Legislature(1995 - 1996)
03/17/1995 03:15 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 236 - REDUCTION IN STATE EMPLOYEE COMPENSATION Number 078 CHAIRMAN KOTT asked Representative Hanley, prime sponsor of HB 236, to come forward. Number 078 MARK HANLEY, PRIME SPONSOR of HB 236, commented that there had been a press conference three weeks ago on an overall five year financial plan. They had discussed that there were three areas of government that made up 75 percent of the spending. Those include education, health and social services, employee salaries and benefits. He stated that overall employee salaries run about $700 million in general funds. All three areas are growing at about four percent per year. The overall goal is to reduce spending $70 million below last year's budget. He said without making reductions in those three areas, it would require incredible cuts in the other 25 percent of the budget. He stated it was not their intent to balance the budget on the backs of state employees. There are major reductions in programs that will be affected throughout the budget, with people all over the state being affected. There is the potential for graduated reduction in the lower range salaries instead of the five percent across the board reduction. He said they are willing to look at areas that will not utilize these particular tools, but the overall goal is to start closing the gap on state spending. REPRESENTATIVE HANLEY pointed out that the specifics of the existing bill is intended to be a five percent reduction for all state employees including the Governor and Lieutenant Governor, who were inadvertently left out. He stated in the backup section of the bill packets, there is information from the Department of Administration that gives statistics of relative levels of state salaries compared to the private sector. The average change in salaries in 1980 to 1991, in the private sector, in comparison to the inflation rate has lost 25 percent, whereas the state wages have lost two percent. He said that non-covered employees are paid based on a salary schedule in statute, this bill makes a five percent reduction in those particular salaries. For employees covered under collective bargaining agreements, as their contracts come up, this bill would require the Governor to negotiate a five percent reduction in the value of those salaries and benefits. The reductions are required for all parties and are to exist for three years. Those who take the five percent reduction through the statutory chart change, at a particular date or those that have their negotiations come up sooner, may take their reductions sooner, but they will last for three years. The intent is that everyone would take a five percent flat line and it would last for three years, even though they're not implemented at the same time. Whatever inequities exist, would exist throughout the process. This does not attempt to equalize all of the contracts. Number 211 CHAIRMAN KOTT asked if theoretically, you could have members within the unions not taking any pay cuts. For instance if the union had just ratified a contract for three years, and a group of individuals within that group retired in two and a half years, would they not take the cuts. REPRESENTATIVE HANLEY replied that would be correct, there would be no penalty for those individuals. Number 220 REPRESENTATIVE KUBINA asked why they were singling out this bill before the special session in October. REPRESENTATIVE HANLEY asked if he was speaking of the Long Range Planning Commission. REPRESENTATIVE KUBINA responded yes. REPRESENTATIVE HANLEY stated the point could be made that why should any reductions be made now, and the same point could be made of why should we allow any increases. He said their intent was to put together a five year plan to try to make progress to that. He said if the commission comes back with some recommendations, they will incorporate them into their plan. Number 247 REPRESENTATIVE ROKEBERG asked how they could implement the sliding scale provisions. REPRESENTATIVE HANLEY commented that people were interested in achieving the same net result but of having less of a reduction on the lower end of the scale. He said the concept was reasonable but would take some time to work through it. Number 280 ALISON ELGEE, DEPUTY COMMISSIONER, DEPARTMENT OF ADMINISTRATION, stated that non-covered employees for the state have not had any kind of increase since 1991. At the present time they are 3.6 percent below most of the bargaining unit salaries. Under the terms of several recently negotiated contracts with the legislature, another 2.5 percent would be added to that. The compounded effect of this will be a 6.2 percent difference between non-covered employees and those protected by collective bargaining. She said the State Personnel Board recommended consideration of an adjustment of this schedule to 6.2 percent looking not only at equity with private sector employers, but also internal equity among state employees. She continued there are several contracts currently under negotiation. Section 10 takes much of the bargaining aspect out of collective bargaining. Once parties reach impasse, the unilateral implementation of changes to compensation of members could not be done as this legislation envisions. She explained there are three classes of employees in the State. Class one employees are not permitted to strike, they include police and fire employees, general prison and correctional employees, and hospital employees. State statute provides