Legislature(2025 - 2026)ADAMS 519
05/16/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB193 | |
| HB96 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 193 | TELECONFERENCED | |
| + | HB 96 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | HB 104 | TELECONFERENCED | |
| += | SB 64 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
May 16, 2025
3:23 p.m.
3:23:05 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 3:23 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Andy Josephson, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Jamie Allard
Representative Jeremy Bynum
Representative Alyse Galvin
Representative Sara Hannan
Representative Nellie Unangiq Jimmie
Representative DeLena Johnson
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Representative Carolyn Hall, Sponsor; Paloma Harbour,
Director, Division of Employment and Training Services,
Department of Labor and Workforce Development; Lennon
Weller, Research and Analysis, Department of Labor and
Workforce Development; Tristan Walsh, Staff, Representative
Carolyn Hall; Representative Mike Prax, Sponsor; Tony
Newman, Director, Division of Senior and Disability
Services, Department of Health; Brodie Anderson, Staff,
Representative Neal Foster; Representative Zack Fields;
Representative Bill Eischeid.
PRESENT VIA TELECONFERENCE
Trevor Storrs, President and CEO, Alaska Children's Trust,
Anchorage; Julie Cleaton, Board Member, Alaska Public
Health Association, Wasilla; Mike Coons, Self, Wasilla;
Alexis Rodich, Research and Policy Director, Service
Employees International Union 775, Tacoma, WA.
SUMMARY
HB 96 HOME CARE EMPLOYMENT STANDARDS ADV BOARD
HB 96 was HEARD and HELD in committee for further
consideration.
HB 104 ADDRESS CONFIDENTIALITY PROGRAM
HB 104 was SCHEDULED but not HEARD.
HB 193 UNEMPLOYMENT BENEFITS; PAID PARENT LEAVE
HB 193 was HEARD and HELD in committee for
further consideration.
CSSB 64(FIN) am
ELECTIONS
CSSB 64(FIN) am was SCHEDULED but not HEARD.
Co-Chair Foster reviewed the meeting agenda.
HOUSE BILL NO. 193
"An Act establishing a paid parental leave program;
relating to unemployment benefits; relating to the
collection of child support obligations; and relating
to the duties of the Department of Labor and Workforce
Development."
3:25:26 PM
REPRESENTATIVE CAROLYN HALL, SPONSOR, introduced the bill.
She read the sponsor statement (copy on file):
According to the August 2024 Labor Trends magazine,
the State of Alaska's Unemployment Insurance (UI)
trust fund is over-funded; HB193 would leverage
existing fund contributions from employers and
employees and utilize the Department of Labor and
Workforce Development's existing infrastructure to
establish the Alaska Parental Leave Program and update
UI benefits for Alaskans.
The policy levers afforded in the bill would
accommodate the new program by diverting existing
employee contributions to create the paid parental
leave fund, enhance the State Training and Employment
Program (STEP), afford an opportunity for employer
contribution tax cut, and maintain the UI trust fund's
solvency, without increasing employer or employee tax
contributions.
As the State seeks to recruit, attract and retain
young families, the paid parental leave policy would
serve a crucial purpose: giving parents the time to
bond with their child. By helping families take
important time off for childbirth, adoption, or
fostering, the State can ensure that parents and
newborns can attend follow-up doctors' appointments;
lower the risk for rehospitalization; have economic
security that reduces stress on parents & children;
further cement the bond between parents and an adopted
child or foster youth; and help mothers re-enter the
workforce after any one of these scenarios.
By building off existing infrastructure in the
Department of Labor & Workforce Development, current
employee and employer contributions can go towards an
invaluable program that returns many benefits back to
our society and economy, while also enhancing STEP,
and ensuring the long-term viability of the
unemployment insurance Alaskans rely on in times of
transition.
Representative Hall introduced the PowerPoint presentation
"HB 193: Paid Parental Leave, Unemployment Insurance
Updates" dated May 16, 2025 (copy on file). She continued
to slide 2 and stated that the bill created a paid parental
leave plan that covered adoption, fostering, childbirth, or
the placement of a child with a legal guardian through a
tribal or state court. She explained that the bill
authorized the Department of Labor and Workforce
Development (DLWD) to set the duration of paid parental
leave between 8 and 26 weeks. She noted that the bill also
created an accelerated benefit option which allowed
participants to access twice the scheduled benefit for half
the duration. The bill also included a tax cut for
employers. She noted that none of the provisions required
unrestricted general funds (UGF).
Representative Hall continued to slide 3 and relayed that
additional changes to HB 193 included a requirement for
DLWD to conduct actuarial studies on the paid parental
leave fund every two years. She explained that the bill
authorized the department to adjust the unemployment
insurance wage base and benefit for inflation and adjusted
the dependent benefit from $23 per week to $72 per week.
She stated that the bill increased funding for the State
Training and Employment Program (STEP). She clarified that
the slide included a typo, as the bill increased funding
for STEP only and not the Technical Vocational Education
Program (TVEP). She added that the change to increase
funding for STEP only had been made at the request of DLWD.
The bill also increased the maximum taxable wage base to
$85,000 per year and raised the maximum weekly benefit to
$817.
Representative Hall continued to slide 4 and explained that
until 1993, there had been no federal or national policy
regarding family leave. She stated that the Family and
Medical Leave Act (FMLA) established job-protected absences
for federal employees and for employees working at
companies with 50 or more employees within 75 miles of the
business headquarters. She explained that the result had
been the establishment of unpaid family leave protections.
She stated that the Alaska FMLA provided 18 weeks of unpaid
leave, which also instituted job-protected absence
allowances for public employees. She shared that paid
parental leave had been shown to improve the health and
life outcomes of infants and allowed for increased bonding
time with adopted and foster children. She added that in
2019, President Trump amended federal law under FMLA to
extend 12 weeks of paid parental leave to federal employees
and military members for childbirth, adoption, and
fostering.
Representative Hall noted that Alaska competed with other
states for young and talented workers, and paid parental
leave was a well-established and valuable benefit that
provided a high return at low cost. She emphasized that all
other states were pursuing such policies and asserted that
Alaska could not afford to be left behind. She stated that
paid parental leave allowed parents to return to the
workforce without being penalized.
3:30:47 PM
Representative Hall continued to slide 5 and reported that
23 percent of employed women returned to work within 10
days of giving birth and an additional 22 percent returned
between 10 and 40 days after giving birth, according to the
American College of Obstetricians and Gynecologists (ACOG).
