Legislature(1995 - 1996)

03/20/1995 03:10 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 236 - REDUCTION IN STATE EMPLOYEE COMPENSATION                           
 CHAIRMAN PETE KOTT asked the prime sponsor of HB 236,                         
 Representative Mark Hanley, to join them at the table.  Chairman              
 Kott asked if there was a suggested amendment to HB 236.                      
 Number 025                                                                    
 REPRESENTATIVE MARK HANLEY pointed out that the amendment addresses           
 the oversight of the Governor and Lieutenant Governor not being               
 included in HB 236.  He commented they have an idea of how they can           
 incorporate a graduated scale of state employees; however, it                 
 creates many questions as well.  People were speaking of a lower              
 percentage reduction within lower ranges and drawing the line                 
 somewhere.  Representative Hanley stated in doing that, they must             
 pick percentages which would all be fairly arbitrary.  This would             
 probably only affect the salary schedule for those that are                   
 noncovered in the union.  He said with the covered employees, the             
 language would suffice; you could probably put intent language in             
 to encourage negotiators to do the same thing.  However, it is hard           
 to identify the same types of ranges across the board in the                  
 different bargaining units.  Representative Hanley suggested                  
 leaving it the same as the language of the bill so an average of 5            
 percent would be achieved, allowing a lower reduction of some, if             
 that were negotiated, and a higher reduction on others, but the               
 average does have to be 5 percent.                                            
 REPRESENTATIVE HANLEY stated that a question had come up concerning           
 Class One employees who are not allowed to strike.  There is                  
 additional language requiring the same of a binding arbitrator,               
 that arbitrators could not award above that for the same amount of            
 time.  He said the Governor is required to negotiate a 5 percent              
 reduction in the salaries and benefits to be maintained for three             
 years.  He supposed if a bargaining unit chose not to accept, at              
 that point it could be imposed on them and certain bargaining units           
 could go on strike.  However, the public safety employees would not           
 be able to go on strike.  At that time, the legislature would have            
 to change it and the Governor's hands would be tied.                          
 Representative Hanley went on to say the law would require the                
 Governor to implement the 5 percent reduction.                                
 REPRESENTATIVE HANLEY suggested the committee, at minimum, address            
 the amendment, including the Governor and Lieutenant Governor being           
 reduced by 5 percent.  He also suggested addressing the binding               
 arbitration situation.  If they want to get into the graduated                
 percentage issue, it would become a much more in-depth issue.  He             
 advised if this were done, that legislators be higher than a range            
 10, but that is a policy call.                                                
 CHAIRMAN KOTT asked if there were questions for the prime sponsor.            
 Number 151                                                                    
 REPRESENTATIVE KIM ELTON asked if the department was still putting            
 together figures on the graduated percents.                                   
 REPRESENTATIVE HANLEY answered they were trying to get numbers                
 based on different categories, at least for the noncovered                    
 Number 160                                                                    
 REPRESENTATIVE NORMAN ROKEBERG asked Representative Hanley to                 
 comment on the university employees and others that are not covered           
 by collective bargaining, but who have historically made a good               
 faith effort to reduce their salaries and benefits.  He said there            
 is a question of equity if they implement an across-the-board cut             
 when these employees have already "bitten some of the bullet."                
 Number 176                                                                    
 REPRESENTATIVE HANLEY stated that every bargaining unit will say              
 they have made good faith efforts to reduce.  Others will say "that           
 union, or that bargaining unit or that noncovered person has better           
 benefits than I do."  He said that the simplicity of the 5 percent            
 reduction is if there is inequity, this maintains it.                         
 Number 197                                                                    
 REPRESENTATIVE BRIAN PORTER commented he had spent a considerable             
 amount of time in one of the positions being discussed.  He also              
 stated he was part of a department which tried to responsibly                 
 involve cost reduction.  He would like to see those people who                
 tried hard at cost reduction be given some assistance.  He said               
 they could possibly evaluate the average increases of contracts               
 over the last appropriate number of years, then appropriate the               
 overall percentages based on the reverse of that.  He asked whether           
 we would not reach the same number, but yet credit past good work?            
 Number 214                                                                    
 REPRESENTATIVE HANLEY responded that you could try.  However, some            
 have held the line on health care benefits, and some have not.                
 REPRESENTATIVE PORTER interjected he was speaking of the value of             
 the overall package.                                                          
 REPRESENTATIVE HANLEY said it gets into the legislature deciding              
 they want everyone on an equal basis.  He feels that is a laudable            
 goal, but to actually derive this goal is next to impossible.                 
 Number 240                                                                    
 REPRESENTATIVE PORTER responded it wouldn't have to be a one-to-              
 one relationship, but they should receive some credit.                        
 Number 252                                                                    
 REPRESENTATIVE HANLEY commented anything was possible.  However,              
 would they do it over three, five or seven years?  Bargaining units           
 change and people move into different scenarios.                              
