Legislature(1995 - 1996)
04/26/1995 09:35 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 152
An Act relating to geographic differentials for the
salaries of certain state employees who are not members
of a collective bargaining unit; relating to periodic
salary surveys and preparation of an annual pay
schedule regarding certain state employees; relating to
certain state aid calculations based on geographic
differentials for state employee salaries; and
providing for an effective date.
Co-chairman Halford directed that SB 152 be brought on for
discussion. ALISON ELGEE, Deputy Director, Dept. of
Administration, came before committee to speak to the bill.
She explained that the legislation was introduced to amend
the statutory geographic differential that covers non-
covered employees of the executive branch and the
legislature. The existing differential has been in statute
since 1972. The majority of the state's union contracts
contain differentials amended on the basis of a 1985 study.
However, differentials for non-covered employees were not
brought current.
The proposed bill also establishes $30.0 as the limit of
total compensation to which the differential would apply.
That threshold would be annualized throughout the year
rather than applied to the first few months of the year and
then shut off.
The legislation also amends current requirements for annual
salary and cost of living surveys to require the conduct of
a cost of living survey every five years, subject to
appropriation. These surveys are extraordinarily expensive
if conducted in the same manner as the 1985 study. That
survey cost $375.0. No funding has been provided to conduct
a comparable survey since that time.
The proposal for transition of employees from the old index
to the new involves a twelve-month freeze for current
salaries.
Portions of the proposed bill relate to other statutory
sections such as revenue sharing which has traditionally
been tied to the old geographic differential. Bill
provisions maintain the historical tie for those programs.
Amendments contained within the legislation would thus not
impact anything but the employee salary base.
Ms. Elgee directed attention to a spread sheet (copy
attached to these minutes) and explained that the column
entitled "1972 index" shows the current differential applied
to non-covered employees. The next column displays the
union differential in place since 1986. The column entitled
"Runzheimer" evidences the result of a study conducted by
the Dept. of Administration last fall. There was limited
funding for the review and results "look a little weird."
The department has thus not relied on the study in
establishing the proposal in pending legislation, except to
the degree that it demonstrates that the cost of living in
Alaska has come down significantly.
The proposal in SB 150 represents a broad-band approach that
looks at geographic similarities, the type of transportation
available to areas, and, in a few cases, other cost of
living information. As an example, Ms. Elgee noted that
because of its size, Fairbanks is showing up on national
studies. Those studies indicate a cost of living in
Fairbanks similar to that in Anchorage.
Ms. Elgee acknowledged questions concerning applicability of
the legislation to the university and the court system. The
university has already eliminated the differential for
Fairbanks, effective in January. At the time that was done,
the university indicated interest in revising the
differential for other parts of the state but was awaiting
the administration's proposal for those areas. The court
system has traditionally followed the statutory
differential.
Referencing the spread sheet, Senator Zharoff noted an
increase from 0.791 to 1.0 for employees stationed in
Seattle. Ms. Elgee explained that national surveys indicate
that the cost of living in Seattle is comparable to
Anchorage. Senator Phillips suggested that lack of sales
tax in Anchorage and a sizable tax in Washington causes the
cost of living to appear similar. Senator Sharp voiced his
understanding that the legislation proposes to increase the
pay for Seattle-based employees by 21% on the first $30.0.
Ms. Elgee responded that it would bring them up to the same
base as Anchorage employees. The state presently has six
employees in Seattle. Senator Donley asked how the bill
might be modified so that Seattle employees maintain the
status quo. Ms. Elgee recommended that if the committee
modifies pay for Seattle employees, it "go to the union
differential which is currently 0.870% of the base. The
1972 index is 0.791%.
Senator Donley referenced page 3, line 1, and MOVED to
maintain Seattle employees at their present level. In
response to an inquiry from Co-chairman Halford, Ms. Elgee
explained that in order to retain current levels of pay for
employees in Seattle, the bill would have to reflect a
percentage below the basic salary schedule. Senator Donley
then MOVED to change the zero for Washington State to -10 at
page 3, line 1. No objection having been raised, the motion
CARRIED and the AMENDMENT was ADOPTED. Co-chairman Halford
also noted need to conform percentage language at page 2,
line 26, to conform to the minus number. He suggested that
language read "Percentage Above or Below" rather than merely
"Percentage Above." No objection having been raised, the
CONFORMING AMENDMENT was ADOPTED.
Senator Zharoff asked how the proposed bill would impact
Alaska's foreign offices. Ms. Elgee advised that the bill
makes no change for Alaska employees in foreign countries.
She noted that the director of personnel would be
establishing salaries for Alaska employees outside the State
of Washington. Problems have arisen concerning Alaska
employees in Washington, D.C., which has a substantially
different cost of living. The administration thus suggests
that these employees be treated similar to those in foreign
offices.
