Legislature(2017 - 2018)BARNES 124
03/10/2017 03:15 PM LABOR & COMMERCE
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HB 141-AK WORKFORCE INVESTMENT BOARD;FUNDS 3:28:50 PM CHAIR KITO announced that the next order of business would be HOUSE BILL NO. 141, "An Act relating to allocations of funding for the Alaska Workforce Investment Board; and providing for an effective date." 3:29:29 PM JON DUFENDACH, Treasurer, Partners for Progress in Delta, referred to a 2/6/17 letter directed to Governor Bill Walker from Commissioner Heidi Drygas, with regard to non-resident employment, and he read as follows: We know it's not enough to encourage Alaska hire only on state projects, but we have looked for creative solutions to address the high rates of residential/non-residential hire in other industries. Administrative Order 278 is part of that effort and it incorporates apprenticeship targets in oil and gas projects. Research shows that apprenticeships are a powerful tool to encourage Alaska hire rates, in addition to their workforce development benefits for employers. MR. DUFENDACH noted that employment rates in the area of non- residency are over 40 percent in the oil industry, and 25 percent in the Operating Engineers Union. He said, "We operate a construction trade academy here in Delta" in an effort to train Alaskans and offer access to jobs in the construction and oil industries. He offered appreciation that the Delta Mine Training Center is now part of the University of Alaska system and is working with Partners for Progress in Delta. He urged the committee to consider an extension of the UA Technical Vocational Education Program (TVEP) and to continue providing training for Alaska's young resident workers. 3:32:18 PM DON ETHERIDGE, Lobbyist, Alaska American Federation of Laborers - Congress of Industrial Organizations (Alaska AFL-CIO), said the Alaska American Federation of Laborers - Congress of Industrial Organizations (Alaska AFL-CIO) supports HB 141, and advised that the organization funds its own training. He commented that when this program first began, he worked with the Alaska Works Partnership Program, AFL-CIO, and several people to put this program "into business" and they would like to see it continue. He remarked that the only benefit "we get out of it" is we go out and cherry pick some of the top students for its apprenticeship programs which has furthered these students' careers over the years. The main issue is local hire, and if Alaska does not have the people trained to take the oil and gas and construction jobs, then there is no argument when people start coming in from outside to take the jobs. The goal, he offered, is to train Alaskans for these jobs, and the Alaska AFL-CIO is in support of these programs. 3:33:56 PM REPRESENTATIVE BIRCH offered concern that the dollars come out of the unemployment insurance slice of an existing employee's pay, such that a piece of every hour of their paycheck goes to unemployment insurance. He commented that it appears these are being syphoned off or reallocated to this program, and asked how that benefits the individual whose paycheck it comes out of ostensibly for unemployment insurance. MR. ETHERIDGE suggested that when looking at the issue as per person, "it doesn't." Although, he explained, it is still not causing harm either because the program is solvent and if a person is out of work they can draw unemployment funds. His view, he advised, is that it saves the overall fund money, to leave it out there for other people to use without having to increase it, if the unemployed people get enough training to go to work. Also, he explained, in the event the person has an opportunity to go to work and not draw unemployment, that saves money, and "they" don't have to increase the rates later on in order to make the program solvent. 3:35:48 PM REPRESENTATIVE BIRCH pointed out that it appears $12 million is coming out of the paychecks of working Alaskans identified as unemployment insurance. Therefore, he said, there's a $12 million slice of unemployment insurance basically going to train someone else, and he said, "we're trying to figure out whether that could be increased, decreased, put into vocational schools in the school district, and so forth." It appears, he said, to not be a truthful representation to the working individual when they think they are paying unemployment insurance and, in fact, $12 million is being redirected. He pointed out that there is no question it is for a worthy purpose, but money is taken out of a working person's pocket to train someone else to possibly come in and take their job, for instance. 