Legislature(2007 - 2008)BELTZ 211

03/11/2008 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
Bills Previously Heard/Scheduled
Including But Not Limited to:
Heard & Held
Moved SB 289 Out of Committee
Moved HJR 25 Out of Committee
        SB 297-NONUNION PUBLIC EMPLOYEE SALARY & BENEFIT                                                                    
1:58:27 PM                                                                                                                    
CHAIR ELLIS announced SB 297 to be up for consideration.                                                                        
ANNETTE  KREITZER,  Commissioner,  Department  of  Administration                                                               
(DOA), said  the state has  the same challenges  with recruitment                                                               
and retention that other employers  have. The governor has tasked                                                               
the executive  working group created  under AO 237 to  review the                                                               
issue of recruitment  and retention. That report  is available on                                                               
the department's web  page.  She said the  labor negotiations are                                                               
one  part  of addressing  recruitment  and  retention, but  those                                                               
decisions are  made at the  bargaining table. The  contracts have                                                               
been offered to seven unions and  she has agreements with four so                                                               
far. These contracts are the best in 15 years.                                                                                  
She said  that changes  in compensation  for state  employees not                                                               
covered by  a bargaining agreement  must be  accomplished through                                                               
legislation and that's  what SB 297 does. Each  union contract is                                                               
unique and  there are other elements  of pay in addition  to COLA                                                               
or service  steps contained in  each one; her  job is to  look at                                                               
the  final full  effect of  the monetary  components of  each and                                                               
consider the  fiscal impact on  the state. She said  her proposed                                                               
budget will be reduced this year.                                                                                               
COMMISSIONER  KREITZER  said the  criticism  that  this bill  has                                                               
service   steps  not   offered   to  one   particular  union   is                                                               
disingenuous in her  opinion. Because one of the  five offers she                                                               
made to  that union included service  steps in addition to  a 40-                                                               
hour work week.                                                                                                                 
She said  the changes in  the offers she  has made will  help the                                                               
state  retain  the  professional knowledgeable  state  employees.                                                               
Each negotiation is  different and one can't simply  pick out one                                                               
element of an offer that a  union refused and say you can't offer                                                               
that to  anyone else because we  turned it down. The  estimate of                                                               
the cost  of the service steps  she offered to the  SU (which she                                                               
brought  up today  because of  a full-page  ad in  today's Juneau                                                               
Empire on this  topic.) was $1.9 million for FY09.  That is still                                                               
a big  number and so is  the $8.5 billion unfunded  liability for                                                               
state employee and retiree pensions and health benefits.                                                                        
COMMISSIONER KREITZER said she wanted  to set the stage by saying                                                               
they are  all dealing with the  same issues of trying  to build a                                                               
bridge to  a gas line  with production declining  at a rate  of 6                                                               
percent a year. She is trying  to hold down spending while trying                                                               
to do sustainable contracts.                                                                                                    
SENATOR   BUNDE   said   the  legislature   recently   passed   a                                                               
supplemental  bill that  included a  substantial amount  of money                                                               
for  these negotiations  and asked  what impact  that had  on her                                                               
MS.  KREITZER replied  that she  had concluded  negotiations with                                                               
GGU  and   with  the  supervisory   unit  and  that  is   in  the                                                               
supplemental. The supervisory unit has  ballots out now to decide                                                               
on whether  or not to  accept that offer  with a closing  time of                                                               
2:02:40 PM                                                                                                                    
KEVIN BROOKS,  Deputy Commissioner, Department  of Administration                                                               
(DOA), walked  them through  SB 297. He  said it  restates salary                                                               
schedules  and   identifies  a  number  of   positions  that  are                                                               
specifically  set  in statute.  Section  1  raises limited  entry                                                               
commissioners  from Range  26, Step  C to  Range 27  and no  step                                                               
reference.  Section  2  is  conforming  language  addressing  the                                                               
Alaska  State   Defense  Force.   Section  3  raises   the  chief                                                               
procurement officer  from a  Range 24  to a  Range 27.  Section 4                                                               
addresses the  step limitation for  deputy commissioners  who are                                                               
appointed. Current language  says they are appointed  at not less                                                               
than Step  A or  more than  Step F and  new language  deletes the                                                               
reference to steps because it's  limiting when people come to the                                                               
state  from  the  private  sector  or  are  promoted  from  other                                                               
2:05:53 PM                                                                                                                    
