Legislature(2017 - 2018)BARNES 124
04/12/2017 03:15 PM House LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB142 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 83 | TELECONFERENCED | |
| += | HB 36 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 142 | TELECONFERENCED | |
HB 142-UNEMPLOYMENT COMPENSATION BENEFITS
3:22:25 PM
CHAIR KITO announced that the only order of business would be
HOUSE BILL NO. 142, "An Act relating to unemployment insurance
benefits; increasing the maximum weekly unemployment insurance
benefit rate; and providing for an effective date."
3:22:50 PM
REPRESENTATIVE WOOL moved to adopt the proposed committee
substitute (CS) for HB 142, Version 30-LS0530\O, Wayne, 4/6/17,
as the working document.
CHAIR KITO objected for purposes of discussion.
3:23:23 PM
REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, as prime
sponsor, reviewed the two changes in Version O of HB 142.
Regarding the first change [on page 9, line 13], he stated that
Section 2, subsection (h), was amended by adding the word
"annually" to specify that the department shall provide for
increases annually. Regarding the second change, he said
Section 2, subsection (i), was amended to remove the requirement
for publication of the notice of changes to the benefit schedule
in the Alaska Administrative Code. He explained that such
notices are not published in the administrative code, so this
was an error in the drafting and that language was removed.
3:24:14 PM
REPRESENTATIVE SULLIVAN-LEONARD requested clarification of where
the changes were made.
CHAIR KITO replied that the changes are on page 9, Section 2,
and requested Ms. Kloster to answer further.
KENDRA KLOSTER, Staff, Representative Chris Tuck, Alaska State
Legislature, on behalf of Representative Tuck, prime sponsor of
HB 142, stated that the word "annually" was added to [Section 2,
subsection (h)], on page 9, line 13.
3:25:00 PM
CHAIR KITO withdrew his objection to the motion to adopt the
proposed committee substitute (CS) for HB 142, Version 30-
LS0530\O, Wayne, 4/6/17, as the working document. Therefore,
Version O was before the committee.
3:25:31 PM
REPRESENTATIVE WOOL inquired about the change in Section 2,
subsection (h), which provides that [annually] after December
31, 2019, the department shall increase weekly benefit amounts
by $2 for each $250 [by which an individual's base period wages
exceed $59,500]. He asked whether the cap of $510 for $59,500
would be lifted after December 31, 2019, and he requested
further clarification.
REPRESENTATIVE TUCK responded that it depends on and is based
upon the average Alaskan income and there is a formula.
CHAIR KITO further explained that on December 31, 2019, the
department would review the average annual salary and if the
average annual salary is above $59,500, then for every $250
above what the average annual salary is, $2 will be added to the
weekly benefit.
REPRESENTATIVE WOOL offered his understanding that $59,500 is
the statewide average and is not for an individual.
REPRESENTATIVE TUCK replied correct.
3:27:18 PM
REPRESENTATIVE STUTES inquired whether the prior year is the
qualifying wage period.
REPRESENTATIVE TUCK replied he is unsure whether it is a full
year and requested that a department representative be allowed
to provide the answer.
ED FLANAGAN, Director, Division of Employment & Training
Services, Department of Labor & Workforce Development (DLWD),
replied yes, that is the base year and it is the full year
prior. He explained that there is a lag of one quarter, so if
somebody opened a claim today [via online as it is no longer
done in person] it would be based on calendar year 2016. If
someone had opened a claim before [January 1, 2017,] it would
have been based on October 1, 2015, and through one year. It is
a full year, he reiterated, and everything the person has earned
in wages in a full year.
REPRESENTATIVE STUTES offered her understanding that it is a
full year, meaning 12 months from the beginning of the last
quarter from which the claimant is filing.
MR. FLANAGAN responded yes, with a quarter in between.
MR. FLANAGAN further pointed out that the average annual wage
right now is $53,000. He explained that the $59,500 is where
the division runs out the schedule to come up with the [weekly]
benefit [depicted in the third column under Section 1] and this
benefit is half of the average weekly wage. He clarified that
after December 31, 2019, an adjustment would occur only if the
average annual wage has gone up, and it is not projected to go
up for the next two to three years at least.