 REPRESENTATIVE PORTER said it was his understanding that numbers              
 are kept on the average contract increase and those numbers are               
 readily available for comparison.  The numbers are there to work              
 with to account for the good work of managers in reducing their               
 REPRESENTATIVE HANLEY asked if Representative Porter was talking of           
 looking at individual bargaining units.                                       
 REPRESENTATIVE PORTER said right now, the noncovered employees                
 are 6.7 percent behind, on average, the covered employees.                    
 REPRESENTATIVE PORTER said he was talking about percentage                    
 differences over a time period in the increases from their                    
 individual basis.                                                             
 Number 265                                                                    
 REPRESENTATIVE HANLEY responded that if you don't take, for example           
 the noncovered employees, which at current level, if you look at it           
 over time, will be the same because if you average it out they will           
 be behind.  The legislature has not granted an increase when                  
 covered employees have had negotiated increases.                              
 Number 267                                                                    
 REPRESENTATIVE PORTER gave an example of three unions and non-reps.           
 In the last ten years `union A' had an increase of 15 percent                 
 overall cost to their contract, `union B' had 18 percent, `union C'           
 had 12 percent, and non-reps had 10 percent.  He explained the                
 amount they should request in deductions should be reflected in how           
 much they have increased over the last ten years, assuming that               
 isn't too difficult to assess.                                                
 Number 287                                                                    
 REPRESENTATIVE HANLEY asked how they should assess the increase.              
 He asked whether they should take the total (indisc. coughing), and           
 divide it by the number of people.  Sometimes certain people                  
 receive different raises within the same bargaining unit because              
 they have tried to bring their own people at the bottom up.                   
 Therefore, you get not only into bargaining unit, but by category             
 and range.                                                                    
 Number 286                                                                    
 REPRESENTATIVE PORTER said they are talking about overall goals for           
 overall costs of contracts.  He thought it wouldn't be difficult to           
 come up with the same result of an overall 5 percent increase and             
 then vary it based on the last ten years.                                     
 Number 297                                                                    
 REPRESENTATIVE HANLEY stated that this would basically equalize               
 everyone's pay.                                                               
 REPRESENTATIVE PORTER commented that he was trying to give some               
 benefit to past experience.  That would not result in a                       
 equalization of pay.                                                          
 REPRESENTATIVE HANLEY commented that it would decrease the margin;            
 it may not equalize it, but it's leaning in that direction.                   
 REPRESENTATIVE PORTER said it would tend toward compressing the               
 Number 312                                                                    
 REPRESENTATIVE ROKEBERG said they were talking about two different            
 elements; those being the impact on the lower ranges and the                  
 disparity between different units and groups of employees.                    
 Number 333                                                                    
 REPRESENTATIVE PORTER said that if you took a higher percentage               
 from bargaining units that have had higher increases over the last            
 ten years, you would be having that effect.  It would be easier to            
 Number 312                                                                    
 REPRESENTATIVE ROKEBERG stated that he did not see that.  He felt             
 that there needed to be two different calculations to achieve the             
 effects talked about.  He asked Representative Hanley to comment on           
 REPRESENTATIVE HANLEY said he didn't have the information there.              
 He said in trying to simplify the bill, it has become more                    
 Number 333                                                                    
 REPRESENTATIVE PORTER stated there was no doubt in his mind they              
 couldn't do this in this committee at this time.  However, he is              
 not suggesting they delay the bill for that purpose, but that is              
 food for thought for the Finance Committee.                                   
 Number 335                                                                    
 REPRESENTATIVE ELTON responded that he would prefer having                    
 something more comfortable before they move it on.  He asked                  
 Representative Hanley if there was any consideration to 5 percent             
 across-the-board and a 1.4 percent for those who didn't participate           
 in the previous pay raise.                                                    
 REPRESENTATIVE HANLEY stated that it is worked into the bill.  The            
 salary schedule is reduced for noncovered employees, whereas the 5            
 percent reduction applies to total compensation packages.                     
 REPRESENTATIVE ELTON asked him to explain this.                               
 REPRESENTATIVE HANLEY explained that the 5 percent cut for                    
 noncovered employees is only for the salary schedule; it does not             
 include benefits.  He said the bargaining unit is about 95 percent            
 of the average of the total package.                                          
 Number 359                                                                    
 REPRESENTATIVE ELTON said he understands the salary schedule was in           
 Section 9.  Section 10 has a series of subparagraphs addressing               
 each of the items Representative Hanley was talking about,                    
 However, his understanding of Section 11 is that it was for the               
 Number 368                                                                    
 CHAIRMAN KOTT interjected about Section 10 (e) of the original bill           
 where it talks about "the average per employee compensation set in            
 the new contract may not exceed 95 percent of the average."  He               
 said Representative Hanley is suggesting for the next bargaining              
 agreement there will be 5 percent in both wages and compensation,             
 or one or the other.                                                          
 REPRESENTATIVE ELTON asked if those same cuts would apply to the              
 noncovered or exempt and partially exempt employees.                          
