Legislature(1995 - 1996)
02/21/1996 01:37 PM Senate CRA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
Number 325
SB 229 STATE TRAINING & EMPLOYMENT PROGRAM
SENATOR TORGERSON brought SB 229 before the committee as the final
order of business. He noted there were three proposed amendments
before the committee for its consideration.
SENATOR RANDY PHILLIPS moved adoption of the following Amendment
No. 1:
Amendment No. 1
Page 4, line 17: Delete "may" and insert "shall"
Page 4, line 20: Delete "pilot project"
Page 4, line 21: Delete "If" and insert "When"
Page 5, line 5 - 6: Delete "a pilot project grant for a period of
up to two years" and insert "grants"
Page 5, line 7: Delete "an"
Page 5, line 8: Delete "training entity" and insert "training
entities. A training entity is eligible for a
grant under this section"
Page 5, line 16: Delete "pilot project"
REBECCA NANCE , Director, Employment Security Division, Department
of Labor, stated the department had no objection to the amendment.
SENATOR TORGERSON asked if there was objection to the adoption of
Amendment No. 1, and hearing none, he stated it was adopted.
Number 352
SENATOR RANDY PHILLIPS moved the adoption of the following
Amendment No. 2:
Amendment No. 2
Page 5, line 1: After "." insert: "The department shall give
preference to projects and services that train individuals in
industries identified in the resident hire report required under AS
36.10.130 as employing a disproportionate percentage of
nonresident individuals."
SENATOR TORGERSON explained the amendment directs the department to
put as a number one priority training people in Alaska to fill the
positions that are held by nonresident workers.
REBECCA NANCE stated the department wants to continue targeting
local hire.
Number 380
SENATOR TORGERSON asked if there was objection to the adoption of
Amendment No. 2, and hearing none, he stated it was adopted.
Number 385
SENATOR RANDY PHILLIPS moved adoption of the following Amendment
No. 3:
Amendment No. 3
Page 5, line 19: Delete "established for the council"
REBECCA NANCE stated the amendment was recommended by the
Department of Labor.
SENATOR TORGERSON asked if there was objection to the adoption of
Amendment No. 3, and hearing none, he stated it was adopted. He
also stated the three amendments would be incorporated into a
committee substitute, which brought the committee substitute before
the committee.
Number 400
SENATOR KELLY noted there were two different fiscal notes on the
legislation, and he asked what the differences were. SENATOR
TORGERSON responded that the original fiscal notes did not add up,
so corrected fiscal notes were requested.
SENATOR KELLY said we are talking about over $3 million being
allocated for the program, but grants in 1994 totaled just a little
over $1 million. He asked where the rest of the money is going.
MARK MICKELSON , Division of Community & Rural Development,
Department of Community & Regional Affairs, directed attention to
a "flow chart" which he said would hopefully provide a picture of
the method by which the STEP funds will flow within the state. He
said a series of new graphs has been provided to the committee
depicting how the 1995 funds were utilized at each of the SDA or
the private industry council levels. The listing originally
provided to the committee was a listing of the "larger grants" that
were let as a result of the competitive RFP process. The balance
of the true program funds, or grant funds that have gone on as
depicted in the new chart, is spent on eligible clients and on
eligible services. They are just done through a different process
in terms of how it is recorded.
SENATOR KELLY said it still doesn't show where the other $1.5
million is going. MR. MICKELSON said the funding is recorded, it
is tracked. A summary report is provided to the Department of Labor
every year identifying all the program activities. For example, if
someone went to a classroom training program at AVTEC or the
University of Alaska, etc., that has been recorded as an actual
expenditure. However, they do not have the records of the hundreds
of transactions of all those small vouchers. He said they are just
providing the straight tuition and the normal costs to send
somebody to one of those training programs.
SENATOR RANDY PHILLIPS observed that even though they may not
record it, they still must have some kind of accounting for those
small voucher transactions. MR. MICKELSON agreed that was correct.
He said for every individual who is served by this program, a file
is maintained that contains the full application, certification
that the information provided is true, eligibility verification,
etc., so that information does exist.
SENATOR KELLY commented there are a whole lot of individuals who
are paying their own tuition and their own transportation, and yet,
if some state employee graces you, then you get it for nothing.
