do  not  appear  in  agency                                                                    
     position  counts. Several  attempts have  been made  to                                                                    
     obtain a  complete list of these  positions and current                                                                    
     salary   levels,   but   these   attempts   have   been                                                                    
     HB  48 is  intended to  eliminate the  establishment of                                                                    
     "temporary  exempt" positions  and instead  place these                                                                    
     positions in the partially  exempt service. Persons may                                                                    
     be "appointed" to  partially exempt positions, however,                                                                    
     they will  be subject to  salary limits like  all other                                                                    
     state employees.  HB 48  will force  the administration                                                                    
     to be  more transparent and  allow all employees  to be                                                                    
     treated fairly.                                                                                                            
9:20:40 AM                                                                                                                    
Vice-Chair  Johnston asked  if the  statute associated  with                                                                    
the  bill [AS  39.25.110(9)]  was limited  to the  executive                                                                    
branch  or could  be  used in  state  enterprise units  like                                                                    
Alaska Industrial Development  and Export Authority (AIDEA),                                                                    
Alaska  Housing   Finance  Corporation  (AHFC),   or  Alaska                                                                    
Permanent Fund Corporation (APFC).                                                                                              
REMOND  HENDERSON,  STAFF,   REPRESENTATIVE  TAMMIE  WILSON,                                                                    
answered the  statute allowed and defined  those individuals                                                                    
covered   by  partially   exempt,  exempt,   and  classified                                                                    
service. Partially exempt  service positions included deputy                                                                    
and assistant  commissioners, directors of  major divisions,                                                                    
attorneys in  the Department of  Law, the  Public Defender's                                                                    
Office,  one   executive  secretary  for   each  department,                                                                    
principal  executive officers  of  councils and  commissions                                                                    
(e.g.  the Alaska  Public  Broadcasting  Commission and  the                                                                    
Parole  Board).   The  positions  Vice-Chair   Johnston  was                                                                    
referencing were covered under exempt service (e.g. AIDEA).                                                                     
Vice-Chair Johnston asked for  verification that some of the                                                                    
state's enterprise units would not  be using the loophole in                                                                    
statute.  She  surmised it  was  more  of an  administration                                                                    
Mr. Henderson believed anyone could  use the statute because                                                                    
it  allowed  something  to be  approved  by  the  governor's                                                                    
office.  There  was also  recent  policy  instituted by  the                                                                    
governor's office requiring the  governor's approval for not                                                                    
only those positions established  under the statute, but for                                                                    
positions above  a [pay] Range  18 or salary of  $150,000 or                                                                    
9:23:14 AM                                                                                                                    
Representative  Sullivan-Leonard  asked  for the  number  of                                                                    
positions identified under  the previous administration that                                                                    
fell under the  purview of the bill. She asked  if they were                                                                    
looking at salary ranges of $300,000 or more.                                                                                   
Mr.  Henderson  replied  they had  not  been  successful  in                                                                    
identifying  the  number  of  positions  that  existed.  The                                                                    
positions  were  buried  in  a large  list  of  hundreds  of                                                                    
positions.  He  explained  the process  involved  trying  to                                                                    
identify a position control number  (PCN) by looking for the                                                                    
word  "temporary." It  was very  difficult to  ascertain the                                                                    
number of  positions created in  that manner.  He elaborated                                                                    
that  the  best source  of  information  was the  individual                                                                    
departments.  He reported  that when  they attempted  to get                                                                    
the  information  from  the departments,  the  response  had                                                                    
varied.  At one  point they  had been  told the  information                                                                    
would be  complied by the  Department of Law, then  they had                                                                    
been  told  it  would  be  compiled  by  the  Department  of                                                                    
Administration, and  it had ultimately come  from the Office                                                                    
of Management and  Budget. He noted they  had never received                                                                    
a complete list of the positions.                                                                                               
Representative  Sullivan-Leonard  surmised  the  legislation                                                                    
would  bring the  issue  to the  forefront  to identify  the                                                                    
number  of positions  and the  salary ranges.  She construed                                                                    
the bill would fix an existing problem.                                                                                         
Mr. Henderson replied in the affirmative.                                                                                       
Representative  Sullivan-Leonard  asked  if  the  bill  also                                                                    
pertained  to   positions  identified  in   the  legislative                                                                    
Mr. Henderson replied in the  negative. The sponsor's office                                                                    
had not  identified any positions in  the legislative branch                                                                    
that had been created under the statute.                                                                                        
9:25:36 AM                                                                                                                    
Co-Chair Wilson  added that  her office  had also  found the                                                                    
issue was not limited to  listed PCNs. She explained that if                                                                    
a department had money from  other resources, it was able to                                                                    
use those funds to pay  for the individuals. She agreed that                                                                    
as the budget  was developed, the legislature  would see the                                                                    
positions,  job descriptions,  and how  the salary  had been                                                                    
Vice-Chair Ortiz appreciated the intent  of the bill and was                                                                    
supportive. He asked  for further detail on  the language in                                                                    