 REPRESENTATIVE KOTT replied that the noncovered employees would               
 receive a straight 5 percent salary cut across-the-board.                     
 REPRESENTATIVE HANLEY added after they have already had a 3.6                 
 percent diminishment in their salaries simply because the                     
 legislature did not increase the noncovered employees the last time           
 around.  Under the provisions of HB 236 they would take another 5             
 REPRESENTATIVE HANLEY gave an example of two employees, one is                
 noncovered, one is covered.  The noncovered employee makes $50,000            
 a year salary and the covered employee makes $50,000 a year salary.           
 Their benefits both equal $20,000 each.  The noncovered employee              
 has 5 percent of the $50,000 reduction.  The covered employee has             
 a reduction of 5 percent of $70,000 because it is compensation pay            
 which includes benefits.                                                      
 Number 399                                                                    
 REPRESENTATIVE ELTON pointed out he was talking about history, not            
 what is happening in the future.  The history is that the                     
 noncovered employees did not participate in the last raise.  The              
 net effect is they are taking a bigger hit with this legislation.             
 Number 410                                                                    
 REPRESENTATIVE HANLEY stated 5 percent of the total package is a              
 bigger reduction than 5 percent of a smaller amount.  If you wanted           
 to do the same thing, you could say noncovered employees would get            
 a 5 percent salary reduction and covered employees would get a 5              
 percent salary reduction.  The bargaining units would then choose             
 how they would achieve that.                                                  
 Number 428                                                                    
 REPRESENTATIVE PORTER noted that would come close to a 3.5 percent            
 Number 430                                                                    
 REPRESENTATIVE ELTON commented the older he gets the more important           
 his benefit package is.  He is not comfortable with what they are             
 proposing, which for many employees, is in the neighborhood of 7              
 Number 435                                                                    
 REPRESENTATIVE ROKEBERG asked if the legislators were part of the             
 salary schedule in Section 9.                                                 
 REPRESENTATIVE HANLEY replied they are paid at a range 10 with no             
 step increases.                                                               
 CHAIRMAN KOTT asked if there were additional questions for                    
 Representative Hanley.  Hearing none, he asked Wendy Redmon to join           
 them at the table.                                                            
 OF ALASKA, STATEWIDE, asked if this was being teleconferenced.                
 CHAIRMAN KOTT stated that it was not.                                         
 MS. REDMON replied she had declined to testify on March 17 because            
 it was on teleconference.  She said this was probably the most                
 uncomfortable testimony she has had to give.  She was asking that             
 the university be exempted from the bill, because the salary                  
 schedule the university recently adopted is lower than what is                
 currently in HB 236.  The university is already paying less in                
 three out of the four key categories--accounting, tax accountants,            
 administrative assistants and secretaries--than what the state is             
 currently proposing at a 5 percent reduced level.  She said the               
 Board of Regents has taken a very hard-line position on salaries              
 over the past decade.  The increase for average employees over the            
 last ten years has been 22.8 percent.  The state has gone up 55.4             
 percent during that same period of time.                                      
 MS. REDMON stated when the state experienced the health care                  
 benefit crisis, the university redid their whole package.  The                
 state is paying $428 per month per employee.  The university is               
 paying $328 per month.  She said the university employees are on a            
 co-pay system; they are paying cash for part of their health care             
 insurance as well as having their overall level of insurance                  
 reduced.  Ms. Redmon related they did away with the Fairbanks                 
 differential three years ago.  She doesn't mean to be blasting the            
 state.  Their current pay scales are not out of line, but for the             
 legislature to say to the university and the Board of Regents, who            
 have taken a very conservative approach to salaries, that they are            
 arbitrarily going to cut back 5 percent?  She said what                       
 Representative Hanley said was correct in that they wouldn't be               
 changing the differential, they'd just be perpetuating it.  Besides           
 the university employees, the other largest market in the state are           
 other state employees.  Ms. Redmon said this a very inequitable               
 situation.  They are trying to do things internally, and hope the             
 university is a good place to work and can make up for it in other            
 ways.  She is requesting there be some acknowledgment that the                
 Board of Regents, in their management of the university, in their             
 fiduciary responsibility, has kept its services in line with                  
 resources that are available.                                                 
 MS. REDMON also stated that the university has two small unions.              
 The first is a faculty unit with approximately 250 employees. Those           
 salaries and benefits are exactly the same as nonunionized faculty.           
 She said physical plant and maintenance workers make up the other             
 unit.  They negotiated a 1.5 percent salary increase over the next            
 two years, which is a very modest increase in light of where they             
 started relative to their peers in the state.                                 
 MS. REDMON acknowledges the dilemma the legislature is in.                    
