Legislature(1995 - 1996)
03/05/1996 08:10 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
MARCH 5, 1996
8:10 A.M.
TAPE HFC 96 - 58, Side 1, #000 - end.
TAPE HFC 96 - 58, Side 2, #000 - end.
TAPE HFC 96 - 59, Side 1, #000 - #572.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 8:10 A.M.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Kohring
Representative Grussendorf Representative Parnell
Representative Therriault
Representatives Navarre and Kelly were not present for the
meeting.
ALSO PRESENT
Mark Boyer, Commissioner, Department of Administration;
Representative Con Bunde; Mila Doyle, Labor Relations,
Department of Administration; Lee Powelson, Labor Relations,
Department of Administration; George Brereton, Captain,
Alaska Marine Highways, Master, Mates and Pilots Union
(MMP); Richard Seward, Business Agent, Alaska State Employee
Association (ASEA), General Government Union (GGU),
Fairbanks; Robert Provost, Regional Director, Inland
Boatman's Union (IBU), Juneau; Don Etheridge, Business
Agent, Alaska State District Council of Laborers, Labor
Trades and Crafts Union (LTC).
SUMMARY
CONTRACT LABOR AGREEMENTS & COMPENSATION INCREASES:
Masters Mates and Pilots (MMP)
Inland Boatman's Union (IBU)
Labor Trades and Crafts (LTC)
General Government (GGU)
MARK BOYER, COMMISSIONER, DEPARTMENT OF ADMINISTRATION,
provided an overview of the contract bargaining process
resulting in a union compromise. Bargaining parameters,
goals and directions were established in the Public
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Employment Relations Act in 1972. He observed that the
concept of joint decision making is important to modern
government's effectiveness. Commissioner Boyer noted that
the Department of Administration (DOA) embraces the contract
negotiations and will be used for addressing disputes and
work stoppages.
Contract negotiations promote harmonious relations between
government and employees. He added these negotiations
attempt to protect public interest in the operations of
State government.
Commissioner Boyer informed members that most of the
proposed contracts indicated wages which have had no
adjustments other than those relating to merit or longevity,
since 1992. He emphasized that there have been no
adjustments to the Consumer Price Index (CPI) or cost-of-
living since 1992. The span of the wage comparison contract
would extend from 1992 through 1999. The maximum increased
monetary exposure to the State of Alaska would be 4.5%.
Commissioner Boyer warned that stagnation in wage growth
creates low morale and frustration among employees.
Commissioner Boyer indicated that the Governor's intent was
to move public employee wages to the "middle of the pack" by
using information from 100 private sector employers to
establish the guidelines. He agreed that work force wages
and benefits must reflect those within the private sector.
Commissioner Boyer advised that the contract agreement
action will regain trust and confidence of the public.
Public ownership of government is important and currently
lacking. The public needs to be reassured that our
government is living within the State's means, and will
provide for the best interest of the people of Alaska.
Those goals are reflected in the contracts.
Commissioner Boyer continued, the plan for monetary terms
would be one-half of the CPI, capped at 1.5%, maximum
exposure of 4.5% for a four year venue. Area cost
differential will also affect correct management by the
Department. Legislation currently has been proposed to
address concerns with non-union employees. That legislation
could trigger a new bargaining agreement, thus saving
revenue in cost avoidance. An additional bargaining
provision will provide for capping area wide differentials
at $30 thousand dollars.
Commissioner Boyer added, reclassification review would
provide for a non-contract and non-legislative provision
implemented by the Department. Currently, the Department
reviews classification of work performed, guaranteeing an
internal alignment of "like pay for like work". The
external alignment would occur through management reviewing
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of the private sector market place.
He added that contracts must be fair and equitable. Area
wide cost differential legislation must be passed to provide
a tool for reducing the overall cost to State government.
The process of classification review should be continued to
guarantee that the State is paying the correct amount for
work done.
Commissioner Boyer stated that the contracts are fair. He
spoke to the CPI increase, pointing out that the Department
has bargained contracts down to a fraction of the local and
state government requests. The Department is measured by
contracts which have been replaced. He pointed out that the
Legislature failed to approve at least three contracts last
year. Significant savings resulted from last year's
bargains, demonstrating that public employees recognize the
fiscal climate of the State and are also willing to "hold
the line" on spending. Commissioner Boyer acknowledged that
a point exists when public employees can no longer "keep
up". He emphasized that the terms of the monetary contracts
are fair.
Commissioner Boyer informed members that the Department of
Labor in 1995 published a document, indicating that U.S.
worker's wages rose by 2.7%. He pointed out that this was
the lowest national rise ever and that at the same time in
Alaska, state employees received no increase.
