Legislature(2015 - 2016)CAPITOL 106

03/29/2016 08:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 368 RIP PUBLIC EMPLOYEES & TEACHERS/E-REPORTS TELECONFERENCED
Heard & Held
*+ HB 24 PROF. SERVICES IN STATE-FUNDED CONTRACTS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
        HB 368-RIP PUBLIC EMPLOYEES & TEACHERS/E-REPORTS                                                                    
                                                                                                                                
8:05:33 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN  announced that the  first order of business  would be                                                               
HOUSE  BILL  NO.  368,  "An  Act  relating  to  the  preparation,                                                               
electronic  distribution,   and  posting  of  reports   by  state                                                               
agencies;  limiting  the  number  of special  assistants  in  the                                                               
executive branch;  changing the  amount of the  required employee                                                               
contribution   to  health   care  premiums   for  certain   state                                                               
employees; establishing  an award for state  employees who report                                                               
or   suggest  certain   efficiencies;   relating  to   retirement                                                               
incentives  for  members  of  the defined  benefit  plan  of  the                                                               
Teachers'  Retirement System  of Alaska  and the  defined benefit                                                               
plan of  the Public Employees'  Retirement System of  Alaska; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
8:06:14 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN, in response to  Representative Keller, indicated that                                                               
the   committee   would   be  considering   [proposed   committee                                                               
substitute  (CS)   for  HB   368,  Version   29-LS1476\W,  Wayne,                                                               
2/25/16].                                                                                                                       
                                                                                                                                
8:06:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SHELLEY   HUGHES,  Alaska   State   Legislature,                                                               
presented  HB  368, as  prime  sponsor.    She relayed  that  the                                                               
proposed  legislation  was drafted  in  response  to the  state's                                                               
budgetary concerns.    She went on to say that  HB 368 would give                                                               
the state  administration additional management tools  focused on                                                               
human  resources,  to bring  down  cost.    She cited  the  three                                                               
principals  of management  -  time, resources,  and  scope -  and                                                               
relayed  that a  great  project  is completed  on  or before  the                                                               
allowed  time, on  or  under  budget, and  meets  or exceeds  the                                                               
required scope.   Representative Hughes related  these principles                                                               
to state  government by saying  that "scope" represents  the size                                                               
of  state  government, "time"  refers  to  the limited  time  for                                                               
addressing  the  state's  challenges  before  essential  services                                                               
would  need   to  be  shut   down,  and  "resources"   are  state                                                               
government's   human  resources.     She   said  that   for  this                                                               
legislation, she and her staff  considered a retirement incentive                                                               
program  (RIP),  a  restriction on  upper  management  positions,                                                               
statutory healthcare contributions  shared by employees, furlough                                                               
options, the personal services  line item, efficiency incentives,                                                               
and paper reduction.                                                                                                            
                                                                                                                                
8:11:35 AM                                                                                                                    
                                                                                                                                
GINGER  BLAISDELL, Staff,  Representative Shelley  Hughes, Alaska                                                               
State  Legislature,  presented  a proposed  committee  substitute                                                               
(CS) for HB  368, Version 29-LS1476\W, Wayne,  2/25/16, on behalf                                                               
of  Representative Hughes,  prime  sponsor.   She explained  that                                                               
under Version W,  two additional provisions would be  added to HB
368 -  one related to furlough  and one to transfers  into or out                                                               
of the personal services line item in the budget.                                                                               
                                                                                                                                
8:12:24 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLER  moved  to adopt  the  proposed  committee                                                               
substitute (CS) for HB 368,  Version 29-LS1476\W, Wayne, 2/25/16,                                                               
as a work draft.                                                                                                                
                                                                                                                                
REPRESENTATIVE STUTES objected for purpose of discussion.                                                                       
                                                                                                                                
MS. BLAISDELL referred  to the section analysis  in the committee                                                               
packet, which  highlights the seven  areas of  proposed statutory                                                               
changes  to provide  new management  tools to  the administration                                                               
for saving  money or  managing employees  differently.   She said                                                               
that the first  area of proposed change is  "Paper Reduction" and                                                               
would be  for the purpose of  cost savings.  She  stated that the                                                               
[federal] Paperwork  Reduction Act  requires that  state agencies                                                               
provide  statutorily  required  reports electronically  and  five                                                               
paper copies to  the library distribution center.   She specified                                                               
that the  changes are in  Section 2,  Section 3, Section  15, and                                                               
Section 16.   She offered that  there is a memo  from Legislative                                                               
Legal  and Research  Services stating  that  the paper  reduction                                                               
section  of HB  368 would  probably not  be acceptable  under the                                                               
Single Subject Rule.                                                                                                            
                                                                                                                                