She stated that experts recommended at least six weeks of
recovery for a vaginal birth without complications and 12
weeks for a cesarean section. She added that all parents
reported being employed in 66 percent of Alaskan households
with children. She stated that the National Institutes of
Health (NIH) estimated that 24 percent of women on average
exited the labor market during the first year of
motherhood. She explained that five years later, the
percentage dropped to 17 percent, and after a decade, 15
percent of those women remained outside the workforce.
Representative Hall advanced to slide 6 and stated that the
first step was to invest in children and families. She
explained that decades of research demonstrated the value
of early childhood development investment that started
before birth and continued through preschool. She reported
that each dollar spent on early childhood investment
resulted in exponential returns in terms of the long-term
success for the child. She relayed that Professor James
Heckman, a prominent figure in early childhood research,
had conducted foundational work that demonstrated a strong
correlation between early investment in a child's social
and emotional well-being and positive life outcomes. She
explained that the returns were generally cited between $13
and $16 for every $1 invested, based on increased academic
performance and lower adverse childhood experience (ACE)
scores. Studies showed that children whose early childhood
development was invested in were less likely to commit a
violent crime and had a reduced risk of becoming a drug
user or addict.
Representative Hall continued to slide 7 and relayed that
paid parental leave could serve as a key mechanism to
achieve high outcomes for children through existing
infrastructure and policy. She stated that studies had
shown that women who took paid leave had a 51 percent
decrease in the odds of rehospitalization within 21 months
of giving birth. The National Partnership for Women and
Families (NPWF), a paid leave advocacy organization, had
conducted extensive research on the benefits of paid
parental leave. She explained that the months preceding and
following birth were formative in an infant's development
and that paid maternity leave improved health outcomes for
both infants and parents. She reported that research had
shown that paid leave led to reductions in low birth weight
and preterm births, particularly for Alaska Native and
African American mothers, among other benefits.
Representative Hall stated that positive associations had
also been found between paid parental leave and reductions
in stress and increases in physical activity, both of which
were critical for new mothers. She added that fathers who
took paid leave were more likely to engage in their
children's lives, which contributed to cognitive and
developmental benefits for children. Fathers who took paid
leave were also more likely to live longer. She asserted
that paid leave had been a well-researched and widely
supported policy that allowed young families to grow and
thrive without enduring economic hardship. She emphasized
that by providing paid leave, infants were more likely to
attend follow-up appointments, mothers were less likely to
experience postpartum depression, and fathers were better
positioned to bond with their families.
Representative Hall moved to slide 8 and indicated that the
majority of workers in the United States lacked access to
paid leave through their employers. In Alaska, over 75
percent of workers lacked access to paid leave, which
equated to roughly 270,000 individuals. She relayed that
unpaid leave under the federal FMLA remained inaccessible
to 68 percent of Alaskans. She added that if Alaskan women
had participated in the labor force at the same rate as
women in countries with paid leave, the state would have
gained approximately 8,000 additional workers and nearly
$314 million in statewide wages. She noted that women made
up 47 percent of Alaska's workforce and owned 28 percent of
its businesses. Paid parental leave could reduce working
women's reliance on public assistance and SNAP by as much
as 40 percent when compared to women who did not receive
the benefit.
Representative Hall continued on slide 9 and reported that
businesses in states with paid leave experienced
significantly fewer challenges managing long absences, with
two-thirds of employers covering absences by temporarily
reassigning the work. Studies in California found that
small businesses experienced a 14 percent decrease in per-
worker labor costs when employees took paid leave. She
noted that the smallest businesses had achieved the
greatest percentage-based savings. In California, 92
percent of businesses reported that paid leave had a
positive impact on employee turnover. She added that
workers with access to paid leave were more likely to
return to the workforce rather than exit entirely. Paid
leave helped workers maintain salary levels and enabled
them to earn more overtime and contribute to both household
income and to the broader economy. She noted that turnover
at small businesses cost approximately 23.5 percent of a
worker's annual wage and could rise to as high as 150
percent of a worker's wage depending on the duration of the
vacancy.
3:35:24 PM
Representative Hall advanced to slide 10 and emphasized
that paid leave had significantly improved employee
retention. She explained that studies had found that
companies implementing paid leave policies experienced
greater revenue and profit per full-time equivalent
employee. She relayed that technology companies had
realized a $2.64 return for every $1 invested, while
manufacturers had seen a $2.57 return per $1 invested. She
added that a recent study had shown that workers with paid
leave were 22 percent more likely to recommend their
employer to a friend that they were if they did not have
the benefit. She stated that polling had found that members
of Generation Z considered paid leave the most important
policy when deciding to relocate for work.
Representative Hall moved to slide 11 and relayed that in
the absence of a national policy, many states had pursued
different approaches, and the policy in HB 193 was one of
the approaches. In a competitive labor market, a paid leave
policy could serve as a cost-effective strategy to attract
workers to both the public and private sectors. According
to MetLife Insurance, 199 bills related to paid leave were
introduced across 36 states in the previous year. She noted
that by the following year, when Delaware, Minnesota,
Maine, and Maryland implemented their programs,
approximately 59 percent of U.S. civilian workers would
have access to some form of paid family leave. She relayed
that 24 states currently offered either paid family leave
or paid parental leave or were in the process of
implementing a leave plan. She stated that three states
passed paid leave bills: Kentucky, Tennessee, and South
Carolina. She stated that 17 states considered expanding or
changing the existing paid leave programs, and 16 states
considered the change but did not pass the legislation.
Representative Hall continued to slide 11 and relayed that
the next portion of the bill addressed unemployment
insurance. She explained that unemployment insurance
functioned as wage replacement when an individual was
unemployed and actively seeking work and was established in
1935 by President Theodore Roosevelt through the Social
Security Act (SSA). Other types of wage replacement, such
as short-term disability, were widely available but had
limited application for family-related purposes beyond
complications from pregnancy. She noted that both public
and private employers were familiar with the unemployment
insurance and payroll deduction processes. She explained
that Alaska required employers to collect the contribution
on behalf of employees, which was a unique feature. She
stated that the bill would reappropriate the contribution
toward paid parental leave. She reported that Alaska was
one of only three states that required an employee
contribution to unemployment insurance. She explained that
the bill would establish a separate fund in which the
employee's contribution would be held for the collection of
a claim.