He informed Committee members that all the contract venues
have the same monetary cap of 1.5%. He added that each
situation includes a "free" period where the status quo on
monetary terms should be "in place". The contracts all have
different ending points. All contracts are capped at 1.5%
and none of the contracts contain retroactive clauses.
Overtime payment was addressed. He noted calculations from
"in pay" status to "at work" status. Overtime compensation
would be paid after 40 hours of actual work time.
Health insurance payments would bring all unions benefits
in-line. At this time, the premium is $423.50 per month.
The Department has negotiated that if the premium escalates,
the employer would pay up to a maximum of 50% of each state
employee's share. Commissioner Boyer added, that in some
contracts, there will be an elimination of certain holidays
and capping of future unknown holidays. Employee's birthday
holidays have been eliminated.
MASTER, MATES AND PILOTS (MMP) UNION
Commissioner Boyer noted that the current contract with MMP
Union would run through June 30, 1996. The current
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agreement became effective April 1, 1994, and includes a
lump sum payment of $950 dollars payable no later than July
15, 1996. The monetary terms have been submitted for
legislative approval. There is a second agreement which
would commence July 1, 1996, through June 30, 1999, and
includes a salary schedule adjustment equal to one half of
the CPI, not to exceed 1.5% for each year of the contract.
A 4.5% increase would be guaranteed if the CPI should exceed
9% over the term of the agreement.
CAPTAIN GEORGE BRERETON, ALASKA MARINE HIGHWAYS, MASTERS,
MATES AND PILOTS (MMP) UNION, noted that the union has done
their best to maintain a leadership role with the Marine
Highways and the State of Alaska. He noted that the
contract was negotiated in "good faith". Currently, manning
is at a minimum level necessary for the safe operation of
vessels. MMP has taken no raises for several years even
though cost-of-living continues to rise. The three year
contract will allow the State to provide continuity of
service at an affordable rate. Union members are not in a
merit step increase system. He concluded that pilotage
services would cost more if transferred to the private
sector.
Co-Chair Hanley requested additional testimony delineating
differences between state and private sector salaries for
similar work done. Captain Brereton added that MMP offers
an area wide differential. Co-Chair Hanley questioned
clauses within the contract which encourage or prohibit
privatization. Captain Brereton noted that concern had not
been addressed in the contract negotiations.
(Tape Change, HFC 96 - 58, Side 2).
MILA DOYLE, LABOR RELATIONS, OFFICE OF THE COMMISSIONER,
DEPARTMENT OF ADMINISTRATION, responded that all State
employees receive a cost-of-living differential or a
geographic differential. The Alaska Marine Highway contract
with the licensed engineers and masters, mates and pilots
functions differently. The differential is paid as a lump
sum payment, differentiated from the base wage. The
negotiated wage increase will not affect or increase the
differential.
Captain Brereton added, MMP has agreed to one half of the
CPI increase applied to 80% of the total wage package for an
Alaska resident worker.
Representative Brown commented on historic discrimination of
the female dominated classes. She noted that a study
provided in the 1980's, indicated that these classes are
paid lower than the male dominated classes. She asked if
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that concern was being addressed in the reclassification
study. Commissioner Boyer thought the only way to address
that concern would be through a reclassification negotiation
process.
INLAND BOATMAN'S UNION (IBU)
Commissioner Boyer commented that monetary terms for IBU had
been rejected last year by the Legislature, nearly resulting
in work stoppage. The Union agreed to rebargin their
assessment. The current agreement includes a lump sum
payment of $950 dollars payable no later than July 15, 1996.
The monetary terms have been submitted to the Legislature.
The tentative agreement would be effective June 1, 1996,
through May 31, 1999, which would include salary schedule
adjustment equal to one half of the increase indicated in
the Anchorage Consumer Price Index (CPI-U) not to exceed
1.5% for each year of the contracts. A 4.5% increase is
guaranteed if the CPI should exceed 9% over the term of the
agreement. Monetary terms have been submitted for
legislative approval.
Ms. Doyle added that IBU does not receive merit increases.
Any increases to the general wage structure are a result of
promotions within the system. There has not been a general
wage increase since 1992. She stressed that the contract
package was fair.
ROBERT PROVOST, REGIONAL DIRECTOR, INLAND BOATMAN'S UNION
(IBU), JUNEAU, echoed that the Union does not receive
automatic increases. The IBU for the last ten years has
been cooperative with the State. He emphasized that members
have lost 17% purchasing power to the cost-of-living over
the past ten years.
