Legislature(2015 - 2016)BARNES 124

04/04/2016 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 125 LEGISLATIVE MEMBERS OF AGDC BOARD TELECONFERENCED
Moved HCS CSSB 125(RES) Out of Committee
-- Public Testimony <Time Limit May Be Set> --
+= HB 372 OMNIBUS INSURANCE TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
+ HB 299 PERS PARTICIPATION: CONTRACTORS TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
             HB 299-PERS PARTICIPATION: CONTRACTORS                                                                         
                                                                                                                                
4:46:27 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE  BILL  NO. 299,  "An  Act  excluding certain  persons  from                                                               
participating  in  the  Public Employees'  Retirement  System  of                                                               
Alaska."                                                                                                                        
                                                                                                                                
4:46:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, speaking                                                                
as the sponsor of HB 299, paraphrased the sponsor statement, as                                                                 
follows: [original punctuation provided]                                                                                        
                                                                                                                                
     HB  299, is  being  brought forward  on  behalf of  the                                                                    
     501(C)3,    nonprofit   corporation    volunteer   fire                                                                    
     departments  within the  Fairbanks North  Star Borough,                                                                    
     operating  as   "independent  contractors".   They  are                                                                    
     currently under  contract with  the borough  to provide                                                                    
     emergency  response   services.  Each   nonprofit  fire                                                                    
     department  has  both  full  time  paid  employees  and                                                                    
     trained  volunteers as  emergency  responders. Each  of                                                                    
     these  organizations  provides  benefit plans  for  all                                                                    
     members.  Dolan vs  King County  was a  lawsuit between                                                                    
     the  County  and independent  non-profit  organizations                                                                    
     which provided  indigent legal services to  the county.                                                                    
     Over  a period  of thirty  years, King  County asserted                                                                    
     increasing budgetary and day  to day authority over the                                                                    
     formerly   independent  non-profit   organizations.  In                                                                    
     doing  so, it  asserted  more control  over the  groups                                                                    
     that   provided   the   services.  Employees   of   the                                                                    
     organizations sued  the County  for the  state employee                                                                    
     benefits.  They argued  that the  County's funding  and                                                                    
     control   over    their   "independent"   organizations                                                                    
     essentially made them state  employees for the purposes                                                                    
     of  participating in  the  Public Employees  Retirement                                                                    
     System (PERS)  and under pertinent statutes  and common                                                                    
     law   principles,  the   Supreme   Court  agreed   that                                                                    
     employees of  the organizations were  "employees" under                                                                    
     state law, and,  as such, were entitled  to be enrolled                                                                    
     in  the  PERS.  HB  299 would  clearly  define  who  is                                                                    
     eligible  for the  Public Employees'  Retirement System                                                                    
     of Alaska  and give added protection  to municipalities                                                                    
     against such liability. In times  of such fiscal strife                                                                    
     this  legislation would  encourage the  exploration and                                                                    
     utilization  of cost  effective  measures for  services                                                                    
     and  promote  independent organizations  and  business.                                                                    
     This  bill emphasizes  the need,  however, to  maintain                                                                    
     the  proprieties of  the independent  relationship when                                                                    
     contracting  for  the  provision  of  essential  public                                                                    
     service. I would appreciate your support of HB 299.                                                                        
                                                                                                                                
REPRESENTATIVE WILSON added that  Washington passed a similar law                                                               
to prevent further litigation.                                                                                                  
                                                                                                                                
4:49:05 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked how many fire service areas would be affected.                                                                
                                                                                                                                
REPRESENTATIVE  WILSON  responded  that Fairbanks  has  five  and                                                               
Ketchikan has the same issue.                                                                                                   
                                                                                                                                
CHAIR OLSON indicated that the  Matanuska-Susitna region may have                                                               
as well.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  WILSON, as  an  aside  to Representative  Colver,                                                               
said  Fairbanks North  Star Borough  has  approximately 109  road                                                               
service areas.   Representative  Wilson pointed  out [Identifier:                                                               
DOA-DRB-HB299-03-18-16] is a zero fiscal  note.   She paraphrased                                                               
the sectional analysis, as follows:                                                                                             
                                                                                                                                
   · Section 1  Contractors and employees of contractors are                                                                    
     excluded from this plan                                                                                                    
   · Section 2  "same thing"                                                                                                    
   · Section 3  adds "a person who is compensated on a                                                                          
     contractual or fee basis"                                                                                                  
                                                                                                                                