8:14:04 AM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL said  that  the second  area  of proposed  change,                                                               
"State Employee Furlough,"  would be a mandatory  furlough for 10                                                               
days  or 80  hours,  but that  the  number of  days  or hours  is                                                               
subject to the committee's recommendation.                                                                                      
                                                                                                                                
REPRESENTATIVE HUGHES  commented that the legislature  might want                                                               
to adjust  the proposed ten-day  furlough to a  five-day furlough                                                               
for exempt employees.                                                                                                           
                                                                                                                                
MS. BLAISDELL  claimed state statute  allows that  only employees                                                               
who fall  under the State Personnel  Act (SPA), most of  whom are                                                               
exempt  and  partially  exempt  (PX), may  be  required  to  take                                                               
furlough days.   She said that Section 4 of  HB 368 would exclude                                                               
furlough as  being subject to  collective bargaining, so  that as                                                               
union contracts  are renegotiated,  the prohibition  for furlough                                                               
would not  be part  of the contracts.   She went  on to  say that                                                               
Section  8 includes  new furlough  language  to the  compensation                                                               
allowance  and leave  section and  lists exceptions  for specific                                                               
employee groups.                                                                                                                
                                                                                                                                
8:15:47 AM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL referred  to the  third area  of proposed  change,                                                               
"Personal Services  Line Item," in  Sections 5  and 6 of  HB 368,                                                               
and explained  that the  objects of  expenditure in  the personal                                                               
services  line  item  in  a  budget  include  personal  services,                                                               
travel,  contractual  and   professional  services,  commodities,                                                               
grants, and miscellaneous.  She  maintained that the overall cost                                                               
for personal  services for the  State of Alaska in  the operating                                                               
budget alone, after excluding formula  programs, is slightly more                                                               
than 50  percent of expenditures.   She  said that the  Office of                                                               
Management &  Budget (OMB)  reported that  $29 million  was moved                                                               
out of personal services to other  lines items in its last fiscal                                                               
year report.   She maintained  that this represents  funding that                                                               
the   legislature  provided   for  personal   services,  to   pay                                                               
employees, but used for other purposes.                                                                                         
                                                                                                                                
8:18:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  commented that  an  example  of how  this                                                               
occurs is when  a funded position is left open  after an employee                                                               
leaves and  the money for salary  is used elsewhere.   She stated                                                               
that the proposed legislation would not allow this to happen.                                                                   
                                                                                                                                
MS. BLAISDELL  mentioned that restricting  transfers into  or out                                                               
of the  personal services line  item would also ensure  that when                                                               
the  legislature asks  for an  unallocated reduction  in personal                                                               
services,  that reduction  would actually  occur in  the personal                                                               
services  line item.    She  further stated  that  the new  state                                                               
accounting   system,  Integrated   Resource  Information   System                                                               
(IRIS),  will  track the  personal  services  line item  by  fund                                                               
source beginning  in November, eliminating any  issue with trying                                                               
to  redistribute the  correct  funding for  each  position.   She                                                               
added  that if  there is  an  issue with  tracking specific  fund                                                               
sources for  positions, the Legislative Budget  & Audit Committee                                                               
could probably  resolve the issue upon  requests from departments                                                               
to reallocate fund sources, with the exception of general funds.                                                                
                                                                                                                                
8:19:57 AM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL said  that the  next  area of  proposed change  is                                                               
"Reduce  the number  of  Special Assistants."    She referred  to                                                               
Sections 9,  10, and 11 in  HB 368 and relayed  that the proposed                                                               
legislation  would limit  the number  of  special assistants  for                                                               
state departments to one.                                                                                                       
                                                                                                                                
CHAIR LYNN asked if that would be across the board.                                                                             
                                                                                                                                
MS.  BLAISDELL  replied yes.    She  stated  that the  next  area                                                               
addressed  in HB  368  is "Efficiency  Incentive  Program."   She                                                               
offered that currently  there is no incentive for  an employee to                                                               
propose an outstanding way to save  money, save time, or make the                                                               
process better.  She referred to  Sections 12 and 14, which would                                                               
allow the governor to establish  an efficiency program in which a                                                               
state  employee could  be rewarded  for  coming up  with a  great                                                               
idea.  She added that the incentives would vary.                                                                                
                                                                                                                                
