Legislature(2001 - 2002)
03/19/2001 09:09 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. 137
"An Act relating to the allocation of money appropriated to
the Alaska Human Resource Investment Council; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
MARY JACKSON, staff to Senator Torgerson, testified that this bill
extends the first year funding provision, or allocation provision,
of the previous legislative session's SB 289. She detailed that the
provision allocated funding for the newly created program through
the University of Alaska, the Kotzebue Technical Center and the
Alaska Vocational and Technical Center (AVTC) because the program
itself was not yet established in a manner to receive funding.
Ms. Jackson shared that these institutions provide technical and
vocational programs in both urban and rural areas of Alaska. She
stated that a review of the uses of the funds, "showed how
necessary those funds were." She referred to supporting
documentation from AVTC.
Ms. Jackson explained that these funds allow the institutions to
"properly prepare" for the influx of new students into their
systems.
Co-Chair Donley asked if the funds for this program come from the
Unemployment Insurance (UI) fund.
Co-Chair Kelly affirmed.
Amendment #1: This amendment to Section 1 (a), page 1, lines 12-14,
changes the distribution of the allocations between the three
vocational technical facilities as follows.
Delete:
University of Alaska 52 percent
Kotzebue Technical Center 16 percent
Alaska Vocational Technical Center 32 percent
Insert:
University of Alaska 67 percent
Kotzebue Technical Center 11 percent
Alaska Vocational Technical Center 22 percent
Senator Wilken moved for adoption.
Senator Austerman objected for the purpose of discussion.
Senator Wilken stated this amendment corrects a drafting error. He
said that the existing percentage breakdown was a part of SB 289
and was determined by the intent to allocate $1 million to AVTC and
$500,000 to Kotzebue Technical Center, with the remainder allocated
to the University of Alaska system. He said the percentage change
is necessary to continue funding the same fixed amounts to AVTC and
Kotzebue Training Center.
Ms. Jackson stated that the sponsor supports the amendment.
Senator Leman asked if the intent is to fund the technical centers
a fixed amount then why percentages were listed in the language
instead of the allocations. He predicted changes would continue to
be necessary in future years.
Ms. Jackson replied, "The dollar values are always going to be
approximate" She explained the actual allocation to AVTC the
previous year was $1,032,000 and the projected amount for the
current year is $1,001,000 out of a total allocation to the program
of $4.5 million.
Senator Leman again asked why the language contains the
percentages, which require changing.
Ms. Jackson answered that the previous allocation was not for the
"full funding year" due to the inception of the program after the
fiscal year began.
Senator Leman asked if the expectation were therefore that the
amended percentage amounts would be accurate in future years.
Ms. Jackson affirmed.
Senator Green expressed that she did not support the project the
previous session and would not support it again this year either.
She opined, "I think it's a misdirection of funds that were very
clearly laid out how they were supposed to be used." She stressed
that this legislation "goes totally against" the UI program.
Senator Austerman removed his objection to adoption of the
amendment.
Senator Olson stated the UI fund is an employer contribution
intended to have "a positive action" on employees. He did not
understand why the University of Alaska was receiving the "lion's
share" of the funds for this program. He predicted the university
would continue to receive larger percentages of this fund and would
eventually expect to receive all of the funds. He stressed that the
emphasis of the program is for vocational and technical training
and that the percentage shifts would take away from the original
intention. He spoke of the preparations for a gas pipeline and the
need to train Alaskans throughout the state for the jobs this
project would bring. He saw this amendment as reducing funding for
"the only technical institution in my area." As a result, he stated
that he objected to its adoption.
Senator Olson opined this amendment "polarizes", "separates the
haves from the have-nots" and causes "a bigger burden to be placed
upon those of us that are already overburdened by the lack of
availability of training."
Senator Olson expressed that the intent of the legislature is to
provide a consensus and "a more even playing field." He saw this
amendment as divisive.
Co-Chair Kelly noted that the funds would be directed to vocational
pursuits and therefore be used to help Alaskans develop the
necessary skills for jobs, such as with the proposed gas pipeline.
He stressed that this amendment does not change the amount
originally intended for the university, but rather corrects
language to allow it.
Senator Wilken explained that the amount funded the program the
previous year was only enough to fund three-fourths of the year
because the program started after the fiscal year had begun.
Senator Olson understood this, but stressed the need to provide
training in rural areas of the state.
