Legislature(2013 - 2014)BARNES 124
03/10/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB316 | |
| HB152 | |
| HB316 | |
| HB152 | |
| HB328 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 316 | TELECONFERENCED | |
| += | HB 152 | TELECONFERENCED | |
| *+ | HB 328 | TELECONFERENCED | |
| += | HCR 15 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 10, 2014
3:29 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Bob Herron
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
Representative Charisse Millett
Representative Craig Johnson
COMMITTEE CALENDAR
HOUSE BILL NO. 316
"An Act relating to workers' compensation fees for medical
treatment and services; relating to workers' compensation
regulations; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 152
"An Act requiring certain employers who terminate participation
in the defined benefit retirement plan or the defined
contribution retirement plan of the Public Employees' Retirement
System to make contributions related to past service liability
and pay termination costs; repealing a requirement that
employers who terminate participation in the defined
contribution retirement plan or the defined benefit retirement
plan of the Public Employees' Retirement System pay for a
termination cost study; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 328
"An Act establishing the Board of Massage Therapists; relating
to the licensing of massage therapists; and providing for an
effective date."
- HEARD & HELD
HOUSE CONCURRENT RESOLUTION NO. 15
Relating to the continuation of the Task Force on Unmanned
Aircraft Systems.
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 316
SHORT TITLE: WORKERS' COMPENSATION MEDICAL FEES
SPONSOR(s): LABOR & COMMERCE
02/19/14 (H) READ THE FIRST TIME - REFERRALS
02/19/14 (H) L&C
03/07/14 (H) L&C AT 3:15 PM BARNES 124
03/07/14 (H) Heard & Held
03/07/14 (H) MINUTE(L&C)
03/10/14 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 152
SHORT TITLE: PERS TERMINATION COSTS
SPONSOR(s): THOMPSON
03/04/13 (H) READ THE FIRST TIME - REFERRALS
03/04/13 (H) L&C, FIN
04/05/13 (H) L&C AT 3:15 PM BARNES 124
04/05/13 (H) Heard & Held
04/05/13 (H) MINUTE(L&C)
03/05/14 (H) L&C AT 3:15 PM BARNES 124
03/05/14 (H) -- MEETING CANCELED --
03/10/14 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 328
SHORT TITLE: BOARD/LICENSING OF MASSAGE THERAPISTS
SPONSOR(s): NAGEAK
02/21/14 (H) READ THE FIRST TIME - REFERRALS
02/21/14 (H) L&C, FIN
03/05/14 (H) L&C AT 3:15 PM BARNES 124
03/05/14 (H) -- MEETING CANCELED --
03/10/14 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
ANNA LATHAM, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the House Labor & Commerce
Standing Committee (HL&C), Kurt Olson, Chair, explained the
proposed committee substitute (CS) for HB 316, Version O.
MICHAEL MONAGLE, Director
Central Office
Division of Workers' Compensation
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified regarding HB 316.
LUKE HOPKINS, Mayor
Fairbanks North Star Borough (FNSB)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 316.
MARIANNE E. BURKE
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 316.
REPRESENTATIVE STEVE THOMPSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as prime sponsor of HB 152.
JANE PIERSON, Staff
Representative Steve Thompson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the sponsor of HB
152 on the changes in Version Y.
MICHAEL BARNHILL, Deputy Commissioner
Department of Administration (DOA)
Anchorage, Alaska
POSITION STATEMENT: Responded to questions regarding HB 152.
KATHIE WASSERMAN, Executive Director
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Testified on HB 152.
BOB BARTHOLOMEW, Director of Finance
City and Borough of Juneau (CBJ)
Juneau, Alaska
POSITION STATEMENT: Testified regarding HB 152.
JIM WILLIAMS, Chief of Staff
Office of the Mayor
City of Fairbanks
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 152.
LUKE HOPKINS, Mayor
Fairbanks North Star Borough (FNSB)
Fairbanks, Alaska
POSITION STATEMENT: Testified regarding HB 152.
KATIE KOESTER, Community and Economic Development Coordinator
City Manager's Office
City of Homer
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 152.
LUCINDA MAHONEY, Chief Financial Officer
Municipality of Anchorage
Anchorage, Alaska
POSITION STATEMENT: Testified regarding HB 152.
JENNIFER JOHNSTON, Member
Anchorage Assembly
Municipality of Anchorage
Anchorage, Alaska
POSITION STATEMENT: Testified regarding HB 152.
REPRESENTATIVE BENJAMIN NAGEAK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as the prime sponsor of HB 328.
MARY SCHLOSSER, Staff
Representative Benjamin Nageak
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 328 on behalf of
Representative Nageak, sponsor.
AMANDA UNSER, Chair
Alaska Massage Therapy Licensure Coalition (ANTLC)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 328.
DON HABEGER, Director
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 328.
TRACI GILMOUR, Massage Therapist
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 328.
CARL KANCIR, Massage Therapist
Northern Comfort Massage Therapy
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 328.
CHERI ZEP, Massage Therapist
Chez Sante
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 328.
ACTION NARRATIVE
3:29:00 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:29 p.m. Representatives
Reinbold, Chenault, Josephson, and Olson were present at the
call to order. Representatives Herron and Saddler arrived as
the meeting was in progress.
HB 316-WORKERS' COMPENSATION MEDICAL FEES
3:29:11 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 316, "An Act relating to workers' compensation
fees for medical treatment and services; relating to workers'
compensation regulations; and providing for an effective date."
3:29:51 PM
REPRESENTATIVE CHENAULT moved to adopt the proposed committee
substitute (CS) for HB 316, labeled 28-LS1362\O, Wallace,
3/10/14, as the working document.
CHAIR OLSON objected for the purpose of discussion.
3:30:17 PM
ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State
Legislature, explained the changes in proposed committee
substitute (CS) for HB 316, Version O. She related that the CS
contains two new subsections pertaining to the duties of the
Medical Services Review Committee (MSRC). She referred to page
2, lines 24-26, Section 2, which explicitly requires the
Workers' Compensation Board (WCB) to request and consider
recommendations from the MSRC on setting conversion factors and
rates. Additionally, language on page 2, lines 27-29, requires
the WCB to consult with the MSRC before evaluating or revising
conversation factors for the fee schedules.
3:30:40 PM
MS. LATHAM explained that there was some opposition to the
[Workers' Compensation Board] setting conversion factors,
including raising questions about the WCB's expertise in setting
the medical schedules. The MSRC is already defined under AS
23.30.095 in the original bill. However, the MSRC has not met
since 2009. The intent of this change is to make it extremely
clear in statute that the MSRC will advise the Workers'
Compensation Board (WCB) on setting the rates.