Representative Hall advanced to slide 13 and stated that
currently, unemployment insurance was funded through two
sources: employer and employee contributions, both of which
fed into the Unemployment Insurance Trust Fund (UITF). She
repeated that Alaska was one of three states requiring
employees to contribute, along with New Jersey and
Pennsylvania. She added that Alaska also funded the STEP
and TVEP programs through a 0.10 percent and 0.25 percent
special employee contribution, respectively. She clarified
that the special employee contributions were separate from
contributions required for UITF.
Representative Hall continued to slide 14 and explained
that HB 193 proposed to redirect the employee contributions
toward a new paid parental leave fund. The bill would
create both a special employer contribution and a special
employee contribution, each directed to the new fund. She
relayed that STEP and TVEP would continue to receive the
existing 0.35 percent special contributions from employees.
The bill would redirect a 0.15 percent special contribution
from employees toward the paid parental leave fund. Based
on actuarial analysis performed by DLWD, the department
would have the authority to implement a special employer
contribution of 0.10 percent for STEP and 0.20 percent for
the paid parental leave fund. The contribution would come
from the remaining 0.70 percent employer contribution to
UITF.
Representative Hall indicated that the department would
also have the authority to reduce employer contributions
down to 0.50 percent, based on actuarial determinations of
fund solvency. If the department determined that UITF was
solvent, there could be a 0.20 percent tax cut for
employees. She noted that the statutory language related to
the special employer contributions could be found on page
12 of the bill. She added that the bill also included a
snapback feature. If UITF was approaching an unhealthy fund
balance or reserve ratio due to a recession, depression, or
another pandemic, the department could redirect employer
contributions back toward UITF. She stated that the self-
correcting mechanism was similar to existing fund
protections that allowed the department take actions to
maintain solvency.
3:41:40 PM
Co-Chair Foster stated that the committee would proceed to
invited testimony, public testimony, and fiscal notes, then
he would open up the floor for questions. He recognized
that Representative Mike Prax was present in the audience
for his bill hearing, and Representative Zack Fields and
Representative Bill Eischeid were also present.
3:42:53 PM
PALOMA HARBOUR, DIRECTOR, DIVISION OF EMPLOYMENT AND
TRAINING SERVICES, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT, introduced herself.
LENNON WELLER, RESEARCH AND ANALYSIS, DEPARTMENT OF LABOR
AND WORKFORCE DEVELOPMENT, introduced himself. He explained
that he functioned as the actuary for the Unemployment
Insurance System (UIS).
Ms. Harbour relayed that the department had created slides
to show the impact on the trust fund of the current version
of HB 193. She was not certain that the slides were made
available and she would keep her remarks concise. The
department reviewed the legislation and examined historical
economic downturns, including the COVID-19 pandemic and the
Great Recession. The department modeled an extreme scenario
wherein the benefit costs would be tripled. The costs were
currently approximately $45 million to $50 million annually
and the benefit costs could rise as high as $350 million
annually in the extreme scenario that was modeled. She
explained that the department aimed to determine how the
trust fund would respond to a severe recession under the
changes proposed in the bill.
Ms. Harbour noted that under the bill, unemployment
benefits would be significantly increased, and employer and
employee contributions would be directed to other funds
outside of UITF. She explained that the department wanted
to ensure the system would remain functional in an extreme
situation, which it would under the bill. She reported that
the lowest projected reserve ratio under the extreme
scenario that was modeled would be approximately 0.5
percent. She acknowledged that the ratio was lower than
what some might consider comfortable, but the system was
designed to adjust employer tax rates to rebuild the trust
fund. She defined the reserve ratio as the amount in the
trust fund compared to a target fund balance. She suggested
that Mr. Weller provide additional details.
Mr. Weller explained that the reserve ratio measured the
trust fund balance as a percentage of wages covered by the
program. He stated that both statute and historical
practice targeted a reserve ratio between 3 percent and 3.3
percent to represent full solvency. He noted that a ratio
that was fully solvent meant it was recession-ready or
capable of absorbing any projected type of historical claim
load. He stated that the current reserve ratio was
approximately 4.7 percent, which was significantly above
the target.
3:47:10 PM
Representative Tomaszewski asked if there was a current or
anticipated cap on the amount of payments that could be
distributed through the fund.
Ms. Harbour responded that the maximum benefit distributed
to an individual was $370 per week per claim. She relayed
that the bill would increase the amount to $817 per
individual per week.
Representative Tomaszewski asked how many individuals could
potentially qualify. He remarked that not every new mother
in Alaska worked, which meant that some would not qualify.
He asked whether there was an estimated number of eligible
individuals based on the average number of births in Alaska
per year.
Ms. Harbour responded that the department had made a rough
estimate based on the number of births in the state and had
found that there were approximately 9,000 babies born in
Alaska annually. The estimate assumed one parent claimed
benefits for the maximum 26 weeks of paid leave, which was
an extreme circumstance because not all parents took 26
weeks. She relayed that if at least one parent took 26
weeks of paid leave, the cost to the state would be $175
million. She stressed that individuals took about eight to
ten weeks of leave on average, and the scenario was extreme
and unlikely. She stated that the department had conducted
a more detailed analysis, which looked at women in specific
age groups. For example, if there were 12,449 women aged 15
to 19, with a fertility rate of 62.3 per hundred thousand,
there would be approximately 776 births. She explained that
the department used the figures to estimate costs under
different scenarios and the estimates ranged from $46.8
million to approximately $12 million. She relayed that she
could provide copies of the estimates to the committee.
Representative Tomaszewski asked if the legislation barred
both parents from claiming benefits.
Ms. Harbour responded in the negative. She clarified that
the actuarial analysis assumed both parents could claim
benefits.
Representative Tomaszewski requested that the committee
receive a copy of the assumptions used in the analysis.
Ms. Harbour responded that she would follow up with the
information.
Co-Chair Foster asked for the name of the study.
Ms. Harbour responded that the study was titled an
actuarial analysis, although she noted it was not an
official actuarial report since it was based on assumptions
and not on actuals.
Co-Chair Foster stated that he would move to invited
testimony, open public testimony, and then return to
questions afterwards. He acknowledged that the committee
had a late start and noted that the public had been waiting
to testify.