REPRESENTATIVE  WILSON advised  that Section  3 would  not impact                                                               
the "university fire service area"  employees, who are members of                                                               
the  Public  Employees'  Retirement System  (PERS),  because  the                                                               
contract with FNSB is with the University of Alaska.                                                                            
                                                                                                                                
REPRESENTATIVE  KITO  inquired  as  to  whether  individuals  are                                                               
covered under another retirement plan.                                                                                          
                                                                                                                                
REPRESENTATIVE WILSON  said yes.   She added that  those affected                                                               
by  the  bill  have  their  own  medical  and  retirement  plans;                                                               
however, they  are not  employees of FNSB  and would  not qualify                                                               
for  PERS.   In  further  response  to Representative  Kito,  she                                                               
explained  that in  Washington,  a nonprofit  that was  providing                                                               
services  sued   for  coverage  under   the  county   system  and                                                               
prevailed.   Subsequently, Washington clarified its  laws related                                                               
to who is a contractor and who  is an employee; the purpose of HB                                                               
299   is  to   clarify   that  contractors   who  contract   with                                                               
municipalities  are  separate  entities, and  therefore  are  not                                                               
eligible for membership in PERS.                                                                                                
                                                                                                                                
4:52:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  directed   attention  to  the  sponsor                                                               
statement and read [in part]:                                                                                                   
                                                                                                                                
     In times  of such fiscal strife  this legislation would                                                                    
     encourage  the  exploration  and  utilization  of  cost                                                                    
     effective   measures    for   services    and   promote                                                                    
     independent organizations and business.                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether HB  299 was  designed to                                                               
help privatize employees who are now public employees.                                                                          
                                                                                                                                
REPRESENTATIVE WILSON said absolutely not.                                                                                      
                                                                                                                                
REPRESENTATIVE  HUGHES asked  whether a  problem related  to this                                                               
issue has arisen.                                                                                                               
                                                                                                                                
REPRESENTATIVE  WILSON answered  that  "being  proactive is  much                                                               
better and much more affordable."                                                                                               
                                                                                                                                
REPRESENTATIVE COLVER questioned  how contracts with firefighters                                                               
are established.                                                                                                                
                                                                                                                                
REPRESENTATIVE WILSON  explained that  there is  a mill  rate for                                                               
each  fire  service  area,  which is  separate  of  the  contract                                                               
between FNSB for  emergency medical services (EMS)  that are paid                                                               
by the number of ambulance calls made.                                                                                          
                                                                                                                                
REPRESENTATIVE  COLVER surmised  EMS is  provided by  the private                                                               
sector or  a 501(c) 3  nonprofit entity that  is not housed  in a                                                               
FNSB fire department facility.                                                                                                  
                                                                                                                                
REPRESENTATIVE  WILSON clarified  that EMS  is part  of the  fire                                                               
department; the fire  service protection is based on  a mill rate                                                               
and EMS is  a different area paid  by a contract with  FNSB.  The                                                               
ambulances, and volunteer and paid  responders, are housed in the                                                               
fire station.                                                                                                                   
                                                                                                                                
4:55:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  concluded that  EMS coverage  is not  by a                                                               
service area,  but is  area-wide.   He asked  about the  chain of                                                               
command.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  WILSON said  the staff  is directed  by the  fire                                                               
chief   and  an   EMS  (indisc.).     In   further  response   to                                                               
Representative   Colver,  she   affirmed  that   the  contractual                                                               
relationship is just between FNSB and the fire service area.                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER  questioned   whether  previous  part-time                                                               
employees have asked to be covered by PERS.                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON said  no.   The employees  are covered  by                                                               
their  own plans  and work  fulltime  or part-time  for the  fire                                                               
service area.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  COLVER  recalled  that in  the  Matanuska-Susitna                                                               
(Mat-Su) Borough, EMS staff is  hired by the borough; however, in                                                               
order  to avoid  paying benefits  and retirement,  employees were                                                               
kept on part-time status, and this  led to a legal action against                                                               
the Mat-Su Borough  over employees' right to PERS.   He cautioned                                                               
that "this  area of this  PERS with  the fire department  and the                                                               
EMS  employees   is  a  very   expensive  proposition   for,  for                                                               
government."                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON  restated  that the  proposed  legislation                                                               
addresses independent contractors, and  none of these [employees]                                                               
are employees  of FNSB.   The  Mat-Su Borough  hired people  on a                                                               
part-time status, but  these [individuals] are hired  by the fire                                                               
service areas as independent contractors.                                                                                       
                                                                                                                                