MS. LATHAM referred to page 3, line 17, subsection (n), which
provides an exemption for critical access hospitals. There are
13 federally designated critical access hospitals in Alaska
certified under Medicare conditions of participation.
Typically, these small hospitals are under 25 beds, are located
in rural areas, and patients have a 96-hour average stay or
less. For examples, critical access hospitals are in Cordova,
Valdez, and Kodiak, and these facilities represent a separate
provider type with their own Medicare conditions of payment as
well as a separate payment method. The critical access hospital
certification allows these hospitals to receive cost-based
reimbursements for Medicare instead of the standard fixed-based
rates. Page 3, line 21, subsection (o) adds language for
geographical area differential, which was inadvertently omitted
in the original bill. The sponsor felt it was imperative in
Alaska for the board to have the option of using the
geographical adjustment factor. She noted that the language is
"may" rather than "shall," so the board will have flexibility to
determine whether to use this option. She referred to page 3,
line 24, Section 3, relating references AS 44.62.245, under
which future amended document or reference material, as listed
can be incorporated by reference in future regulations.
3:33:24 PM
MS. LATHAM pointed out that the sunset provision in the original
bill [Section 5] was removed. The language was originally
envisioned as a safety net to give the board four years to set
rates, conduct an audit, and require legislative action to
extend the new fee schedules; however, substantial public
opposition occurred, such that providers and insurers testified
against it, noting it would be difficult for future planning.
CHAIR OLSON interjected that the sunset provision is the only
provision that brought all the stakeholders together. No one
liked the sunset provision except for the sponsor, so it's gone.
3:34:19 PM
MS. LATHAM concluded her testimony by outlining the effective
dates. She referred to page 4, lines 15-17, to the effective
date language. With the sunset provision removed, new fee
schedules and conversation factors will be effective on January
2015; and proposed Section 5, would make subsections (h) and (i)
effective on July 1, 2014. Thus, the board has an opportunity to
begin its review to set fee schedules on July 1, 2014, and the
fee schedules and conversion factors would be effective on
January 1, 2015.
3:36:33 PM
MICHAEL MONAGLE, Director, Central Office, Division of Workers'
Compensation, Department of Labor & Workforce Development
(DLWD), introduced himself.
3:37:07 PM
REPRESENTATIVE JOSEPHSON asked whether the [WCB] with advice
from the MSRC would set this conversion rate.
MR. MONAGLE answered yes.
3:37:29 PM
REPRESENTATIVE JOSEPHSON asked for more information on the WCB.
MR. MONAGLE answered that the board is actually the Workers'
Compensation Board. He acknowledged it has an advisory role,
but most importantly under the statutes it provides that the
department may not adopt a regulation unless the regulations are
approved by the WCB. Thus, the WCB has authority under the
statutes to be the final voice for any regulations that the
department proposes. The WCB is comprised of 18 members; 9
representing labor, 9 representing industry, and all 18 members
are appointed by the governor.
3:38:23 PM
REPRESENTATIVE JOSEPHSON asked whether the nine labor members
are required to have any specific background before they can be
nominated for confirmation by the governor. He further asked
what identifies these appointees as being associated with labor.
MR. MONAGLE answered that the Office of the Governor, Boards and
Commissions makes the selection process. He commented that the
division rarely is consulted, unless it relates to the knowledge
or activity of potential board members. He offered his belief
that the people who serve on the WCB are typically involved in a
labor union with representation from most of the larger labor
organizations in the state.
CHAIR OLSON remarked that the committee has been responsible for
the language in HB 316, and it was a unanimous decision by all
members to put forth the resolution which led to a good portion
of the bill, including labor, medical insurance, and lay people.
3:40:00 PM
REPRESENTATIVE JOSEPHSON recalled earlier testimony from a
previous committee hearing that indicated that there needs to be
an effort to control treatment. He asked how the committee will
know that this reform doesn't go too far and that rates will not
be set in a way that undermines the capacity of an injured
worker to obtain the treatment he/she needs.
MR. MONAGLE agreed it is a balancing act that the MSRC and the
WCB are challenged to achieve, which is to set the conversion
factors at a level that appropriately awards doctors but not so
low as to cause providers to elect not to treat injured workers.
He offered his belief that a broad range of data exists that
suggests some specialties - as provided in members' packets as
price comparisons - that some allowable reimbursement rates are
400-500 percent higher than in regional states such as
Washington, Oregon, and Idaho. He said he can't speak for
either the MSRC or the WCB, but those would be areas these
entities would be focused on when determining the appropriate
conversion factors. Additionally, rates for other treatment
such as evaluation and management, office physician, physical
medicine, physical therapist, and chiropractor are more
reasonable, although they are higher than regional costs, but
don't represent 400 percent higher costs. He further said that
one of the values of the conversion factors is the MCRC and WCB
can customize them for each specialty and "it's not going to be
one size fits all."
3:42:30 PM
REPRESENTATIVE JOSEPHSON asked whether the bill should spell out
and define the goal of a conversion factor so those involved in
setting the factor know the policy they are trying to implement.
MR. MONAGLE answered that he certainly would leave that policy
decision to the committee. He said he thought there was some
public testimony - both written and in person last week to that
effect.
3:43:18 PM
LUKE HOPKINS, Mayor, Fairbanks North Star Borough (FNSB),
testified in support of HB 316. He said the FNSB and the FNSB
school district workers' compensation plans are self-funded
programs. The FNSB spends approximately $1.1 million per year
on workers' compensation benefits. The FNSB continues to see
medical costs increasing. The regulation of fees and charges
for medical treatment, equipment, and drugs could reduce the
overall workers' compensation costs. The FNSB doesn't have any
ability to steer the workers' compensation related injuries to
the PPOs network, where certain services are provided. In most
circumstances the FNSB is paying the additional costs for these
claims more than if they were non-work related injuries covered
under the self-funded plan. He said that allowing the board to
adopt a fee schedule based on quantified data, based upon
federal Centers for Medicare and Medicaid service scales, is a
positive change and would provide the needed reform to address
the highest workers' compensation costs in Alaska. The FNSB and
the FNSB assembly fully support HB 316. The FNSB assembly
adopted a resolution on February 13, 2014. He thanked members
for the opportunity to express the FNSB's concerns.
3:45:05 PM
MARIANNE E. BURKE said she is representing herself. She stated
there are some problems with the workers' compensation system
with respect to the value for the single person.
CHAIR OLSON informed Ms. Burke that the bill she is referring to
is not currently the bill before the committee [so he would not
take her testimony at this time.]
[HB 316 was held over.]