 However, there does need to be some consideration in looking at               
 those elements of the state that have taken the initiative to try             
 to deal with this issue and not just throw them in with an across-            
 the-board reduction.                                                          
 Number 512                                                                    
 CHAIRMAN KOTT commented this was what Representative Porter alluded           
 to earlier.  There have been a number of conscientious and frugal             
 efforts in the negotiation process, and possibly those bargaining             
 units should be given some credit.                                            
 REPRESENTATIVE PORTER asked if, in the first category, they took a            
 higher percentage reduction in existing wage than 5 percent, or               
 whether she was comparing.                                                    
 MS. REDMON interjected that she was comparing.  Currently, for                
 example, the administrative assistant position at the university              
 has a pay scale (which they just put into place) at $14.62 an hour.           
 The pay scale under HB 236 for the beginning wage for this position           
 is $16.25 an hour, $2.00 more than what the university is currently           
 REPRESENTATIVE PORTER asked if their classifications mirrored the             
 state classifications.                                                        
 MS. REDMON responded their classifications are not set in statute.            
 This legislation would direct the Board of Regents to adopt a                 
 compensation reduction in accordance with the state.  There is no             
 perfect correlation.  She stated there are many positions at the              
 university the state does not have.  For the ones that are similar            
 they would look at, for example, the administrative assistant mid-            
 level position and find their salaries are $14.62.  State salaries            
 are set at $16.25.  She doesn't think it is the state's intent to             
 give them the extra money so the scale levels are comparable.                 
 REPRESENTATIVE PORTER asked if these positions were the same job              
 MS. REDMON replied essentially, yes.  She said with the faculty, of           
 course, there are no comparisons.  HB 236 doesn't anticipate how to           
 deal with that.  Average salaries for faculty are $45,700 per year.           
 The average for K-12 teachers is $46,000.  Ms. Redmon stated that             
 for West Coast universities the averages are $47,000 per year.                
 Without including the area differential in faculty salaries, it has           
 presented enormous problems in trying to recruit faculty to come to           
 Alaska.  She realizes many of their constituents would not feel               
 sorry for them, making a $46,000 year, a nine-month salary.                   
 However, that is the national market they are competing in to get             
 faculty.  If they cannot be competitive in their salaries, they               
 simply cannot find people to come here with the other downsides to            
 many disciplines working in the state.                                        
 Number 533                                                                    
 REPRESENTATIVE ELTON asked if the annual salary included teaching             
 MS. REDMON responded it was only full-time, nine-month faculty.               
 She said there are people that have been working at the university            
 for 30 years and are making $90,000 a year, but most of the faculty           
 are at the low end of the scale.                                              
 Number 562                                                                    
 REPRESENTATIVE ELTON asked if those would be assistant, associate,            
 and full professors.                                                          
 MS. REDMON said that would be correct, with Ph.Ds.                            
 Number 562                                                                    
 REPRESENTATIVE KUBINA commented on the Vice Chancellor at the                 
 University of Fairbanks making $124,000 a year.  Maybe they could             
 take it out of those people's salaries.  He asked, as the bill is             
 written, whether they would have to reduce everyone's salary 5                
 percent, period.                                                              
 Number 568                                                                    
 MS. REDMON explained it would direct the university to develop a              
 compensation reduction in accordance with Section 9.  Section 9               
 says essentially, salaries will be reduced by 5 percent.  She                 
 supposed they could argue they would do nothing, because in effect,           
 their salary schedules are already, and in many cases, lower than             
 what is set out in Section 9.  Therefore, they would just ignore              
 this; however, she would feel better if they were either clearly              
 exempted and there was some confidence the Board of Regents was               
 going to continue to do what they've been doing in terms of                   
 managing its fiduciary responsibilities.  So it is a little                   
 MS. REDMON continued that it was very clear, with the collective              
 bargaining side, they are under the Public Employment Relations Act           
 (PERA).  The elements under Section 10 would clearly apply to those           
 collective bargaining groups they are currently under negotiations            
 Number 583                                                                    
 REPRESENTATIVE KUBINA observed from being on the campaign trail, it           
 is not the $46,000 salaries, but rather, it is the $124,000                   
 salaries that make it hard for the public to have sympathy.                   
 CHAIRMAN KOTT commented that on the same campaign trail they heard            
 about the state employee at the assistant deputy commissioner                 
 position making $80,000, not the clerk making $12,000 per year.               
 Number 589                                                                    
 REPRESENTATIVE ROKEBERG asked Ms. Redmon if they had an analysis to           
 prove their point or demonstrate that more graphically.                       
 MS. REDMON stated she had her people pull out four of the most                
 common classified positions and they took a look at what the                  
 university pay rate is, what the state range is, what their current           
 hourly rate is, and what the proposed hourly rate is under HB 236.            
 She said she was quite moved by the testimony of state employees              
 eligible for public assistance.  It never occurred to her so many             
 people employed at the university, earning less than $11.00 hour,             
 with a family of four, would be eligible for assistance.                      
