Legislature(2003 - 2004)
01/27/2004 01:30 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 237-AK RAILROAD EDUCATION APPRENTICE PROGRAM
CHAIR BUNDE announced SB 237 to be up for consideration.
MR. RICHARD SCHMITZ, staff to Senator John Cowdery, sponsor of
SB 237, said the purpose of the bill is to create a scholarship
program for study in fields related to railroad operation. The
state is coming up on what looks like a lot of construction -
realignments with the Alaska Railroad through the Mat-Su and an
extension to Delta Junction continuing down to the Canadian
border, perhaps. The Knik Arm Crossing and the gas pipeline are
also possible. History shows that whenever there is a heat up of
construction in Alaska, the positions get filled by a lot of
outside hire. Senator Cowdery wants to head this off at the pass
early. The proposed scholarship program would be for Alaskan
students to study in Alaskan institutions for railroad related
tasks.
He explained that two bills established the Alaska Railroad as
being state owned. One is the Alaska Railroad Transfer Act,
which is the federal legislation that gave the railroad to the
state from the Army, and the other is the Alaska Railroad Act,
the state enabling legislation.
The Alaska Railroad Corporation (ARRC) has a 93 percent Alaska
hire rate over the last five years, but 52 hires are from areas
outside of Alaska. The program in SB 237 is a way that the
Railroad can fill those positions. The $1.2 million per year
would come out of the Railroad's operating funds and would fund
about 200 scholarships for about $17,000 - $18,000 each. The
scholarships could cover positions from office work to welding
and engineering.
CHAIR BUNDE noted that a dividend back to the state from the
railroad had been discussed and asked if that would have to be
limited to railroad purposes also. He also asked if the
scholarship would take the dividend off the table.
MR. SCHMITZ replied that the dividend is a separate issue.
SENATOR STEVENS said while he supports Alaskan schools, there
might be only one place one could learn how to be a diesel steam
operator, for instance. Second, he asked if current employees
would be eligible to apply. Third, he asked if there would be
any commitment from those who get the scholarships to work for
the railroad.
MR. SCHMITZ replied that the idea is to give the railroad a
broad selection of people to choose from, but individuals don't
have to commit to work for the railroad when they get a
scholarship.
SENATOR STEVENS thought language could be added that says the
funds would be returned unless the individual is eventually
hired by ARRC.
MR. SCHMITZ responded that was not Senator Cowdery's intent.
CHAIR BUNDE said there has been talk of limiting the Alaska
student loan program to just Alaskan schools, but constituents
have strong feelings about whether they should be forced to go
to school here. He asked if an Alaska resident is defined for
the bill's purpose.
MR. SCHMITZ responded that latitude would be given to the ARRC.
CHAIR BUNDE said he thought the issue of repayment should be
discussed if the recipients of the scholarship don't stay in
Alaska.
MR. SCHMITZ added that the sponsor envisioned them staying some
period of time in Alaska. "The idea would be that this
scholarship would benefit Alaska students in a broad and general
sense...."
CHAIR BUNDE asked if the requirements could be stretched far
enough that someone who gets the scholarship, but doesn't work
for the railroad, and stays in Alaska, would somehow be
considered a benefit to the railroad.
MR. SCHMITZ responded that a statutory requirement under the
federal Alaska Transfer Act says revenues generated by the
state-owned railroad shall be retained and managed by the state-
owned railroad for railroad related purposes. That's why this
bill mandates that the scholarships are for a railroad related
purpose.
CHAIR BUNDE bantered that he thought a semi-talented lawyer
could drive a train through that phrase.
SENATOR STEVENS asked if these funds could be managed through
the Commission on Postsecondary Education to avoid creating
another bureaucracy.
MR. SCHMITZ replied that Senator Cowdery would be amenable to
that.
TAPE 04-1, SIDE B
SENATOR SEEKINS asked if they were considering a ramp-up for
funding the program.