HB 152-PERS TERMINATION COSTS
3:46:55 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 152, "An Act requiring certain employers who
terminate participation in the defined benefit retirement plan
or the defined contribution retirement plan of the Public
Employees' Retirement System to make contributions related to
past service liability and pay termination costs; repealing a
requirement that employers who terminate participation in the
defined contribution retirement plan or the defined benefit
retirement plan of the Public Employees' Retirement System pay
for a termination cost study; and providing for an effective
date."
3:48:14 PM
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature,
introduced himself.
3:48:59 PM
REPRESENTATIVE CHENAULT moved to adopt the proposed committee
substitute (CS) for HB 152, labeled 28-LS0272\Y, Wayne, 2/26/14,
as the working document.
CHAIR OLSON objected for the purpose of discussion.
3:49:24 PM
JANE PIERSON, Staff, Representative Steve Thompson, Alaska State
Legislature, explained that HB 152 addresses the future
financial stability of the municipal Public Employees'
Retirement System (PERS) employers and PERS unfunded liability.
Legislation was passed in 2008 establishing that PERS is a
consolidated system combining the defined benefit and defined
contribution salary bases to pay down the unfunded obligations.
Paying off the unfunded obligation is predicated on a stable,
reasonably growing system-wide base. She related a concern in
the 2008 legislation was that employers might en mass elect to
convert PERS salaried employees to contracted positions to avoid
PERS costs thereby shrinking the PERS salary base needed to pay
off the unfunded obligation. To address this concern, the state
set a contribution floor such that employers would be required
to pay the greatest of 22 percent based on the current defined
benefit and defined contribution salary base or the total
payroll for the period ending June 30, 2008. Language providing
for termination studies was also added requiring employers who
terminate participation of a department, group or other
classification of employee to pay the following: the cost
associated with obtaining a termination study from the PERS
actuary; the actuarial cost to the employer for future benefits
due employees whose coverage is terminated; the past service
cost annually on each position terminated until the unfunded
liability paid off decades from now.
MS. PIERSON said the requirement for termination studies makes
it difficult for employers to manage their delivery of services,
discriminates against small municipalities, even though their
impact on the system is minimal, is costly, and nearly
impossible to implement in an equitable manner. It also fails
to recognize the original and personnel structures differ
between municipalities. The system-wide salaries have increased
by $325 million or 18.6 percent over the salary base floor
established in 2008. As a result, contributions towards the
unfunded liability have not been compromised; rather, they have
increased at a greater than actuarial assumed growth of four
percent, which is what was assumed in 2008. Thus, Version Y,
would eliminate termination costs and provide municipalities
with the operational flexibility to effectively manage the
delivery of programs and services while maintaining the minimum
22 percent contribution requirement.
3:52:32 PM
MS. PIERSON provided a section-by-section analysis of the
proposed committee substitute (CS) for HB 152, Version Y, as
follows [original punctuation provided]:
Section 1. Amends AS 39.35.615(i) Conforming language due
to the repealing of termination costs in AS 39.35.625,
eliminates being current on the termination costs as a
bar for an employer to renew a terminated department,
group or classification of employees into the PERS
system.
Section 2. Amends AS 39.35.620(k) Conforming language due
to the repealing of termination costs in AS 39.35.625,
eliminates being current on the termination costs as a
bar for a terminated employer participant to return into
the PERS system.
Section 3. Repeals:
· AS 39.35.625 Termination Costs
· AS 39.35.958(c) Assessing Termination costs
· AS 39.35.958(e) Payment of termination costs
· AS 39.35.958(f) Payment of the termination cost
study
Section 4. Annuls AAC 35.235.
Section 5. Is a conditional effective date upon the
legislature taking action this session to smooth the PRS
accrued liability.
Section 6. Provides for an immediate effective date for
sections 1-4 of the bill, upon the passage of section 5.
3:54:04 PM
REPRESENTATIVE JOSEPHSON asked whether the $1.2 billion in
Section 5 is in addition to the $3 billion the governor is
proposing.
MS. PIERSON answered no; that it was basically a placeholder in
case the $3 billion did not come through that the governor was
proposing.
3:54:37 PM
REPRESENTATIVE JOSEPHSON asked whether this would mean the
governor would only be contributing $1.8 billion to reduce the
unfunded liability.
MS. PIERSON answered yes. She pointed out that funds would also
go into the Teachers Retirement System (TRS). She pointed out
that this bill just addresses the PERS unfunded liability.
3:55:11 PM
REPRESENTATIVE JOSEPHSON referred to the fiscal note from the
DOA Retirement and Benefits, which suggests the institution
paying the costs would change, but the costs would not change,
and this could add $75 million to the state's burden.
MS. PIERSON acknowledged that is true; it assumes a 20 percent
reduction for a $75 million fiscal note, which is the latest
draft fiscal note from the agency.
3:56:06 PM
REPRESENTATIVE JOSEPHSON referred to the 2013 Administrative
Order 37 issued by Mayor Sullivan, which he characterized as one
of the most divisive in his community. He asked how to avoid
incentivizing reduction in the public sector, since the public
sector tends to be more responsive to citizens.
MS. PIERSON said she believes his concern relates to
privatization. She noted that there may be some privatization,
but if that is happening that some divisions might not be able
to be maintained. She recalled that happened in Fairbanks. She
said that currently the employer must keep departments that it
cannot maintain due to the termination costs and studies.
3:57:55 PM
REPRESENTATIVE JOSEPHSON asked why HB 152 was abandoned for the
wholesale repeal of the termination studies in Version Y.
MS. PIERSON answered that the sponsor thought it was a cleaner
approach.
3:58:19 PM
REPRESENTATIVE THOMPSON stated that as a former mayor having
faced costs of PERS when the actuarial presented the actuals,
and in observing how termination costs have affected
municipalities, he predicted many small communities will go away
because they can't afford to exist. He explained that with the
current budget situation and potential reductions to revenue
sharing, municipalities will likely layoff more people, which
will lead to more termination studies and increased liabilities.
He offered his belief that this is something that must be
addressed, that it has a fiscal note, but it will save
communities.
3:59:21 PM
REPRESENTATIVE CHENAULT expressed concern about the
municipalities and the costs associated with PERS and TRS and
said the state has stepped up to the tune of hundreds of
millions of dollars, if not $1 billion. The state has picked up
the amount in excess of 22 percent for municipalities. He
cautioned that as the committee reviews this it needs to make
sure that it considers the municipalities "bottom line" but that
the committee also consider the state's "bottom line" in terms
of continuing to pay for associated costs.
