Legislature(2001 - 2002)
05/08/2002 10:46 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 58(L&C)
"An Act relating to the calculation and payment of
unemployment compensation benefits; and providing for an
effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
AT EASE 7:40 PM / 7:42 PM
Amendment #1: This amendment deletes Sections 2,3,5 and 6; all
language from page 5 line 23, through page 14 line 31 and page 15
lines 2 and 3. This amendment also changes the effective date of
Section 1 to January 1, 2002.
Senator Green moved for adoption.
Senator Olson objected.
Senator Olson moved to amend the amendment to include the language
of Amendment #2. This amendment changes the effective date of
Section 1 to July 1, 2002, on page 15 line 1. He detailed the net
effect of this motion is that Section 1 of the bill would take
effect six months prior to that proposed in Amendment #1.
Senator Green objected.
Co-Chair Donley asked for an explanation of the main amendment.
Senator Green shared that Amendment #1 "caps the growth … and stops
the next incremental growth … at 272."
Co-Chair Kelly advised Senator Olson to withdraw his motion and re-
offer it as a separate amendment after action is taken on Amendment
#1.
Senator Olson WITHDREW his motion to amend Amendment #1 without
objection.
Senator Green explained Amendment #1 deletes much of the language
in the original bill and changes the effective date.
Co-Chair Kelly clarified this amendment would "essentially take the
first years' increase and adopt that in the bill."
Senator Green affirmed and commented the matter could be revisited
at a later time. She stated she was approached "by several groups"
concerned about the incremental impacts of the bill.
Senator Wilken spoke to the extensive comments he received from
parties in support and also in opposition to the bill. He
referenced a handout titled, "Response to Chamber of Commerce
Position Statement and Attachments", prepared by the Department of
Labor and Workforce Development dated May 8, 2002 [copy on file.]
He asked for an explanation of this handout so he could understand
the impact. He understood that the Department predicts the
incremental increases would not occur.
Senator Wilken shared that he reviewed the material to calculate
how it would impact his business of 20 employees; which in two
years would cost him $220. He spoke to the "clamor" he has heard
that asserts this "is really an onerous bill … and hard on small
business, especially in light of the minimum wage passing." He
assured that he is sympathetic; however, he calculated that
"frankly, it's minimal".
REBECCA GAMEZ, Deputy Commissioner, Department of Labor and
Workforce Development referenced the first page of a handout titled
"Alaska's Maximum Weekly Benefit Amount as a Percentage of Average
Weekly Wage". [Copy on file]. The Department issued these graphs
and the Alaska Chamber of Commerce added handwritten notations. The
Chamber submitted the marked-up versions to the Committee.] Ms.
Gamez indicated that the handwritten notations on this graph
compares, "apples to oranges".
RON HULL, Director, Division of Employment Security, Department of
Labor and Workforce Development furthered that the handwritten
notations compare maximum dependant allowances to average weekly
wages. He stressed the actual impact is significantly less,
explaining that the average dependant allowance "across all claims"
is $20.26, rather than $24, $48, or $72 as indicated by the
notations.
Co-Chair Kelly requested clarification.
Mr. Hull qualified some of the information contained on the graph
is "guesswork because it isn't our work." He understood the
information on the graph to infer that the average weekly benefit
amount for claimant with three dependants of $320 would equal 50
percent of the average weekly wage. He furthered that the average
weekly benefit amount is 46 percent of the average weekly wage for
a claimant with two dependants and 43 percent for a claimant with
one dependant.
Senator Wilken noted that the Alaska Chamber of Commerce is
projecting that the average [maximum] weekly benefit amount for a
claimant with three dependents would increase to $392, which would
increase the percentage to 62 percent of the average weekly wage.
Mr. Hull affirmed, but stressed that only three percent of the
"claimant population" receive the maximum weekly benefit amounts
with the maximum dependant allowance of three dependants.
Senator Wilken next asked the average weekly benefit allowance.
Mr. Hull answered, $189 "and some change".
Senator Wilken asked the amount of the average weekly benefit
allowance of a claimant with three dependants under the provisions
of this legislation, noting the current amount is $320.