3:36:50 PM MR. ETHERIDGE responded that most of the individuals going through [TVEP programs] have paid into the funds and are reusing some of their own funds in many cases. He commented that it is probably not absolutely fair that it only goes to these few programs, but those are the programs "we picked out when we first started it." Initially, he said, there were only four to five programs and with each allocation "the pie got smaller" for each group. Speaking as someone who has paid unemployment insurance all of his life, he said that he does not begrudge any of that money training someone else to further their career and enhance local hire in Alaska. He stressed that if the state has to spend a bit of money to train these people so Alaskans are able to get those jobs, "I think we need to do it." 3:38:42 PM GRETA SCHUERCH, Liaison, Governmental and External Affairs, NANA Regional Corporation, advised that the UA Technical Vocational Education Program (TVEP) has served as an essential funding source to the Alaska Technical Center based in Kotzebue, and it serves as a catalyst for individuals to develop various career tracks. The Alaska Technical Center (ATC) is an adult vocational and technical school for all Alaskans, she described, which has been an essential player in the advancement of the collective workforce development efforts within the region. She commented that it benefits employers, such as the Northwest Arctic Borough School District, NANA Regional Corporation, and the Red Dog Mine through core programs, and it includes tracks and business technology, health occupations, construction trade technology, culinary arts, process technology, and offers a variety of short courses meeting the needs of local employers and business partners. In 2016, she offered, 696 individuals graduated, and 81 percent of whom are currently employed. The TVEP has had a tremendous positive impact statewide, and she pointed to the Youth Learning Center in Bethel, which serves a key role in the dental health aide therapy program benefiting all areas of the state through its rigorous dental training program, and whose graduates provide mid-level dental care in small rural communities throughout Alaska. The NANA Regional Corporation shareholders also benefit from other programs funded through TVEP at the University of Alaska, the Galena Interior Learning Academy, Alaska Vocational Technical Center, and the INANA Regional Corporation appreciates the legislature's continued support for secondary, post- secondary, and adult education that prepares Alaskans for future jobs in Alaska, she said. 3:41:28 PM CHAIR KITO, after ascertaining no one wished to testify, closed public testimony on HB 141. 3:42:02 PM PALOMA HARBOUR, Director, Central Office, Division of Administrative Services, said she was available for questions. REPRESENTATIVE SULLIVAN-LEONARD asked Ms. Harbour whether the funding dispersed from 2000 to present was $142.5 million. MS. HARBOUR responded that the cumulative total through FY 2017 was $142.5 million. 3:42:51 PM REPRESENTATIVE SULLIVAN-LEONARD asked the amount of dollars, per employee, which has been paid into the system from 2000 to 2016. MS. HARBOUR advised that she did not have that analysis with her, but the Research and Analysis Section of the department calculates the total number of employees in Alaska, how many employees are resident/non-resident, and she could go back and prepare that analysis. 3:43:44 PM REPRESENTATIVE SULLIVAN-LEONARD noted that she was looking for a ball park figure. She asked whether other pieces are taken out of unemployment insurance for government funding. MS. HARBOUR answered that the department funds two different programs: the State Training and Employment Program (STEP) which performs competitive workforce development grants; and the Technical and Vocational Education program is designated to the recipients in statute. REPRESENTATIVE SULLIVAN-LEONARD explained that she would like to know whether additional money is taken from unemployment insurance that would go toward these types of grants. MS. HARBOUR reiterated that the STEP and TVEP programs are the two programs that come out of employee contributions to unemployment insurance. She referred to the previous response she provided to Chair Kito's office and explained that it shows the employee's contribution to unemployment insurance, the STEP and TVEP contribution, how much money is deposited into the UI Trust Fund, and how much money is deposited into the STEP and TVEP accounts. 3:45:15 PM REPRESENTATIVE JOSEPHSON asked whether the other 49 states have technical training assistance for these two programs, such as Alaska. MS. HARBOUR responded there are other funding mechanisms in other states for training, but they do not originate from employee contributions to unemployment insurance. Alaska, New Jersey, and Pennsylvania, are the only three states in the nation that collect employee contributions for unemployment insurance, and New Jersey and Pennsylvania do not have a similar program for training out of that funding. 