that those employees, should they reach impasse, would go to mediation. If that was not successful, they would go to arbitration. Class two employees include public utilities, snow removal, and sanitation employees. If they were to reach impasse, they go to mediation. If mediation is unsuccessful, they are able to strike. Class three employees are able to strike if impasse is reached. Her concern in this section is that there is no anticipation of strike resolution. If they are bound by an inability to negotiate compensation under any conditions then the five percent reduction and the employees go to strike. Number 331 REPRESENTATIVE ROKEBERG asked Ms. Elgee to explain how she came up with the 6.2 percent. MS. ELGEE stated that the last pay adjustment for non-covered employees was passed by the 1991 legislature. Since that time, employees covered by collective bargaining have received additional increases. The non-covered employees are 3.6 percent, below the Alaska Public Employees Association (APEA) employees. She said many of the other smaller units that currently have contracts under consideration by the legislature would include an additional 2.5 percent in conjunction with a 40 hour work week. The compounding effect of these two actions will make the non-covered employees, as of July 1, 6.2 percent below the majority of union members. REPRESENTATIVE ROKEBERG asked if the first integer was 3.6 percent and if it had a compounding affect over the life of the average contract. MS. ELGEE replied that it was 3.6 percent with 2.5 percent on top of the already adjusted base. The accumulated effect being 6.2 percent. CHAIRMAN KOTT pointed out that there were bills in both the House and Senate that would close that gap. Number 364 REPRESENTATIVE KUBINA asked if the Administration supports this bill. MS. ELGEE responded that they had not taken a position on the bill yet. number 368 CHAIRMAN KOTT asked her to comment on Section 10, as to whether or not she could suggest any compromise language that could resolve the no strike provision of the bill. MS. ELGEE stated that she would talk to the labor relations analyst to see if they have suggestions that might work. CHAIRMAN KOTT announced that the Speaker of the House, Gail Phillips, had joined the meeting. Number 379 ART SNOWDEN, ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM, stated that he had major problems with the substantive contents of this legislation. He pointed out the non-covered, including judicial employees, have not had a raise in a much longer period than their union counterparts. He also stated that the 3.6 percent that the Executive Branch talks about should be compounded back to when this raise was given to the unions. The non-unions have lost the use of that money. The State Personnel Board, has suggested the following: While it appears that state employees are generally adequately compensated, in most job classes the non-represented employees have not received reasonable cost of living increases, received by and offered to represented employees. The State Personnel Act requires that the statutory pay plan reflect the principal of like pay, for like work, (AS 39.25.150 2B). He continued that the law further requires that the annual pay schedule be developed, taking into account the statistics and reasonable internal pay relationships.(AS 39.27.035). This report suggests that there is a 6.2 percent pay gap. He stated that we are violating statute right now, and he believes that they are balancing the budget on the backs of the employees, mainly because of the sponsor's statement that the unions would only take a reduction for the term of their contract. He stated that when you change the statute, it could be forever. It doesn't say for three years and then it sunsets. He pointed out that 70 percent of the court system employees are a range 15 or under. These people are on the edge of having to receive assistance. He said that 200 of his employees have already organized, and if this legislation passes, they'll be hanging out a sign that says "Union Shop." He said if they want fairness, take the union cuts first once they've achieved those, then they can cut the general pay schedule. He said that they would then be even and they wouldn't have to cut the general pay as much because unions are already in front of the non-covered in regard to salaries. MR. SNOWDEN passed out a document that would take the committee through the judicial side of his testimony. He disagreed with Representative Hanley's remarks that the state employees had not taken a big hit on the Consumer Price Index (CPI). He illustrated that when you adjust for cost of living that, for example, a Supreme Court Judge in Atlanta, makes `X' amount and the CPI in Atlanta is `X', a judge in Anchorage makes `Y' and the CPI in Anchorage is 'Y', based on this report, Alaska's Supreme Court ranks 35th in the nation in pay. On page 2, it shows the Intermediate Court of Appeals ranks thirty-third in the nation. The general trial court is thirty-fourth. He said that since 1975, the Supreme Court judges have lost approximately $17,000 in purchasing power. In 1989, the legislature had to provide the judges approximately an $18,000 pay raise because the only applicants they were getting were out of the public sector; private sector attorneys wouldn't even apply. He stated they need to provide a range that attracts some of the most skilled attorneys in the state to the bench. With this reduction, our courts would drop to forty-fifth in the nation, in