Co-Chair Hanley asked if IBU had a geographic differential
established. Mr. Provost explained the differences from
other unions and that two different wage scales had been
established in 1983. At that time, the difference between
Seattle based/Alaska based wages was 22.5%. Over the years,
increases have been negotiated for residents living in
Alaska. At this time, some employees in the Washington
State Ferry System receive higher wages than employees
working for Alaska State Marine Highway Transportation. Ms.
Doyle offered to provide information to the Committee
regarding the pay schedule of the Washington State Ferry
System employees.
Mr. Provost clarified that he was speaking of wage
comparisons and not the benefit packages. Ms. Doyle pointed
out the differences between the systems. Washington State
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Ferries are day boats, whereas, Alaska ferries are a twenty-
four hour operation. Co-Chair Hanley commented that the
benefit package should be considered in those comparisons
and that they should be negotiated. He asked if an
evaluation process existed addressing the employees work
performance. Mr. Provost replied that annually, all
employees are evaluated on the basis of work performance.
He pointed out that there are no pay increases tied to that
evaluation, although, they are submitted to the personnel
file of that employee.
Ms. Doyle explained that the law required that the CPI be
determined by cost differences in Seattle and Alaska. The
cost-of-living differential implemented in Alaska measures
those costs, using Anchorage as the center point.
Regardless of where an Alaska Marine Highway employee lives
within the State, the cost-of-living allowance would only be
22.5%.
Co-Chair Hanley asked if there were privatization provisions
within the current contract. Mr. Provost responded, IBU
represented all Alaska Marine Highway employees on board the
vessels except the MMP Union employees. Ms. Doyle noted
that there has been a collective bargaining agreement with
the IBU for over 30 years.
LABOR, TRADES AND CRAFTS UNION (LTC)
Commissioner Boyer pointed out that the LTC contract had
been rejected by the Legislature last year. The current
agreement includes the conversion to a system of personal
leave. The contract also includes 50% of sick leave
converted to personal leave with the remainder retained as
sick leave. Contracting out provisions are changed to
require a cost efficiency study in all classes.
The tentative agreement would be effective July 1, 1996,
through June 30, 1999. It would include a wage schedule
adjustment equal to one-half of the increase in the
Anchorage Consumer Price Index (CPI-U), not to exceed 1.5%
for each year of the contract. A 4.5% increase was
guaranteed in the CPI which should not exceed 9% over the
term of the agreement. Tool allowance will increase by ten
dollars per month. The State's monthly contribution to the
Local 71 Health and Welfare Trust may increase up to $26
dollars a month, and be matched by an employee payroll
deduction. Current employees will receive a one-time
addition of two days to personal leave. Holidays proclaimed
by the President will no longer be observed.
LEE POWELSON, LABOR RELATIONS, OFFICE OF THE COMMISSIONER,
DEPARTMENT OF ADMINISTRATION, noted that the tool allowance
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would be given to a limited classification of employees.
Commissioner Boyer advised that this union was covered by
the Health and Welfare Trust. The State agreed to match up
to $26 dollars per month for a health plan increase. Co-
Chair Hanley disclosed for the record that he had been a
member of this union.
DON ETHERIDGE, BUSINESS AGENT, ALASKA STATE DISTRICT COUNCIL
OF LABORERS, LABOR TRADES AND CRAFTS UNION (LTC), testified
that the union included all highway maintenance,
construction, airport maintenance and ferry facilities,
Pioneer Home workers, and those employees who cook for the
correctional industries.
He noted that the Union's membership was not pleased with
the last year's legislative rejection for a pay increase.
He noted that a new contract has been negotiated including a
compromise on the part of both the union membership and the
State. Labor management committees were established to help
negotiate regulations of the contracts. Mr. Etheridge added
that morale has been an important concern for the Local 71
Union. Pay raises have been sacrificed in order to obtain
health coverage. There are no merit increases in this
Union.
Discussion followed regarding the personal leave situation.
Mr. Powelson commented on the geographic differential
condition of the contract, noting that it was based on a
fixed amount.
Co-Chair Hanley pointed out that in 1993, the State provided
$500 dollars per person per month to that union to address
their own health care benefit. He asked how increases would
be determined. Mr. Powelson commented that an increase
would be based on a plan experience or by the trust. After
one year in operation, the plan would be provided to the
State for an actuarial evaluation. The State has the
authority to review the plan with private consultants, and
then it could be negotiated or arbitrated. Commissioner
Usera settled with the Union at a $24 dollar per month
increase. Under the proposed terms, July 1, 1997, would be
the first date possible for an increase to the State's
contribution.