3:51:46 PM
TREVOR STORRS, PRESIDENT AND CEO, ALASKA CHILDREN'S TRUST,
ANCHORAGE (via teleconference), stated that the mission of
the Alaska Children's Trust (ACT) was to prevent child
abuse and neglect by addressing the root causes and
strengthening protective factors. He relayed that the
organization focused on primary prevention by proactively
building systems, policies, and various supports that
allowed families to thrive before harm occurred. He stated
that by investing in the conditions that allowed children
and families to be safe, stable, and connected, the state
could prevent abuse and neglect from occurring.
Mr. Storrs stated that one of the key ways to prevent child
abuse and neglect was to ensure that families had the time
and resources to care for their loved ones without risking
financial instability. He explained that a comprehensive
statewide paid family and medical leave policy was one of
the trust's top priorities and was a primary form of
prevention. He asserted that HB 193 provided an important
opportunity for Alaska to build a proactive system of
support that would strengthen families before challenges
escalated into crises. He clarified that the trust
considered a comprehensive policy to be paid leave for
three purposes: bonding leave for caring for a new child,
family leave for caring for a loved one with a serious
health condition, and medical leave for addressing a
worker's own serious health needs.
Mr. Storrs noted that 14 states with paid family and
medical leave had adopted a comprehensive model that
included all three categories. He stated that research
consistently showed that paid leave was a smart primary
prevention strategy that benefited families, the economy,
and the state's budget. He asserted that paid leave
strengthened protective factors and drove broader economic
gains by allowing workers to care for themselves and their
families without risking financial stability. Paid leave
led to improved child and maternal health outcomes such as
higher vaccination rates, reduced rates of low birth
weight, and lower rates of maternal depression. He added
that families with access to paid leave were less likely to
rely on public assistance, which eased the burden on state-
funded safety nets. For example, paid family leave had
reduced reliance on public assistance in California by 14
percent among low-income mothers.
Mr. Storrs indicated that paid leave increased workforce
participation and retention. On a national scale, women
were 20 percent more likely to remain employed one year
after childbirth if they had access to paid leave, which
boosted household income and tax revenue. He noted that
employers benefitted from reduced turnover and improved
employee productivity, while the broader economy benefitted
from a more stable and engaged workforce. The state
benefited because paid leave brought about lower downstream
costs in health care, child welfare, and public assistance,
and ultimately resulted in long-term savings for the state
budget. Every dollar invested in prevention reduced future
expenditures on crisis response. He stated that paid family
and medical leave was not only a benefit to families, but
also a fiscally responsible policy that strengthened
Alaska's workforce, supported economic growth, and reduced
costly social outcomes.
Mr. Storrs expressed appreciation for Representative Hall
and the work the House Labor and Commerce Committee had
done on the bill. He asserted that the bill provided a
strong foundation for a paid leave policy. He noted that
the trust wholeheartedly supported the foundation created
by the bill, but the trust also thought it was appropriate
to offer ideas for expanding policy. One opportunity for
improvement would be to expand the scope of leave beyond
parental bonding to include medical and family caregiving
leave. Medical leave was essential to ensure that mothers
had adequate time to recover from childbirth and to manage
pregnancy-related complications, which often lasted longer
than the allotted bonding leave. Without medical leave,
parents might be forced to return to work prematurely and
risk their own health and their baby's well-being while
increasing health care costs. He stated that Alaskans often
needed time to care for older children with complex
illnesses, to support aging parents, or to manage their own
serious medical conditions. Including other types of leave
would better reflect the real-life needs of Alaskan
families and workers. He suggested that even a modest
expansion to include a limited number of weeks of medical
leave would make the program more comprehensive and provide
critical support while aligning the program with best
practices in other states.
Mr. Storrs continued that in addition to expanding the
scope of leave, another suggestion was to ensure that
employers could offer additional paid leave to workers. He
stated that private and public partnerships existed in
other states and that the trust would be happy to share
examples of how other states had successfully coordinated
the efforts to better support families and businesses. He
added that the trust would like to offer a program and cost
modeling analysis for the committee's consideration that
would support a more dynamic policy that included various
tiered options for adjusting policy levers, such as the
number of weeks and percentage of wage replacements. The
modeling had been done using a paid leave micro-simulator
designed by the U.S. Department of Labor to help states
develop paid leave policies. He explained that the model
used labor data and information about current use of job-
protected leave within Alaska to determine likely take-up
rates for paid leave programs. The information was then
combined with wage data and various policy choices to help
determine program costs.
Mr. Storrs relayed that the simulation model had been
benchmarked against actual program costs and had been
widely used by policymakers and advocates across the
country. He emphasized that the model could help guarantee
that Alaska's paid leave program would be accessible to
families at various income levels while also supporting the
design of a policy that was fiscally responsible and
sustainable.
Mr. Storrs stated that several other states had already
adopted a comprehensive statewide paid medical and family
leave policy that extended beyond bonding leave to
encompass a broader range of family medical needs. He
asserted that the policy fit especially well with the
public insurance model proposed in HB 193 and had the
potential to benefit all workers in Alaska. He asserted
that a comprehensive statewide paid family medical leave
program would be an investment in Alaska's families,
children, communities, and businesses.
3:59:32 PM
Co-Chair Foster OPENED public testimony.
4:00:09 PM
JULIE CLEATON, BOARD MEMBER, ALASKA PUBLIC HEALTH
ASSOCIATION, WASILLA (via teleconference), indicated that
the Alaska Public Health Association's policy committee was
in support of the bill. She explained that since 2013, the
American Public Health Association had advocated for paid
sick leave and family leave policies. There were several
well-studied benefits of parental leave, including fewer
preterm births, reductions in C-section deliveries, more
"well-baby" visits, decreased infant mortality, longer
periods of breastfeeding, and the improved mental health of
new mothers. She stated that in some studies, the positive
effects were identified only when parental leave was paid.
She asserted that parental leave could be lifesaving and
that investments in early childhood paid significant
dividends later in life.
Ms. Cleaton stated that the association would also support
future expansions to family and medical leave. She remarked
that she hoped to see the bill passed quickly. She shared
that she was 31 years old, earned the primary income for
her family, and had been saving vacation days for years to
afford what her coworkers jokingly referred to as maternity
vacation. She emphasized that most workers could not do
what she had done, and those who could, should not have to
sacrifice a year's worth of vacation time in "post-pandemic
parenthood." She thanked the committee for its time and
consideration.