3:29:01 PM
REPRESENTATIVE KNOPP inquired about the amount of weekly benefit
that would be received, as depicted in the third column [under
Section 1].
MR. FLANAGAN answered that if the bill were to pass, this is the
benefit schedule that would be in effect. It is very easy to
get confused, he said, because the base year is one thing and
the average annual wage is another. Should the average annual
wage go up to, for example, $59,000, there would at that point
be an increase in the [weekly] amount. He explained that this
is the way the state has always raised the increase when it does
make an adjustment the state runs the schedule out longer so
there is not the situation which is referred to now under
current law where somebody who makes $84,000 in his or her base
year gets the same benefit as someone who makes $42,000. It
acknowledges that some people are going to need more to maintain
their lifestyle.
REPRESENTATIVE KNOPP posed a scenario in which the state
averages $59,000 or $59,250 for a number of years, then a
recession occurs, and everybody is laid off and their
unemployment benefits are at about $508. He asked whether the
state is going to get to that point and said his concern is that
Alaska doesn't lead the nation in unemployment insurance
benefits and causing people to be incentivized to not be
aggressively looking for work. Another of his concerns, he
continued, is that by increasing these rates it will increase
the cost to employers a jump of 42 percent over five years by
2023. He asked whether he is accurate with this number.
MR. FLANAGAN stressed that that is over what is projected had
nothing been done for employees who make $39,000, which is
currently the maximum and the point at which contributions by
both employers and employees stop.
REPRESENTATIVE KNOPP stated he hopes the committee will consider
the contribution rate. He offered his belief that employers are
paying 6.5 [percent] and employees 1.5 and said he would like
for the committee to talk about the rates that employees pay
versus what employers pay. He also noted that state employees
are eligible for unemployment insurance benefits, but that the
employees don't contribute while the state does.
MR. FLANAGAN replied that if HB 142 were passed, Alaska would
never be the state with the highest maximum weekly benefit
amount because there are other states that gear it towards as
much as 60 percent of the average annual wage. For example,
Washington is currently at $690, which is much higher than where
Alaska would be with this bill. He offered his belief that
Washington's benefits automatically adjust, as do the benefits
in many states. Regarding Representative Knopp's first
question, Mr. Flanagan said that if a person were making $59,000
when this bill is passed, then yes, the person would get $508
because that is based on the current average annual wage, which
is $53,000. When the average annual wage gets up to $59,000,
which would be several years from now, the maximum benefit would
be about $570 or $580 due to the automatic adjustor. Regarding
Representative Knopp's second question about contribution rates,
Mr. Flanagan said they do fluctuate but that the employee rate
is currently at the statutory minimum for employees of 0.5
[percent]. He added that the employee rate has a minimum of 0.5
and a maximum of 1.0 and noted that Alaska is one of three
states in which employees pay anything. The current employer
contribution is, on average, about 1.01 [percent]. The employer
minimum is 1 percent and there is no maximum on the employer
contribution.
3:35:09 PM
LENNON WELLER, Economist, Research & Analysis, Division of
Administrative Services, Department of Labor & Workforce
Development (DLWD), noted that he serves as the actuary for the
unemployment insurance system. Speaking to Representative
Knopp's questions, he said the average rate for an employer is
1.01 percent, which is just off the 1.0 percent minimum rate for
employers, with the maximum being 6.5 percent.
REPRESENTATIVE KNOPP offered his understanding that Mr. Weller
is saying a maximum rate of 6.5 percent.
MR. WELLER replied correct and added that no employer can be
charged more than that.
REPRESENTATIVE KNOPP offered his understanding that 6.5 percent
is not where the rate is at.
MR. WELLER responded that the rate is currently at one-hundredth
of a percentage point off the minimum rate.
REPRESENTATIVE KNOPP asked what the contribution rate is for the
Technical and Vocational Education Program (TVEP).