(Tape Change, HFC 96-59, Side 1).
Co-Chair Hanley questioned the trust cost per individual.
Commissioner Boyer replied that the groups differ
considerably. The rate for this union is higher due to the
fact that they are blue collar workers who are exposed to
more work-place accidents. Co-Chair Hanley indicated that
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the State currently pays $100 dollars a month more in health
care benefits to this Union, amounting to $2 million dollars
per year.
Co-Chair Hanley questioned the privatization of the Union.
Commissioner Boyer commented that there are a number of jobs
which originally were handled by Local 71, which are now
contracted out. Mr. Etheridge explained that a large cut in
membership has occurred. All custodial work in the State
operated buildings has been contracted out to private firms.
Representative Parnell asked the Union's funding source.
Commissioner Boyer advised that the Union also receives
federal receipts, through employee's being employed through
the Department of Transportation and Public Facilities
(DOTPF).
Co-Chair Hanley noted legislative frustration observing the
number of supervisors in relationship to the number of
workers within the Union which creates top-heavy management.
He requested a documented justification of the number of
workers and supervisors.
Commissioner Boyer reiterated that "stagnation" of State
employee wages are a concern for the Department. He
referenced the profits indicated by the soaring Permanent
Fund and increased business tax base. Co-Chair Hanley
countered that there has been compensation in merit pay and
benefit level increased packages. He thought that benefit
level increases should be done in lieu of wage increases.
Co-Chair Hanley emphasized that all increased considerations
are important.
GENERAL GOVERNMENT UNION (GGU)
Commissioner Boyer spoke to the current agreement which
extends the terms of the prior contract with no change in
monetary terms. The tentative agreement would be effective
July 1, 1996, through June 30, 1999. It would include a
salary schedule adjustment equal to one-half of the increase
Anchorage Consumer Price Index (CPI-U), not to exceed 1.5%
for each year of the contract.
The State's monthly health insurance contribution may
increase up to $50 dollars for each eligible employee per
month, with future increases matched by employee payroll
deduction. Martin Luther King, Jr. Day will be observed by
Class One employees. As of January 1, 1997, the employees
birthday will no longer be observed and as of February,
1999, Lincoln's Birthday will no longer be observed.
Correctional Officers will convert to a system of personal
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leave, with a 60% conversion of sick leave to personal
leave. Overtime after 37.5 hours of work in a work week
versus the 37.5 hours in pay status. He added that these
monetary terms would be submitted for Legislative approval.
RICHARD SEWARD, BUSINESS AGENT, ALASKA STATE EMPLOYEE
ASSOCIATION (ASEA), GENERAL GOVERNMENT UNION (GGU),
explained the membership of GGU consists of 8,600 members,
50% being female. GGU represents the professional work
force of the State.
He pointed out that there has been no cost-of-living
increase for three years. The Union does receive merit
increases and longevity bonuses. A merit increase requires
proving that the employee is of "progressively greater
value" to the State of Alaska. He elaborated that only 60%
of the union members ratified the contract. The
controversial issues regarded health insurance payments.
Through the bargaining process, the Union dropped from the
old coverage of 90%, to an 80% coverage plan. He noted that
would place GGU in line with health insurance plans
nationally and statewide.
Mr. Seward noted that the employees need to be recognized
for their good work performed and could receive that
recognition with the 1.5% increase pay rate. He sensed that
within the State employee work force there is "high stress".
The work force needs the recognition by the Legislature. As
staff has been cut, employees are working hard to keep up.
They are willing to take half a cost-of-living raise. Mr.
Seward remarked that the State is paying comparable wages to
the private sector.
A geographic differential exists. To encourage employees to
move to those more remote areas, requires incentive
addressed through the geographic differential. GGU believes
that the current geographical differential around the State
is fair.
Representative Brown asked what percentage of employees
eligible for merit increases received them. Mr. Seward
replied in excess of 90%. He noted that the State is better
at terminating employees than denying them merit increases.
Co-Chair Hanley read from back-up material, comments from
Commissioner Boyer on the merit system:
"Of the employees eligible for consideration, over
99% are awarded. A high percentage would be
expected, based on the competitive recruitment,
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examining and selection processes, the probation
period and the constructive and progressive
discipline to deal with performance deficiencies
of permanent employees."
Co-Chair Hanley continued that Commissioner Boyer estimated
that only 20 employees per year are denied a merit increase
when eligible for consideration. Co-Chair Hanley stressed
that what currently exists is an automatic guarantee, not a
merit increase. Compensation continues to rise.
ADJOURNMENT
The meeting adjourned at 10:05 A.M.
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