CHAIR LYNN relayed that the U.S.  Air Force had a similar program                                                               
which proved successful.                                                                                                        
                                                                                                                                
MS.  BLAISDELL related  that some  agencies have  found a  way to                                                               
recognize  outstanding employees,  but  the proposed  legislation                                                               
would give specific recognition.                                                                                                
                                                                                                                                
8:23:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS asked  Ms. Blaisdell which agencies                                                               
recognized outstanding employees.                                                                                               
                                                                                                                                
MS. BLAISDELL  responded that the Department  of Transportation &                                                               
Public  Facilities   (DOT&PF)  purchases  Carhartt   jackets  for                                                               
employees  as  recognition  for outstanding  recommendations  for                                                               
improvements to business or for savings.                                                                                        
                                                                                                                                
8:23:28 AM                                                                                                                    
                                                                                                                                
MS. BLAISDELL  went on to  state that  the next area  of proposed                                                               
change is "Health  Care Contribution," found in Section  13 of HB
368.   Employees covered  under the  State Personnel  Act, exempt                                                               
and PX  employees, would be required  to pay 20 percent  of their                                                               
healthcare coverage, and  the state would cover  the remaining 80                                                               
percent.    She   added  that  this  change   would  not  involve                                                               
bargaining unit contracts.                                                                                                      
                                                                                                                                
8:24:09 AM                                                                                                                    
                                                                                                                                
MS. BLAISDELL said  that Section 17 of HB 368  discusses the last                                                               
area  of  proposed  statutory change,  which  is  the  Retirement                                                               
Incentive Program  (RIP).  She  mentioned that already  there has                                                               
been  a  great  deal  of  interest  from  employees  regarding  a                                                               
possible RIP.   She stated that  a RIP is a  management tool that                                                               
could be offered  to incentivize employees, who  are within three                                                               
years  of their  normal retirement  date, to  retire early.   She                                                               
added that the RIP  is not a mandatory offering.   She went on to                                                               
say that in  the event of an employee taking  advantage of a RIP,                                                               
management  has the  option  of leaving  the  position vacant  or                                                               
filling it with an employee entering  at a lower step - in either                                                               
case, saving  the state money.   The RIP would require  an agency                                                               
to  offer  a specific  window  of  opportunity during  which  its                                                               
qualified employees could apply for a RIP.                                                                                      
                                                                                                                                
8:25:32 AM                                                                                                                    
                                                                                                                                
MS. BLAISDELL continued by saying  that an employee who is within                                                               
three years of his/her normal  retirement date could apply to the                                                               
commissioner of  the agency  between July  and September.   Those                                                               
individual employee applications  would be sent to  an actuary to                                                               
determine  the  savings,  if  any, the  state  would  achieve  by                                                               
approving  early   retirement.     The  actuary  would   look  at                                                               
birthdate, retirement  date, range  and step,  and intent  of the                                                               
department - whether it is going  to fill it, leave it vacant, or                                                               
delete  the position  - to  decide  whether the  state will  save                                                               
money.                                                                                                                          
                                                                                                                                
8:26:40 AM                                                                                                                    
                                                                                                                                
CHAIR  LYNN asked  if the  sponsor has  experienced any  informal                                                               
support or opposition to the RIP program.                                                                                       
                                                                                                                                
MS. BLAISDELL  replied that  the sponsor has  not heard  from any                                                               
groups for  or against a RIP  but has had a  number of employees,                                                               
who  possibly qualify,  show an  interest in  applying for  early                                                               
retirement.                                                                                                                     
                                                                                                                                
MS. BLAISDELL went  on to say that the  commissioner would decide                                                               
whether the  position would be filled  immediately, deleted, left                                                               
vacant,  or reclassified.    She  said that  if  the employee  is                                                               
approved  for the  RIP, he/she  would have  a specific  period of                                                               
time in which to retire or  the application process would have to                                                               
begin again.   She added that typically that period  would be the                                                               
60 days after the actuary's report.                                                                                             
                                                                                                                                
8:28:01 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN requested if there would  be a bonus for that employee                                                               
for retiring early.                                                                                                             
                                                                                                                                
MS.  BLAISDELL  responded  that  no bonus  was  provided  in  the                                                               
proposed  legislation.    She offered  that  the  employee  would                                                               
receive  his/her  pension  based   on  time  earned  without  any                                                               
additional years and would receive healthcare coverage.                                                                         
                                                                                                                                