MR. BROOKS said Section 5  restates the salary schedule contained                                                               
in Title 39  to reflect a 5.5 percent increase.  Sections 6 and 7                                                               
provide for raising  the salary schedule by 3 percent  in July 1,                                                               
2008 and 3 percent more in July 1, 2009.                                                                                        
Section 8  adds a new  subsection that allows for  pay increments                                                               
every  two years  beyond Step  F; currently  an individual  would                                                               
progress  from Steps  A through  F annually  and after  that adds                                                               
more years between steps according to AS 39.27.022.                                                                             
He explained  in 1972 longevity  steps A-F were added  to statute                                                               
to reward people  for longer service, but now that  is more of an                                                               
obstacle and extra steps are  needed to keep employees on longer.                                                               
It is tied to an annual "good" review rating.                                                                                   
2:08:43 PM                                                                                                                    
SENATOR  BUNDE asked  if people  ever receive  less than  good or                                                               
adequate reviews and why are they retained.                                                                                     
MR.  BROOKS   answered  that  some  individuals   receive  a  low                                                               
acceptable or  unacceptable rating. There  is a process  for them                                                               
to  go through  of identifying  areas that  need improvement  and                                                               
developing a  plan. In  some cases they  are retained  and others                                                               
SENATOR BUNDE asked if a majority of reviews are good or better.                                                                
MR. BROOKS answered  it was safe to say a  majority of review are                                                               
mid-acceptable or higher.                                                                                                       
SENATOR BUNDE asked if the  range is unacceptable, acceptable and                                                               
MR.  BROOKS  replied there  are  five  different rankings  within                                                               
"entirely unacceptable" and "outstanding."                                                                                      
SENATOR BUNDE said the positions  in this bill are non-bargaining                                                               
MR. BROOKS replied yes, but many  of them would receive an annual                                                               
review using a standard form for classified people.                                                                             
SENATOR BUNDE  said he  thought merit  pay was  a good  idea, and                                                               
that he  would like more  information on how many  are acceptable                                                               
and unacceptable.                                                                                                               
MR. BROOKS said he could get  some data on that; it was important                                                               
to tie it to a certain level  of performance and one of the items                                                               
the  task force  talked  about was  bring  accountability to  the                                                               
COMMISSIONER KREITZER  added that this  won't be done all  in one                                                               
year. The  working group report  talks about improvements  to the                                                               
merit  system  and how  it  can't  work  without a  co-effort  to                                                               
prepare proper  evaluations. She is  trying to figure out  how to                                                               
make the evaluation process simpler  for supervisors so they will                                                               
see the value in it and do them.                                                                                                
SENATOR  BUNDE  said he  is  trying  to  avoid a  Lake  Woebegone                                                               
situation where everyone is above average.                                                                                      
MR.  BROOKS  said   Section  8  had  a   couple  of  subsections;                                                               
subsection (i) ties this to the  pay plan that is in Title 39.25.                                                               
Subsection  (j)  allows  for   the  legislature  and  independent                                                               
agencies within the  legislative branch to choose  to apply these                                                               
types  of  merit increases  to  their  staff  or not.  Section  9                                                               
addresses  pay  for commissioners  within  the  RCA as  mentioned                                                               
2:14:16 PM                                                                                                                    
Section  10  repeals  former  AS  39.27.022  that  addressed  the                                                               
longevity steps that are now  in section AS 39.27.011. Section 11                                                               
covers  executive branch  salary overrides.  He explained  that a                                                               
number  of   employees  in  the  executive   branch  are  exempt,                                                               
partially  exempt and  classified, and  he identified  the exempt                                                               
ones on  a salary  override. In  other words  they are  not being                                                               
paid off of the salary schedule;  they are being paid some amount                                                               
that has been determined by  their employer to be appropriate and                                                               
adequate.  The goal  is  if  someone has  already  had their  pay                                                               
adjusted, it won't be adjust again  at 5.5 percent. It applies to                                                               
commissioners and others who are not part of the salary system.                                                                 
MR. BROOKS  said Section  12 covers  judicial employees.  It also                                                               
mistakenly groups  magistrates with  judges and he  had suggested                                                               
language  for  that.  Section 13  addresses  the  University  and                                                               
states that they  are under the policies that are  adopted by the                                                               
