Legislature(2001 - 2002)
02/26/2002 09:17 AM Senate FIN
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* first hearing in first committee of referral
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SENATE CONCURRENT RESOLUTION NO. 29
Relating to urging the Governor to institute a hiring freeze
on state government.
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Kelly opined that when requesting a hiring freeze, there
are complexities to the issue that are not immediately apparent.
Therefore, he requested the Division of Legal and Research Services
and the Division of Personnel to comment on the matter.
SKIFF LOBAUGH, Human Resource Manager, Personnel Office,
Legislative Administrative Services, Legislative Affairs Agency,
testified that it is common for managers to assist with the duties
of other positions during a temporary hiring freeze. He told of a
disadvantage in that if this practice continued over a length of
time, managerial positions could change. He spoke of Fair Labor
Standards and job classifications and the percentage of time spent
performing clerical duties, which could make a manager employee
eligible for overtime compensation.
Co-Chair Kelly asked the specific percentage of time spent on
clerical duties whereby the position is no longer considered
professional and exempt from Fair Labor Standards.
BARBARA CRAVER, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency, testified
the amount is established in case law and is between 20 and 50
percent. She stressed the issue is that an employee's job duties
regularly involve nonprofessional duties, the status as a
profession could be lost and the position could subsequently become
subject to overtime compensation.
Co-Chair Kelly commented that becoming liable for overtime
compensation for managers could defeat the cost saving purpose of a
hiring freeze.
Co-Chair Kelly pointed out that if this resolution were passed, the
Executive Branch is not required to implement it because of the
Separation of Powers. He referenced another Senate resolution
relating to a constitutional amendment to allow the Legislature to
enact a hiring freeze, which is currently in the Senate State
Affairs Committee.
Ms. Craver replied that if the Administration decided to institute
a hiring freeze, a number of statutory changes would be necessary,
although these could be temporary.
Senator Wilken referenced page 1, line 8 and 9 of the resolution,
which reads as follows.
WHEREAS the proposed fiscal year 2003 budget contains an
increase of 858 full-time positions from the current fiscal
year, at a cost of $115,000,000; and
Senator Wilken asked if these positions are funded with general
funds.
Co-Chair Kelly stated that not all the positions would be funded
with general funds.
Senator Wilken suggested the funding sources of the positions
should be clarified.
Senator Austerman asked if those positions funded from other
sources require general funds for medical and retirement benefits
packages and whether this cost is reflected in the $1.5 million.
Co-Chair Kelly stressed this resolution is not intended to "beat up
on the Governor". He noted that the increased number of positions
is partially because of legislative action. She requested Ms.
McConnell address Senator Wilken's and Senator Austerman's
questions in her testimony.
ANNALEE MCCONNELL, Director, Office of Management and Budget,
Office of the Governor, spoke to the purpose of a hiring freeze at
this time. She surmised that some feel that before additional
revenue sources could be considered, it must be demonstrated to the
public that existing resources are utilized wisely. She referenced
the hiring freeze instituted in Alaska in 1999 because of a
significant reduction in oil prices, and hiring freezes instituted
in other states experiencing "emergency situations" caused by "a
sudden precipitous drop in their revenues." By contrast, she stated
the situation currently in Alaska has been known for some time,
which is the need to address the fiscal gap with both budget cuts
and revenue measures.
Ms. McConnell said the question is whether a hiring freeze would
provide "good cost control" and also whether it would provide
assurance to the public.
Ms. McConnell addressed the cost control issue, saying there is not
a surplus of state employees who are not performing any work or
important work. She stated that five years of budget reductions and
a past hiring freeze has "concentrated the effort quite
significantly" and forced many agencies to determine how to perform
necessary functions with fewer people.
Co-Chair Donley asked how many state employees were released "non-
voluntarily" i.e. were fired.
Ms. McConnell did not have that information.
Co-Chair Donley requested examples of how the Administration is
attaining efficiency, whether through job reassignments, etc.
Ms. McConnell replied there have been several consolidations within
departments, such as the Tax Division, which performs with fewer
managers and the Department of Labor and Workforce Development,
which has instituted cross training of inspectors.
Ms. McConnell asserted a hiring freeze does not guarantee budget
reductions in specific areas. She noted this resolution exempts
those positions related to health and safety. She commented it must
then be determined what constitutes health and safety. She listed
Alaska State Troopers and the necessary administrative support in
the crime lab, investigations and payroll.
Co-Chair Kelly asked if there have been lay-offs.
Co-Chair Donley said the case has been argued that efficiencies
have been made that that the state needs every person currently
employed. He asked the number of employees dismissed over the past
year to "maximize the productivity of the workforce".
Ms. McConnell spoke to difficulties due to position vacancies,
which she said she would address later in her testimony.