MR. SCHMITZ replied that they envisioned $1.2 million from the
railroad per year.
SENATOR SEEKINS asked how many employees the ARRC has now. He
also wanted to know what their retention rate was to justify
their turnover needs.
MR. SCHMITZ replied that there were 732 new hires over five
years and 52 of those were from areas outside of Alaska. In
2003, there were l17 new hires.
CHAIR BUNDE was concerned that Alaskans are very creative and
could figure out a way to absorb that money.
SENATOR SEEKINS related how a federal program tried to target
particular qualifications by designating a student trainee
status. To encourage students to start working for a certain
department, retirement benefits started accruing from the day
they enrolled in college as a student trainee. A lot of people
were retained as a result of that. He wondered if any thought
was given to using some kind of status for the students that
would be reportable back to the Alaska Railroad.
CHAIR BUNDE asked how many scholarships would be available next
year if this program started immediately.
MR. SCHMITZ replied 200 - 250 scholarships.
CHAIR BUNDE noted that the Railroad wouldn't hire 250 people
annually.
MR. SCHMITZ responded that the thinking is that ARRC would have
a broad range of trained people to choose from.
SENATOR SEEKINS said he would have a problem without a ramp-up.
MR. SCHMITZ said that Senator Cowdery would be amenable to
letting the Commission on Postsecondary Education run the
scholarship program; he just wants a workforce to be available
when needed.
MS. WENDY LINDSKOOG, Director, ARRC External Affairs, said:
While management for the Alaska Railroad Corporation
strongly believes that investing in an educated and
skilled workforce is essential to operating a safe and
successful railroad, we do not support SB 237. This
bill seeks to remedy a problem that does not exist and
fails to recognize the extensive training and
education programs already provided for Alaska
Railroad employees. In 2003, the Alaska Railroad spent
$1.8 million on workforce development programs and
plans to sustain that level of support in the years to
come. SB 237 contains no findings or other evidence
that ARRC is currently experiencing a shortage of
skilled and educated employees or expects such a
shortage in the future. In fact, there is an abundance
of Alaskan workers who can fill the few openings the
railroad has available each year for management,
administration, technical and professional employees.
The only area where ARRC may have problems recruiting
a qualified employee is in the specialized railroad
trades such as car men and locomotive electricians -
those types of trades. This bill will not increase the
pool of qualified workers in these trades, because,
quite frankly, there are no Alaska schools that teach
these types of specialized railroad skills. To address
the situation, ARRC does provide apprenticeship
programs and other in-house training for new
employees. And, as mentioned before, we spent
approximately $1.8 million last year to educate and
train employees over the past five years, and we have
a 93 percent Alaska hire rate.
Requiring ARRC to hand out $1.2 million per year in
scholarships to unnecessarily educate managers,
administrators, computer technicians, account
insulators and other white collar employees that are
already in abundant supply in Alaska would actually
reduce the amount of money ARRC does need to provide
its new operational employees with the unique
railroad-specialized training. The cost of a full-ride
scholarship at the University of Alaska, according to
what we found, is approximately $8,000 per year.
Requiring ARRC to provide $1.2 million per year for
such scholarships means we would be paying to educate
about 150 people per year to work at the railroad when
there are really only about 70 full-time permanent
positions available each year. Thus there would be no
ARRC jobs for approximately 50 percent of the people
trained each year. Furthermore, SB 237 does not
require scholarship recipients to actually go to work
for ARRC when they complete their training, nor does
it require a payback to the railroad if they fail to
complete their training.
Finally, the Railroad's net earnings are our only
source of federal match funds. We do not receive any
state matching funds to garner federal funds. The
Railroad currently has a 9 percent Federal Transit
Administration (FTA) match. Requiring the Railroad to
pay $1.2 million for unneeded scholarships could cause
ARRC to lose over $12 million in FTA formula funds per
year.