CHAIR LYNN mentioned that some  organizations offer a small bonus                                                               
incentive for early retirement.                                                                                                 
                                                                                                                                
MS. BLAISDELL  answered that  she was not  aware of  any employer                                                               
who offers  a bonus incentive.   In  response to Chair  Lynn, she                                                               
said she would check into that possibility.                                                                                     
                                                                                                                                
MS. BLAISDELL relayed that the  State of Alaska has offered three                                                               
retirement incentive  programs - one  in the 1980s, one  in 1996,                                                               
and   House  Bill   329  from   the  Twenty-Third   Alaska  State                                                               
Legislature,  which  didn't  pass.   She  said  that  Legislative                                                               
Budget and  Audit did  perform an audit  in conjunction  with the                                                               
1996 RIP  but only looked at  two specific employee groups.   The                                                               
University  of Alaska  identified  784 employees  who would  have                                                               
been eligible  to retire early,  of which only  377 participated.                                                               
She added that  not everyone wants to leave  state service early.                                                               
The  University  of  Alaska reported  $17.8  million  in  savings                                                               
resulting from the  377 early retirees.  The  actual savings were                                                               
unknown  because  140  of  them returned  to  work  as  part-time                                                               
employees.  She offered that there is potential for savings.                                                                    
                                                                                                                                
MS.  BLAISDELL related  that the  second group,  included in  the                                                               
audit,  was the  Information Technology  Group (ITG),  now called                                                               
Enterprise Technology  Services (ETS),  within the  Department of                                                               
Administration (DOA).   There were 27 employees  eligible for the                                                               
RIP program at ITG, 14 elected  to retire early, and ITG reported                                                               
a savings  of $1.2  million.   She declared that  none of  the 14                                                               
came back  as part-time employees.   She added that ITG  chose to                                                               
leave the positions vacant for  the remainder of the year, before                                                               
rehiring.                                                                                                                       
                                                                                                                                
8:31:39 AM                                                                                                                    
                                                                                                                                
MS. BLAISDELL  said that  the State  of Alaska  Workforce Profile                                                               
Fiscal Year 2015,  an annual report published by  the Division of                                                               
Personnel,  reported that  there  are a  total  of 15,576  active                                                               
employees  in the  state's retirement  system.   Of those,  1,960                                                               
have less than one year to  retire, and 1,502 are between one and                                                               
five  years  of retirement,  together  comprising  22 percent  of                                                               
current employees.                                                                                                              
                                                                                                                                
8:33:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS asked  for a  history of  employee                                                               
furlough  programs  in  the  past   as  background  and  baseline                                                               
reference to understand the effect of the proposed legislation.                                                                 
                                                                                                                                
MS. BLAISDELL responded that the  only furlough program, of which                                                               
she  was  aware, occurred  to  employees  governed by  the  State                                                               
Personnel Act - exempt and PX  employees.  She said that she knew                                                               
of one agency that did ask  their members to take a furlough, and                                                               
they  took  two days  last  fall.    She  stated that  the  State                                                               
Personnel   Act   includes   the   Department   of   Law   (DOL),                                                               
commissioners'  office  staff,  directors, the  legislature,  the                                                               
court  system, and  the university.    She added  that for  these                                                               
employees to be furloughed, each  of these agencies would have to                                                               
initiate  their own  furlough.   She said  that almost  all other                                                               
employees of the  state are covered by  collective bargaining and                                                               
would  not  be  eligible  for furlough  unless  their  bargaining                                                               
contract stated that they could be.                                                                                             
                                                                                                                                
8:35:09 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS noted  that some  departments have                                                               
more  than   one  deputy  commissioner,  defined   as  a  special                                                               
assistant  in  HB  368,  and  expressed  his  concern  for  large                                                               
departments with  complex responsibilities  needing a  high level                                                               
of  management.   He cited  the Department  of Natural  Resources                                                               
(DNR),  tasked with  executing the  Alaska LNG  Project, and  the                                                               
effect of  taking away the  ability to  have a high  level person                                                               
working with  the commissioner on  a project of  that complexity.                                                               
He  asked  which  agencies  would be  affected  by  the  proposed                                                               
statutory language and if the  sponsor had contacted them, and he                                                               
suggested  approaching   the  reduction  of   special  assistants                                                               
through the budget process.                                                                                                     
                                                                                                                                