Ms. McConnell informed that paying overtime to existing employees
is more expensive then hiring new employees. She told of the 55
correctional officer vacancies in the Department of Corrections,
the 15 percent vacancy rate in probation officers, 17 medical
positions and five percent vacancy rate for administrative
positions. She stressed that the administrative staff "has not kept
pace" with the overall growth of the number of prisoners. The
Department of Law, she continued, has had a 39 percent turnover
rate in the Criminal Division since January 1, 2000. She emphasized
that a hiring freeze would impact the Department's ability to hire
graduates in the fall, when most are hired. She also reminded of
difficulties in hiring and retaining nurses. In addition, she noted
the Legislature approved funding for a new hearing officer position
in the Department of Labor and Workforce Development to address the
backlog of Workers Compensation Claims. However, she informed that
another hiring officer position has been vacated and a hiring
freeze instituted at this time would negate the effect of the
additional position.
She also pointed out that new employees require a period of time
before they are able to fully complete their duties and that the
impact of a hiring freeze would be realized in future delivery of
services as well as in the short term.
Ms. McConnell spoke to the complex matter of general fund
positions. She told of a general funded position in the Labor
Market Information Section of the Department of Labor and Workforce
Development, which generates over $550,000,000 federal funds.
Ms. McConnell next addressed public perception and the difficulties
experienced during the past hiring freeze when non-general funded
positions continued to be advertised. She stated it is also a
misperception as to the importance of general funded positions.
Ms. McConnell asserted Alaska has instituted budget reduction
measures before many of the states that are currently instituting
hiring freezes. She suggested the Legislature could identify
functions and modify statutes to reduce the level of certain
services.
Ms. McConnell reminded of the FY 02 budget Conference Committee
intent that although funds would be approved for various increases,
the total position count would not be adjusted. She said this
decision required the additional positions to be accounted in the
FY 03 Governor's budget.
Ms. McConnell referenced a handout: Understanding the FY 2003
Budget, Analysis of Position Changes [copy on file], which she said
addresses the questions raised by Senator Wilken and Senator
Austerman. She pointed out that the aforementioned figure of 858
new positions is inaccurate because it "disregarded" many positions
although funds had been approved by the Legislature. She informed
that of the 536 new positions included the Governor's proposed
budget, 116 are either federally funded or self-supporting. Another
75 of those positions, she said, were previously part time
positions; 12 new positions are for programs or facilities
previously approved by the Legislature; and 29 new positions in the
Governor's Oil Safety and Development Initiative are to address the
aging pipeline and other oil and gas facilities and to streamline
the permitting process. She continued that 11 new positions
proposed for the Department of Corrections are intended to meet the
increase probation officer and child protection caseloads.
Ms. McConnell remarked that the Administration continues to
recognize that there is a need to assure the public that funds are
spent wisely. However, she asserted that the "primary issue right
now is addressing the revenue side of the equation."
Co-Chair Kelly referenced a conversation held in Committee a week
prior relating to the specifics of the budget and the difficulties
for the Legislature at finding efficiencies. He commented that the
same applies to a hiring freeze. He stated he would not presume to
tell the Governor the best method to implement a hiring freeze.
However, he hoped to enter a dialog on the matter.
Co-Chair Kelly stressed the number of positions has increased by
1,200 since 1995. He qualified he did not dispute the importance of
many of these positions and noted that some of these positions are
the result of legislative action. Regardless, he surmised that a
hiring freeze is a common sense response to a growing government in
times of a fiscal gap. He wanted to reach an agreement with the
Administration as to how a hiring freeze could best be implemented.
Ms. McConnell reiterated there is a disagreement about whether a
hiring freeze is the best solution. She talked about the unfairness
of requiring employees funded with general funds to perform the
work of one and one-half positions while other employees working in
non-general funded positions are not. She noted employee contracts
prohibit this practice and that it would be unfair to the public as
well as to employees.
Co-Chair Kelly did not disagree and requested assistance in
crafting a hiring freeze to avoid the problems Ms. McConnell
mentioned.
Ms. McConnell asked the purpose.
Co-Chair Kelly responded the purpose would be to slow the growth of
government in light of a $1.3 billion fiscal gap. He asserted that
a hiring freeze is a reasonable response of management in times of
a budget shortfall. He pointed out the Governor has proposed
increased spending every year except one, when there has been a
revenue shortfall.
Ms. McConnell stressed the Legislature has approved each of those
budgets. She expressed that if the Legislature wants the
Administration to stop certain functions, the statutes establishing
those services should be amended.
Co-Chair Kelly responded, "Act like an executive," and "take hold
of this problem and begin to do something about it rather than just
passing out money like it's Christmastime."
Ms. McConnell pointed out many vacant positions could not be filled
because pay scales and compensation packages are not commensurate
with the federal government and the private sector, or because or a
short supply in trained workers for certain jobs. She stressed that
a hiring freeze prohibiting the Administration from recruiting for
these positions would compound the problem.
Co-Chair Kelly noted this resolution is "fairly general" and does
not restrict recruitment.
