Legislature(2019 - 2020)BARNES 124
03/09/2020 03:15 PM LABOR & COMMERCE
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HB 235-AK WORKFORCE INVESTMENT BOARD:ALLOCATIONS 3:16:17 PM CHAIR SPOHNHOLZ announced that the first order of business would be HOUSE BILL NO. 235, "An Act relating to allocations of funding for the Alaska Workforce Investment Board; and providing for an effective date." 3:16:34 PM ASHLEY CARRICK, Staff, Representative Adam Wool, Alaska State Legislature, on behalf of Representative Wool, prime sponsor, provided a summary of HB 235. She stated that HB 235 reauthorizes the Technical Vocational Education Program (TVEP) for three years to 2023. This program provides technical and vocational training across the state to various recipients and has been in place since 2000. 3:17:17 PM REPRESENTATIVE STUTES moved to adopt the proposed committee substitute (CS) for HB 235, labeled 31-LS1480\M, Wayne, 3/6/20, as the working document. 3:17:37 PM CHAIR SPOHNHOLZ objected for the purpose of discussion. 3:17:47 PM TED MADSEN, Staff, Representative Ivy Spohnholz, Alaska State Legislature, on behalf of Chair Spohnholz, explained the changes to HB 235 proposed under the committee substitute (CS), Version M. He paraphrased from the document, entitled Explanation of Changes Version A to Version M [included in the committee packet], which read in its entirety as follows [original punctuation provided]: The proposed committee substitute makes three substantive changes to the original A version of House Bill 235: ? In Section 1, it changes the TVEP contribution rate from .16 to .18 percent. This adds to the overall available pool of TVEP funds. This change is found on page 1, line 7 of version M. ? In Section 2, it extends the sunset date an additional 2 years. The program would now sunset on June 30, 2025, rather than 2023 as proposed in the A version. This change is found on page 1, line 13 of the M version. ? In Section 2, the M version proposes to add one new allocation at 1.925% to the Kodiak Seafood and Marine Science Center. This change is found on page 2, line 13. o Allocations for other institutions, aside from the University of Alaska, are slightly decreased. These changed allocations are found on page 2, lines 4-12. o While allocations for most existing statutorily designated institutions are reduced by 3.5% from their current statutory amount, the change to the TVEP rate found in Section 1 allows each institution to see an increase in overall funds disbursed. See attached Table #1. o Section 3 adds a new subsection to AS 23.15.835. This new subsection (i) directs that the University of Alaska administer the funds allocated to the Kodiak Seafood and Marine Science Center for programing and capital improvements consistent with AS 16.52.020. AS 16.52.020 spells out the duties of the Kodiak Seafood and Marine Science Center. This change is found on page 2, lines 14-18. There is one additional change to the A version in the retroactivity clause (section 4). All sections of the bill, including the newly proposed changes in Section 1 and Section 2, and the added Section 3, will take effect retroactively if the bill does not take effect by June 30, 2020. 3:20:11 PM MATT GRUENING, Staff, Representative Louise Stutes, Alaska State Legislature, on behalf of Representative Stutes, discussed the Kodiak Seafood and Marine Science Center (KSMSC). The KSMSC was established under the University of Alaska (UA) under the College of Fisheries and Ocean Sciences in 1981 by the legislature through Title 16 [Fish and Game], Chapter 52 [Fishery Industrial Technology Center], AS 16.52.010-070, as the Fisheries Industrial Technology Center. It is the states only seafood pilot plant. The KSMSC mission under AS 15.52.020, is to support employment opportunities and other benefits to the state and the seafood industry through training, research, and industry collaboration. He provided a short history of the center and directed attention to an informational document, entitled About Kodiak Seafood and Marine Science Center [included in the committee packet]. He said that Alaskas seafood industry is the states single largest private employer; however, the processing industry receives little annual dedicated funding. He explained that seafood processing employees contribute a significant amount of funds to the TVEP each year. From fiscal year 2016 (FY 16) to FY 18 processing workers contributed an average of $607,000 to the fund while only averaging $64,000 per year from FY 14 to FY 20 in TVEP funding, which is approximately 1.2 percent of the universitys TVEP allocation. He stated that while the university and Alaska Vocational Technical Center (AVTEC) have increased a percentage of their TVEP funds focused on fisheries and maritime training over the last few years, very little funding has been targeted to the seafood industry workforce directly. MR. GRUENING noted that the industry has clearly identified training needs and desires through the Alaska Research Consortium survey [included in the committee packet], which was provided for by a federal Economic Development Administration grant to identify the statewide needs. He reported that over 25,000 seafood workers contribute to the TVEP fund annually. He said with the legislative mandate for the KSMSC yet to be realized, this reauthorization represents an opportunity to reinvest in Alaskas seafood industry with funds that are generated from that industry. He further noted that doing so will help contribute to statewide employment opportunities, the value of Alaskas seafood, and the long-term economic health of the state. He added that this would not result in a decrease to shares. Furthermore, there are letters of support from organizations [included in the committee packet], such as the Pacific Seafood Processors Association (PSPA); the Alaska Seafood Marketing Institute (ASMI); North Pacific Seafoods, Inc. (NPSI); the Alaska Research Consortium (ARC); and others. CHAIR SPOHNHOLZ asked for the bill sponsors position on the proposed CS. 3:25:12 PM MS. CARRICK explained that Version M represents a compromise between