MS.   BLAISDELL  responded   that   agencies   now  have   deputy                                                               
commissioners  and  assistant  commissioners   who  also  act  as                                                               
directors  in some  divisions.   She  claimed  that almost  every                                                               
department  has two  or more  deputy  commissioners and  possibly                                                               
some assistants.   There is  a wide  variety.  She  conceded that                                                               
they all  have important  roles but  asserted that  the sponsor's                                                               
constituency has  advocated for  a reduction in  upper management                                                               
positions.   Since these  positions are  created in  statute, the                                                               
proposed  legislation would  be  needed to  change the  statutory                                                               
requirement in order to reduce upper level management.                                                                          
                                                                                                                                
MS. BLAISDELL,  in response to  the second part of  the question,                                                               
stated that  the legislature  appropriates funds,  not positions,                                                               
and  although  the  legislature  could reduce  the  budget  by  a                                                               
specific  amount   and  request  that   it  be  applied   to  the                                                               
elimination of a  specific position control number  (PCN), in the                                                               
end, the agency is free to  decide to keep the position and apply                                                               
the reduction elsewhere.                                                                                                        
                                                                                                                                
8:38:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS  asked   if  reductions   in  the                                                               
allocation for  a commissioner's  office budget are  not specific                                                               
enough for that purpose.                                                                                                        
                                                                                                                                
MS. BLAISDELL answered  that a budget reduction  is monetary only                                                               
and does not require an agency to remove a position.                                                                            
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS mentioned  that in  his experience                                                               
on the  DNR finance  subcommittee, a  reduction allocated  to the                                                               
commissioner's  office budget,  although not  specific to  a PCN,                                                               
could be  targeted, but  he conceded that  ultimately it  was the                                                               
commissioner's decision where to make the budget cut.                                                                           
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  referred to  page 5,  lines 30-31,                                                               
and  noted that  current  statute  limits to  two  the number  of                                                               
special assistants  in the commissioner's  office of  a principle                                                               
department  of  the  executive  branch.     He  referred  to  Ms.                                                               
Blaisdell's statement  that some  departments have more  than two                                                               
assistants and asked if that had been addressed.                                                                                
                                                                                                                                
MS. BLAISDELL replied  that she had been referring  to deputy and                                                               
assistant commissioners and  did not know of  any department with                                                               
more than two special assistants.                                                                                               
                                                                                                                                
8:40:10 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLER asked  if Ms.  Blaisdell had  a definition                                                               
for special assistant.                                                                                                          
                                                                                                                                
MS.  BLAISDELL  said  that  Section   9,  which  would  amend  AS                                                               
39.25.120, discusses  all of the  positions that are  included in                                                               
the partially exempt service but  doesn't include a definition of                                                               
special  assistant.    She  added that  special  assistant  is  a                                                               
specific job  class code  and includes  special assistant  to the                                                               
commissioner I  and II, reflecting  two different  salary ranges.                                                               
She  reasoned that  a department  could choose  to have  only one                                                               
special assistant.                                                                                                              
                                                                                                                                
8:41:56 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KELLER asked to flag page  3, line 29, to bring to                                                               
the  sponsor's attention  the  terminology  "leave" when  talking                                                               
about a  furlough -  his understanding  being that  leave implies                                                               
"with pay."  He asked for  clarification of page 2, line 9, which                                                               
would  change  the  number  of  copies  of  a  state  publication                                                               
required  for the  publication distribution  center from  four to                                                               
five.                                                                                                                           
                                                                                                                                
MS. BLAISDELL answered  that the change from four  to five copies                                                               
was  proposed in  response  to  the fact  that  no other  printed                                                               
copies  would be  available to  the public,  and the  publication                                                               
distribution center considered five copies to be more adequate.                                                                 
                                                                                                                                
8:43:10 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN  asked if  DNR, which  represents the  state's primary                                                               
income,  and the  Department  of Public  Safety  (DPS), which  is                                                               
charged with the  public's safety, are included  in the reduction                                                               
of the number of deputy commissioners.                                                                                          
                                                                                                                                
MS. BLAISDELL responded yes, the  reduction would include the two                                                               
mentioned  departments, but  added that  both have  a variety  of                                                               
directors  under   them  who  would   be  in  contact   with  the                                                               
commissioner and deputy commissioner.                                                                                           
                                                                                                                                
CHAIR LYNN  opined that considering  the projects that  Alaska is                                                               
pursuing,  such as  the gas  pipeline, the  departments might  be                                                               
better  off  with  an  assigned  amount  of  money  allowing  the                                                               
commissioner or governor to decide how  to best manage it and who                                                               
they need to hire, rather than micromanaging.                                                                                   
                                                                                                                                