4:01:36 PM
MIKE COONS, SELF, WASILLA (via teleconference), opposed HB
193. He asserted that the UITF was overfunded in part
because more people were working, or because those who had
lost jobs had either left the state or exited the workforce
and were now on welfare or Medicaid. He suggested that
overfunding was beneficial, given the fluctuations in the
workforce. He stated that he had done a Google search that
indicated it was difficult to determine the exact number of
businesses in Alaska offering maternity leave, as it was
typically a company-specific benefit and not a statewide
requirement. However, he understood that the Alaska Family
Leave Act (AFLA) required state employers with more than 25
employees to provide job-protected absence for up to 18
weeks for employees dealing with pregnancy, childbirth, or
adoption. He added that FMLA also offered unpaid leave for
qualified employees at covered companies, but it did not
mandate paid leave.
Mr. Coons stated that the bill would draw funding from UITF
and that it remained unclear whether Ballot Measure 1 [the
Minimum Wage Increase and Paid Sick Leave Initiative],
which passed the previous year, might also impact the bill.
He suggested that employees receiving unemployment benefits
under the bill might trigger additional payments under
Ballot Measure 1. He thought "double dipping" would negate
any tax reduction mentioned by Representative Hall.
Mr. Coons understood that one of the fiscal notes for the
bill stated that revenue into the parental leave fund would
come from the Division of Employee Contributions and would
be an amount equivalent to 0.15 percent of taxable wages.
He thought it seemed to be a tax increase on employees. He
stated that DLWD had accurate data on employment and that
including maternity would obscure the accuracy of future
unemployment payout projections. He asserted that the
program would reduce the trust fund balance and might leave
the fund unable to meet demand during a future unemployment
spike.
4:04:30 PM
Co-Chair Foster CLOSED public testimony.
Co-Chair Foster noted that Mr. Storrs had provided invited
testimony and that the committee had the opportunity to ask
him questions.
Representative Galvin asked Mr. Storrs for confirmation
that the trust supported protective factors in general. She
wondered if ACT would also support a policy that included
maternal leave, which she interpreted as bonding leave. She
asked if he thought bonding leave, family leave, and
medical leave should all be included in the bill.
Mr. Storrs responded in the affirmative. He stated that
bonding or parental leave was already addressed by the bill
and the trust fully supported it. He remarked that in an
ideal scenario, the state's leave would become more aligned
with FMLA and would also include family leave, such as
caring for a loved one with a serious health condition, and
medical leave, to address the worker's own serious health
needs.
Representative Galvin asked whether medical leave would
also include post-birth medical complications.
Mr. Storrs responded in the affirmative. He explained that
medical leave would allow parents time to recover after
birth. He affirmed that complications such as cesarean
sections or other conditions could delay healing. He noted
that medical leave also included broader medical issues
such as cancer.
Representative Galvin understood that Mr. Storrs had
indicated there were four states that were embracing family
leave. She asked whether he had meant four states or 14
states.
Mr. Storrs responded that 14 states had adopted
comprehensive policies that included all three categories
of leave.
Representative Galvin asked whether the passage of federal
family leave for federal employees included all three
components that Mr. Storrs had identified as best
practices.
Mr. Storrs asked for the question to be repeated.
Representative Galvin asked whether FMLA included all three
categories of leave identified earlier by Mr. Storrs as
best practices.
Mr. Storrs responded in the affirmative.
4:09:53 PM
Representative Galvin asked how many weeks of parental
bonding were considered to be best practice. She wondered
what had been passed in other states.
Mr. Storrs responded that he would need to follow up with
the information. He noted that best practices
internationally recommended up to a year. However, best
practices in other states typically fell closer to 12
weeks.
Representative Hannan asked how long it had been since the
state increased its unemployment insurance benefits.
Ms. Harbour responded that the last increase occurred in
2008 and became effective in 2009.
Representative Hannan understood that the maximum weekly
wage replacement benefit available to an employee in Alaska
had remained at $370 since 2010. She asked whether her
understanding was correct.
Ms. Harbour confirmed that the maximum weekly benefit had
remained at $370 since 2010.
Representative Allard noted that the weekly benefit amount
was similar to FMLA. She understood that under FMLA,
individuals must use all of their sick leave first before
using other leave. Individuals could remain on leave for as
long as the leave was approved, but the leave would not be
paid. She asked for clarification on how the process
currently worked in Alaska.
Ms. Harbour responded that there was not currently a
program in place in the state and there was no established
process. She explained that the bill proposed up to 26
consecutive weeks.
Representative Allard asked if a woman who gave birth
without any leave would have to take leave without pay.
Ms. Harbour responded that if the individual did not have
paid leave through their employer, then the leave would be
without pay.
Representative Allard commented that the bill carried a
significant fiscal note. She asked for an explanation of
how the state would be able to cover the expenses given the
current fiscal conditions.
Ms. Harbour responded that the program would be funded
through a reallocation of existing unemployment insurance
contributions. Instead of all contributions going toward
unemployment insurance, a portion would support the paid
parental leave program. She clarified that the program
would not draw from the general fund but from the trust
fund.
4:14:08 PM
Representative Allard asked if the trust fund could afford
to sustain the program on an annual basis.
Ms. Harbour responded that the trust fund could afford the
program under the current economic conditions, given
existing wage and benefit claim levels. She acknowledged
that a significant recession could impact the fund's
ability to cover the program. In such a scenario, taxes
could be increased to support the program. She clarified
that the system was designed to make such adjustments.
Representative Allard noted that she had not fully reviewed
the bill and asked if it would be more beneficial for
policymakers to align with the current federal structure
under FMLA.
Ms. Harbour responded that her understanding of FMLA was
that it provided unpaid leave and that there was no paid
leave program at the federal level.
Representative Allard relayed that a federal employee must
first use all available leave under FMLA and would
ultimately be placed on leave without pay. She asked if the
current state policy was similar.
Ms. Harbour responded that Representative Allard's
understanding was correct.
Representative Bynum appreciated the intent of the bill but
thought that it required additional review. He noted that
the sectional analysis (copy on file) was seven pages long
with five sections, and that the bill itself was 27 pages
long. He remarked that the subject matter was complicated
due to its connection to medical leave and the unemployment
trust. He asked if a breakdown of the benefits could be
provided to the committee to help members better understand
the bill. He asked to be provided with a chart similar to
the chart that would be given to employees to explain their
potential benefit. He stated that the current language in
the bill referred to a benefit of eight to 26 weeks of
leave. He asked how the department would determine the
length of time for which an individual would be eligible.
He noted that a couple of examples would be helpful if it
required complicated formulas.