Board  of  Regents and  not  covered  by  this bill.  Section  14                                                               
provides  prospective  application  of  the  steps  to  not  harm                                                               
someone in the middle of his  salary schedule. Section 15 is more                                                               
transition language.                                                                                                            
2:17:35 PM                                                                                                                    
He  said  the  retroactivity  addresses  the  first  5.5  percent                                                               
increase going back to July 1, 2007.                                                                                            
MR.  BROOKS wrapped  up that  he  has heard  the statement  "high                                                               
level employees" and  this bill really covers  about 1,500 people                                                               
- 14 commissioners,  75 directors, but it includes a  lot of rank                                                               
and   file  folks.   It's  much   broader  than   he  has   heard                                                               
SENATOR ELLIS asked why this bill was introduced on March 3.                                                                    
MR. BROOKS answered  that the administration has  been working on                                                               
this since the fall; they could  have offered it earlier and have                                                               
been running  different scenarios, but  they have been  in active                                                               
negotiations with different unions.                                                                                             
SENATOR  ELLIS  asked  if  the specific  timing  related  to  any                                                               
negotiations with public employees.                                                                                             
MR. BROOKS answered no.                                                                                                         
SENATOR BUNDE  asked if language  on page  4, line 3,  applies to                                                               
legislative staff.                                                                                                              
MR.  BROOKS  answered it  applies  to  all legislative  employees                                                               
including the Legislative Affairs Agency (LAA).                                                                                 
2:20:19 PM                                                                                                                    
CHRIS CHRISTIANSON, Deputy  Administrative Director, Alaska Court                                                               
System,  said  all employees  in  the  judicial branch  are  non-                                                               
covered.  It  is  the  largest  group  of  non-covered  employees                                                               
outside  of  the  University  and   the  lowest  paid  branch  of                                                               
government; approximately  70 percent of its  employees are Range                                                               
15  or below.  Largely  because of  this they  have  a very  high                                                               
turnover rate which  translates into high training  costs, a high                                                               
ratio  of   supervisors  to  clerks  and   other  inefficiencies.                                                               
Notwithstanding the pay,  he said, many of them  are hard working                                                               
He  said over  the last  15 years  state employees  have received                                                               
COLA  adjustments  much  less  than the  rate  of  inflation.  In                                                               
today's dollars  what he pays  a Range 10 today  is substantially                                                               
less than what he paid to a Range 10 twenty years ago.                                                                          
In addition  to the COLA the  bill proposes to change  the scheme                                                               
of  longevity  pay  which  addresses   a  very  real  problem  of                                                               
retaining long  term employees. He  stated that most  entry level                                                               
employees at  the court system are  a Range 8 or  10. The highest                                                               
ranking person at the court might be  a Range 16. So there is not                                                               
a lot of upward mobility to get people to stay a long time.                                                                     
2:22:28 PM                                                                                                                    
MR.  CHRISTIANSON said  he didn't  agree with  two provisions  in                                                               
this  bill:  one  was  magistrate  pay.  They  don't  have  their                                                               
salaries set  in statute  and are ordinary  state employees  on a                                                               
salary schedule. However, he has  received indication that change                                                               
would be supported.                                                                                                             
The other  provision is  the retroactivity  for judges.  The bill                                                               
lumps judges  together with political appointees  in denying them                                                               
retroactive pay for the current  fiscal year. Judges, unlike most                                                               
other  state  employees,  do  not get  longevity  pay.  A  normal                                                               
employee  over  the  course  of   an  18-year  career  will  have                                                               
increases equal  to 40 percent of  their salary; a judge  who has                                                               
worked for  18 years  gets exactly  the same pay  as a  brand new                                                               
judge.  They are  uniquely dependent  on getting  cost of  living                                                               
adjustments from the legislature for their pay raises.                                                                          
During the 20-year period prior  to the 2006 pay raise, inflation                                                               
ran about 77 percent and judges  got pay raises equal to about 50                                                               
percent. They  went from the  highest paid state court  judges in                                                               
the country  down to the 48   ranked in the  country. The results                                                               
were very  negative; they had  judicial positions for  example in                                                               
Bethel that couldn't be filled  because qualified people wouldn't                                                               
apply. Also,  the courts face  smaller applicant pools  that tend                                                               