4:00:13 PM
MICHAEL BARNHILL, Deputy Commissioner, Department of
Administration (DOA), stated that the DOA has been working with
municipalities and the Alaska Municipal League (AML) on various
versions of HB 152 for about three years. He said that,
generally speaking, the DOA is sympathetic to the concerns
expressed by the sponsor in terms of the difficulty in managing
the personnel workforce for municipalities, which is one reason
the DOA has been working with them. He asked to take a step
back and understand the reasons for termination studies and
costs in the first place, which Ms. Pierson adequately
addressed. The DOA is fundamentally concerned about cost
shifting. He reminded members the state has an $11.9 billion
unfunded liability across the PERS and TRS. In 2007-2008, the
legislature wanted to maintain some participation by
municipalities in paying off the unfunded liability. The state
was concerned that without statutory provisions to maintain the
participation, that positions would be pulled out of the PERS,
reducing the payroll base and the unfunded liability that would
be paid by the positions being included in the PERS payroll
would then shift to the state.
MR. BARNHILL acknowledged that as Speaker Chenault just
mentioned, since the enactment of Senate Bill 125 in 2008, the
state has paid in excess of $600 million on behalf of
municipalities through FY 2014. The state will continue to pay
substantial amounts on behalf of municipalities going forward.
This happens through the 22 percent employer contribution rate
cap. If the actuarial rate is greater than 22 percent, and it
has been in the PERS since 208, the state pays it. IN FY 15,
the actuary is recommending adopting an employer contribution
rate of 44 percent. The employers are capped out at 22 percent
but the actual rate will be 44 percent, which means the state
pays 22 percent of the total payroll on behalf of municipal
employees, which is considerable relief. He said he has not
done a state-by-state comparison, but he imagined this magnitude
of state assistance on behalf of municipalities is quite
extraordinary. The state has gone a considerable distance in
providing relief, he said. In 2008, one means of avoiding
further cost shifting, which is the reason for the termination
cost studies. Another feature put into law was the 2008 salary
floor; thus, if the municipal payroll base goes below what it
was in 2008, that 22 percent will be based on the 2008 payroll.
These are important measures to keep in place to preserve a
certain amount of municipal participation in paying down the
unfunded liability.
4:04:03 PM
MR. BARNHILL pointed out that the municipalities have found this
particular feature of law as being restrictive so the state has
been examining ways to make adjustments without shifting
unfunded liabilities to the state. He explained that Version Y
repeals all termination study cost requirements. The state's
actuary has said that if this is passed into law that all
municipalities will take 22 percent of their payroll out of PERS
service. He said the state isn't sure that is a good
assumption, but certain municipalities are considering making
changes that will pull a considerable number of PERS positions
out of PERS service. He did not think it would be unreasonable
to assume a 20 percent reduction over time. The actuary has
reported that the net present value out of pulling 20 percent of
the positions out of PERS will cost approximately $75 million,
assuming this takes place over an extended period of time.
4:05:30 PM
MR. BARNHILL explained that the governor has proposed to
appropriate $3 billion from the state's Constitutional Budget
Reserve to the PERS and TRS retirement trusts. He reported that
it would be allocated at $1.9 billion to the PERS and $1.1
billion to the TRS. Equally important to the governor's plan is
that on a going forward basis the state assistance for the PERS
will be capped at $172 million per year as compared to the
current fiscal year in excess of $300 million per year for PERS
grading up to close to $500 million. In response to a question,
Mr. Barnhill answered that the $157 million in the governor's
plan is state assistance from the general fund on behalf of
municipal employers, including the state since state employees
participate in PERS.
4:06:54 PM
MR. BARNHILL stated that capped state assistance is roughly 50
percent of the current costs for PERS, which is fixed until 2036
and should give substantial fiscal certainty with respect to
general fund expenditures going forward. Additionally, this
plan better aligns the municipal and state's interests in terms
of new unfunded liability. New unfunded liability can come in
the form of investment losses and changes that municipalities
may make to their payroll. Under the governor's proposal, any
new unfunded liability will get added to the end of the
amortization term in 2036, which is shared on a proportional
basis between the state and the municipalities. Under the
status quo any new unfunded liabilities that are created are
borne entirely by the state. When the legislature passed Senate
Bill 125 in 2008, there was an assumption that the payments the
state would make on behalf of municipalities would grade down,
but the opposite has happened and the costs have graded up
steeply. The reason for that is due to the substantial
dislocations in the investment markets. In FY 2009, the state
lost 25 percent of its investment assets.
MR. BARNHILL reiterated that the state has borne the unfunded
liability associated with that loss in the form of steadily
increasing state assistance payments. Under the governor's
proposal, new unfunded liability would be shared. In viewing
the conditional effect of this bill, if the legislature
appropriates $1.2 billion from the CBR for PERS and TRS, without
any indication how that would be allocated if the bill takes
effect. It is not clear that Version Y will accomplish what the
governor proposes, which is that $1.9 billion for PERS, capped
$157 million payments going forward through 2036, and alignment
of the state and municipal interests. The $1.2 isn't sufficient
to do that, so the $75 million - if all employers remove 20
percent out of PERS service - would still be borne by the state
under this version of the bill. He said that DOA's concerns
remain the same until a conditional effect is put into place
which is to align the interests through a capped state
assistance that will put new unfunded liability at the end of
the amortization terms to be shared by the state and
municipalities.
4:10:45 PM
CHAIR OLSON asked what kind of shape PERS would be in if it had
gone forward with Senate Bill 125 in 2008.
MR. BARNHILL answered that employer contribution rates paid by
employers and municipal employers would have paid $609 million
more than they did since the state picked up those payments. He
said you'd have to ask your constituents what that would have
felt like.
CHAIR OLSON offered his belief that a good number of entities
would not have been able to pay that.
MR. BARNHILL answered absolutely. He said that other states
have not provided this sort of relief to municipalities, which
are evident by the various bankruptcy proceedings that have
happened in Detroit, Stockton, and San Bernardino.
4:12:22 PM
KATHIE WASSERMAN, Executive Director, Alaska Municipal League
(AML), stated that municipalities truly appreciate the 22
percent that has saved numerous municipalities from huge
financial concerns. This bill was crafted with the governor's
proposal in mind, she said. She understood discussions are
being held about the amount. The first concern was not to
repeal, but after the governor's proposal, considerable
discussion was held with the DOA, the AML's members, and some
PERS board members that this could be tacked on to the end of
the amortization schedule. In other words, the municipalities
chose "to remortgage our home and extend the payments out." The
municipalities will cost share those costs with the state at the
end of the amortization over 31 years. She reminded members
that the non-state employers are 38 percent of the entire
liability. The AML and municipalities support Version Y.
Referring to Senate Bill 125, she said the termination costs
have made a huge difference on whether municipalities want to
accept grants that would entail hiring a grant person since it
would trigger a termination study and costs on that employee for
the next 25 years or until the end of the liability.