4:17:24 PM
TRISTAN WALSH, STAFF, REPRESENTATIVE CAROLYN HALL,
responded first to Representative Allard's question. He
explained that the 2019 National Defense Authorization Act,
signed by President Trump, established up to 12 weeks of
paid leave for childbirth, adoption, and fostering for
federal employees and members of the military.
Representative Allard commented that she believed the bill
was probably beneficial and remarked that she liked the 12-
week component. She commented that she liked the way the
military implemented leave. She stated that she appreciated
aligning with FMLA and considered the approach to be fair.
She relayed that she had served in the military and
understood how various systems interacted with FMLA,
parenting, and leave.
Ms. Harbour asked to be reminded of Representative Bynum's
question.
Representative Bynum restated the question. He noted that
the bill referred to eight weeks to 26 weeks of leave and
asked for a basic explanation of how an employee would know
whether they qualified for 8, 10, or 26 weeks.
Ms. Harbour responded that one of the changes in the most
recent version of the bill was that the department would
annually determine the number of weeks a claimant could be
eligible for, based on the health of the family leave fund.
She stated that the department could set the maximum
benefit period at eight weeks or at 26 weeks and that the
number would define how many weeks a claimant could
receive. At the beginning of the program, the department
would likely set the minimum number of weeks as the maximum
allowed while the fund accumulated sufficient resources.
She explained that once the department was confident that
the fund could handle the anticipated benefit load, the
maximum number of weeks could be increased. She clarified
that if the department set the maximum at eight weeks, then
all claimants would be eligible for eight weeks. However,
the actual benefit amount would vary per individual and
would be based on the claimant's wages during the base
year. She explained that a claimant could choose to take
the full eight weeks or could opt for a shorter period of
time. If the claimant selected four weeks, they would
receive double the benefit payment per week by choosing the
four-week schedule.
Representative Bynum relayed that he had reviewed a portion
of the bill regarding eligibility, which he believed
required at least $2,500 in wages within two quarters. He
asked for clarification on how an employee's contributions
would be assessed and how eligibility would be determined.
Ms. Harbour responded that eligibility would be based on
unemployment insurance eligibility criteria. She stated
that if an individual experienced a qualifying event, such
as childbirth, the department would look at the
individual's wages during the base period. For example, if
a baby was born on June 2 of a given year, the department
would examine wages from the first four of the five
completed calendar quarters immediately preceding the
quarter in which the birth occurred. She clarified that if
the individual earned at least $2,500 over the course of
two separate quarters within the time period, then the
individual would be eligible for the benefit.
Representative Bynum shared his understanding that the
payment amount that an individual would be eligible for
would be based on a percentage of the wages the individual
had earned. He asked whether there was a minimum amount.
Ms. Harbour responded that the minimum was $2,500. She
stated that if an individual earned below that amount, they
would not be eligible to receive a benefit. She added that
for earnings between $2,500 and $2,750, the benefit would
be $56. She indicated that the full benefit schedule could
be found in Section 5 of the bill.
4:22:35 PM
Representative Bynum remarked that large employers might be
able to absorb the absence of an employee for up to six
months. However, he was concerned about the potential
impact on small employers. He posed a hypothetical scenario
in which an employer had only two employees and one of them
utilized the proposed benefit. He asked how such a
situation would impact the employer.
Mr. Walsh responded that the issue raised by Representative
Bynum was one of particular interest during the policy
development process. He explained that small businesses
were already at a disadvantage when competing for the same
workforce as larger employers. He stated that planning for
employee absences, particularly for those starting
families, posed a significant challenge for small
businesses. He explained that the bill would allow small
businesses to use existing contributions already paid into
the unemployment insurance system to help support a planned
process for managing employee absences, which could help
improve the competitiveness of smaller employers. He added
that there were relevant slides in the presentation and he
could follow up with examples of small business in other
states that had implemented similar policies.
Representative Bynum clarified that his concern was not
limited to the financial cost to the employer. He explained
that he was referring to the operational impact on a small
business when an employee was unavailable for six months.
He stated that such a situation could force an employer to
hire a temporary employee, which could be difficult given
existing labor conditions. He asserted that if a
replacement could not be found, the remaining operations
would suffer. He asked if the potential consequences had
been considered and how small businesses would be affected.
Ms. Harbour responded that the question was outside her
area of expertise. However, she shared that her
understanding was that the bill would not expand an
employee's legal entitlement to leave. She explained that
under the existing AFLA, an employee could take up to 18
weeks of job-protected leave. The proposed program could
provide benefits for up to 26 weeks, but it would not
create a new entitlement to job protection.
Mr. Walsh added that workforce reentry barriers had
decreased in states where similar policies had been
implemented, particularly for women. He relayed that job
satisfaction had improved, and employees were more likely
to return to work under similar legislation. He explained
that while large employers also faced retention challenges,
the policy could assist small businesses with employee
retention and reduce turnover costs.
Co-Chair Foster stated that the committee would take a
recess shortly.
Representative Bynum stated that it was his understanding
that the benefit would not be limited to birthing mothers.
He asked whether an employee whose spouse gave birth would
also be eligible. He remarked that current law allowed an
employee to take unpaid leave and maintain job protection,
but there was no income replacement guarantee. He thought
that it created pressure for a working parent supporting a
family to remain employed. He understood that
hypothetically, if he were a small business owner and his
wife had a child, he could leave work for up to 26 weeks
with income replacement. He stated that the situation could
create a significant challenge for small businesses. He
clarified that he was not suggesting that allowing time for
bonding was unimportant, but he meant to highlight that the
benefit could potentially apply to both parents at once,
which could further impact small employers. He asked if it
would be possible for both parents to receive the benefit
at the same time.
Ms. Harbour responded in the affirmative.
Representative Bynum remarked that the basis of his
question was to better understand the potential impact on
small businesses.
4:28:18 PM
Representative Stapp understood that the presentation had
referred to short-term disability as having limited
application for pregnancy complications, but he asserted
that short-term disability did cover pregnancy and was
classified as a sickness. He explained that coverage was
not limited to complications.
Co-Chair Foster asked which page the information appeared
on.
Representative Stapp replied that it was located on the
third-to-last slide [slide 12].
Co-Chair Foster stated that the committee could address the
correction upon return from a recess. He announced that
conference committee was beginning and that the committee
would recess for approximately 30 minutes.