CHAIR BUNDE commented that if they couldn't put $1.2 million
toward scholarships each year, why not just have ARRC give the
state a dividend each year to grow the economy and that would
help railroad related purposes. Seriously, though, he wanted to
hear from their legal department about why some dividend can't
come back to the state since it capitalized the railroad
originally.
SENATOR GARY STEVENS asked Ms. Lindskoog to talk about the
railroad's current education program for its employees.
MS. LINDSKOOG replied that apprenticeship programs are offered
through the Union. They also have a scholarship type program in
house for someone who wants to get a new skill that would
benefit the railroad.
CHAIR BUNDE asked if those people who get the extra training
have an obligation to work for the railroad afterward.
MS. SUSAN LINDEMUTH, Director, ARRC Human Resources, answered
that they don't, but the job relatedness of the training is
reviewed before any training is started.
SENATOR SEEKINS asked if the railroad has a method of tracking
residency status of its employees.
MS. LINDEMUTH replied that it doesn't have a method in place
now, but uses the address on the job application for residency
and doesn't do any kind of verification.
SENATOR SEEKINS asked if she had any indication of what percent
of ARRC's new hires are Alaska residents.
MS. LINDEMUTH replied that a majority of ARRC's employees are
Alaska residents and "have been here for some period of time."
SENATOR SEEKINS asked how many railroad employees are sent to
ARRC from local unions.
MS. LINDEMUTH replied that the local union doesn't have any kind
of local hiring hall. In other words, when people are hired,
they then join the union.
SENATOR STEVENS said he heard that Alaskan schools don't teach
railroad trades and asked where people go to learn those skills.
MS. LINDEMUTH replied that scales and maintenance of weights is
taught on the job and workers move up through the ranks by union
seniority. ARRC has an apprenticeship program for the car men,
the locomotive electricians, and the locomotive mechanics that
eight apprentices have recently been hired for. If skilled
journeyman are needed, ARRC looks outside to other areas.
MS. LINDSKOOG added that there are special schools for some
railroad skills in the Lower 48 and offered to get a list of
them for the committee.
SENATOR SEEKINS asked her to estimate what percentage of
railroad jobs required either a vocational or a four-year
college degree.
MS. LINDEMUTH replied that a majority of the 120 people in the
mechanical department require an apprenticeship. There are about
150 management positions, 75 percent of which may not require a
college degree, but would certainly require in-lieu experience.
CHAIR BUNDE asked what ARRC's minimum requirements are for
someone walking in off the street to apply for a job.
MS. LINDEMUTH replied that each job has different requirements,
but an entry level skill like track laborer requires high school
graduation and a good driving record and preferably some type of
mechanical aptitude and background.
SENATOR HOLLIS FRENCH asked how the FTA match works.
MS. LINDSKOOG explained that the ARRC is required to provide a 9
percent match for any money it receives from FTA. No state match
is involved.
SENATOR FRENCH said if $1.2 million is taken out of the railroad
side, ARRC would lose $12 million in federal matching funds and
asked how high up that figure could go.
MS. LINDSKOOG replied that she didn't have the FTA totals, but
could get them. The railroad has a net income between $1 million
and $10 million; $1.2 million is used for workforce development
programs and matching funds for internal capital projects, etc.
"There is a limited amount that we have and we try to make the
most of it."
CHAIR BUNDE inserted that the federal match is not an unlimited
amount of money. ARRC wouldn't get the 9:1 ratio from the feds
with $10 million, for instance.
SENATOR SEEKINS commented that not coming up with enough money
to get the matching funds was a worst-case scenario. The
committee indicated its general agreement.
CHAIR BUNDE said he would hold SB 237 and hoped the ARRC and
Senator Cowdery could find some middle ground. He looked forward
to learning how tightly the federal regulation on railroad-
related purposes is written. There being no further business to
come before the committee, he adjourned the meeting at 2:45 p.m.
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