4:15:03 PM
MS. WASSERMAN recalled Representative Thompson's earlier
remarks. When you go to the small communities, the people
terminated must be included in a class or group. For example,
in the City of Pelican, if one harbormaster exists, and the
harbormaster is laid off, it will immediately trigger a
termination study; whereas in a larger community, laying one off
wouldn't trigger a study.
4:15:43 PM
CHAIR OLSON asked whether this applies to seasonal employees.
MS. WASSERMAN answered that will depend on agreements with the
state. She acknowledged that Mr. Barnhill has assisted
municipalities considerably. She understood that cuts will be
happening throughout the state, which usually results in a
trickledown effect. She stated that municipalities are in a "no
win situation" since municipalities to raise extra money through
taxes or cutting services since they cannot cut employees.
4:16:30 PM
REPRESENTATIVE CHENAULT asked for clarification if Anchorage and
Pelican laid off harbormasters, whether it would result in
termination studies.
MS. WASSERMAN responded that it would likely result in only one
study, through the City of Pelican.
REPRESENTATIVE CHENAULT asked if two municipalities eliminate a
harbormaster if it would result in two termination studies.
MS. WASSERMAN answered that the municipalities would have done
that if it were possible.
REPRESENTATIVE CHENAULT suggested that perhaps everyone could be
reclassified.
4:17:24 PM
MS. WASSERMAN stated that the municipalities have looked for
ways to make this work but are not trying to slip through the
cracks.
REPRESENTATIVE CHENAULT related he is trying to find a solution.
MS. WASSERMAN summarized that most municipalities know that the
governor's proposal at 22 percent is something they can budget;
that the municipalities are willing to pick up more years if
that is what it takes, but to have ongoing termination studies
constantly arising creates difficulties and it affects their
hospitals, schools, and economic development.
4:18:24 PM
REPRESENTATIVE HERRON said after reviewing correspondence he
understood municipalities want to eliminate the termination
studies. He wondered what would happen if a cost shift occurred
and the small municipalities didn't pay the costs. He asked
whether the PERS needs the termination cost study.
MS. WASSERMAN answered that if the governor's proposal goes
through in some form, the entire termination study that each
city incurs will be "pushed to end" and everyone will share the
costs.
REPRESENTATIVE HERRON asked whether the state would pay for the
studies.
MS. WASSERMAN answered that the [municipalities and the state]
will all pay for them.
REPRESENTATIVE HERRON clarified that if there was no cost to
municipalities whether the state would pick up termination
costs.
4:19:27 PM
MS. WASSERMAN answered that is not what is being proposed.
4:19:34 PM
REPRESENTATIVE HERRON asked if it would be acceptable if the
municipalities were not responsible but someone else paid the
termination study costs.
MS. WASSERMAN said that AML is not attempting to cost shift.
REPRESENTATIVE HERRON asked whether the AML would support
something like that to look out for the smallest employers.
MS. WASSERMAN answered that she would like to see the proposal
in writing.
4:20:12 PM
CHAIR OLSON said he's been out of municipal government for about
12 years. He asked whether the AML has been seeing a trend in
privatization, in which the jobs are contracted out.
MS. WASSERMAN answered that some communities are holding
discussions, but most of Alaska's communities cannot do so. She
recalled only two situations in a list of jobs that were
contracted out. She did not believe there has been much
discussion overall; however, she anticipated there could be
considerable "push back" from people in the community.
4:21:26 PM
CHAIR OLSON understood that many communities might be desperate
enough to do so since they may not see any other alternative.
MS. WASSERMAN offered her belief the communities would still
incur a termination study so they haven't done so.
CHAIR OLSON suggested it would do away with future termination
studies.
MS. WASSERMAN indicated she was unsure what municipalities might
do. She said she hoped that municipalities would not layoff
people.
4:22:10 PM
CHAIR OLSON asked whether smaller communities are not aware of
the issues or are not prepared.
MS. WASSERMAN asked for clarification on whether he meant not
prepared for extra costs or for termination studies. She stated
that municipalities are aware of the issues and many have not
laid off any employees since they don't want to incur the
termination study costs.
4:22:59 PM
CHAIR OLSON stated that there isn't any easy answer.
MS. WASSERMAN responded that the AML has been working on this
issue for three years. The AML has not been trying to push off
employee costs to the state and is trying to find a way to all
share the [unfunded liability costs], but the municipalities
cannot absorb the upfront costs every time they need to manage
their personnel.
4:23:23 PM
REPRESENTATIVE JOSEPHSON related his understanding that this
bill will shift costs to 2036.
MS. WASSERMAN answered that the AML hopes the governor's
proposal will pass. If so, this bill will transfer the unfunded
liability cost to the end of the amortization. The AML and
state would each pay 22 percent. She acknowledged there would
be some transfer of costs, but everyone shares the costs and the
payments would be extended at least five to six years or more.
4:24:24 PM
REPRESENTATIVE JOSEPHSON suggested that the original bill seemed
to take more a "scalpel than a knife" approach and have a
graduated system with payrolls under $1 million, $1-5 million,
and over $ 5 million. He wondered if smaller cities are having
more difficulty since they have one harbormaster instead of
three, whether the committee should consider the original
version of the bill as the approach.
MS. WASSERMAN answered that AML is very supportive of HB 152,
but with the governor's proposal the AML envisioned a way to
help even more and contain costs.
4:25:22 PM
REPRESENTATIVE JOSEPHSON said if he heard Mr. Barnhill
correctly, there is some resistance from the administration. He
asked whether the committee is back at "ground zero" on this
issue.
MS. WASSERMAN answered no, she did not think so, but Mr.
Barnhill would need to assess any pushback.
CHAIR OLSON said everyone seems to still be talking so he did
not think that the stakeholders were at loggerheads.
4:25:50 PM
BOB BARTHOLOMEW, Director of Finance, City and Borough of Juneau
(CBJ), commented that the CBJ has been working with AML. He
said that at times CBJ would be considered a small employer and
at others a large employer. From CBJ's perspective the
termination study is very difficult to implement and to try to
manage changes in the workforce. Two recent instances did not
try to remove PERS positions - and historically CBJ has not
removed many PERS positions - but CBJ has tried to make
organizational changes that would result in some classes not
being used. For example, an investment officer might not be
needed, but CBJ might need an investment accountant, and that
simple reclassification would trigger a termination study, even
though CBJ would still retain the same number of PERS employees.
Therefore, CBJ doesn't do something that makes logical sense
because CBJ doesn't know what that study will be.
MR. BARTHOLOMEW said the statement that it's hard to implement
and administer is true, which is something many municipalities
are encountering. He stated that the bill eliminating the
termination study makes things simpler. Secondly, the "big
picture" of the unfunded liability still exists and how it would
be affected by the bill creates some uncertainty, which is
difficult for employers. Representative Josephson's question
about how to minimize the risk and incentives to do some gaming
or downsizing brings the issue back to the governor's proposal.