MR. MICKELSON responded they are trying to make the program
accessible and available where people would normally go for
assistance for employment, for unemployment insurance. He conceded
they perhaps could do a better job at making the service better
known to everyone. He also clarified that tuition at the
University of Alaska is an allowable expense if it is compatible
with someone's career goals. He added that they do not allow
people to pursue long-term educational goals just for the sake of
going to school. The program is focused on reattachment to the
labor force.
SENATOR KELLY asked if they would send any of their clients out of
state for training. MR. MICKELSON answered that's generally not
the case, but it would be possible if a very specialized training
course or program was not available in the state of Alaska.
However, the individual still must meet all the criteria.
SENATOR KELLY asked if there is a parallel with the STEP program
and the training provisions contained in the welfare reform
legislation. SENATOR TORGERSON said he has discussed this with
Mike Andrews of the Alaska Human Resource Investment Council and
this does not parallel the welfare reform legislation, although the
welfare reform creates another training program. The STEP program
is driven by employee contributions so it's really not general fund
money.
TAPE 96-10, SIDE B
Number 001
After brief discussion on how the employer/employee contributions
are calculated, SENATOR TORGERSON invited Chris Miller to the table
to explain the process.
Number 060
CHRIS MILLER , Chief, Research Analysis Section, Department of
Labor, explained that when they calculate the UI tax rate, the
total contribution is separated at an 82 percent contribution from
the employer and 18 percent from the employee. The tax rate is
determined by multiplying the 82 percent times what they call their
average benefit cost rate. The same thing is then done for the
employee. He added it is possible that the employee tax will vary,
but it varies only slightly over time. The last time the employee
tax rate changed was in 1991 when it dropped to 0.5 percent. The
0.5 percent is on the wages earned up to the taxable wage base,
which is currently at $24,400.
To clarify the process, Mr. Miller said, as an example, for the
current year the maximum an employee would pay, based on the
taxable wage base of $24,400, would be $122, and the average an
employer would pay, discounting the varying rates they have, would
be $529 for a maximum.
SENATOR KELLY asked, if he, as an employer, is paying 2.17 percent
for domestic help, what's the highest rate somebody is paying and
how much that employee is paying. MR. MILLER responded the highest
rate is 5.4 percent for the employer and the employee is still at
0.5 percent. He also clarified for Senator Kelly that the
employers at the 5.4 percent rate are penalty employers. These are
employers who have not met various reporting requirements, or for
other reasons they are paying a penalty rate.
Number 215
SENATOR KELLY commented that the program is quickly becoming a
funding mechanism, with DOL, DCRA and AHRIC getting parts of the
pot. He asked if any of the numbers go through the budget process.
ARBE WILLIAMS , Director, Administrative Services, Department of
Labor, replied they do and they are listed in various places in the
Department of Labor budget. SENATOR KELLY asked why they are
asking for more money this year. MS. WILLIAMS said the difference
between the total grant amount is what they estimate will be
collected from one-tenth of employees' salaries.
SENATOR KELLY wondered who is getting this money because he doesn't
know anybody who his benefiting from this program. MARK MICKELSON
related that the system is capable, in the future, of providing a
lot of information on where individuals are being served, what they
are enrolled in, etc., if that kind of information is desired. He
added there are over 6,000 Alaskans who are very pleased this
program has been in place. He has seen a lot of good things done
with the program, and he believes they can provide the kind of
accountability and information that would give assurance that this
program is well designed in intention.
Number 320
SENATOR TORGERSON asked about the possibility of finding a cap so
that no more than a certain amount of money is taken out for
administration. He said it is an employee giving money and it is
funding other segments of government. MS. WILLIAMS spoke to
reorganization efforts that are going on in the Employment Security
Division, and she said they are well aware of the fact
administratively, at all levels, that if they are not efficient, it
costs their programs.
Number 358
SENATOR TORGERSON stated he was going to hold SB 229, and he
requested that the department provide more detail on where this
money goes to balance the $3.6 million figure. He also believes it
is a good idea to look at the possibility of a cap to limit the
amount of overhead for the program.
There being no further business to come before the committee, the
meeting was adjourned at 2:55 p.m.
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