8:45:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ   asked  for  the  rationale   for  the                                                               
proposed limit on special assistants  to the commissioner besides                                                               
constituent  concern for  bloated  upper management.   She  noted                                                               
ample research  on best management  practices and  questioned the                                                               
rationale  for  such  a  very specific  number  in  the  proposed                                                               
legislation.   She questioned  whether, in light  of some  of the                                                               
extensive  projects that  the state  asks  the commissioners  and                                                               
their teams  to accomplish,  HB 368 would  not be  impeding their                                                               
efforts.                                                                                                                        
                                                                                                                                
MS.  BLAISDELL  responded  that concerns  from  constituents  and                                                               
other  legislators   prompted  the  proposed  limit   on  special                                                               
assistants  as  one tool  to  reduce  upper management  in  state                                                               
government.                                                                                                                     
                                                                                                                                
8:47:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  referred  to  Section  14,  which                                                               
would  amend  AS 44.19.018,  and  noted  the "may  versus  shall"                                                               
discrepancy in  the language.   He mentioned that  subsection (a)                                                               
read,  "The governor  may award...a  pin..."  and subsection  (b)                                                               
read, "The governor shall make arrangements for the pin..."                                                                     
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS referred  to  the proposed  health                                                               
care contribution change, Section 13,  page 7, line 31, and asked                                                               
what cost  shifting would result as  far as savings to  the state                                                               
and what  an employee would  be paying  per month if  required to                                                               
contribute [20 percent] of health care coverage costs.                                                                          
                                                                                                                                
MS.  BLAISDELL  responded  to  the  question  on  the  governor's                                                               
efficiency incentive  program by saying that  the governor "shall                                                               
implement  a program"  but would  have the  option of  awarding a                                                               
pin, a merit increase, or cash award.                                                                                           
                                                                                                                                
MS.  BLAISDELL, in  response  to Representative  Kreiss-Tompkins'                                                               
second  question  on  the  cost   implication  for  changing  the                                                               
contribution  basis  of  the healthcare  cost,  deferred  to  the                                                               
representatives from  the Department of Administration  to answer                                                               
that question,  but conceded that  these representatives  may not                                                               
have had  the opportunity to  fully vet the fiscal  impact, which                                                               
explained the absence of a fiscal note.                                                                                         
                                                                                                                                
8:50:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VAZQUEZ   referred  to   the  fiscal   note,  OMB                                                               
component number  58 dated 3/25/16,  and asked for the  amount of                                                               
related expenditures or savings.                                                                                                
                                                                                                                                
MS. BLAISDELL deferred the question to the DOA representative.                                                                  
                                                                                                                                
REPRESENTATIVE KELLER  declared that  there was  a representative                                                               
from the  Division of Personnel  Labor & Relations  (DPL&R), Kate                                                               
Sheehan, to testify.                                                                                                            
                                                                                                                                
REPRESENTATIVE  VAZQUEZ asked  Ms. Blaisdell  if the  sponsor and                                                               
her  staff  have  identified,  in  dollar  terms,  how  much  the                                                               
proposed legislation could potentially save the state.                                                                          
                                                                                                                                
MS.  BLAISDELL responded  no,  that they  had  not identified  an                                                               
actual  dollar savings.   She  offered that  based on  historical                                                               
information,  the  retirement  incentive program  could  possibly                                                               
save the  State of Alaska a  significant amount.  She  went on to                                                               
say that a  RIP could give any public entity  - school districts,                                                               
municipalities, the  state, and  the university  - the  option to                                                               
make  that offering.   She  stated that  a significant  caveat is                                                               
that not  every person who might  be eligible for a  RIP may want                                                               
to retire.   She added that some divisions may  not want to offer                                                               
a  RIP even  if it  is available.   She  cited the  example of  a                                                               
school district that after spending  $100,000 to recruit a school                                                               
superintendent,  might  not  want   that  superintendent  to  RIP                                                               
because of  the expense of  replacement.  She suggested  that the                                                               
actuaries  could take  that into  consideration.   She reiterated                                                               
that the  actuaries would be  able to calculate a  potential cost                                                               
savings for a  particular RIP candidate.  She  mentioned that the                                                               
1996 audit suggests potential savings for the State of Alaska.                                                                  
                                                                                                                                