He acknowledged considerable effort was made in the governor's
proposal and suggested that a comprehensive solution to move
forward and how to address the unfunded liability is how to
minimize the risk. If employers are confident that their share
will stay at 22 percent, and an infusion of capital occurs [via
the governor's proposal], the financial markets will likely
consider it as a positive, and local government credit ratings
won't be adversely affected. He offered his belief that this
bill on its own needs help as far as a comprehensive solution,
which includes the contribution and commitments to cap the rate
that will give the state some fiscal certainty on the general
fund. In response to Chair Olson, he stated that he previously
worked for the Alaska Permanent Fund Corporation and the
Department of Revenue.
4:29:36 PM
JIM WILLIAMS, Chief of Staff, Office of the Mayor, City of
Fairbanks, stated that he echoes the comments and concerns
expressed by Ms. Wasserman. The City of Fairbanks recognizes
that termination studies were added to prevent employers from
initiating steps to intentionally and unfairly reduce their
portion of the growing unfunded liability obligation. However,
evidence has shown that employers have not acted in this way.
In fact, the salary base has grown since 2008. Additionally,
the unintended consequences of the termination study and
contributions have led to some challenges for small
municipalities and employers. The impact of the termination
studies and long term continuing past service payment
obligations is significant and burdensome. The laws make the
day to day management of workforce impractical and difficult to
implement changes. He expressed concern about the long-term
sustainability and fairness of the PERS and supports HB 152.
4:31:46 PM
LUKE HOPKINS, Mayor, Fairbanks North Star Borough (FNSB),
suggested that if it was possible to roll back to the
discussions on unfunded liability, the FNSB's past chief
financial officer, Michael Lamb, identified the proposed
municipal share at 22 percent. He offered his belief that the
proposed appropriation of $1.9 billion for PERS should be done.
He urged members to move forward with HB 152. With respect to
termination study costs, he recalled Buck Consultants projected
$75 million in costs. He indicated that 20 percent reduction in
workforce seems to be a "pretty wild assumption." He emphasized
that he wanted to manage his workforce. He stated that the
FNSB's workforce has grown and the idea of termination costs
being assessed to municipalities seems unwarranted to him.
MAYOR HOPKINS asked the committee to consider removing the
termination study costs. He said, "It is real. It is not going
away, but there are ways to manage it." He suggested that HB
152 puts forward pieces that are reasonable for the state and
all the other employers who are paying [the liability] to PERS.
4:35:41 PM
KATIE KOESTER, Community and Economic Development Coordinator,
City Manager's Office, City of Homer, asked to testify in
support of HB 152, which eliminates termination study costs.
Municipalities are feeling "the pinch of lean times and reduced
budgets." Personnel costs represent the largest expense and
it's important for municipalities to manage their workforce and
personnel. Homer is one of the municipalities that have a
number of very small departments. In fact, the personnel
department has a personnel director and economic development
consists solely of her position. As the city makes choices
about how to organize the workforce, it is limited due to the
termination costs even in instances in which the city considers
whether it would be beneficial to have a city attorney.
Currently, the city contracts out its legal work, but it can't
consider creating a new class of employees. She expressed
support for transferring funds to the retirement trust and
thanks the legislature for its leadership on the serious issues
of past service cost, and PERS and TRS retirement costs. She
encouraged members to continue to work on this thorny issue.
4:37:25 PM
LUCINDA MAHONEY, Chief Financial Officer, Municipality of
Anchorage, stated that the MOA needs to have flexibility
especially as the state faces fiscally challenging times. She
acknowledged that repeal of termination costs will give the MOA
the ability to adjust the staffing levels as funding levels
change year to year. She emphasized that the MOA needs this to
determine what programs to offer citizens. For example, some
grant funding could be reduced or eliminated due to changes
beyond municipal control, such as reduced state or federal
funding. That loss of funding may result in our need to reduce
staff and change staff classifications. For instance, if the
MOA transferred an employee from one job classification to
another and in the process eliminate a classification, this will
trigger a termination cost even though the particular employee
is still employed. Anchorage is working on modernizing and
standardizing its job classification to achieve efficiency.
This effort could result in fewer classifications, but not
necessarily fewer employees. She said that the MOA currently
has many classifications on the books that have been vacant -
some for over 10 years. She indicated it would be efficient to
eliminate these positions since it would reduce administrative
costs, but the MOA doesn't do so since it may trigger
termination costs.
MS. MAHONEY said the MOA understands the fiscal impact everyone
faces due to the unfunded liability, but the fiscal impact of
the termination costs is significant to Anchorage, but
immaterial to the total PERS unfunded liability of $12 billion.
Certainly, the MOA appreciates every dollar that reduces the
unfunded liability and are committed to partner with the state
to reduce this burden by supporting the governor's plan to
contribute $3 billion and assuming a greater financial portion
of the unfunded liability. This represents nearly $300 million
more that the MOA would pay into the unfunded liability if the
$3 billion is contributed. As Kathie Wasserman explained, the
way that happens is because the 22 percent of our payroll would
be contributed for approximately five more years, which
illustrates the importance of this bill.
4:40:59 PM
JENNIFER JOHNSTON, Member, Anchorage Assembly, Municipality of
Anchorage, stated that she is past president of the AML. She
thanked the legislature for its assistance with the unfunded
liability. She stressed that the governor's plan outlines a way
in which the municipalities can share the risk and will have
alignment as far as managing the liability. She considered a
different perspective, and what happens with the termination
costs. For example, when the permanent dividend program
initially started, it was extremely labor intensive. She
surmised that the PFD program probably does not have as many
employees or the employees may be working differently in the
current "My Alaska" program. She asked what would happen to the
state if it maintained the past employees in non-existent
positions, and how they could adapt to the 21st Century
technology. She said that is how the state and municipalities
will have to manage. She suggested that the MOA wants to grow
and manage its workforce. She emphasized that the MOA wants to
grow its workforce but adapt to the 21st Century technology.
4:42:50 PM
REPRESENTATIVE JOSEPHSON asked for the AML's position at the
time Senate Bill 125 passed. In other words, did the
municipalities believe that dispensing with Tier III and defined
benefits was a bargain they'd be happy to take in exchange for
the burden of termination costs and termination cost studies.
He asked what whether she knew about the history.
MS. JOHNSTON answered that she came in late in 2008. She
related her understanding that a number of retirement funds
existed but no one knew the allocation of the unfunded
liability. Trying to come up with something that was fair to
everyone going forward was "trying to wrap their arms, their
huge arms around a big problem." She was unsure of the AML's
policy at the beginning, but she understood the AML was active.