Co-Chair Kelly recalled the original intent was to provide funding
to the vocational training centers and that this amendment
continues to do this.
Senator Hoffman suggested that the intent of the program is to
provide training for jobs in technical areas and that the
university is an institution of higher learning. He said the
question is actually whether the allocation to the university is
appropriate.
Senator Green reminded that there was "great heated debate" on SB
289 during the previous session about the method of changing the
use of the UI funds. She remarked, "That's not what this money was
intended for, it's not why the money was collected. It was not go
to institutions. It was to got to individuals who had specific
needs." While she understood the fund has a surplus, she argued
that this money should go to individuals. She stated that SB 289
was "supposed to be a one-year budget fix."
Co-Chair Kelly did not remember SB 189 as a "one-year budget fix."
Senator Green asked if it was not, why the issue was before the
Committee this session.
Co-Chair Kelly recalled the original discussions included
statements that the program would be on-going.
Senator Wilken also did not remember the program as a "one-year
budget fix." He stressed that funding for this program is not
collected from the employee but rather from the employer's matching
funds. He found it appropriate to train unemployed workers so they
could qualify for other jobs, which would be an appropriate use of
UI funds. He added that the University of Alaska is included in the
program because it has a "statewide reach." He noted that while
AVTC and Kotzebue Training Center are located in two rural areas,
there are campuses of the University of Alaska in several more
rural communities. He pointed out that University of Alaska
President Hamilton understands the need to provide vocational and
technical training.
Co-Chair Kelly stated, "There is no reallocation of dollars from
one institution to another." He stressed that this is a technical
amendment. He reiterated that the university is the statewide
entity able to funnel these funds into rural Alaska for vocational
training.
Senator Austerman asked for a breakdown of how the university spent
the funds allocated to it for this program.
Co-Chair Kelly stated this information is available on the
Internet.
Senator Green expressed, "the university [has] done a fine job"
with the funds allocated for this program. She cited the "major
emphasis" at the Mat-Su campus on vocational technical studies.
However she repeated that the intended use of the UI fund was not
for institutions, but rather to individuals with specific needs.
She stated that the funds could be given to unemployed workers to
pay for tuition at one of the institutions.
Co-Chair Donley remembered the argument that was held during the
Senate debate on SB 289 the previous session regarding employer-
matching funds comprising the allocation to this program. He asked
for an explanation of how the source of these funds affects the
"bottom line." He understood that the "bottom line" is money
available to pay benefits to unemployed Alaskans who contributed to
the fund. He surmised that using UI funds for the vocational and
technical training programs would reduce the amount available to
unemployed Alaskans regardless of whether the funds were collected
from the employer contribution or the employees.
Senator Wilken recalled a chart referenced during the previous
discussions, which he no longer possessed. He remembered that the
unemployment benefits were based on the demand of the available
money. He explained that the funds allocated to the vocational
technical training program are "over and above" the demand and
would not affect the benefits. He qualified that in the previous
session, the Department of Labor and Workforce Development warned
that using the excess amount in the fund for other purposes would
affect benefits. He remarked that this was found to be untrue and
that the excess balance has grown despite the withdrawal of funds
for the vocational technical training program.
Co-Chair Donley stated that it does not matter whether the funds
allocated to the vocational and technical training program come
from the employee or the employer share of the payments to the UI
fund. He expressed that any usage of the fund for other purposes
affects the amount available to pay unemployment benefits. He said
this is because of the presupposition that the status quo is the
proper policy call. He stated that the amount paid unemployed
workers in benefits is "some of the most miserable lacking benefits
in the nation." He suggested that the policy should actually be
whether to increase the amount of benefit payments or direct the
funds to other projects such as the vocational and technical
training program.
Senator Wilken disagreed and emphasized that the amount allocated
from the UI fund to the vocational and technical training program
is excess money in that fund, which constitutes a reserve. He
stated that Co-Chair Donley's suggestion to increase benefit
payments would need to be addressed as separate legislation.
Senator Wilken admitted that while it could be stated that Alaska
has "miserable" unemployment insurance, the state has other
"extraordinary" benefits that compensate for this.
Co-Chair Donley argued that the benefit payment issue is directly
relevant to the legislation before the Committee. This, he stressed
is because other usage of the UI funds "cuts off the availability,"
or impedes the flexibility to improve the benefits paid to
uninsured Alaskans.