Ms. McConnell gave an example of accounting clerk positions, which
the Legislature could determine to not be health and safety
related. She warned the system could not function without basic
administrative support.
Senator Ward asked the number of new positions added since 1996.
Ms. McConnell did not have that information.
Senator Ward wanted to know the number of new positions requested
since the 1999-hiring freeze.
Ms. McConnell responded a position analysis has been prepared each
of the last three or four fiscal years. She noted some positions
are a result of federal transportation funding and other non-
general fund sources.
Senator Ward asked if since 1999 any non-essential positions have
been added. If not, he suggested this resolution is unnecessary.
Ms. McConnell remarked the question is what positions are
necessary, listing correctional officers and crime lab staff. She
emphasized the Legislature and the Executive Branch reached the
decisions regarding specific additional positions, jointly. She
maintained that the addition of social workers, and other such
positions are necessary.
Senator Ward did not disagree, but questioned the addition of
managerial positions.
Senator Hoffman compared Alaska's approximately one billion dollar
fiscal gap to the $1.6 billion fiscal gap of the State of
Washington, noting that although a hiring freeze is being
considered for Washington, additional revenue sources are under
consideration as well. He commented that the deficit in Alaska of
is more significant due to the lower population.
Senator Hoffman indicated a hiring freeze, delayed pay raises and
other proposals are reactions to the budget problem. He remarked he
would be more supportive of the proposed measures if he were able
to "see the light at the end of the tunnel." He explained this must
include consideration of new revenues, rather than only a spending
limit.
Senator Hoffman referenced a survey published in the Juneau Empire
on Monday February 25, 2002, which indicated broad support of
addressing the fiscal gap.
SFC 02 # 17, Side B 10:04 AM
Senator Hoffman warned. "We don't have the time, Mr. Chairman, to
be sitting around and hoping that something big is going to happen
out of the blue. We need to be a little bit more active in the
concerns of the economy of the state and the services that we are
obligated to provide to the citizens of the state."
Ms McConnell added that between 1990 and 1997, the Washington state
general fund budget increased 33 percent, whereas the general fund
budget for Alaska was reduced .6 percent during the same time
period. She suggested that a hiring freeze might be reasonable in
Washington due to this growth. She noted that because another state
is implementing a hiring freeze it is not necessarily advisable for
Alaska to do likewise.
Co-Chair Kelly agreed this was not a valid reason to implement a
hiring freeze, but noted it is not uncommon to address budget
shortfalls with a hiring freeze. He asked if the witness considered
the 1999-hiring freeze successful.
Ms. McConnell responded it reduced the growth in the number of
employees. However, she stated the state is currently having
difficulties in filling existing vacancies. She reiterated the
issue regarding non-general fund positions that continued to be
advertised.
Co-Chair Kelly suggested that showing that the 1999 hiring freeze
was unsuccessful would be an effective argument against this
resolution.
Ms. McConnell asked which positions the Legislature could recommend
should be vacant.
Co-Chair Kelly remarked the issue relates to cooperation between
the Legislature and the Executive Branch in making budget
decisions.
Senator Austerman addressed the 75 positions changing from part
time to full time and asked if the positions were originally
created through federal funding.
Ms. McConnell answered that in some cases three part time positions
would be converted into one or two full time positions; other
changes are the result of increased workloads. She pointed out the
data does not report the deletion of part time positions.
Co-Chair Donley remarked the per capita spending argument is an
"excuse" of the Executive Branch to "do nothing". He informed the
per capita spending of Alaska is approximately $9,000, compared to
the state of Hawaii with the next highest per capita spending of
approximately $5,000. He partially attributed this to significant
oil revenues generated in the 1980s.
Co-Chair Kelly noted the Alaska Constitution requires this state to
provide more services than other states.
Co-Chair Donley agreed but stressed Alaska spends more per capita
on education then any state.
Senator Wilken commented that "stealing" from "working people" and
small businesses as the first step to solving the state's fiscal
problem, is actually an oncoming train at the end of the tunnel.
Senator Wilken asked for reconciliation between the 18,300
positions listed by the Division of Legislative Finance as approved
by the Legislature for FY 02, and 19,339 positions cited by the
Office of the Governor.
Ms. McConnell explained that although the Conference Committee
authorized funding for new positions, the position count was not
increased.
Co-Chair Donley again spoke to the comparison of per capita
spending in the State of Washington and the State of Alaska.
Ms. McConnell noted Alaska's expenditures are higher because of
constitutional requirements. She stated Alaska spends more for
education then most states. She also pointed out the unified court
system requires more state funds.
Ms. McConnell compared current per capita spending in Alaska to the
amount spent in 1979 informing that, adjusted for inflation, the
state spends $1,100 less. She agreed there were spending increases
in the 1980s but stressed decreases have been made since then and
spending has not "kept pace" with population increases. She
emphasized the question is "what is right for us today".
Co-Chair Kelly ordered the bill HELD in Committee to await a
constitutional amendment resolution on the same subject.
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