Co-Chair Foster announced that the amendment deadline for
SB 39, relating to payday loans under $25,000, would be set
for 5:00 p.m. on Saturday, May 17, 2025.
Co-Chair Foster announced that SB 64 would be set aside. He
stated that although there had been an effort to reach
consensus, it was not feasible to give the bill the proper
attention needed for full consideration and passage. He
explained that the bill included too many moving pieces to
complete by the end of session.
Co-Chair Foster stated that the committee would reconvene
at 5:00 p.m. He confirmed that the committee would continue
work on HB 193. He added that the next bill would be HB
104, concerning the address confidentiality program, and
that the committee would hear public testimony. The final
bill of the day would be HB 96.
4:30:49 PM
RECESSED
5:47:42 PM
RECONVENED
Co-Chair Foster stated that the committee would take a few
additional questions on HB 193 before moving on.
Representative Galvin stated that her question was for the
actuaries. She wanted to confirm her understanding of the
overall structure of the proposal. She referenced slide 14
of the presentation which appeared to show the current
unemployment insurance tax rate at 1.5 percent. She
understood that under the bill, the rate would be split
between unemployment insurance and the proposed paid
parental leave program. She understood that no new tax
would be added and that businesses could potentially see a
slight decrease in their contributions. She asked whether
her understanding was correct and whether the employee
contribution would be divided to support both the existing
and new programs.
Mr. Walsh responded that Representative Galvin was mostly
correct. He explained that employees were currently
contributing 0.35 percent toward the STEP and TVEP
programs. He stated that the 0.15 percent employee
contribution shown in the chart on slide 14 would be a new
special contribution dedicated specifically to the paid
parental leave program.
Representative Galvin understood that the actuarial
analysis considered a scenario in which approximately 9,300
babies were born in the state each year and both parents
chose to use the benefit. She thought that the fund would
remain solvent under the assumptions. She asked whether the
projection showed that the fund would not decrease
excessively due to its current overfunding.
5:51:59 PM
Mr. Weller responded that he was the actuary for UITF but
he could not speak directly to whether the new revenue
stream would be sufficient to meet the maximum potential
liabilities of the paid parental leave program. He thought
that how the proposal would affect the trust fund was a
separate question. He confirmed that the 0.15 percent tax
being redirected to paid parental leave would otherwise
have gone into the trust fund. He stated that the trust
fund was currently over-capitalized. The financing system
used to calculate benefit costs and set the target balance
for the trust fund was based on a reserve ratio and could
absorb a wide range of costs. He stated that redirecting an
additional 0.15 percent from the employee and up to 0.3
percent from the employer would not be detrimental to the
solvency of the trust fund.
Representative Galvin remarked that not many states had a
trust fund for unemployment like Alaska's. She asked if
there were many examples of similar funding models for
family leave programs.
Mr. Weller responded that Alaska was one of only three
states that had an employee contribution to unemployment
insurance funding. He stated that the structure had opened
the door for other programs to be funded using a similar
mechanism. He confirmed that Alaska's system was unique.
Representative Galvin asked whether funding for STEP and
TVEP had ever been legally challenged or caused any issues.
She asked if the proposed funding mechanism for the paid
parental leave program was legally sound and if there was
precedent for using employee contributions in such a
manner.
Mr. Weller responded that the diversion of the employee
contribution had been deemed to comply with federal
guidelines and regulations governing unemployment insurance
funding. He clarified that the employer contribution was a
separate issue and that employer contributions could not be
diverted for purposes other than funding unemployment
insurance. However, employee contributions could be used in
the manner proposed by the bill.
5:55:01 PM
Mr. Walsh responded that during the drafting process, the
sponsors had worked closely with Legislative Legal Services
(LLS) and it was important to note the bill referred to the
contributions as "special contributions." He emphasized
that the contributions were separate from the unemployment
insurance contributions currently made by employees. The
proposed employee and employer contributions would go
specifically toward paid parental leave. Under the bill,
the contributions would be accounted for separately from
the contributions held in UITF. He explained that the state
would administer the contributions as distinct revenue
streams. He stated that the creation of two new special
contributions had satisfied legal concerns.
Representative Galvin asked if the bill was also designed
as a preventative measure to support foster children in
bonding with foster parents in the same way as biological
children. She asked if there would be a period of time
before the foster child's placement to allow foster parents
to prepare, and if coverage for paid parental leave would
include foster parents.
Mr. Walsh responded that page 2 of the bill referenced one
of the qualifying purposes as the anticipated birth of a
child, but the bill also included language intended to
cover the period prior to adoption or foster placement. He
stated that the sponsors would be open to collaboration to
refine the language if needed to ensure the inclusion of
adequate protections and eligibility for foster parents.
Representative Galvin asked if any work had been done to
examine how beneficial the policy might be for recruitment
and retention and if other states had reported that
offering a similar leave benefit made the states a more
attractive place to live.
Mr. Walsh responded that Representative Hall's office had
referred to it as a "sticky policy" in terms of retention
and recruitment. He highlighted that a slide in the
presentation had referenced that the cost of reduced
recruitment and retention to a business was approximately
23.5 percent of an employee's salary. He explained that as
time progressed, businesses also experienced opportunity
costs related to vacancies. He added that the range of
costs could be as low as 23.5 percent of the position's
salary or as high as 150 percent.
5:59:03 PM
Representative Stapp expressed appreciation for the bill
but thought that some of the mechanisms involved would
require deeper consideration. He referred to subsection (b)
on page 5 of the bill and stated that he understood that
payments for paid leave could be made concurrently with
payments provided under a short-term disability policy or a
separate bank of paid time off (PTO). An employee could
collect paid parental leave in addition to disability
payments and PTO if the bill were to pass. He asked whether
the Division of Insurance (DOI) had been consulted. He
relayed that disability policies under federal law
typically reimbursed only 70 percent of an employee's
wages. He expressed concern that if an employee received
PTO, short-term disability, and paid parental leave
simultaneously, the total compensation could exceed the
employee's regular salary.
Mr. Walsh responded that DOI had not been specifically
consulted. He added that the bill's intent included
protections under subsection (c) to ensure that the total
amount received would not exceed the employee's prior
weekly earnings. He agreed that the topic would be
worthwhile to discuss.