Representative Wool, prime sponsor, and the House Labor and Commerce Standing Committee. She said Representative Wool would like to express his acceptance of the proposed CS. 3:25:46 PM REPRESENTATIVE STORY expressed her concern about extending the reauthorization period from three years to five years. She pointed out that HB 235 concerns contributions to the states technical and vocational education programs, adding that Alaska has made strides in offering those. She offered her belief that a three-year sunset would better allow for the opportunity to readjust if necessary. She asked how input - specifically regarding industry trends - would be incorporated and received with a five-year authorization period. MS. CARRICK explained that recipients prefer the stability of knowing that they will receive funding. She said all recipients that were asked unanimously preferred the 5-year reauthorization period compared to the option of three years. REPRESENTATIVE STORY opined that three years is certainty. CHAIR SPOHNHOLZ asked Representative Story if she intends on offering an amendment today or if she is objecting to the CS. REPRESENTATIVE STORY expressed her hope that the bill sponsor would withdraw the five-year sunset. CHAIR SPOHNHOLZ pointed out that currently, its part of the proposed CS. She explained that Representative Story could offer a conceptual amendment to the CS if Version M were adopted. 3:30:27 PM REPRESENTATIVE FIELDS expressed his support for the stability that a five-year window lends the recipients and the institutions. He offered his belief that between the annual TVEP report and the ability that legislators have to interact with those institutions there will be an opportunity to make suggestions or intervene if necessary. 3:31:20 PM REPRESENTATIVE RASMUSSEN asked if the increased contribution rate is .02 percent of every Alaska workers paycheck. CHAIR SPOHNHOLZ clarified that it is not an increase on withholdings from workers paychecks. She explained that the fund was overcapitalized, leaving enough money to withstand this additional increase. She said they are putting that money to good use. REPRESENTATIVE RASMUSSEN questioned whether there is enough of a surplus to cover five years instead of three. CHAIR SPOHNHOLZ answered yes. 3:32:29 PM LENNON WELLER, Economist/UI Actuary, Department of Labor & Workforce Development, explained that the unemployment insurance trust fund has currently found itself in an enviable position with substantial reserves. Currently, there is nearly half a billion in the fund, which is roughly 80 million dollars above the ideal position to meet the majority of potential benefit costs. Regarding reserve ratios, he said, the fund targets between 3-3.3 percent of wages at any given time. Currently, there is over 3.8 percent, which means .5 percent of wages are above their own statutory targets. CHAIR SPOHNHOLZ noted that there is over 500 million dollars of overcapitalized in the fund and the proposed CS budgets 1.68 million dollars additional per year. MR. WELLER affirmed that. He restated that the fund has nearly 500 million dollars in it, adding that they are overcapitalized by roughly 80 million dollars. He said based on the statutory and historical targets, taking an additional 1.6 million dollars from the fund would not be detrimental. 3:34:59 PM CHAIR SPOHNHOLZ removed her objection. There being no further objection, Version M was adopted as the working draft. 3:35:19 PM REPRESENTATIVE STORY expressed her hope that the next annual report will show trends in enrollment in the various career and technical programs and that any necessary adjustments will be considered. 3:36:36 PM REPRESENTATIVE RASMUSSEN agreed with Representative Story. She moved Conceptual Amendment 1, which would replace the five-year reauthorization with a three-year reauthorization. CHAIR SPOHNHOLZ objected to Conceptual Amendment 1. She maintained that the majority of TVEP recipients prefer more stability in funding. 3:37:35 PM MS. CARRICK reiterated that after speaking with over half of the TVEP recipients, she is certain that they unanimously prefer a five-year reauthorization. 3:38:03 PM REPRESENTATIVE HANNAN expressed her opposition to a three-year reauthorization. She opined that a three-year window to reauthorize the program is a short window to accomplish any planning. She said five years is not too long, and any program that is not meeting its labor needs may have already shifted and changed after five years. She stated that five years is a good planning window. 3:39:30 PM REPRESENTATIVE FIELDS noted that NACTEC, for example, works closely with the local school district, so in considering the timeframe one must also take into account the actions of the school board and, in turn, the employers. He said five years is not a long time to implement a change, analyze, and assess it. 3:40:07 PM REPRESENTATIVE RASMUSSEN asserted that she doesnt want this to be perceived as an attack on the importance of this program. She said there may be adjustments and additional needs that arise, which is the reason she is advocating for a three-year reauthorization. A roll call vote was taken. Representatives Rasmussen, Story, and Gillis voted in favor of Conceptual Amendment 1. Representatives Fields, Stutes, Hannan, and Spohnholz voted against it. Therefore, Conceptual Amendment 1 failed by to be adopted by a vote of 3-4. CHAIR SPOHNHOLZ articulated that an important part of crafting a compromise is to make sure that everyone wins. She expressed her hope that CSHB 235 is now moving from the committee with that standpoint. She said a new beneficiary was added to the TVEP, which helps to support Alaskas fishing industry; furthermore, every beneficiary came out with more financing without jeopardizing the fund source or the stability of the state. She shared her belief that this is a win. 3:42:51 PM REPRESENTATIVE STUTES moved to report CSHB 235, Version LS1480\M, Wayne, 3/6/20, out of committee with individual recommendations and the accompanying fiscal notes. Without objection, CSHB 235(L&C) was moved from the House Labor and Commerce Standing Committee.