Mr. Hull replied, "If you're using averages, you should use $189
and change and $20.26 for the average dependants allowance."
Senator Wilken calculated the amount to be $209.
Mr. Hull affirmed.
Senator Wilken again asked the revised amount according to the
provisions of this legislation.
Mr. Hull responded the average weekly benefit amount would be $206,
plus $20.26 for each allowable dependant up to three dependants.
Senator Wilken calculated the maximum benefit amount including the
maximum dependant allowance at $392. He continued the average
weekly benefit would increase from $209 to $226.
Mr. Hull affirmed.
Senator Wilken commented on the assertions that unemployment
benefit amounts in Alaska are low; however, he pointed out Alaska
is one of only 12 states that provide additional benefits to
claimants with dependants.
Senator Wilken remarked he does not favor the amendment, as this
legislation would not adversely impact small businesses. On the
contrary, he noted that the benefit amounts have not been adjusted
for "quite some time" and that the proposed increases are
"manageable" and "affordable." He announced he supports the bill in
its current form.
Senator Olson questioned how the Department explained the
information detailed in the graph and suggested the Chamber of
Commerce could explain it differently, as it is the entity that
compiled the information.
Co-Chair Kelly and Senator Green established this discussion is
relevant to the amendment.
PAM LABOLLE, President, Alaska State Chamber of Commerce, detailed
the same graph, explaining that in preparing it, she utilized a
chart issued by the Department showing the historic range between
the maximum weekly benefit amount and the average weekly wage in
Alaska. She pointed out the variation of this range has been
between 30 and 40 percent and that currently, the maximum weekly
benefit amount is below 30 percent of the average weekly wage. She
emphasized that this bill as presented would "be a major policy
shift for the State: from keeping this variation between those two
levels; to taking it right up to the 50 percent level." She
asserted this is not including the dependant allowance. She
explained that with supplemental benefits for three dependants, the
total benefit would equal 50 percent of the average weekly wage.
Ms. LaBolle then stated that the amendment calculates the base
amount of the maximum weekly benefit for a claimant with zero
dependants at $272; with one dependant at $296; with two dependants
at $320, which is 50 percent of the average weekly wage; and with
three dependants, to an amount that is 54 percent of the average
weekly wage.
Ms. LaBolle cited the Department of Labor and Workforce
Development, stating that 43 percent of the claimants in Alaska
receive supplemental benefits for dependants. She again referenced
the graph pointing out that a claimant with any number of allowable
dependants would receive over 50 percent of the average weekly
wage.
[Note: The testimony regarding percentages is included in these
minutes as presented, despite discrepancies.]
Co-Chair Kelly interjected for clarification of the number of
claimants receiving additional benefits for allowable dependants.
Ms Gamez repeated the Department calculation that three-percent of
all claimants receive the maximum weekly benefit and the maximum
supplemental benefit for allowable dependants.
Ms. LaBolle continued with the second page of the handout provided
by the Chamber, titled "Maximum Weekly Benefit Amount By State."
th
She noted that this chart indicates that Alaska currently ranks 47
among all states. She handwrote on this chart how Alaska ranks when
including the supplemental benefits for dependants into the regular
benefit payments; and how Alaska would rank "right in the middle of
the states" if this legislation were enacted. She considered this
comparison "apples to apples."
Senator Wilken noted the Chamber focuses on maximum weekly benefits
while the Department focus is on average weekly benefits. He
identified how Ms. LaBolle calculated the ranking of Alaska
benefits, including the maximum amount of dependant supplemental
benefits, and asked if the information for the other states
reflects the maximum benefit amounts available for those states.
Ms. LaBolle responded that because only 12 states provide
supplemental benefits for dependants, the chart in question
reflects the maximum amount of weekly benefits available in other
states without any supplemental benefits for dependants. She
emphasized that she is focusing on the maximum benefit amount
because it reflects the titles of the original handouts presented
by the Department.
Senator Wilken asked what criteria determines the maximum weekly
benefit and if factors other than dependants are considered.
Ms. Gamez explained the benefit amount is solely based on the
amount of wages earned during four of the previous five quarters
worked.