salary. He added judicial employees work two and a half hours more, per week, than the Executive Branch; they don't receive overtime until after 40 hours. They process over 140,000 cases, per year, and they didn't receive the last pay raise. He asked that the committee change their priorities and demand that the unions negotiate these cuts and, at that point in time, bring the non-covered employees into parody with the unions. CHAIRMAN KOTT asked where the document came from. Number 468 MR. SNOWDEN stated that they took from the National Center of State Courts, their report on salaries of judges in all states, and the report from census bureau on the CPI. He said that they matched these across the country and made the reductions accordingly. Number 470 REPRESENTATIVE ROKEBERG made the comment that it would be interesting to see these same graphs, along with the price of oil, adjusted for inflation. He said this might help everyone put things in prospective. MR. SNOWDEN stated that since 1975, a range 24 wage has increased by 165 percent, a range ten has increased by 177 percent, a superior court judge by 99 percent. These are well behind the other state employees. In reference to Representative Hanley's recommendation that they start at two percent for lower ranges, graduated for the middle range, and more for the upper ranges, the personnel studies show that the highest paid executives in the state are well under paid. The Commissioner of Health and Social Services, running a $300 million organization, makes $78,000, he said if there is a negative adjustment for the private sector, it's in the middle. Therefore, adjusting the salaries as suggested by Representative Hanley, would further exacerbate this problem at the top. He understands the problems of the state. However, if they want to cut everybody, don't take the uncovered first this time. Number 496 ALLEN ODELL, testifying via teleconference, said he is an operator for the Department of Transportation and Public Facilities (DOT/PF). He said that he is opposed to HB 236. His major concern was with them bypassing collective bargaining. He asked if troopers and teachers would be included in the pay cuts. CHAIRMAN KOTT responded that yes, there is that provision. Number 509 RICHARD SEWARD, ALASKA STATE EMPLOYEES ASSOCIATION (ASEA) LOCAL 52, AMERICAN FEDERATION OF STATE COUNTY AND MUNICIPAL EMPLOYEES (AFSCME), said he is the chief spokes person for the General Government Unit (GGU) at the collective bargaining, currently taking place, testified via teleconference. He agreed with the Administration's concerns about the effect of HB 236 on collective bargaining. He feels that it takes the bargaining out of collective bargaining and is a detriment to the whole process. He said he is concerned about the numbers that have been thrown about. The last collective bargaining agreement was January 1990, since that time the CPI has increased by 19 percent. Their wages have increased by eight percent. He said that this may be more than the unchartered employees, but he encourages all uncovered employees to "organize, organize, organize." MR. SEWARD said that through various negotiations, proposals and research he has done a great deal of comparisons with the private sector. He said that the numbers he uses are generated by the Department of Labor. He found that the average hourly wage, monthly wage and work week for members of the GGU remain in the middle of the private sector. In the mining and construction industries, we do much worse. In the retail trades, we make a better average wage. He stated that in going from work site to work site, as a business agent for the unions, he has come to believe the workers in the field are running a fat free operation. He said that Alaska needs to decide what services are no longer needed and, in that way, shrink the size of government. Number 540 DEBRA CHRISTIANSEN, testifying via teleconference, said she has been employed with the state since 1986. She said she is a Native Alaskan, single mother of three and is currently a range 10 grossing $526 per week. She explained that six months ago her children's father filed for a garnishment of her wages. The state finance office notified the courts that she did not make enough money for a garnishment. She said that if the legislature decreases her wages five percent over the next three years, her day care and housing costs would still remain the same. At that time, it would behoove her to quit her job, obtain food stamps and any other assistance that is out there. She closed by stating that "our elected officials profess to believe in the sanctity of the Alaskan family. But Alaskans are seeing with HB 236, is to the contrary". CHAIRMAN KOTT thanked Ms. Christianson for her testimony and commented that the bill sponsor had made comments on the possibility of graduating the percentages. He stated that if this bill did come to fruition, she would be affected very minimally. MS. CHRISTIANSEN stated that any decrease in her salary would affect her children and she could not afford it, period. The people that she works with can't afford it. She said if you decrease her salary by even one percent, she wouldn't be able to meet her living costs. Number 565 BRUCE LUDWIG, BUSINESS MANAGER, ALASKA PUBLIC EMPLOYEES ASSOCIATION, ALASKA FEDERATION OF TEACHERS (AFT), testified against HB 236. He said it is inconstant with both the collective bargaining and merit system. Bargaining units are established on the basis of a community of interest. He said that each group