Legislature(1995 - 1996)
02/14/1996 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 1847 CHAIRMAN KOTT announced the committee would hear 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." He said the bill was introduced by the Administration and deals with state training in the employment program. At the last hearing on the measure, there was testimony given by the Department of Labor suggesting the bill is a good bill. Number 1889 DWIGHT PERKINS, Special Assistant, Office of the Commissioner, Department of Labor, explained the bill relates to a pilot program that has operated over the last six years very successfully. He encouraged the committee to give the bill their consideration and to institutionalize the program. CHAIRMAN KOTT referred to the word "institutionalize" and said Mr. Perkins doesn't mean to lock the bill up. MR. PERKINS said he would like the program to be a permanent program. He noted the committee members have in their packets a copy of the program's executive summary which talks about the program since its inception. In the second half of 1989 (Fiscal Year 90), and July of 1994, State Training Employment Program spent $9.79 million towards providing training and services to 4,890 individuals. The program is paid for by the working employees, 1/10 of 1 percent is deducted and .5 percent of the ESD goes towards that. There are no general fund or federal monies appropriated to the program. The program helps to upgrade employee's skills. CHAIRMAN KOTT asked why we should force the employed, who likely paid for their own training, to subsidize the training of others, the unemployed. Number 2223 MARK MICKELSON, Manager, JTPA/SDA Program, Division of Community and Regional Development, Department of Community and Regional Affairs (DCRA), came before the House Labor and Commerce Committee. He referred to the question of why should there be a subsidy, an opportunity, a fund, to provide for additional training and said the answer, in his mind, is fairly simple. It is because most people are not saving for training for themselves, and many employers don't have funds dedicated for training. The STEP Program has been both employer friendly and employee friendly, in the sense that it has provided an incentive and an opportunity for many people and businesses to invest in additional skills and work force readiness for the Alaskan work force. The STEP Program has provided training for over 5,000 people. In many cases, it has been for Alaskans to upgrade their skills to make them more competitive against out-of-state job seekers. He referred to the Fisheries Community Development Program and said they made a significant difference in providing training for hundreds of rural Alaskans to be competitive in the bottom fish offshore industry. They have done some very innovative things with trades in respect to providing incentive for outreach and recruitment, pre- apprenticeship work in rural areas where traditionally the trades have not had a very strong presence. It is an incentive that essentially rewards work. Mr. Mickelson said it is not, in any way, a duplication of existing programs. The federal commitment to employment and training is very meager and is getting slimmer. He said he is anticipating about a 30 percent reduction this year with the federal commitment under the JTPA Program. The STEP Program has been a very flexible and adaptable program because the department gets to write the regulations. Mr. Mickelson said in 1988, the legislature did a good job in researching other states and how programs were structured. It is an effective tool to promote more Alaskan hire and greater skills. Number 2442 REPRESENTATIVE PORTER asked how the program is funded. He also asked how an employee or employer who is interested in having additional training for employees would go about getting into the program. [End of Tape...] TAPE 96-9, SIDE A Number 001 [Part of Mr. Mickelson's response wasn't recorded during the changing of the tape.] MR. MICKELSON explained the maximum an employee contributes to the program is approximate $24 for a year. The $24 does not impact an employee's benefits. He referred the question of how an employer or employee would access the fund and said the money is currently provided down through the employment training structure in the state. Currently, there are three service delivery areas. There is an Anchorage Mat-Su consortium that is administered by the municipality of Anchorage. There is a Fairbanks Private Industry Council. There is then a balance of state or statewide. He referred to the rural areas of the state and said that has been the DCRA's area of operations. Once the department receives the grant, they make funds available, generally through a competitive solicitation to the businesses, the educational agencies and to individuals who are seeking assistance. So any individual who becomes unemployed, goes in unemployment insurance, will be advised of this in the employment service offices. They will be made aware of these services by any educational agency providing the service and by word of mouth. MR. MICKELSON noted the program could be applied in Pelican since the cold storage closed. He noted staff will be sent there to have discussions about possible resources, and STEP might be one resource if there is inadequate federal money to provide help. He noted he has had discussions with staff in the DCRA Interior office with respect to providing additional training in the mining industry. REPRESENTATIVE PORTER asked if the training is available just to people who are unemployed or if it is available for upgrading employed people's skills. MR. MICKELSON explained there is an eligibility criteria that allows training for those who have exhausted unemployment insurance benefits. Another criteria is for those who may be facing a potential layoff due to plant closure, technological changes or advances, etc. Mr. Mickelson said an employer could approach the department and ask for assistance to retain staff if they could identify a specific training need that was appropriate. Number 332 CHAIRMAN KOTT asked what the ceiling is that an employee pays. MR. MICKELSON said he believes it is in the neighborhood of $24. CHAIRMAN KOTT said he remembers it being a very small amount. He said he thinks that ceiling is reached for an employee who makes about $11,000. Number 413 REPRESENTATIVE ROKEBERG referred to page 8 of the Executive Summary and said it appears there are a number of construction trade type occupations that were covered by the STEP Program, including painters, electricians, plumbers, pipe steam fitters, carpenters, roofers and sheet medal workers. He asked if this isn't something that the craft councils of the various unions provide their employees. He asked if the DCRA is duplicating something or if they are subsidizing the unions. MR. MICKELSON said the organized trades tend to have very well structured and organized training modules and components. If they want to be included, they have to make a case for need. Mr. Mickelson said from his own personal experience, the painters were never going to go into places like Kotzebue, etc., to recruit and provide training for people. They didn't have it within their budget. That type of threshold of need is required before the department would select them for training. He said he believes Anchorage and Fairbanks has similar criteria in that they are not going to provide unlimited subsidizes to organizations that are already covered. REPRESENTATIVE ROKEBERG asked if these people are getting jobs and where are they going. MR. MICKELSON said he believes that in the overall report there are some result summaries that do indicate that the program is working. Of course on an individual bases, there may be times when an individual does not become employed. He said the DCRA's expectation is that they'll return to work. The expectation of the program is that there will be a reduced demand on the unemployment insurance trust fund. He said he believes that after six years of operation, the evidence suggests that the program is working. Number 615 REPRESENTATIVE ROKEBERG asked how most of the training is conducted. He questioned whether it is conducted through vocational education schools or with employers. MR. MICKELSON said the training is provided under all those methodologies. Programs such as "On the Job Training" have been offered directly with private employers. There have been programs offered through existing educational agencies such as the Alaska Vocational Technical Center in Seward, branches of the university, unions, companies themselves, etc. There is multitude of delivery methodologies and options. CHAIRMAN KOTT noted the committee has been given an updated fiscal note. Number 840 REPRESENTATIVE ELTON made a motion to pass HB 435 out of the House Labor and Commerce Committee with attached fiscal notes and individual recommendations. REPRESENTATIVE PORTER said another way of describing HB 435 is a mini dedicated state income tax. Since it does seem to be doing some good, he stated he wouldn't object to moving the bill. REPRESENTATIVE ROKEBERG asked if he is correct in assuming that the fiscal note is a wash and it wouldn't affect the general fund budget. MR. PERKINS said Representative Rokeberg is correct as there are no additional general funds or federal funds in the program. CHAIRMAN KOTT said there is a motion before the committee to move HB 435. Hearing no objection HB 435 was moved out of the House Labor and Commerce Committee.