Senator Wilken countered the bill does not address the possibility
of using employer and employee contributions to the UI fund to
increase the amount of benefits paid to individuals. He stressed
that this bill allocates funds collected "over and above" the
amount paid out in benefits and establishes the amount of reserve
funds necessary.
Co-Chair Kelly agreed Co-Chair Donley's concern is a subject for
another bill. He explained that the existing structure of the UI
fund enables payments for vocational programs without impacting the
benefits paid to individuals.
Senator Wilken noted that the matter is complicated, just as it was
when it was first discussed the prior year. He asked that the
Department of Labor and Workforce Development explain the issues.
Co-Chair Kelly ordered the bill HELD until later in the hearing.
The motion to adopt Amendment #1 remained on the table.
SB 137-ALASKA HUMAN RESOURCE INVESTMENT COUNCIL
[The Committee continued deliberations from earlier in the hearing.
A motion to adopt Amendment #1 remained on the table.]
Co-Chair Donley restated his objection to the bill as the same
reason he voted against similar legislation the previous year. He
expressed that this legislation utilizes funds that would "more
appropriately" be used in improving the unemployment benefits to
those workers who have paid into the system. He asserted that this
is the "purpose of the system" and that the current benefit
schedule is "sub par" and does not adequately compensate unemployed
workers. He noted that the intended purposes contained in the
legislation are worthy.
Co-Chair Kelly reminded that the Committee debate has been whether
this bill could adversely affect the potential to increase
unemployment payments.
SENATOR JOHN TORGERSON affirmed Co-Chair Donley's assertion that
this legislation "intercepts" unemployment insurance (UI) funds.
Senator Torgerson listed this amount as one-tenth of one percent of
the amount paid into the fund by the employee. He remarked that the
UI trust fund is "the most lucrative it has been in the history of
our state" with a balance of approximately $220 million. He said
the average balance is between $160 million and $180 million. He
noted there is other legislation before this legislature that would
increase the UI benefits. He stressed that if at any time the
benefits need exceeds the balance of the UI trust, the employer
would pay the difference. Therefore, he assured that the trust is
never compromised.
Senator Torgerson made the case that by providing funding for
training facilities the number of workers reliant on UI benefits is
reduced. In fact, he pointed out, these workers were instead
employed and therefore contributing to the UI fund. He noted that
this theory was also agreed upon when establishing the State
Training Employment Program (STEP) several years earlier and as a
result, the balance of the trust increased.
Senator Ward referenced the amendment and asked if its necessity
was caused by a mistake in SB 289, which set the original
allocation percentages.
Senator Torgerson replied, "this was actually driven by money" and
that his intention was to allocate $3 million to the University of
Alaska. He stated this was because the House of Representatives did
not fund the full request in the FY 01 operating budget. He noted
that other legislation was pending that could have accomplished
this, but that SB 289 was chosen to also provide funds to AVTEC and
Kotzebue Technical Center.
Senator Ward asked the projected amount appropriated to the
university under this amendment.
Senator Torgerson answered, $3,051,046.
SFC 01 # 47, Side A 10:44 AM
Senator Leman requested that the debate return to the amendment
before the Committee.
Co-Chair Kelly pointed out that the amendment is a technical
correction, but noted there was objection to the amendment based
upon the program. He emphasized that the program continues, whether
the amendment is adopted or not, but warned that if the amendment
is not adopted, the program does not continue as intended in SB
289. He surmised that while this debate could be "healthy" it does
not pertain to the amendment or the legislation before the members.
He reiterated that the amendment adjusts the percentages to reflect
a full fiscal year rather than the three-quarter year funded in the
first year of the program.
Senator Leman concluded that this amendment is "a fix that is
necessary to get us to where we intend to be." He appreciated
Senator Olson's comments but disagreed that this takes from the
"have-nots" and gives to the "haves". Senator Leman did not think
the redistribution was in a manner that would be detrimental to the
Kotzebue Training Center. He supported the amendment because it is
consistent to the intent of SB 289. He stated that like Co-Chair
Donley and Senator Green, he objected to the use of the UI funds
for an education program in the previous session and that he voted
against the original legislation. He qualified that he did not
oppose funding vocational technical programs. However, he stated
that this amendment is appropriate given that the program is in
place.
Senator Olson moved to amend the amendment, changing the
percentages to 61 percent to the University of Alaska, 13 percent
to the Kotzebue Technical Center and 26 to the Alaska Vocational
Technical Center. He said he offered this as a compromise saying it
would provide a 40 percent increase to each institution.