is unique, or it wouldn't be its own bargaining unit. He said that we all have different demands, and working conditions. They deal with these issues through the bargaining process. To establish an across the board cut ignores this process. He said that the state has the responsibility to establish wages. Many people think that the unions go in and negotiate the wages, however, the Supreme Court took this away from them several years ago. He said the only thing they negotiate is the salary schedule. The state has the right to put classes at different levels. Depending on the statute, they may put a clerk typist at a range 6, 8, or 10. He said that he represents the supervisory unit employees (middle management). In the last ten years, they have received four increases. In 1985, they received a 3.5 percent; in 1990, it was 3.3 percent; 1991 was 5 percent; and in 1992, they received a 3.6 percent increase. He said that they had a 3.8 percent scheduled for 1996, but voluntarily gave that up when the price of oil dropped. He said hundreds of their members volunteered to a reduced work week and to leave without pay. The raises that they have received are 27.8 percent behind the Anchorage CPI since 1993, taking into account the 6.6 percent increase that is before the legislature at this time, negotiated during the Hickel Administration. He said they have substantially cut their health plan, holidays, travel and premium pays. TAPE 95-20 SIDE A, Number 000 MR. LUDWIG pointed out that everyone knows that the oil money is tapering off and they aren't going to have the money they used to. He suggests that the state figure out which programs they don't want to operate, or let the employees within the Administration try to mitigate and keep as many programs from going with a certain amount of money to accomplish that. He closed by saying taking five percent from everyone is not a good idea. They should bury the bill, and "let it rest in peace." Number 015 CHAIRMAN KOTT asked Mr. Ludwig to summarize the second recommendation. Number 020 MR. LUDWIG stated that they are currently working with the Administration to create a labor management program with the different state unions. Their goal is to identify ways of cutting costs by giving workers a target figure. For example, "Joe" is two years away from retirement. If we can find a way to have him retire early, that would save `X' amount of dollars. "Mary" wants to be a programmer. If we can get her training, that would leave her position vacant. He said maybe there is no alternative but to layoff. However, the employees are the ones that do the work and have the best ideas on how best to do it. Number 144 DON ETHERIDGE, PUBLIC EMPLOYEES LOCAL 71, testified that Local 71 just finished negotiations with the Administration. Both sides feel the negotiations were fair, both sides had concessions in that contract. He said that it wouldn't be fair for this contract to now be thrown out after spending so much time and effort on the negotiations. They are opposed to a five percent cut in any form. He said in the contract, they voluntarily went to a 40 hour work week with no wage increase. They did this because they were tired of public ridicule for not putting in a 40 hour work week. He said that the only thing they wanted with this was their hourly wage. They were offered an increase, at the table, and declined. He stated that Local 71 has probably been the hardest hit in any of the state bargaining units since the 1986 cuts. The Buildings Division in Juneau had 33 employees in the 1970s to take care of all buildings in the Juneau area. Today there are seven caring for those same buildings. He said that there was more maintenance staff taking care of the Capitol Building, than there are taking care of the rest of the state buildings in the area. He said that Local 71 has had no step increases, except for longevity, which is three percent after seven years, another three percent after your ninth year. REPRESENTATIVE KUBINA asked if the maintenance people in the Capitol building were all working for the legislature. MR. ETHERIDGE responded "yes," they work for Legislative Affairs. However, when the Capitol Building was taken from the Division of Buildings, they also took two employees and then gave the Division of Buildings back maintenance of the third floor. REPRESENTATIVE KOTT referred to the 40 hour work week, and asked if they were compensated for the extra two and a half hours, and didn't take a wage increase beyond that. MR. ETHERIDGE said that they will be paid the base rate for the extra hours Number 144 GINA SAMUELS testified via teleconference that she is a 25 year resident, and a 10 year state employee for the Department of Corrections at the Wildwood Pretrial Facility in Kenai. She disagrees with the five percent pay cut. She said that 75 percent of the state employees are under a range 15. She herself is a range 10 and can't afford a pay cut. She said that there are other ways money can be cut from the budget. She said she cannot understand how the legislature can even consider cutting state employees wages when the Eighteenth Legislative Council voted to increase their per diem rate. She asked how can it be fair to raise per diem rates and then turn around and cut employees wages. She noted that the sponsor of HB 236, along with Chairman Kott and Speaker Phillips, were the people that voted for this increase. She asked that they consider that the bulk of state workers do not make big bucks. The loss of this money is also a loss to