8:53:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE VAZQUEZ  asked if  those drafting the  RIP portion                                                               
of HB  368 considered prohibiting  departments or  divisions from                                                               
issuing contracts to individuals who RIP.                                                                                       
                                                                                                                                
MS. BLAISDELL  said that the  terminology "retire  rehire" refers                                                               
to the  scenario Representative Vazquez  described.  She  said an                                                               
employee who works for the  state under contract provides his/her                                                               
own healthcare, taxes, and administrative  overhead.  She offered                                                               
that such an  arrangement could offer cost savings  to the state.                                                               
She  added  that the  state  could  rehire  an individual  for  a                                                               
limited  time period  - for  training  or seasonal  work -  which                                                               
could  be  beneficial to  the  state.    She  said that  when  an                                                               
employee  retires and  is  then rehired  for  the same  position,                                                               
there could be  a morale issue in regard to  another employee who                                                               
might have wanted  to apply for or be promoted  into the position                                                               
but would not have that  opportunity.  She claimed that including                                                               
both the  personal services line  item change  and the RIP  in HB
368 would  make it  difficult to  replace employees  with someone                                                               
under contractual  services, because  money could not  be shifted                                                               
from personal services to contractual.                                                                                          
                                                                                                                                
REPRESENTATIVE VAZQUEZ  added that the morale  issue includes the                                                               
resentment  of  employees over  what  is  considered as  "double-                                                               
dipping."  She said that the  same issues also exist in regard to                                                               
rehiring the RIP retirees for  part-time employment as well as on                                                               
contract.                                                                                                                       
                                                                                                                                
8:56:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VAZQUEZ  opined  that   the  section  in  HB  368                                                               
limiting  the number  of special  assistants to  the commissioner                                                               
could work  with smaller  departments but  would not  be feasible                                                               
for  the  larger  departments, for  example,  the  Department  of                                                               
Health and Social Services (DHSS) with over 3,000 employees.                                                                    
                                                                                                                                
8:57:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE VAZQUEZ referred to the  fiscal note on HB 368 and                                                               
asked  for  the costs  and  savings  in  regard to  the  proposed                                                               
legislation.                                                                                                                    
                                                                                                                                
8:57:54 AM                                                                                                                    
                                                                                                                                
KATE SHEEHAN, Director, Division  of Personnel & Labor Relations,                                                               
Department of  Health and Social  Service (DHSS),stated  that the                                                               
fiscal note  represents the cost  of an  extra merit step  or pay                                                               
increase for  five employees  awarded by  the governor  each year                                                               
under the proposed legislation.                                                                                                 
                                                                                                                                
REPRESENTATIVE VAZQUEZ stated that the  fiscal note refers to one                                                               
feature of  HB 368, and  asked why the  other features of  HB 368                                                               
were not considered in the fiscal note.                                                                                         
                                                                                                                                
MS. SHEEHAN  responded that  her understanding  was that  OMB was                                                               
working on a fiscal note for  the other sections.  In response to                                                               
Representative Vazquez,  she confirmed  she was referring  to the                                                               
fiscal  note  included  in  the  committee  packet,  labeled  OMB                                                               
component number  58, dated 3/25/16, which  solely represents the                                                               
five employees who could get the extra merit step.                                                                              
                                                                                                                                
8:58:56 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLER asked  if  the proposed  reduction of  the                                                               
state's share  of the cost  of healthcare for employees  had been                                                               
analyzed or if it is forthcoming in the additional OMB analysis.                                                                
                                                                                                                                
MS.  SHEEHAN responded  that the  proposed  change in  healthcare                                                               
contribution in HB  368 had not been analyzed by  the Division of                                                               
Personnel and stated that she does not  know if it is part of the                                                               
OMB analysis.                                                                                                                   
                                                                                                                                
9:00:07 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  asked  what   80  percent  of  an                                                               
employee's healthcare  [coverage costs] would be  and what fiscal                                                               
savings could be expected from the proposed statutory change.                                                                   
                                                                                                                                
9:00:30 AM                                                                                                                    
                                                                                                                                
KATHY  LEA, Chief  Pension Officer,  Division  of Retirement  and                                                               
Benefits  (DRB), Department  of  Administration (DOA),  responded                                                               
that the  Division of Retirement  and Benefits is  developing the                                                               
fiscal notes for  HB 368, including an actuarial  fiscal note for                                                               
the RIP and an analysis on  the healthcare costs and savings, and                                                               
both will be available early next week.                                                                                         
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS asked if  Ms. Lea could provide him                                                               
with an  estimate of 80  percent of  healthcare cost for  a state                                                               
employee.                                                                                                                       
                                                                                                                                