to  be much  younger and  less qualified  that in  the past.  The                                                               
legislature  realized  there was  a  problem  two years  ago.  He                                                               
remarked between  the day the judges  got that pay raise  and the                                                               
end of the current fiscal year  the inflation rate is going to be                                                               
between  7 and  8 percent;  so judges  will lose  roughly 7  to 8                                                               
percent  of the  amount the  legislature thought  was a  suitable                                                               
amount two years ago. He advised  to not start down the path they                                                               
took 20  years ago  when judges' pay  was gradually  chipped away                                                               
because small COLA  adjustments were not made on  a regular basis                                                               
and large  adjustments have  to be made  every few  decades after                                                               
having lots of problems.                                                                                                        
CHAIR ELLIS remarked  that he was talking to  legislators who are                                                               
a Range 10, plus  some per diem; so they would try  to keep it in                                                               
2:25:48 PM                                                                                                                    
CHRISTINE SCHLOUSS,  Anchorage Attorney, said  she used to  be an                                                               
assistant public  defender and a  member of the  Teamsters Union.                                                               
She  is very  pro-union, but  on  this issue  she disagreed  with                                                               
union  people who  speak out  against this  bill because  a union                                                               
contract did  not contain the  longevity steps. That is  what she                                                               
wanted to focus her comments on.                                                                                                
MS. SCHLOUSS  said she started  as a  public defender in  the 70s                                                               
and 80s  where salaries  were competitive  with those  in private                                                               
practice.  That is  no longer  even remotely  the case.  What she                                                               
sees frequently  now because  she litigates  against the  DAs and                                                               
public defenders  is that the  state is losing the  brightest and                                                               
the best.  These folks often come  out of law school  $150,000 to                                                               
$200,000 in debt and they start out  by not being able to keep up                                                               
with their debt. She knows  of an assistant district attorney who                                                               
drives a  cab at  night to  make ends  meet. The  Public Defender                                                               
Agency just lost  a terrific well qualified attorney  who went to                                                               
work  as a  sales  representative for  an  online legal  resource                                                               
organization  because it  pays  her  2.5 times  her  salary as  a                                                               
public defender.                                                                                                                
She urged  the legislature to  recognize that the state  needs to                                                               
have the kind  of lawyers who want to work  in public service but                                                               
could make  2.5 more in  private practice. These  longevity steps                                                               
don't  do  enough, but  they  do  something.  She urged  them  to                                                               
recognize the worth  of rank and file employees who  want to stay                                                               
working with the state by giving  them the opportunity to have at                                                               
least small step increases.                                                                                                     
2:30:12 PM                                                                                                                    
MARGO  LACHAPELLE,  Employee Representative,  Bethel  Supervisory                                                               
Unit (SU),  said she  is also  a supervisor  for the  Division of                                                               
Public Health  Nursing, Department of Health  and Social Services                                                               
(DHSS).  She said  the SU  has  been negotiating  with the  state                                                               
since December 06  and the administration refused  to include the                                                               
longevity steps  in their final  contract offer. Four  days after                                                               
her  members  voted  to  accept   the  contract,  this  bill  was                                                               
introduced  offering a  better deal  to political  appointees. By                                                               
doing so,  she felt  the administration did  not value  the state                                                               
employees with  the SUs.  In addition to  denying the  SU members                                                               
the  longevity  steps  during  negotiations,  the  administration                                                               
waited  until  after   the  ballots  went  out   to  publish  the                                                               
Governor's  Recruitment  and  Retention Task  Force  Report.  She                                                               
said, "It  echoed all the things  we've been saying for  the last                                                               
year  at the  bargaining table.  We can't  hire enough  qualified                                                               
people to staff our positions because the pay is too low...."                                                                   
She asked that  this bill be amended so that  the extra longevity                                                               
steps  for the  non-unionized employees  of the  executive branch                                                               
are  contingent  upon  the  same   steps  being  applied  to  the                                                               
unionized employees of the executive branch.                                                                                    
CHAIR ELLIS thanked  everyone for the comments and  held the bill                                                               
for further work.                                                                                                               
2:33:24 PM at ease 2:33:39 PM                                                                                               

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