Legislature(1995 - 1996)
02/07/1996 03:13 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 435 - STATE TRAINING & EMPLOYMENT PROGRAM Number 862 CHAIRMAN KOTT announced the next order of business would be HB 435, "An Act relating to employment contributions and to making the state training and employment program a permanent state program; and providing for an effective date." Number 903 DAVID DEAN testified via teleconference from Fairbanks. He said he is fairly familiar with the state training employment program since he works with an office that administers the pilot program that has been in existence for several years. He said he is also familiar with the benefits it has provided to residents throughout the state. Of all the of the employment training programs available to Alaskans, none compare to the flexibility and benefits this program has offered. Many unemployed workers have obtained funding for short duration training and immediately obtain a job after completing their training. Without the benefit of the (indisc.) funding, there would have been no alternatives except to continue on unemployment or some of the social welfare programs that currently exist. Mr. Dean pointed out that it is important to remember that the Step Program doesn't supplant the existing programs, it greatly enhances them. On the surface this program sounds too good to be true. Residents obtain job related skill training, unemployment insurance payments are reduced, non resident workers don't take Alaskan jobs and there is no cost to the state. Funding is obtained from working Alaskan's contributions to the unemployment insurance trust fund in a perpetual process almost assuring the fund is replenished by those who are working. The program allows the work force to take advantage of technological improvements in the workplace as they develop and not after someone from the Lower 48 arrives in Alaska to take another Alaskan's job. Mr. Dean urged passage of HB 435. CHAIRMAN KOTT referred to Mr. Dean's comments regarding non- residents don't take Alaskan jobs. MR. DEAN explained through technological advances, if the work forces isn't trained locally, there will be non-residents coming into the state to take those jobs that Alaskans now hold because they're not advancing in the state of art training. The bill funds training and keeps it current. A lot of that training currently is offered in the Lower 48. People get the experience or qualifications and then they move to Alaska where the jobs are. Mr. Dean said he thinks the Step Program prevents some of that because it allows for the training of our own work force. Number 1035 CHAIRMAN KOTT referred to the Department of Labor's most recent annual report regarding non Alaskans work in the state of Alaska in 1984, and said there are 77,000 non-residents working in Alaska. We must do something to ensure Alaskans work in Alaska. He added that the unemployment rate during that same period ranged from 5,000 to 17,000. Number 1140 REBECCA NANCE, Director, Central Office, Division of Employment Security, Department of Labor, came before the committee to testify on HB 435. She said she believes the committee members have received a brief program overview, the 1995 Executive Summary and the sectional analysis of the bill. She noted David Stone of Echo Bay had to leave the meeting, but said she would submit written testimony from him. MS. NANCE referred to Section 1 and said it is the legislative findings. It sets up the goals of the program which is basically to train Alaskans for jobs and to reduce claims on the Unemployment Insurance Program. MS. NANCE referred to Section 2 and said it simply codifies the old temporary program and sets up a new chapter, Chapter 23. Within that chapter there would be eight sections. Section 010 would create the program as a permanent program using primarily the original language. This is essentially the same bill that has been in the pilot phase. MS. NANCE said Section 020 establishes the employment assistance and training account in the general fund. She said this isn't general fund money, it is money that has been earmarked and then the legislature appropriates the funds so they can be spent on this program. MS. NANCE referred to Section 030 and said it provides the funding mechanism for the program. She said 1/10 of 1 percent of employee wages go into this program and are earmarked. The legislature approve and appropriate those funds for this use. The maximum amount any individual would pay into this program as part of their tax contribution would be $24 and some change, per employee, if they max out on their wages. She said she believes $24,200 is the amount they pay of the 1/10 of 1 percent. Number 1280 MS. NANCE