She stated that if the state didn't come up with another program
other than defined benefits that the state would extend the
situation to a point at which it would be completely
unmanageable. She suggested that Mr. Barnhill and Ms. Wasserman
could probably better answer the question.
4:45:06 PM
REPRESENTATIVE JOSEPHSON related a scenario in which it was 2036
and the $11 billion unfunded liability was gone, but a new
unfunded liability was created by another stock market crash or
other variables. He wondered what would prevent the
municipalities from asking the state to absorb the unfunded
liability from the permanent fund. He wondered why this
wouldn't become a "moving target" for decades.
MS. JOHNSTON acknowledged that the MOA and state can't predict
the future. She offered her belief that the governor's proposal
does "set the table" for managing the unfunded liability and
having alignment between the employers and the state.
4:46:26 PM
CHAIR OLSON removed objection to adopt the work draft. There
being no further objection, the committee substitute (CS) for HB
152, Version Y was before the committee.
[HB 152 was held over.]
4:46:43 PM
The committee took an at-ease from 4:46 p.m. to 4:48 p.m.
HB 328-BOARD/LICENSING OF MASSAGE THERAPISTS
4:48:38 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 328 "An Act establishing the Board of Massage
Therapists; relating to the licensing of massage therapists; and
providing for an effective date."
4:48:40 PM
REPRESENTATIVE BENJAMIN NAGEAK, Alaska State Legislature,
introduced himself and his staff, Mary Schlosser.
4:49:28 PM
MARY SCHLOSSER, Staff, Representative Benjamin Nageak, Alaska
State Legislature, stated that Alaska is one of six states that
does not regulate massage therapists. She stated the standard
of practice or regulation allows consumers to self-educate the
expected standard of care and an appropriate therapy for their
individual care. This bill endorses business development by
allowing massage therapists to become an in-network provider,
giving them the ability to bill insurance directly versus going
through chiropractors, physical therapists, or physicians'
offices. This may be especially important in light of the roll
out of the Affordable Care Act. She surmised that physical
therapists may see an increase in demand. Regulation may be a
nuisance but it is expected.
MS. SCHLOSSER related that in the fall of 2013, Forbes graded
states in terms of their legal and regulatory framework. She
reported that Alaska ranked 37th in business friendliness. Part
of the standing ranks the states' regulatory environment and
Alaska is ranked 44th of 50 states. She said that this bill
encourages greater professional opportunities for therapists.
The massage therapy profession is growing at a rate of
approximately 120 therapists per year in the state. The time
has come to bring clear industry standards for the health and
safety of Alaskans. She reported that 84 percent of respondents
in the field support state licensure. The sponsor requests the
committee to support this bill and raise the massage therapy
standard in the state.
4:51:59 PM
REPRESENTATIVE JOSEPHSON said he was familiar with massage
therapist rates, which range from $60 to $120, depending on the
time. He surmised that providers that massage therapists work
under receive a portion of the fees. He asked whether this
would change that in massage therapists' favor.
MS. SCHLOSSER deferred to the professionals to answer.
4:52:55 PM
AMANDA UNSER, Chair, Alaska Massage Therapy Licensure Coalition
(ANTLC), stated the ANTLC represents 600 members. She also
serves as the first vice-president of the American Massage
Therapy Association, Alaska Chapter, in charge of legislation.
She has practiced massage therapy for 12 years. She has
previously been licensed in the State of Washington and
maintains that license. The majority of massage therapists are
employed by chiropractors. She referred to a letter of support
from the chiropractors in members' packets. She explained that
the Alaska Massage Therapy Licensure Coalition formed in 2012
and houses two major groups that represent massage therapists
nationwide: the [Associated Bodywork & Massage Professionals]
ABMP and the [American Massage Therapy Association] AMTA, and
massage therapists throughout Alaska. The intentions were to
assess whether massage therapists were ready for licensure and
to get feedback on bill provisions, such as grandfathering or
transition provisions, education, cardiopulmonary resuscitation
(CPR) requirements, exemptions, and how the licensing board
would be formed. The result was overwhelming support from
massage therapists throughout the state. After two years of
research and much deliberation, the result was HB 328. She
urged members to pass HB 328 out of the committee.
4:55:28 PM
DON HABEGER, Director, Division of Corporations, Business, and
Professional Licensing (DCBPL), Department of Commerce,
Community, & Economic Development (DCCED), stated that bring up
one issue. He referred to page 3, line 24, related to
qualifications of a license. He read [beginning on page 3, line
22]:"[Sec.08.61.030. Qualification for license.] The board shall
issue a license to practice massage therapy to a person who (1)
applies on a form provided by the board; ...." He stated that
the division is happy to allow the board to do that work but
typically it is delegated to the department. The same issue
occurs on page 4, line 18. He stated that this language
requires the boar to supply the form, but often this is
something that the department does. He offered his neutrality
on this issue, but if the board wants to delegate this activity,
the department will take the responsibility. In response to a
question, he directed attention to page 4, line 18.
4:57:52 PM
REPRESENTATIVE JOSEPHSON asked for assurances that fees won't
rise above $500. He further asked what assurances that the
biennial fees would be predictable and massage therapists will
not see marked increases.
MR. HABEGER responded that predictability is one of the issues
the department and the legislature have been discussing
recently. He said there are no assurances that it will be $500
year after year. He explained that the license fees are a cost
and fee relationship. The centralized licensing in AS 08.01
basically requires costs incurred by the program results in fees
adjusted accordingly. Licensees are required to pay for the
activities of the program; however, fees don't tend to fluctuate
but are concentrated more on small programs.
4:59:33 PM
CHAIR OLSON offered his belief that a bill before the House
Finance [Standing Committee] would attempt to level out the
fees.
MR. HABEGER answered yes.
4:59:41 PM
REPRESENTATIVE HERRON said he has read the bill and asked
whether this bill provides a typical, normal setup for any new
licensed profession.
MR. HABEGER answered that this program looks similar to an
existing program, and the fiscal note is based on the Board of
Social Work Examiners, consisting of five board members, likely
with a shared licensing examiner based on the time spent working
on the program.
REPRESENTATIVE HERRON asked whether the state has a position on
the bill.
MR. HABEGER answered no.
5:00:53 PM
REPRESENTATIVE HERRON asked if there is a need for this bill.
MR. HABEGER stated that the division has not received any calls
prior to advocates requesting the program about a year ago.
REPRESENTATIVE HERRON noted one letter in opposition to the
bill. He asked whether he has read the letter.
MR. HABEGER answered no.
CHAIR OLSON asked whether the suggested changes would provide
more comfort to the division.
MR. HABEGER answered the two changes are merely suggestions that
may make it easier for the board.