4:58:48 PM                                                                                                                    
                                                                                                                                
MITCH  FLYNN,  Fire  Chief,   Steese  Volunteer  Fire  Department                                                               
(SVFD),  informed  the  committee  SVFD is  a  501(c)3  nonprofit                                                               
organization  in Fairbanks,  and an  independent contractor  with                                                               
the Fairbanks  North Star Borough  (FNSB) that provides  fire and                                                               
EMS  services  within   a  service  area  on   an  annual  basis.                                                               
Recently, FNSB  revealed problems with SVFD's  contracts that may                                                               
pose a financial  liability risk to fire service  and EMS service                                                               
area  taxpayers.   Although improvements  to  its contracts  have                                                               
been made, SVFR  remains concerned about a possible  claim from a                                                               
current  or past  employee who  may  sue for  PERS benefits.  The                                                               
purpose of  HB 299 is  to eliminate the aforementioned  threat to                                                               
PERS,  and  is   not  to  prevent  the   fulfillment  of  current                                                               
contracts,  or  to  remove  employees  currently  receiving  PERS                                                               
benefits  from  the  system.    Mr.  Flynn  said  there  are  six                                                               
nonprofit   fire  departments   statewide  which   contract  with                                                               
municipal  governments to  provide fire  and EMS  services.   The                                                               
Steese  Volunteer  Fire  Department   has  its  own  medical  and                                                               
retirement benefits programs and members  do not intend or expect                                                               
to participate  in PERS.   He asked  the committee to  support HB                                                               
299  in  order  to  protect  PERS and  those  employees  who  are                                                               
rightfully entitled to PERS membership.                                                                                         
                                                                                                                                
REPRESENTATIVE  COLVER  asked  whether   it  is  problematic  for                                                               
municipalities to  contract with  nonprofits or others,  and seek                                                               
an exclusion from PERS.                                                                                                         
                                                                                                                                
5:02:37 PM                                                                                                                    
                                                                                                                                
KATHY  LEA, Chief  Pension Officer,  Division  of Retirement  and                                                               
Benefits,  Department of  Administration, said  it is  common for                                                               
municipalities  to  contract-out  for certain  aspects  of  their                                                               
work; however, from the perspective  of PERS, it is important for                                                               
independent contractors  to remain  independent from  the control                                                               
of the  municipality related to  finances, behavior,  or physical                                                               
arrangement.   If not,  the independent  contractor is  no longer                                                               
independent, and can be considered an employee.                                                                                 
                                                                                                                                
REPRESENTATIVE COLVER  inquired as  to the  hours an  employee is                                                               
required to work to be entitled to PERS.                                                                                        
                                                                                                                                
5:03:49 PM                                                                                                                    
                                                                                                                                
MS. LEA said the threshold for  part-time service is a minimum of                                                               
15  hours regularly  scheduled every  week, and  fulltime service                                                               
requires  at least  30 hours  of work  regularly scheduled  every                                                               
week.                                                                                                                           
                                                                                                                                
5:04:21 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced that public testimony would remain open.                                                                  
                                                                                                                                
[HB 299 was held over.]                                                                                                         

Document Name Date/Time Subjects
HB372 Draft Proposed CS ver H.pdf HL&C 4/4/2016 3:15:00 PM
HB 372
SB125 ver S.PDF HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Fiscal Note-(L&C)-DCCED-AGDC-02-29-16.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Sponsor Statement.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Legal Memo CS ver G 3-31-16.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
HB299 ver A.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Sponsor Statement.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Fiscal Note DOA-DRB-HB299-03-18-16.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Email-Steven Crouch 3-16-16.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Resolution AK Municipal League 11-20-15.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Resolution K. Gateway Borough 10-5-15.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Case Summary Dolan vs King County.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Dolan VS King County 8-18-11.pdf HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Email-Arthur Hansen 2-27-16.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Email-Dave Nebert 2-27-16.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
HB299 Supporting Document-Email-Mitch Flynn 2-22-16.PDF HL&C 4/4/2016 3:15:00 PM
HB 299
SB125 Sponsor Statement ver S.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Sectional Analysis ver S.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB 125 Supporting Document Legislative Membership State Boards and Commissions.pdf HL&C 4/4/2016 3:15:00 PM
SB 125
SB125 Dept. Law Memo to Leg. Office 03-20-16.pdf HL&C 4/4/2016 3:15:00 PM
SB 125