Ms. Gamez asserted the Department attempted to be straightforward
in the information it provided to the Committee. She referenced a
letter from the Department dated April 15, 2002 addressed to Co-
Chair Kelly, which identifies the other states that provide
supplemental benefits for dependants. This letter, she pointed out,
informs that of the "entire claimant population" including the 43
percent of claimants who receive supplemental benefits for
dependants, the amount paid for the supplemental benefits is less
than $20 per claimant. Therefore, she asserted that very few
claimants receive supplemental benefits for maximum three
dependents allowance.
Senator Austerman noted that 57 percent of claimants do not receive
supplemental benefits for dependants.
A roll call was taken on the motion to adopt Amendment #1.
IN FAVOR: Senator Green, Senator Leman and Senator Olson
OPPOSED: Senator Austerman, Senator Hoffman, Senator Wilken, Co-
Chair Donley and Co-Chair Kelly
ABSENT: Senator Ward
The motion FAILED (3-5-1)
The amendment FAILED to be adopted.
AT EASE 8:06 PM / 8:11 PM
Co-Chair Kelly spoke to a proposed committee substitute, Version
"J", as a compromise to Amendment #1. He explained this version
contains the same provisions of the Senate Labor and Commerce
committee substitute for the first year after the law is enacted;
but establishes the maximum amount at $290 for the second year,
rather than $320 as stipulated in the Senate Labor and Commerce
committee substitute.
Senator Green moved for adoption of CS HB 58, 22-GH1016\J as a
working draft.
Co-Chair Donley objected noting he supports the provisions in the
Senate Labor and Commerce committee substitute.
A roll call was taken on the motion.
IN FAVOR: Senator Green, Senator Leman, Senator Olson and Co-Chair
Kelly
OPPOSED: Senator Wilken, Senator Austerman, Senator Hoffman and Co-
Chair Donley
ABSENT: Senator Ward
The motion FAILED (4-4-1)
The committee substitute FAILED to be adopted.
Amendment #2: This amendment changes the effective date of Section
1 to July 1, 2002, on page 15 line 1.
Senator Olson moved for adoption.
Co-Chair Kelly objected for discussion.
Senator Olson explained this amendment would make the effective
date of the bill "in front of us instead of behind us," as the
original date of January 1, 2002 had passed.
Co-Chair Donley asked the reason for the existing effective date
and whether the Department objected to the amendment.
Ms Gamez replied that HB 58 was introduced during the first session
of the Twenty-Second Alaska State Legislature in the year 2001. She
stated that a retroactive effective date would cause "a major
administrative problem" and she stressed the Department does not
oppose the amendment.
Senator Austerman suggested the effective dates of the three
apropos sections should be amended.
Senator Green moved to amend the amendment to change the effective
date of Section 1 to January 1, 2003, Section 2 to January 1, 2004,
and Section 3 to January 1, 2005.
Senator Olson remarked he supports his amendment as initially
submitted with Section 1 taking effect on July 1, 2002.
Senator Wilken asked why this amendment to the amendment is
necessary.
Co-Chair Kelly replied that a year has passed since this
legislation was introduced.
Co-Chair Donley objected to the adoption of the amendment to the
amendment.
A roll call was taken on the motion.
IN FAVOR: Senator Green, Senator Hoffman, Senator Leman and Co-
Chair Kelly
OPPOSED: Senator Olson, Senator Wilken, Senator Austerman and Co-
Chair Donley
ABSENT: Senator Ward
The motion FAILED (4-4-1)
The amendment FAILED to be amended.
Amendment #2 was ADOPTED without objection.
Senator Wilken commented this is a good bill with minimal impact on
small businesses. He informed that in five years, the total
unemployment insurance costs to his company would increase $1,060
as a result of this legislation.
Senator Austerman "moved HB 58-individual recommendations and
[indiscernible] fiscal note."
There being no objections, SCS CS HB 58 (FIN) was REPORTED from
Committee with a forthcoming zero fiscal note from the Department
of Labor and Workforce Development dated 5/9/02.
AT EASE 8:24 PM / 8:24 PM
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