MR. WELLER answered that the current contribution rate for the
TVEP program is 0.16 percent.
REPRESENTATIVE KNOPP inquired whether the 0.16 percent is a
component of the 1.01 percent that employers are paying.
MR. WELLER replied that it is a portion of what employees pay.
Employees currently pay a half a percentage point, of which 0.16
is attributed towards the TVEP program.
REPRESENTATIVE KNOPP asked whether part of the conversation here
should include state employees not making any contributions.
MR. FLANAGAN replied that generally employers with relatively
low rates of unemployment are what determine it. But they like
to be reimbursable, he continued, and the state is one that is
reimbursable. School districts and public employers generally
can elect to ...
REPRESENTATIVE KNOPP inquired as to the cost to the state.
MR. FLANAGAN responded that if it were economical, he thinks the
state would elect to be a contributory employer as generally
reimbursable is a better deal.
MR. WELLER confirmed that Mr. Flanagan's response is correct.
3:37:48 PM
REPRESENTATIVE WOOL stated he has concerns like those of
Representative Knopp. He said he is in favor of increasing the
payout above what it was before, but that in his own business
life he has sometimes encountered people who would prefer to
collect unemployment than to work and they tell him that they
can come work when their unemployment finishes. While the bill
would provide a higher payout, he continued, a person would have
to make more money to get more money. He offered his
understanding that claims today are filed electronically rather
than in person and inquired whether it is verified that
claimants are seeking employment as is required.
MR. FLANAGAN answered yes and said [the division] does confirm
[that claimants are seeking employment]. [The division] does
spot checks because it cannot check everybody and routinely does
audits, he explained. If someone says they went to "so-and-so"
to apply for a job, the division will contact "so-and-so" to
verify if the person went. The division does catch people, he
continued, and this is where overpayments that the division is
recovering come from. Folks collecting unemployment while
working under the table are violating the law, he added, and if
the division finds out about it the division will pursue the
violator to recoup the benefits plus a 50 percent penalty. In
egregious cases the division will prosecute if the division can
get a prosecutor to do so.
3:39:40 PM
DENNIS KNEBEL, President, Anchorage Central Labor Council,
testified in support of HB 142. He stated that the council is
an organization of unions that represent employees throughout
the Anchorage Bowl. It exists to serve the goals established by
its members and the council believes that economic health of the
community depends on strong, vibrant workforce. He said the
council demands that a government be responsive to the people.
The council requires folks to participate in the community so
that every citizen has the education and tools for success. He
reported that on March 15, 2017, the council unanimously passed
a resolution urging the Alaska State Legislature to increase the
maximum unemployment benefit. Alaska ranks forty-fourth in
average weekly benefits, currently at $252, he pointed out, and
Alaska significantly trails the states of Washington, Oregon,
and California in weekly unemployment benefits. Right now, he
continued, Alaska is in an economic downturn and the state's
laid off skilled workforce needs financial security. To be
successful in the community, local employers must maintain a
skilled labor pool to draw from when the economy picks up. He
urged HB 142 be passed.
3:41:30 PM
REPRESENTATIVE WOOL moved to report CSHB 142, Version 30-
LS0530\O, Wayne, 4/6/17, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 142(L&C) was reported from the House Standing
Labor and Commerce Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB142 version O.pdf |
HL&C 4/12/2017 3:15:00 PM |
HB 142 |
| HB142 Supporting Document-Resolution FBCTC 3.29.17.pdf |
HL&C 4/12/2017 3:15:00 PM |
HB 142 |
| HB142 Additional Document-Letter Ed Flanagan 4.10.17.pdf |
HL&C 4/12/2017 3:15:00 PM |
HB 142 |
| HB142 Memo of Changes version D to version O 4.11.17.pdf |
HL&C 4/12/2017 3:15:00 PM |
HB 142 |
| HB142 Sectional Analysis version O 4.11.17.pdf |
HL&C 4/12/2017 3:15:00 PM |
HB 142 |