Discussion of the Runzheimer study followed between Senator
Phillips and Ms. Elgee.
Senator Zharoff asked what impact the proposed bill would
have in terms of getting people to serve in rural Alaska.
Ms. Elgee acknowledged that the department anticipates a
combination of effects. She attested to past criticism
regarding "very high differentials in rural Alaska" that
make service in rural areas so attractive that people are
recruited from Anchorage and Fairbanks when jobs could be
made available to local residents. At the same time, there
sometimes are no local residents to fill specific
professional qualifications. The administration will have
to explore other options (advanced step placement) to
encourage individuals to accept jobs in rural Alaska. The
department does not feel the geographic differential should
be utilized to solve recruitment difficulties.
As an example of operation of the proposed legislation,
Senator Sharp cited a road grader operator in Fairbanks
making $40.0 a year and asked if the new index would reduce
his pay by $6.0. Ms. Elgee explained that the salary
schedule is set as a base salary schedule. It is then
adjusted relative to recognition of an area cost of living
differential. All road grader operators throughout the
state start with the same basic level of pay. She then
acknowledged that the operator in Fairbanks would experience
the above-noted reduction. That impact, however, would be
implemented one year from the effective date of the
legislation to give employees adequate notice of the change.
Senator Sharp remarked that the reduction would require
considerable adjustment for someone with mortgage payments
and other financial obligations.
Co-chairman Halford voiced his understanding that the bill
addresses two issues:
1. The first limits the geographic pay differential
to the first $30.0.
2. The second adjusts the schedule.
He then suggested the changes would entail a less
significant adjustment for individuals at lower pay scales
if the existing schedule remains in place for a couple of
years, the $30.0 threshold is held harmless for three years,
and the schedule change is thereafter adopted. Ms. Elgee
advised that Sec. 8 of the bill contains the twelve-month
transition period. Should the committee wish a longer
period to mitigate impact on employees, that is the section
that should be amended. Co-chairman Halford suggested that
changing July 1, 1996, to July 1, 1997, would extend the
period one year.
In response to a question from Co-chairman Frank, Ms. Elgee
advised that the legislation proposes that the differential
apply only to that portion ($30.0) of the salary that
actually "goes to cost of living instead of to the entire
salary of the individual as in the past."
Co-chairman Frank questioned the fact that the current
differential for Valdez is greater than for interior
villages and suggested that the two do not deserve the same
differential. Ms. Elgee concurred. She added that if the
committee is interested in splitting election districts,
that could be done at page 2. line 30, by excepting Valdez
and Cordova from the listing of districts 34, 35, and 36.
Valdez and Cordova could then be included within districts
at line 29. Past geographic differential schedules have
been written in that fashion. Co-chairman Frank voiced
reluctance to do so without review of supporting data for
both existing and suggested differentials. Senator Sharp
noted a similar problem for Delta. In response to further
concerns, Ms. Elgee advised that rural state employees are
primarily located in regional centers.
In response to a question from Senator Zharoff, Ms. Elgee
explained that the legislation impacts non-covered employees
in the executive branch including the Dept. of Law, Office
of the Governor, Public Defender, Office of Public Advocacy,
Pioneer Home Administrators, and AHFC rural housing offices.
Senator Phillips asked if there was a difference between
union coverage and that proposed for non-union employees.
Ms. Elgee responded affirmatively. She added that the
recent ASEA agreement contains a reopener clause that would
be triggered by passage of the legislation. Senator
Phillips voiced a preference for treating all employees the
same. In response to a further question, Ms. Elgee advised
that at the present time non-covered employees are higher in
most districts than union employees. That has been the case
for the past ten years. The proposal would make the
majority of the districts lower, but there are a couple of
exceptions. Senator Donley commented that most of the non-
covered employees are top level, management positions which
benefit from larger salaries.
In response to comments regarding potential cost savings,
Ms. Elgee advised of savings of $1.2 million, when fully
implemented.
Senator Donley MOVED for passage of CSSB 152 (Fin) with
individual recommendations.
GREGG McDONALD, representing Public Safety Employee's
Association (PSEA), came before committee. He acknowledged
that the bill would not directly effect PSEA employees but
advised of several concerns. The first is that it
establishes various classes of employees working in the same
area. Further, it sets the cap at $30.0 gross. Mr.
McDonald noted that while it would not presently impact PSEA
employees, it would become a factor in future negotiations.
Prior studies upon which the differential was based were
scientific. There is no such evidence to support the
current proposal. Mr. McDonald expressed a preference for
maintaining the current differential based on its
accountability.
Co-chairman Frank voiced need to further review possible
impacts of the proposed legislation. The bill was thus held
in committee for additional consideration.
ADJOURNMENT
The meeting was adjourned at approximately 11:05 a.m.
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