 Number 604                                                                    
 OF ADMINISTRATION, stated he was there to answer any questions.               
 Number 609                                                                    
 CHAIRMAN KOTT asked if he could discuss the various categories of             
 employees, levels one, two and three.                                         
 MR. McMULLEN said the collective bargaining statute (PERA) provides           
 three classes of employees.  Class One is not allowed to strike.              
 If earlier processes of bargaining have failed, there is mandatory            
 arbitration to set the contract terms for that group, which                   
 consists of police, fire and corrections.  Class Two employees are            
 those whose services can be interrupted without affecting public              
 safety or welfare.  Those include snow removal and education.                 
 Those employees are treated like Class Three until the employer is            
 able to convince a court that public safety is being jeopardized.             
 At that point, they are treated like Class One employees.  The                
 biggest class is Class Three employees, who have the unlimited                
 right to strike when they reach impasse in the collective                     
 bargaining process.  It is that group, where the employees have the           
 economic mechanism of striking, where the employer has the economic           
 mechanism of imposing contract terms.                                         
 CHAIRMAN KOTT asked if resources were available to go back over the           
 past ten years and look at the various bargaining contracts, to see           
 what kind of increases there have been.  He asked if that                     
 information was available within the department.                              
 MR. McMULLEN said the information was available.  He said that it             
 makes a threshold question of at what point in time were relations            
 between the units equitable, to be a baseline just picking a point            
 in time.                                                                      
 TAPE 95-21, SIDE B                                                            
 Number 000                                                                    
 CHAIRMAN KOTT asked if the unions had negotiated a contract since             
 MR. McMULLEN commented the Class One employees have not had a new             
 contract since 1990.  The rest have.                                          
 CHAIRMAN KOTT asked if the noncovered employees' last increase was            
 in 1991.                                                                      
 MR. McMULLEN said that was correct.                                           
 CHAIRMAN KOTT noted Representative Elton's concerns were that the             
 noncovered employees had not had a cost of living increase since              
 MR. McMULLEN said it was a 3.6 percent increase in 1992.                      
 CHAIRMAN KOTT asked if Mr. McMullen had the numbers for 1993, 1994.           
 MR. McMULLEN said nonrepresented employees, and general government            
 employees have not had an increase.  Supervisors have an increase             
 scheduled under the terms transmitted to this legislature, as well            
 as do laborers and crafts.  Confidential has a 2.5 percent increase           
 scheduled for July 1, transmitted to the last legislature.  The               
 Inland Boatman's Union has a 3.5 percent increase scheduled for               
 July 1.  The Mt. Edgecumbe teachers have an increase coming up                
 which was transmitted to the last legislature.                                
 CHAIRMAN KOTT asked when the last cost of living increase for                 
 noncovered employees was.                                                     
 MR. McMULLEN answered 1991.                                                   
 CHAIRMAN KOTT noted that the noncovered employees had lost...                 
 MR. McMULLEN interjected, 3.6 percent to the rest of the state.               
 CHAIRMAN KOTT asked if this was per year or over the past three               
 MR. McMULLEN responded over the last three years.                             
 Number 074                                                                    
 REPRESENTATIVE ROKEBERG commented it would be helpful to have a               
 spreadsheet analysis of the historic perspective of the items they            
 have been discussing.                                                         
 Number 081                                                                    
 MR. McMULLEN responded they had recently prepared a document of               
 that nature for the Senate Finance Committee.                                 
 Number 088                                                                    
 REPRESENTATIVE ELTON commented they were significantly changing the           
 philosophy of collective bargaining.  He asked Mr. McMullen if he             
 considered himself still a collective bargainer if you were                   
 operating under the terms of this epic of legislation?  He said               
 there is not a lot to bargain other than implementing the mandate             
 from the legislature.                                                         
 Number 100                                                                    
 MR. McMULLEN responded that doing this does not destroy collective            
 bargaining per se.  The collective bargaining statute clearly sets            
 out the legislature's role in agreements.  It is specific from the            
 statute that the legislature has a role in providing oversight to             
 the process.  He said within the realm of collective bargaining,              
 the legislature would give some guidance.  In regards to specific             
 bargaining for the three-year life contemplated by HB 236, this               
 would take away the flexibility for trading anything for or against           
 salary increases.                                                             
 Number 139                                                                    
 REPRESENTATIVE ELTON pointed out he does not remember a time the              
 oversight has been applied pre-bargaining instead of post-                    
 bargaining when legislative oversight has been provided.                      
