Legislature(2001 - 2002)
04/17/2001 09:14 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. 180
"An Act implementing pay differentials based on geographic
areas for certain state employees and for members of the
Alaska State Defense Force; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
PAUL LYLE, partially exempt State of Alaska Employee, testified via
teleconference from Fairbanks on his own behalf, that this
legislation is preferable to previous proposals, since it does not
reduce the pay to partially exempt employees currently receiving a
geographical differential. He requested the Committee amend Section
10 (b) the portion regarding freezing the salaries of partially
exempt employees. He did not think it reasonable partially exempt
employees should work for ten years before receiving a pay raise.
He assured that he considered himself well compensated and that he
made a career choice to work as a partially exempt employee.
However, he asked that employees continue to receive pay increases
in accordance with the provisions in effect when they were first
hired. He spoke of the need to support families and the influx of
younger employees as well as the need to provide incentive to
attract employees to remote locations.
PAM HARTNELL, partially exempt State of Alaska employee, testified
via teleconference from Fairbanks on her own behalf to say, "this
is an issue of fairness." She elaborated that while other employees
receive pay raises, partially exempt employees' salaries would be
frozen. She asked that this provision in the bill be changed. She
reiterated many of the points raised by the previous witness.
Co-Chair Donley presented the bill saying it implements the
geographic pay differential currently in place for all collective
bargaining employees of the state for certain non-collective
bargaining employees. He referred to the existing cost of living
variance, pointing out that it has not been changed since 1976. He
said an updated cost of living variance has been implemented for
the majority of state employees.
Co-Chair Donley asserted that this legislation treats employees who
are not covered by a collective bargaining unit almost the same as
those who are covered, using a grandfather clause to implement the
newer geographical pay differential ratio. He pointed out that the
non-covered employees have had the benefit of a "higher than
truthful" geographical pay differential for many years and have
been paid more than covered employees performing the same functions
in other areas of the state where the actual cost of living is
greater.
Co-Chair Donley affirmed the need to treat long-term employees
fairly and opined that this bill does "more than treat them fairly"
because the non-covered employees continue to receive higher
salaries than they would under the updated geographical pay
differential. He said this adjustment is fair to those employees
who have been paid according to the updated geographical
differential.
Co-Chair Donley noted that some exempt employees would receive
higher pay based on the geographical differential changes, while
others would be "held harmless" and would not receive a raise. He
stressed that new employees would be paid at the new geographical
differential ratio, which would result in "significant savings" to
the state over a period of time.
Co-Chair Donley addressed the fiscal notes, showing that the Alaska
Court System fiscal note shows increased expenses for the first two
years after the legislation becomes effective, then decreased
expenses escalating in future years. He described the Department of
Administration fiscal note reflecting expenses for all state
agencies showing savings to the state in excess of $100,000 in the
first year, doubling in the next year and continuing to grow in the
out years. He expressed this savings is a result of action that is
"fundamentally fair" in treating all state employees the same with
regard to geographical pay differentials.
CHRIS CHRISTENSEN, Deputy Administrative Director, Alaska Court
System, testified to the fiscal note stating that the largest
impact would occur in Fairbanks, with a ten-percent differential
and Palmer, with 3.5 percent. He pointed out that the increased
expenses would be realized in smaller communities such as Bethel
with a ten-percent increase, Barrow and Kotzebue with 10.5 percent
increase and Nome with a 2.5 percent increase. He informed that the
Alaska Court System takes no position on this legislation and noted
that half of the employees would be unaffected because they are
located in Anchorage.
Senator Olson asked the witness the effect this would have on the
ability to fill vacancies in rural courts.
Mr. Christensen told of the difficulties in filling vacancies in
courts located in rural communities. He gave one reason as some
borough governments, such as in Barrow, pay a significantly higher
salary than the state. He therefore predicted that if the
geographical pay differential were to increase for these
communities, it could be easier to hire for those positions. He
pointed out however, that there could be some repercussions by
those employees in non-rural communities who have their salaries
frozen through this legislation.
Senator Wilken referred to information showing job growth in
different fields across the state that was used in the
consideration of other legislation. He suggested this information
could be helpful in considering this legislation and requested it
be provided to the Committee.
Senator Wilken said he appreciated the intent to make systemic
changes to the state employee salary procedures but was concerned
that the small amount savings could come at the expense of "people
who have built their lives around their paychecks as almost all of
us do." He recommended investigating the cost of applying the
updated geographical pay differentials only to newly hired
employees and retaining the existing salary structure for current
employees.
Senator Hoffman asked for an explanation of the Department of
Administration fiscal note.
ALISON ELGEE, Deputy Commissioner, Department of Administration,
explained that the fiscal note gives consideration to the assumed
five-percent annual rate of turnover as a result of the frozen
salaries for current employees. She said with this turnover, new
employees are hired at lower salaries. She added that the fiscal
note also makes future assumptions for the current employees when
their salaries are no longer frozen and they receive pay increases.
She estimated that by FY 07, this legislation would result in a
maximum net savings of $446,000. She told of the various funding
sources involved.
Ms. Elgee pointed out that the governor is in support of the
legislation and she noted that he has actually introduced similar
legislation in the past. She relayed his assertion that the issue
is a matter of equity in making the geographical pay differentials
the same for all state employees.
Senator Hoffman referenced the five geographical areas that would
experience salary reductions listed in the fiscal note. He asked
for a detailed analysis.
Ms. Elgee did not have figures to reflect the amounts resulting
from this legislation, noting the limited time the administration
had to prepare for this hearing. She offered to compile this
information.
Co-Chair Kelly asked for a comparison of this bill with one passed
in the previous legislative session then vetoed by the governor.
Ms. Elgee replied that the earlier legislation contained unrelated
amendments to the Supplemental Benefits System (SBS), which
resulted in the governor vetoing the bill. She noted this bill does
not contain these provisions. She explained the provisions
established a two-tiered environment for SBS, reduce the employer
contribution to half of the employee contribution and set a maximum
salary in statute.
Co-Chair Kelly agreed that the information Senator Wilken requested
would be valuable. However, he noted the need to report the bill
from Committee and suggested the information could be provided
before the Senate Rules Committee hearing on the bill.
Co-Chair Donley stated he would not request a hearing for this bill
in the Senate Rules Committee before the information is received.
Co-Chair Donley offered a motion to report from Committee SB 180
with accompanying fiscal notes from the Alaska Court System, Trial
Courts for $94,300, and the Department of Administration, all state
agencies, for a negative $108,000.
The bill MOVED from Committee with no objection.
AT EASE 9:40 AM / 9:42 AM
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