the sponsor statement stating that  the bill would force the                                                                    
administration  to   be  more  transparent  and   allow  all                                                                    
employees to be  treated fairly. He asked for  detail on how                                                                    
employees had not been treated  fairly. He wondered if there                                                                    
was any downside to adopting the bill.                                                                                          
Co-Chair Wilson  answered that  temporary positions  did not                                                                    
go through  the same process  as all other  state employees.                                                                    
The deletion of  the statute would mean  all employees would                                                                    
go  through the  same  process  - the  state  would have  to                                                                    
consider the job description and  how much an individual was                                                                    
paid  and  would  not  be able  to  randomly  determine  the                                                                    
person's salary.  She stated the  issue was  about employees                                                                    
who  went  through  the   [general  hiring]  process  versus                                                                    
employees who were currently hired via the loophole.                                                                            
9:27:38 AM                                                                                                                    
Vice-Chair   Ortiz   asked   for   verification   that   the                                                                    
individuals would be treated more  fairly because they would                                                                    
go through the same hiring process.                                                                                             
Co-Chair Wilson replied in the affirmative.                                                                                     
Vice-Chair Ortiz  asked if there were  any opportunity costs                                                                    
associated with  the bill. Mr. Henderson  replied there were                                                                    
no  additional  costs to  the  bill.  He reported  that  the                                                                    
department had prepared a zero fiscal note for the bill.                                                                        
Vice-Chair  Ortiz   clarified  he  was  not   talking  about                                                                    
financial cost  but opportunity costs. For  example, perhaps                                                                    
past administrations  had used  the statute to  attract more                                                                    
highly qualified people for a position.                                                                                         
Mr.  Henderson answered  that  he  saw the  bill  as a  cost                                                                    
savings measure.                                                                                                                
Vice-Chair Ortiz  understood. He clarified he  was wondering                                                                    
if the statute  had been used in the past  to attract highly                                                                    
qualified  people or  talented individuals,  which would  no                                                                    
longer be possible if the bill was adopted.                                                                                     
Mr. Henderson  replied that the  bill would not  prevent the                                                                    
administration  from maintaining  that  practice. The  state                                                                    
would still  be allowed to  seek those individuals  for hire                                                                    
but  would  have to  provide  written  justification to  pay                                                                    
individuals  above  a  certain   range.  He  explained  that                                                                    
written justification was not currently required.                                                                               
9:29:41 AM                                                                                                                    
Representative Josephson  asked how  the positions  would be                                                                    
more transparent to the  finance committee, legislature, and                                                                    
Mr.  Henderson answered  that as  the statute  was currently                                                                    
used,  individuals  could  be  appointed  to  the  positions                                                                    
without salary limitations. He  explained that the positions                                                                    
were  not subject  to a  classification pay  plan. The  bill                                                                    
would  require the  individuals  to be  placed in  partially                                                                    
exempt service  where there was  a statutory  provision that                                                                    
identified  the  positions  covered under  partially  exempt                                                                    
service and the associated salary scales.                                                                                       
Representative  Josephson asked  if the  positions moved  to                                                                    
partially  exempt service  that it  meant the  employees may                                                                    
not    receive    healthcare   or    retirement    benefits.                                                                    
Alternatively, he  wondered if  the individuals  would still                                                                    
be eligible for the benefits.                                                                                                   
Mr.  Henderson   replied  that  the  individuals   would  be                                                                    
entitled  to  healthcare  and  benefits  provided  to  other                                                                    
Representative   Carpenter   understood   the   concept   of                                                                    
increased transparency. He asked  what would happen if there                                                                    
was a need  for a temporary employee in a  timely manner. He                                                                    
noted  the  bill's provision  that  would  require hiring  a                                                                    
person  through the  normal process.  He asked  if the  bill                                                                    
eliminated  the executive  branch's  ability to  bring in  a                                                                    
person with subject matter expertise.                                                                                           
Mr. Henderson  replied in the  negative. The bill  would not                                                                    
prohibit the administration  from hiring someone immediately                                                                    
that they found qualified for a temporary position.                                                                             
9:32:21 AM                                                                                                                    
RUSSEL   SAMPSON,   SELF,  WASILLA   (via   teleconference),                                                                    
supported  the   bill.  She  thanked  Co-Chair   Wilson  for                                                                    
sponsoring the bill.                                                                                                            
Co-Chair Wilson CLOSED public testimony.                                                                                        
Co-Chair Wilson  reported amendments were due  the following                                                                    
day by 5:00 p.m.                                                                                                                
HB 48 was HEARD and HELD in committee for further                                                                               
Co-Chair Wilson discussed the schedule for a meeting the                                                                        
following day. She reported the next meeting was that                                                                           

Document Name Date/Time Subjects
HB077 Sectional Analysis ver A 3-19-19.pdf HFIN 3/26/2019 9:00:00 AM
HB 77
HB077 - sponsor statement 3-19-19.pdf HFIN 3/26/2019 9:00:00 AM
HB 77
HB048 ver M Sponsor Statement 3.21.19.pdf HFIN 3/26/2019 9:00:00 AM
HB 48