MS. LEA responded that her expertise  was in pensions, so she did                                                               
not readily have that information.                                                                                              
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  asked  who  could  give  him  the                                                               
information on healthcare cost.                                                                                                 
                                                                                                                                
MS.  LEA  responded  that  Michele   Michaud,  the  chief  health                                                               
official, would have that information.                                                                                          
                                                                                                                                
REPRESENTATIVE  KELLER  offered  that  the  language  in  HB  368                                                               
reflects that the commissioner would  have to provide projections                                                               
for the cost of healthcare and  then calculate 80 percent of that                                                               
amount.                                                                                                                         
                                                                                                                                
MS.  BLAISDELL cited  the last  bargaining  unit contract,  which                                                               
shows that  the state pays  between $1,300 and $1,400  per person                                                               
for healthcare.   She added that under  the proposed legislation,                                                               
[80 percent  of that amount would  be the state's portion  and 20                                                               
percent  the employee  portion].   She mentioned  that there  are                                                               
more expensive healthcare plan options.                                                                                         
                                                                                                                                
9:03:01 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN  asked Ms. Blaisdell  to give the committee  members a                                                               
broad review of the sponsor's expectations in regard to HB 368.                                                                 
                                                                                                                                
REPRESENTATIVE KELLER  referred to  page 11, lines  15-18, [under                                                               
Section  44.99.250.  Electronic  distribution and  posting],  and                                                               
related  that   at  times,  legislative  committees   would  want                                                               
firsthand  reports.   He suggested  an amendment  to add  "except                                                               
upon request of a standing committee of the legislature."                                                                       
                                                                                                                                
9:04:16 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ  requested that  the cost that  would be                                                               
shifted to retirement  cost, as a result of a  RIP, be calculated                                                               
and included in the total cost implication.                                                                                     
                                                                                                                                
9:04:53 AM                                                                                                                    
                                                                                                                                
CHAIR  LYNN opined  that HB  368  is a  good bill,  yet would  be                                                               
difficult to pass because it covers  so many different areas.  He                                                               
asked what  the sponsor's plan  was for the  proposed legislation                                                               
over the interim.                                                                                                               
                                                                                                                                
MS. BLAISDELL responded  that the reason HB 368  was drafted with                                                               
"so  many moving  parts" was  because the  areas of  the proposed                                                               
legislation were related in that  they would provide cost savings                                                               
to the  state, would require  statutory change, and could  not be                                                               
accomplished  solely  through  the appropriation  process.    She                                                               
stated that HB 368 was  brought forward to start the conversation                                                               
on  the parts  of the  proposed legislation.   She  conceded that                                                               
areas  of  HB  368  might   more  appropriately  fit  into  other                                                               
legislation  or stand-alone  legislation,  but  she offered  that                                                               
they  are related  in that  they are  all statutory  changes that                                                               
would provide  the state administration more  management tools to                                                               
save money.                                                                                                                     
                                                                                                                                
[HB 368 was held over.]                                                                                                         

Document Name Date/Time Subjects
01 Blank CS HB 368 v.W 2-26-2016.pdf HSTA 3/29/2016 8:00:00 AM
HB 368
02 HB 368 v.A.PDF HSTA 3/29/2016 8:00:00 AM
HB 368
03 Sponsor Statement HB 368 ver W 3-1-2016 (002).pdf HSTA 3/29/2016 8:00:00 AM
HB 368
04 Section Analysis HB 368 ver W 3-1-2016 (002).pdf HSTA 3/29/2016 8:00:00 AM
HB 368
05 HB 368 ver W Description of Changes 3-25-2016.pdf HSTA 3/29/2016 8:00:00 AM
HB 368
06 HB 368 Fiscal Note - DOA 3-25-2016.pdf HSTA 3/29/2016 8:00:00 AM
HB 368
01 HB 24 ver A.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
02 HB 24 Sponsor Statement.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
03 HB 24 Sectional Analysis.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
04 HB 24 Supporting Documents-Leg Research Report.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
05 HB 24-DOA-DGS-02-05-16.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
06 HB 24 ACEC qbs_matrix 2013.pdf HSTA 3/29/2016 8:00:00 AM
HB 24
07 HB 24 Supporting Documents-Presentation ACEC Aug 2011-.pdf HSTA 3/29/2016 8:00:00 AM
HB 24