the communities and local economies. Number 192 ELAINA SPRAKER testified via teleconference against HB 236. She said that she is married to area biologist, Ted Spraker, who works for the Department of Fish and Game. She said it is obvious that supporters of this bill are balancing the state budget on the backs of the state employees. She indicated she speaks on behalf of the many of the Department of Fish and Game employees, in using her husband and family as an example. Her husband averages 60 hours per week. She said last week, three of the days he worked were 18 to 20 hours, per day, with no overtime pay. Any compensation he receives in his pay, which is called "hazardous pay," is a whopping $2.11 per hour. She enlightened the committee as to what hazardous pay has included: One plane crash, one helicopter crash, he fell off the side of a mountain while taking goats, has been bitten by wolves, kicked by moose and crawled into many bear dens, but the most dangerous hazard that he endures is when people don't realize the dedication that he has to his job. She said that his colleagues with the same number of years in the department have also endured these hazards as well and she has rarely heard them complain. Most the employees in the Soldotna Fish and Game Office have not had a pay raise in ten years. She stated that this gives her heartburn. With her husbands busy schedule, he is very hard to reach. Many people call their house figuring that since she lives with him that she too works for the state. She said that she has personally donated hours and hours of public service to the department, and is glad to do it because she supports her husband, the Department of Fish and Game and the state of Alaska. If she is willing to do this, the legislature should be willing to do so also. HB 236 is taking direct aim at destroying one of the highest standards of resource management in the United States by cutting wages and budgets from skilled and dedicated people. The wildlife scientist will soon become underpaid historians. She pointed out that most of the funding from the Department of Fish and Game comes from permits and licensees. The five percent cut would be very unfair. Number 236 PAT MOSS, testified via teleconference that she had been employed with the state since 1989. She is a 21 year Alaska resident. She said when she went to work for the state, she took a 50 percent pay cut from her private sector job. That job, due to automation, was done away with. She reiterated that low range employees would be very much affected by this. There hasn't been any cost of living decrease. She observed that in talking with many of her co-workers, they were willing to accept a wage freeze, but they are not willing to take a reduction. What concerns them is the continued addition of legislative mandates for more work, longer hours with no additional pay and now this five percent decrease in salary. She said the Department of Labor, Unemployment and Job Placement Division, has experienced a 33 percent staffing attrition. Another office within the Department of Labor, has lost more than 50 percent in the past two years, yet are asked to do the same job. She pointed out that the legislature had said they intended to reduce all government spending, yet the teachers just negotiated a contract. The way education handles decreases in money is that they don't decrease salaries of teachers or administrators, they decrease programs. She commented that the University of Alaska, Fairbanks campus, is a mess. The buildings are dilapidated with paint peeling, water dripping and yet, they build a huge new home for the chancellor. Number 280 CHAIRMAN KOTT appreciated that state employees are doing more with less. Number 295 FATE PUTNAM, LOBBYIST, ALASKA STATE EMPLOYEES ASSOCIATION, AFL-CIO, AMERICAN FEDERATION OF STATE AND COUNTY AND MUNICIPAL EMPLOYEES LOCAL 52, reemphasized the previous testimony of members of his union. He stated that they are a 8,600 member bargaining unit currently in the middle of bargaining contracts. The Administration is doing a very good job negotiating that contract to be in the best interest of the state of Alaska. The offers put across the table are evidence that the legislature is getting a good bargaining position from the state. He said that they haven't had a pay raise since 1992, the cost of living has gone up, their pay has stayed level. The purchasing power of the dollar has been reduced. He said that they are not opposed to a pay freeze, but most of these people are range 10 and below. They qualify for public assistance. There are state employees that are on public assistance. If you ask them to take an additional five percent cut, the number of people opting for welfare assistance will increase. He stated that this isn't something they want to see happen, and they go on record as opposed to a pay reduction. He said that it should be left to collective bargaining to allow them to negotiate a reasonable salary for all state employees. Number 319 REPRESENTATIVE JERRY SANDERS asked if the $526.50 received by the lady who testified previously, if this was gross or net. MR. PUTNAM thought this would be her gross salary. He said that people on public assistance would have to make over $11 an hour to make it reasonable to come off public assistance. He said that there are state employees making less than that. CHAIRMAN KOTT asked if there was anyone else wishing to testify on HB 236. Hearing none he stated that they would hold HB 236 over until the next committee meeting.