Co-Chair Kelly understood the amendment as stated but did not think
it gave a 40 percent increase over what was requested in the prior
year.
Senator Torgerson pointed out that the Kotzebue Training Center is
estimated to receive $516,000 under the previous year's
appropriation and would receive $500,019 in the current year. He
continued that AVTC was projected to receive $1,032,000 and would
receive $1,001,000. He suggested that the percentages could be
changed slightly to make up for these reductions. He stressed that
the intent is to provide the same amount to each facility as in the
prior year and for the university to receive the maximum amount
possible.
Co-Chair Kelly stated that because the actual amount would
fluctuate every year, he did not support adjusting the percentages
based on the previous year's funding.
A roll call was taken on the motion to amend the amendment.
IN FAVOR: Senator Hoffman and Senator Olson
OPPOSED: Senator Wilken, Senator Austerman, Senator Leman, Senator
Ward, Co-Chair Donley and Co-Chair Kelly
ABSENT: Senator Green
The motion FAILED (2-6-1)
The amendment FAILED to be adopted.
Senator Leman expressed that Senator Torgerson raised a
"compelling" argument in that these numbers are not exact and
suggested that a one-half percent adjustment would accomplish this.
He surmised changing the Kotzebue Training Center percentage to
11.5, changing the AVTC percentage to 22.5 and the University of
Alaska percentage to 66, would achieve the same funding amounts for
each of the three facilities.
Co-Chair Kelly stressed that although this might make the amounts
the same as the previous year, they would be different in future
years. He did not recommend adjusting the percentages to align
exactly with the previous year's amounts, but rather supported
establishing a percentage breakdown.
Senator Torgerson affirmed that the actual amounts are fluctuating
depending on the amount paid into the UI trust fund.
Senator Leman stated that he would no offer this as an amendment to
the amendment.
A roll call was taken on the motion to adopt the amendment.
IN FAVOR: Senator Leman, Senator Ward, Senator Wilken, Senator
Austerman, Co-Chair Donley and Co-Chair Kelly
OPPOSED: Senator Hoffman and Senator Olson
ABSENT: Senator Green
The motion PASSED (6-2-1)
The amendment was ADOPTED.
Co-Chair Donley stated that there was confusion as to whether this
bill is necessary in order to extend the program. He referred to
the sponsor statement; "…SB 137 extends the date of the direct
allocations to named institutions for two more years." He asked if
the bill accomplishes two functions, adjust the percentage levels
and also extend the effect of SB 289 for two years.
Senator Torgerson responded that SB 289 established a grant program
that would be given to accredited institutions in Alaska based upon
grant criteria. He stated that he introduced the current
legislation because the Department of Labor and Workforce
Development has not issued any regulations, nor has the Alaska
Human Resource Investment Council (AHRIC) taken steps to issue
these grants. Henceforth, he remarked, this legislation provides a
direct grant to the three institutions, rather than require the
institutions apply for the grants.
Co-Chair Donley asked how this legislation with the set
percentages, relates to the operating budget. He noted that because
it does not set specific amounts, it is not an appropriations bill.
He wanted to know if it is a guide or formula to be used when
preparing the operating budget.
Senator Torgerson replied that this legislation has nothing to do
with the operating budget and that a forthcoming fiscal note will
reflect the percentage breakdowns to each institution.
Co-Chair Donley referred to an outdated zero fiscal note that
stated the bill appropriates $4.5 million to the program.
REMOND HENDERSON, Director, Division of Administrative Services,
Department of Labor and Workforce Development, testified that a
fiscal note would be necessary to appropriate the intended $4.5
million into the department's budget. This, he stated is because
the funds are not included in the budget under the House of
Representative's version of the FY 02 operating budget. He admitted
that this request should have been submitted with the governor's
proposed operating budget but was omitted. He stressed that if this
bill passes without the related fiscal note, the department would
not have the necessary $4.5 million to issue in grants to the three
institutions.
Senator Torgerson stated his intent to reflect the funds in a
fiscal note in the event that the governor vetoes the bill. He
explained that if the veto occurred, the funds would not be
available for the department to expend otherwise and would be held
for future appropriation.
Co-Chair Kelly announced the Committee would wait for a proper
fiscal note.
Senator Torgerson offered to write the fiscal note.
Co-Chair Kelly ordered the bill HELD in Committee.
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