 MR. McMULLEN responded there had been no specific legislation                 
 pre-negotiation.  However, there had been clear directions.  For              
 example, the question of retroactivity, the feedback from the                 
 Finance Committee about no longer having retroactive agreements, to           
 the point they do not have retroactive agreements coming before the           
 REPRESENTATIVE ELTON asked if those directions were in the form of            
 MR. McMULLEN replied they were not.                                           
 REPRESENTATIVE KUBINA queried whether the legislature had ever                
 passed a law directing them to do something regarding collective              
 Number 158                                                                    
 MR. McMULLEN stated they had passed laws regarding out-of-state               
 differential under PERA.                                                      
 Number 171                                                                    
 REPRESENTATIVE KUBINA asked if the legislature could pass a                   
 resolution rejecting the contracts already submitted.  Or, can the            
 legislature just not fund them?                                               
 Number 197                                                                    
 MR. McMULLEN responded that, with respect to the three there now,             
 the legislature could clearly reject by resolution.  Even without             
 the resolution, they could be turned down in the appropriations               
 bill, which has happened before.  He said the contracts from prior            
 years are past the resolution point.  However, funding can be                 
 turned down.  There has been a front section in some appropriation            
 bills in the past that says, none of the appropriations made by               
 this bill can be used to fund the increase in such a contract for             
 the coming fiscal year.  He said there are multiple mechanisms                
 available to the legislature in rejecting terms of contracts.                 
 REPRESENTATIVE KUBINA asked if the rest of the contract would still           
 be in effect.                                                                 
 MR. McMULLEN explained if the contract is rejected in any form, the           
 parties go back to negotiation.  The resolution is nonbinding in              
 that, if the appropriation itself doesn't come through at the end,            
 that resolution doesn't mean the rest of the terms go forward.                
 REPRESENTATIVE KUBINA asked if the Administration supports HB 236.            
 MR. McMULLEN replied, it does not.                                            
 REPRESENTATIVE KUBINA asked if the Administration has taken an                
 official position against the bill.                                           
 MR. McMULLEN responded he was out of town on the 17th and did not             
 know what the deputy commissioner testified.                                  
 Number 218                                                                    
 CHAIRMAN KOTT asked if the state could unilaterally rescind an                
 existing contract, simply by not funding it.  Wouldn't the state              
 still be liable?                                                              
 MR. McMULLEN explained the legislature could reject the terms by              
 specifically not funding those changes the contracts provide.  This           
 is a major issue with retroactive agreements.  If the parties have            
 an agreement, they start filling that agreement in January, and               
 then in May the legislature says they don't get the salary part of            
 the agreement.  These parties have already been living with the               
 agreement in other areas, but it was all part of the same package.            
 Mr. McMullen stated if part of the package is thrown out, then the            
 whole package is thrown out.   The legislature can kill any                   
 provision by specifically not funding (indisc. -- coughing).  Then,           
 the parties are left to renegotiate.                                          
 Number 261                                                                    
 REPRESENTATIVE KUBINA thought there was a court decision that said            
 once the contract has been ratified by the legislature the first              
 year, they were obligated to the full three years.                            
 MR. McMULLEN noted it was the opposite conclusion.  The legislature           
 has the renewed opportunity each year to address those terms.                 
 REPRESENTATIVE KUBINA asked what the use of a contract was.                   
 Number 269                                                                    
 REPRESENTATIVE PORTER commented that, like so many things, the term           
 of the contract is subject to appropriation.  This is the power the           
 legislature has.                                                              
 REPRESENTATIVE ELTON observed that if that was the case, they                 
 didn't need the bill.                                                         
 MR. McMULLEN stated the legislature could reject the contracts by             
 not appropriating them.  However, he didn't think they could roll             
 back to anything except what had existed before the contract was              
 before them.                                                                  
 Number 274                                                                    
 REPRESENTATIVE ELTON stated there was nothing in HB 236 prohibiting           
 a 5 percent pay cut and a four-day work week.  For example, under             
 the terms of the contract, you could have a four- day work week of            
 eight hours a day, for 32 hours.  That would reduce the package by            
 5 percent.                                                                    
 Number 295                                                                    
 REPRESENTATIVE PORTER thought the bill provided the wage scale                
 would be reduced for the nonrepresented employees.                            
 CHAIRMAN KOTT asked if there were any further questions for Mr.               
 McMullen and made the point the Administration was against HB 236.            
 MR. McMULLEN replied yes.                                                     
 CHAIRMAN KOTT asked Ms. Ellerbee from the Department of Health &              
 Social Services to talk about the threshold of state employees on             
 public assistance and the number of potentially eligible employees.           
 Number 314                                                                    
 HEALTH & SOCIAL SERVICES (HESS), said she would explain the chart             
 provided to the committee along with the basic eligibility criteria           
 for Aid to Families with Dependent Children (AFDC).  She stated in            
 regards to how earned income is used and how they apply the                   
 disregards, they use gross earned income.  They allow the family to           
 have an earned income disregard of $90 from the gross.  Ms.                   