3:45:58 PM REPRESENTATIVE JOSEPHSON asked for clarification that there are only three states in the union requiring the employee to contribute to unemployment insurance. MS. HARBOUR answered that Representative Josephson was correct. REPRESENTATIVE JOSEPHSON said, notwithstanding Alaska being one of the three states, Alaska has low unemployment insurance benefits relative to sister-state Washington State. MS. HARBOUR responded, "Correct," and she opined that Alaska has a 30 percent wage replacement rate in its maximum unemployment insurance payment to Alaskans, but she did not have the exact figure with her today. REPRESENTATIVE JOSEPHSON asked whether she knew the 30 percent number to be lower than the mean. MS. HARBOUR responded "Yes," and she said she did not want to misspeak because she is not an expert on unemployment insurance, but opined that Alaska is on the very bottom in states' maximum weekly benefit payments. 3:47:09 PM REPRESENTATIVE KNOPP asked how Alaska compares as far as contributions rates to the other states. MS. HARBOUR asked whether Representative Knopp was asking about the employer and employee contribution rates. REPRESENTATIVE KNOPP referred to the percentages "we pay on payroll," and asked how Alaska compares to other states because obviously less benefits are received under a claim. He inquired as to how Alaska stands as far as the contribution rates compared to the other states with revenue versus expenditure. MS. HARBOUR answered that she could speak to TVEP, but she could not speak to the unemployment insurance program, and she did not know the answer to that question. REPRESENTATIVE KNOPP reiterated his request for the unemployment rates, employee/employer total contribution rates, and how Alaska compares to the other states. Obviously, he commented, Alaska is substantially low in the benefits section. He asked how Alaska rates in terms of contribution. MS. HARBOUR said she would look into the contribution rates. In response to Representative Josephson, she said she received a message that Alaska is 39th in the United States per maximum weekly benefits. 3:48:52 PM REPRESENTATIVE WOOL surmised that Alaska is one of the three states wherein the employee pays into the unemployment insurance contribution, and asked whether the other states are all employer only. MS. HARBOUR said that Representative Wool was correct, for all of the other states it is solely employer contributions. 3:49:22 PM REPRESENTATIVE BIRCH referred to STEP and TVEP, and asked whether STEP is the same dollar magnitude, for example, if it was $142 million for employee unemployment insurance contributions going to TVEP, and whether it was roughly the same for STEP. MS. HARBOUR answered that she did not run those numbers, but opined that it is less. The STEP contribution is 0.1 percent and TVEP is 0.16 percent, possibly two-thirds, she said. 3:50:37 PM REPRESENTATIVE ZACH FANSLER, Alaska State Legislature, in response to Representative Knopp, said that a quick internet search indicated Pennsylvania employees contributes 0.07 percent, and New Jersey employees contribute 0.3825 percent according to the 2016 Fast Wage and Tax Facts. 3:51:26 PM REPRESENTATIVE KNOPP asked what Alaska's employee/employer combined contribution rate is. REPRESENTATIVE FANSLER replied that the Alaska employee contribution is 0.5 percent, and the employer contribution is 1.01 percent. 3:52:31 PM REPRESENTATIVE JOSEPHSON commented that he agrees with Representative Birch and said the line item on a paycheck has the unemployment insurance, and it should say "UI, TVEP STEP." That would be truth in description, he described, but it is a policy call about whether, why, or how much to fund through this. This legislation is about something quite different, he related that it is about extending a program that does many things besides TVEP. He noted that he does not have children, but as part of the social compact, he invests some of his property taxes in public schools, police officers, and so forth, "and I am okay with that." This is the way the world often works, and he described it as a sharing of responsibility. 3:54:08 PM REPRESENTATIVE STUTES offered that she is in full support of the bill and opined that the committee members have paid into unemployment insurance as an employee or employer. She said she is happy to know that at least some of that money is going to retrain people that she could possibly use in her business. Alaska is "pulling up the rear" in trained individuals, and vocational training particularly, such as plumbers, or refrigeration operators for the seafood processing plants, she commented. 3:55:19 PM REPRESENTATIVE KNOPP related that he is also a fan of vocational training, especially because Alaska is large and diverse, and the local communities decide which type of vocational training best suits its needs geographically. He said he does not disagree with Representative Birch and the funding mechanism could be debated at another time, but in some manner it will be funded and right now he doesn't see a better option. 3:56:01 PM REPRESENTATIVE WOOL moved to report HB 141, labeled 30-LS0551\A, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 141 passed from the House Labor and Commerce Standing Committee.