Legislature(1995 - 1996)

03/29/1996 08:08 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
  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 again be  brought                 
  before committee and referenced a draft committee substitute                 
  (0-GS0049\F,  Cramer,   3/29/96).    ALISON   ELGEE,  Deputy                 
  Commissioner, Dept. of Administration, came before committee                 
  and provided the following review of the draft:                              
                                                                               
       Secs. 1, 2, and 3 are from the original bill.                           
                                                                               
       Sec. 4 was redrafted to include committee amendments to                 
       place the Fairbanks  area in  the 5 percent  geographic                 
       differential and employees in Washington  State at -20.                 
                                                                               
                                                                               
       Sec. 4 (b) reflects amendment of the base salary amount                 
       from $30.0 to $50.0.                                                    
                                                                               
       Sec. 4(c) allows  for premium pay situations  for those                 
       practicing  law  or  medicine  in  rural  districts  37                 
       through 40.                                                             
                                                                               
       Sec. 5 remains the same as in the earlier version.                      
                                                                               
       Secs. 6,  7, 8, and  9 contain technical  amendments to                 
       reflect the renumbering  of the geographic differential                 
       section.                                                                
                                                                               
       Sec. 10 contains  transition provisions.   It has  been                 
       amended to reflect a hold harmless  period in year one,                 
       a limited reduction of no more than 5 percent of salary                 
       in year two, and full implementation in year three.                     
                                                                               
                                                                               
  Ms. Elgee directed attention  to a handout (copy on  file in                 
  the  Senate Finance Committee  master file  for SB  152) and                 
  explained that it sets forth figures under both the  current                 
  and new differential for  a $60.0 employee in Fairbanks  and                 
  an employee at the same pay level in Nome.                                   
                                                                               
  Senator Randy Phillips questioned the repeal date of July 1,                 
  1998,  set  forth in  Sec.  12,  suggesting  that it  should                 
  reflect 1997.    Ms.  Elgee explained  that  1997  would  be                 
  correct in  the event  of a  one-year hold  harmless and  no                 
  transition.  July  1, 1998,  allows for the  second year  of                 
  transition per the proposed draft.                                           
                                                                               
  Discussion  followed between  Senator Rieger  and  Ms. Elgee                 
  regarding  operation  of  hold  harmless  provisions.     In                 
  response  to a scenario presented by  the Senator, Ms. Elgee                 
  said the department  would freeze the salary of  an employee                 
  who is overpaid based on the new differential.  Freezing the                 
  salary would not preclude award  of merit increases or cost-                 
  of-living adjustments.   Those amounts  would be  calculated                 
  against the revised salary.   The employee is frozen  at the                 
  current salary, or transitioned  down to the 5 percent,  and                 
  the bookkeeping  entries are  applied against  what the  new                 
  salary would  be.   At the  point that  the adjusted  salary                 
  meets or exceeds the frozen salary, the employee would begin                 
  to realize "some benefit from those increases."                              
                                                                               
  Senator Sharp referenced Sec. 10(a)(2) and suggested that it                 
  would appear to produce a savings, yet none is shown  on the                 
  fiscal note.  Ms. Elgee agreed  that there would be savings,                 
  in FY 98,  as employees turn over  or relocate out  of their                 
  current geographic differential areas.   It is impossible to                 
  project  what  those  savings might  be.    The fiscal  note                 
  represents  application   of  this  legislation   upon  full                 
  implementation in FY 99.                                                     
                                                                               
  Senator  Sharp MOVED  for  adoption of  the  draft CSSB  152                 
  (Finance)  as a mark-up  vehicle.  No  objection having been                 
  raised, CSSB 152 (Finance) was ADOPTED.                                      
                                                                               
  Senator  Zharoff  voiced concern  for  election  districts 5                 
  through 9 and  asked how  the index  and union  differential                 
  work.   Ms.  Elgee  explained that  the  index reflects  the                 
  statutory schedule applied to non-covered employees.  It has                 
  been in place  since 1972.   In 1985  an extensive  cost-of-                 
  living study was conducted.  As a result of that study,  new                 
  cost-of-living indices  were adopted through  the collective                 
  bargaining process with unions.  That union differential, in                 
  place  since  1986,   applies  to  the  bulk   of  unionized                 
  employees.                                                                   
                                                                               
  Co-chairman Halford asked how many  employees fall under the                 
  statutory index.    Ms. Elgee  responded,  "I think  in  the                 
                                                                               
                                                                               
  executive branch  we're talking  about 1,200  people."   Co-                 
  chairman Halford voiced his understanding that approximately                 
  15 percent of state employees would be  directly impacted by                 
  the proposed  bill.  The remainder would  be negotiated into                 
  the system.  Ms.  Elgee concurred.  She  added that not  all                 
  non-covered employees  would be  impacted  because those  in                 
  Anchorage and Juneau  will see no  change since they do  not                 
  now  receive  a   differential.    The  bill   would  affect                 
  approximately 93 people in the Fairbanks area.                               
                                                                               
  Senator Sharp MOVED  for passage of CSSB  152 (Finance) with                 
  individual  recommendations  and accompanying  fiscal notes.                 
  Senator Zharoff OBJECTED.  He  said that testimony indicates                 
  arbitrary  decisions were  made in  changing the index.   He                 
  reiterated  concern for  election  districts  5  through  9,                 
  saying that he was not comfortable with possible impact.  He                 
  expressed his belief that employees in those districts would                 
  experience reductions because  backup information  indicates                 
  the cost  of living in those areas  is much higher than what                 
  is reflected  in  the  proposed  legislation.    Co-chairman                 
  Halford  called  for  a show  of  hands  on  the motion  for                 
  passage.  The motion CARRIED on  a vote of 5 to 1, and  CSSB
  152 (Finance)  was REPORTED  OUT of  committee  with a  zero                 
  fiscal note  from the Office  of the Governor,  covering all                 
  departments.   Co-chairmen  Frank  and Halford  and Senators                 
  Rieger  and Sharp  signed  the committee  report with  a "do                 
  pass" recommendation.   Senators Donley and  Phillips signed                 
  "no recommendation."  Senator Zharoff signed "do not pass."                  
                                                                               

Document Name Date/Time Subjects