 Ellerbee said households are allowed a $30 deduction which runs for           
 12 months, and an additional one-third of the remainder for the               
 first four months.  This means the first four months on AFDC, if              
 the net income is $891 for a family of two or less, they apply the            
 ratable reduction.  Therefore, if a family's earned income, with              
 all the disregards, equals $891, they would pay them $821 per                 
 month.  Ms. Ellerbee stated there is also an allowance for up to              
 $200 for child care deductions.  They use the net earned income,              
 subtracted from the needs standard.                                           
 Number 345                                                                    
 REPRESENTATIVE KUBINA asked if there were state employees receiving           
 aid for dependent children.                                                   
 MS. ELLERBEE said she didn't have that information, but would                 
 research the matter.                                                          
 REPRESENTATIVE KUBINA stated he would like to know that information           
 and if we cut salaries 5 percent, how much more will they have to             
 pay in aid to dependent children.                                             
 REPRESENTATIVE PORTER asked with regard to that, if she would                 
 separate how much is state money and how much federal.                        
 MS. ELLERBEE replied that it was always 50/50.                                
 REPRESENTATIVE KUBINA said they are referring to the full-time                
 Number 358                                                                    
 CHAIRMAN KOTT noted the federal poverty level for a family of four            
 was $1,579.                                                                   
 MS. ELLERBEE stated the need standard for a family of four was                
 REPRESENTATIVE KUBINA asked Ms. Ellerbee to explain what the need             
 standard was.                                                                 
 MS. ELLERBEE replied the federal government mandated they set the             
 need standard.  The legislature has set the need standard at                  
 $1,113, which is the minimum to live on.  That is illustrated on              
 the AFDC Needs and Payment Standard Chart.                                    
 Number 380                                                                    
 REPRESENTATIVE PORTER asked her to define the application of the              
 rate of the reduction.                                                        
 MS. ELLERBEE stated in 1993, the legislature said they were going             
 to reduce the payment by a percentage of the need.  That started              
 out at 2.84 percent.  She said it is now 7.85 percent of need.                
 They previously paid 100 percent of need, until October 1993, and             
 now they will pay only a portion.  That is why there is a                     
 difference between the need and the maximum payment.  Ms. Ellerbee            
 related the maximum payment will not change until the legislature             
 changes it.  The percentage of need will constantly change as                 
 social security doesn't increase every January.                               
 CHAIRMAN KOTT noted this was gross.                                           
 MS. ELLERBEE agreed this was gross, prior to taxes and any other              
 Number 407                                                                    
 REPRESENTATIVE SANDERS asked if they pay federal income taxes on              
 this money.                                                                   
 MS. ELLERBEE replied no.  They take their gross income and give               
 them the $90 earned income disregard, which is supposed to include            
 the amount they pay for federal tax.                                          
 Number 408                                                                    
 REPRESENTATIVE SANDERS asked if she had said taxes and other                  
 MS. ELLERBEE replied that employers often take deductions to cover            
 other benefits out of paychecks.  For example, part of their health           
 care, but it does not come out of this money.                                 
 REPRESENTATIVE ROKEBERG asked if they make more money would they              
 have to give it back to the state.                                            
 MS. ELLERBEE said if the state has overpaid them, they would have             
 to pay it back.  If they are working and make too much money and              
 they declared it on their monthly report, the state would close the           
 case.  She stated in some cases, depending on how long they have              
 been on assistance, they are entitled to extended benefits, as in             
 Medicaid and child care assistance.                                           
 Number 420                                                                    
 REPRESENTATIVE SANDERS asked if people on assistance have health              
 benefits for hospital stays.                                                  
 MS. ELLERBEE answered they would have Medicaid because it is                  
 related to this particular program.  If they have insurance from              
 their employer, that insurance would cover them first, then                   
 Medicaid would pick up the balance.                                           
 REPRESENTATIVE SANDERS commented he wasn't thinking of working                
 state employees.  He's thinking of them not working.  He said when            
 you add all of the programs up, the people on assistance would be             
 making more than some of the people who have testified on the                 
 teleconference line.  He asked how many people are working for the            
 state who could be on welfare if they lost 5 percent from their               
 MS. ELLERBEE said she didn't have the number of employees and what            
 their salaries are.                                                           
 Number 438                                                                    
 CHAIRMAN KOTT asked what the minimum amount that a family of four             
 must gross to be above Alaskan poverty standards.                             
 MS. ELLERBEE didn't have the exact figures with her.                          
 CHAIRMAN KOTT commented they could have quite a number of people              
 below poverty standards who are presently working, who might opt              
 for assistance if they get hit with a 5 percent cut.  He asked the            
 department to supply the committee with a breakdown of the number             
 of employees in the different ranges.                                         
 REPRESENTATIVE KUBINA pointed out that page 3 of the bill shows the           
 monthly salaries.  The lowest range is $1,425 per month.                      