5:02:06 PM
REPRESENTATIVE HERRON asked him to read the letter in opposition
to the bill.
MR. HABEGER agreed to do so.
5:02:18 PM
TRACI GILMOUR, Massage Therapist, stated she has waited 19 years
for licensure. She is a fourth generation Juneauite and has
been practicing massage since 1994 in Juneau. She attended an
800-hour massage program in Seattle, and has held a license from
Washington for her entire career. She owns a massage business
and has practiced under the supervision of a chiropractor for 17
years. She practices medical massage as a majority of her
business and passing this bill will allow her to be recognized
as a health care provider. She has been required through her
license and national membership to receive continuing education
annually. She has not felt burdened by her Washington licensing
fees and the American Massage Therapy Association (AMTA) not the
costs associated with her initial and continuing education. She
indicated that she holds a business license, pays sales tax, and
charges $60 per hour. She did not believe her fees would
increase due to costs incurred with licensure. She takes great
pride in the diverse knowledge she has about the body and
welcomes the opportunity to discuss massage and how she can help
her clients. This bill will assist nearly 600 massage
therapists become current with their education, knowledge of the
body and the many ways they can help or harm their clients. She
urged members to pass the bill from the committee.
5:04:00 PM
REPRESENTATIVE SADDLER asked how many people who are practicing
massage therapy will be barred from doing so under the bill.
MS. GILMORE answered that the grandfathering provisions would
permit anyone practicing massage therapy right now and can
properly prove it. There are seven ways in which they can prove
they have been currently working in the industry.
5:04:47 PM
REPRESENTATIVE SADDLER understood that no one would be barred.
MS. GILMORE agreed so long as they have been working in the
industry for fees. In response to a question, she deferred to
Ms. Unser to reference the specific provisions.
MS. UNSER referred to page 10, line 3, to the transition
provision in HB 328. She specified the bill allows six
different ways to transition in, which can date back to five
years prior to the [effective date of the bill].
5:05:57 PM
CARL KANCIR, Massage Therapist, Northern Comfort Massage
Therapy, stated that he received his training at the University
of Alaska Anchorage (UAA). He started in approximately 2000 or
2001 to get state licensure for massage therapists. He strongly
supports state licensure for massage therapists, but he does
have some questions and comments on the bill. He referred to
page 3, line 27, to the number minimum of hours of in-class
supervised instruction, which he felt should be 1,000 hours. A
number of other states require a minimum of 750 to 1,000 hours.
He offered his belief that increasing the number of hours would
lend credibility for massage therapists, in particular, to gain
knowledge on healing and yet still stay within their scope of
practice and not "run afoul of doctors, chiropractors and other
health care professionals." Again, he suggested it would be
more credible to raise the minimum to 1,000 hours for the
minimum hours for a course of study.
5:08:16 PM
MR. KANCIR referred to page 2, line 26, to the one public
member, which seemed confusing. The language read, as follows:
"(2) one public member; the governor may not appoint as a public
member (A) a licensed health care provider; ...." Additionally,
he expressed concern about requirements for submitting the
person's Form W-2, which he believes is private and personal to
obtain licensure as a massage license. Instead, he thinks that
this provision should be limited to those applicants without
education. He indicated that his accredited studies required
1,250 hours, although he wished he had obtained more hours. He
suggested that provision may need further clarification. He
related he has obtained numerous hours of continuing education
costing several thousand dollars. He just finished a February
1-2 course that cost $400, which illustrates his commitment to
his profession.
5:11:06 PM
REPRESENTATIVE HERRON referred to the transition language. He
asked whether the committee should base the minimum requirements
on the length of time a person has practiced massage therapy.
MR. KANCIR answered yes. He pointed out that the current
massage therapists can't go backwards to gain more hours. He
reiterated his belief that from this point forward the minimum
number of hours for massage therapists should be increased. He
knows many massage therapists, some of whom worked on the issue
of licensure for massage therapists who also objected to being
required to submit federal income tax forms. He said, "It just
doesn't make sense." He acknowledged that he not a lawyer and
suggested the bill language could be stated in "plainer
language" so it could better be understood.
5:13:02 PM
CHAIR OLSON asked whether it is common to require applicants to
submit federal income tax documents and records.
MR. HABEGER answered that he could not think of any program that
requires it.
MS. SCHLOSSER responded that the transition language offers
numerous options and the signed federal income tax is only one
of many options applicants can use to prove they have met the
education and examination requirements. She referred to page 10
to [paragraph (2)(A)-(F)] that lists the options.
5:14:22 PM
CHERI ZEP, Massage Therapist, Chez Sante, stated that she was
raised in Southeast Alaska and has been practicing massage
therapy for 10 years. She stated she is self-employed and owns
and operates Chez Sante in Juneau. She said she provides
employment for six other massage therapists. The hourly rate
for massage is $60 plus tax and she does not anticipate raising
rates since she currently engages in continuing education and
associated costs. She supports massage therapy licensure in the
state to provide public safety for clients and the massage
therapists. The bill sets a standard of education to ensure
massage therapists are trained in contraindications as well as
the body systems and the effect of massage on the body. She
acknowledged that if massage therapists are not properly
educated they can cause harm. It protects clients from
potential sex offenders and human traffickers. Currently,
anyone can call themselves massage therapist since the person
doesn't need to submit to background checks or fingerprinting.
Thus it is possible to have sex offenders and sexual predators
working on innocent people without their knowledge. She chooses
respect and asked members to pass HB 328.
5:15:51 PM
REPRESENTATIVE JOSEPHSON asked whether she pays for malpractice
insurance.
MS. ZEP answered that she pays for liability or malpractice
insurance.
REPRESENTATIVE JOSEPHSON asked about the cost of the insurance.
MS. ZEP answered she pays $195 per year for a $2 million policy.
REPRESENTATIVE JOSEPHSON remarked that is a bargain.
5:16:24 PM
REPRESENTATIVE HERRON asked whether some massage therapists
"won't make the cut" if HB 328 passes.
MS. ZEP answered that she didn't know. She suggested that those
who cannot meet the standards are those currently "hiding behind
the curtains" without a business license and not paying sales
taxes. She offered her belief that there are lots of people in
Juneau that do not want the bill to pass.
5:17:11 PM
REPRESENTATIVE HERRON asked if there are inappropriate people in
the business. He asked whether this activity is prevalent.
MS. ZEPP said she has heard about some issues in larger cities.
She said, "It's not happening here in our town so I don't think
it's going on right now...." She said that it could happen.
[HB 328 was held over.]
5:18:17 PM
ADJOURNMENT
There being no further business before the committee, House
Labor & Commerce Standing Committee meeting was adjourned at
5:18 p.m.