referred to Section 040 and explained it targets the population for the program. She said she believes this is the part of the Step Program that allows the flexibility that Mr. Dean spoke to. There are a lot of other federal programs such as dislocated worker programs and the JTPA. The guidelines and rules for the JTPA Program are very very rigid. The Step Program simply trains Alaskans for Alaskan jobs. The intended target group are past, future or current recipients of unemployment insurance. MS. NANCE referred to Section 050 and said it defines the services that must be provided. Not all of these services must be provided by a grantee, one or more of some sort of combination of services listed must be provided by the grantee. Number 1318 MS. NANCE said Section 060 defines the duties of the department in terms awarding grants to the Alaska Human Resource Investment Council. The council was established by the legislature last year. It consolidated four councils into one council. So, instead of having four councils with 40 people, it consolidated into one council with 26 people. Those people will be working under a subcommittee structure. This supersedes the sunsetted Alaska Job Training Council (AJTC) that used to get the grant awards. Ms. Nance said the council, as in the pilot program, may administer its own employment and training programs or it may awards grants to other entities as long as the target lists are adhered to and, again, as long as the grantee provides one or more of the services in Section 050. MS. NANCE explained Section 070 sets out the duties of the Alaska Human Resource Investment Council in awarding step grants. Again, the flexibility really comes into play here. She said Step isn't interested in displacing current training programs in Alaska. They just want to fill the void where no training exists. MS. NANCE referred to Section 900 defines terms. MS. NANCE explained Section 3 simply provides an effective date of July 1, 1996. MS. NANCE informed the committee members the program has been a very flexible program, it's Alaska specific, it is paid for and utilized by Alaskan workers, it stabilizes employment and it keeps Alaskans trained and ready to work in Alaska. She urged support for the bill. Number 1430 REPRESENTATIVE ROKEBERG asked Ms. Nance to explain the 1/10 of 1 percent, the impact, the fund raising aspects and the cost to Alaskan workers. MS. NANCE said the 1/10 of 1 percent is the employee wage contribution. The employer does not pay for this, the employees do. There is a ceiling on the amount they can pay in and 1/10 of 1 percent is $24.20. The employee rate is 1/2 of a percent of their wages to the $24,000 figure. This year there is about $3.5 million in the Step program that is employee contributions. REPRESENTATIVE ROKEBERG questioned whether any collections will be changed. MS. NANCE said it is identical to pilot that has been in effect for the last six years. The only significant change is that we're moving to the Human Resource Investment Council instead of the Job Training Council. REPRESENTATIVE ROKEBERG asked if there is an employer contribution. MS. Nance said no. Number 1530 CHAIRMAN KOTT asked how much is the percentage that employees are currently paying. MS. NANCE said employees pay 1/2 of 1 percent of their wages up to $24,200 into the unemployment insurance trust fund. She pointed out Alaska is only one of four states that has employees paying into it at all. CHAIRMAN KOTT asked Ms. Nancy if she is paying into it. MS. NANCE indicated she is not. Chairman Kott asked if he is paying into it. Ms. Nance said she is not aware of Chairman Kott's businesses outside of the legislature. REPRESENTATIVE SANDERS said he is paying into it and he believes it is a great idea. CHAIRMAN KOTT asked if it is reflected on his earnings. Representative Sanders indicated it is reflected on his earnings. MS. NANCE pointed out that if this isn't made permanent, the Step program will go away, it sunsets. Number 1660 CHAIRMAN KOTT noted the committee didn't have a quorum present so action couldn't be taken on the bill. He announced the bill would be held over until the next Labor and Commerce Committee hearing. REPRESENTATIVE ROKEBERG noted the bill has a number of committee referrals. CHAIRMAN KOTT said there are four committees of referral. He also said his understanding is that there is no fiscal impact. MS. NANCE said there is no fiscal impact, it is basically a wash, and anything that is not spent goes back to the unemployment trust fund. There is no impact. Number 1774 REPRESENTATIVE ROKEBERG referred to an employees paycheck and asked if this shows up as a separate line item. MS. NANCE said it is included in the unemployment insurance contribution.