 Number 463                                                                    
 REPRESENTATIVE PORTER referred to the previously mentioned                    
 comparison of what would result from this legislation passing, as             
 relating to the benefits provided to current welfare recipients,              
 and the assumption that the benefits that are provided to current             
 welfare recipients are going to stay static.  He said he would                
 submit that's probably not the case.                                          
 Number 469                                                                    
 REPRESENTATIVE ROKEBERG stated there were too many variables to               
 take the chart.  They are dealing with elusive numbers and could be           
 drawing some incorrect conclusions.                                           
 REPRESENTATIVE SANDERS commented that in two days of testimony, he            
 had come up with many more questions than answers.  He hesitates              
 sending the bill out without knowing more.                                    
 CHAIRMAN KOTT stated HB 236 would go to a subcommittee, which                 
 Representative Sanders would chair.                                           
 Number 485                                                                    
 REPRESENTATIVE ELTON concurred with Representative Sanders.  He               
 said at some point, they essentially would be encouraging people at           
 the lower end of the pay scale to get off that pay scale and on to            
 public assistance.                                                            
 Number 497                                                                    
 REPRESENTATIVE ROKEBERG commented if the Alaska poverty level is              
 $15,000 for a family of four, is that what their target is?                   
 Number 504                                                                    
 REPRESENTATIVE ELTON said an easier way to look at it, perhaps, is            
 not focusing on people coming off the state payroll and onto public           
 assistance but, rather the disincentive for people to go off public           
 assistance and into an entry level state job.                                 
 CHAIRMAN KOTT asked if it was worth going to work 40 hours a week             
 for $200.                                                                     
 REPRESENTATIVE ROKEBERG said they should give the Department of               
 Administration some prototype comparisons so they could figure the            
 variables.  For example, a single mother with one child; also, a              
 family of four.                                                               
 Number 519                                                                    
 REPRESENTATIVE PORTER said he had no doubt the lowest paid full-              
 time, state salaried employee makes more than 50 percent of many of           
 the employees in small businesses, considering the total package of           
 the state.  To say we have to have the lowest paid full-time                  
 salaried employees be able to sustain a family of seven is                    
 ridiculous.  This bill is part of the package that is looking at              
 reducing every section of state spending.  He also said some of the           
 items they are comparing against it, in terms of welfare, are not             
 going to be there either.                                                     
 Number 537                                                                    
 REPRESENTATIVE ROKEBERG agreed they should have entry level jobs to           
 provide more employment for everyone, but they are not going to pay           
 the freight for raising the payments they have.                               
 Number 560                                                                    
 CHAIRMAN KOTT asked if there were more people wishing to testify on           
 HB 236.  Hearing none, he said it was the committee's intent to               
 hold the bill over to be heard in a subcommittee chaired by                   
 Representative Sanders along with Representatives Masek and Kubina,           
 which will look at the possibility of a graduated scale.                      
 Number 574                                                                    
 CHAIRMAN KOTT stated they did have an amendment yet to be adopted.            
 Number 577                                                                    
 REPRESENTATIVE PORTER made a motion to adopt amendment one K-1,               
 dated March 8, 1995.                                                          
 CHAIRMAN KOTT restated the motion to adopt amendment one, K-1 dated           
 March 8, 1995, by Kramer.  He asked if there was any objection.               
 Number 581                                                                    
 REPRESENTATIVE ELTON was uncomfortable in increasing the disparity            
 they have, for example, with the new CEO of Alaska Housing Finance            
 Corporation (AHFC) and the Governor.  He has a philosophical                  
 objection with increasing the disparity with the Governor and a               
 captain of the ferry system.  We are requiring the commissioner of            
 Natural Resources to run an oil company, and we are not paying them           
 much to do this.  He feels they are compounding a problem they                
 already have.  Representative Elton said if people think they are             
 correcting unfairness in the salary code by reducing the Governor's           
 salary by $4,000 a year, we're not getting to the heart of any of             
 the state's spending or revenue problems.                                     
 CHAIRMAN KOTT appreciated his comments and added if the amendment             
 was adopted they could deal with the inequities on an equitable               
 Number 604                                                                    
 REPRESENTATIVE PORTER believes they both ran on reduced spending              
 and would probably want be part of it.                                        
 Number 608                                                                    
 REPRESENTATIVE ROKEBERG associated himself with the comments of               
 Representative Porter.                                                        
 CHAIRMAN KOTT asked for a roll call.  Representatives Porter,                 
 Masek, Rokeberg and Sanders voted in favor of the amendment.                  
 Representatives Elton, Kubina and Kott voted against the amendment.           
 The amendment was adopted.  Chairman Kott restated the bill would             
 be held in committee until further considerations could be made.              
 Number 626                                                                    
 REPRESENTATIVE PORTER said they should try to keep in mind the                
 number the Finance Committee had in mind and target that number               
 with whatever scenario they came up with.                                     
 CHAIRMAN KOTT stated he preferred they iron out the details before            
 sending it on.                                                                

Document Name Date/Time Subjects