Representative Stapp stated that he was uncertain whether
the bill violated any policy standards. He noted that
subsection (c) indicated that the total compensation could
not exceed the employee's average weekly earnings. He noted
that disability policy limits were intended to prevent
employees from earning more while not working than while
employed. He encouraged Representative Hall to further
consider how the mechanism would function in practice,
particularly within the private sector. He expressed
concern that private sector employers might not understand
that an employee receiving short-term disability could be
using PTO and claiming paid parental leave at the same
time. He reiterated that while it might not ultimately be a
problem, it was worth further investigation.
Representative Jimmie asked if Mr. Walsh could walk the
committee through how a paid parental leave program might
be particularly beneficial for families in rural Alaska
where access to childcare and support was limited.
Mr. Walsh responded that one of the more fascinating
benefits of the policy was how it related to rural Alaska.
He explained that the cost of infant childcare in urban
Alaska was already often high. In locations with no access
to childcare at all, the policy could help keep households
economically stable while parents made arrangements to
return to work. He added that it would also allow families
to benefit from important bonding experiences with their
newborn child, foster child, or adoptee.
Representative Jimmie asked for a more detailed explanation
of the childcare aspect. She noted that in many rural
villages, there were no daycare centers, and the only way
to obtain care was to pay family members or someone in the
community to take care of a child.
Mr. Walsh responded that the bill would allow a family unit
to receive income while taking care of a child rather than
seeking out expensive or unavailable childcare. He stated
that the bill would help new families figure out how to get
started.
6:04:30 PM
Representative Bynum remarked that the provisions in FMLA
already covered many of the same elements. He noted that a
major difference was that employers were not required to
pay employees under FMLA. He asked why the bill did not
simply mirror FMLA, with the addition of pay protections.
Mr. Walsh replied that the current bill leveraged elements
of existing infrastructure such as the unemployment
insurance system, which employers participated in
regardless of their size. He stated that FMLA applied only
to employers of a certain size or scale, and the bill
attempted to strike a balance between coverage and
feasibility.
Representative Bynum explained that under current law, many
employers required employees to use accrued sick leave and
vacation leave in conjunction with FMLA if the employee
wanted to receive pay. He noted that the bill appeared to
offer pay without requiring that employees first use
accrued leave. He asked how the bill might align or
conflict with federal law.
Mr. Walsh responded that he could further examine federal
law and follow up. He noted that language on page 5 of the
bill regarding coordination of benefits indicated that a
worker might be unable to roll over accrued time from year
to year. He stated that by utilizing contributions already
made by the employer and employee, the state could
potentially provide a more effective benefit for a lower
cost.
Representative Stapp complimented Representative Hall and
her staff on their breadth of knowledge and noted that the
topics they addressed were complex. He was impressed with
their understanding of the content. He referenced page 9 of
the bill which mentioned AS 23.10.700 through AS 23.10.795
regarding federal tax withholding. He explained that the
tax tracking type on a deduction typically determined
whether benefits were taxable. He stated that if premiums
were deducted on a pre-tax basis, the benefits were
typically taxable, but if the payroll deduction was made
after-tax, the benefits were typically not taxable. He
asked how the employer would make the deduction and whether
the deduction would be made on a pre-tax basis or on an
after-tax basis. He stated that the answer would likely
impact the tax tracking type.
6:09:23 PM
Mr. Walsh responded that he had been researching the issue
that morning. He reported that the Internal Revenue Service
(IRS) had issued recent guidance regarding the taxability
of similar compensation and the IRS was treating the
contributions the same way it treated unemployment
insurance contributions. He stated that the IRS was
considering the contributions to be taxable. He relayed
that he would likely need to follow up with more
information.
Representative Stapp thought that the issue should be
reviewed. He reiterated that the taxability of disability
insurance benefits was determined by whether contributions
were made using pre-tax or after-tax dollars. He referred
to page 10 of the bill regarding amounts deducted for
federal income taxes and withheld from paid parental leave.
He understood that subsection (3) on page 9 allowed an
individual to elect to have federal income tax deducted and
withheld from the individual's parental leave payment. He
thought that the language suggested the department would be
responsible for withholding federal income tax on behalf of
the individual and transmitting the withheld amount. He
expressed concern about whether the duty should be the
department's responsibility and wondered if it would be
better to make the individual responsible for the liability
if they received the benefit.
Mr. Walsh responded that the bill was based on a policy
that was built off of the functions of the unemployment
insurance system. He noted that Representative Stapp's
points were well-taken. He suggested that someone from the
department could provide more details.
Representative Stapp suggested that the sponsor and her
office examine the issue.
Co-Chair Foster asked who the best person would be to
respond.
6:13:00 PM
Ms. Harbour responded that she would need to review the
unemployment insurance statute. She explained that the
department issued 1099-G forms for unemployment benefits
and she was not aware of any tax withholdings on
unemployment benefits.
Representative Stapp noted that at the bottom of page 9,
the bill stated that the individual may elect to have
federal income tax deducted and withheld from the
individual's payment of paid parental leave in the amount
specified.
Representative Galvin stated that she believed the bill did
not apply to independently owned businesses or sole
proprietorships. She asked if she was correct.
Mr. Walsh confirmed that the bill did not apply to self-
owned sole proprietorships. He explained that during
discussion of earlier drafts of the bill, the department
had indicated that it currently lacked the infrastructure
to collect unemployment insurance contributions from self-
owned or sole proprietorships because the businesses did
not currently make contributions.
Representative Tomaszewski asked whether both parents were
covered under the bill and whether their marital status
affected eligibility.
Mr. Walsh replied that the marital status of the parents
would not matter. In a given household, either parent would
be able to file a claim, provided they had paid into the
benefits system. He stated that both parents would be
eligible for the benefit.
Representative Tomaszewski understood that the eligible
parent would be determined by who signed the paperwork at
the hospital if the parents were unmarried. [He received
nonverbal confirmation that he was correct.] He stated that
he also had a question for DLWD regarding the graphs on
slide 2 of the presentation and the unemployment insurance
stress test scenario of HB 193.
Mr. Weller confirmed that all of the graphs reflected
unemployment insurance financing, trust fund balance,
benefit costs, and average employer and employee tax rates.
Representative Tomaszewski stated that he understood from
the presentation that there were two different funds
involved: one for paid parental leave and another for
unemployment insurance. He had assumed that some of the
employer contributions went into UITF and some of the
contributions went into the fund for paid parental leave.
He asked for clarification on whether the funds were
separate.
Mr. Walsh responded that the funds were separate. He
relayed that slide 14 of the presentation depicted the two
funds separately and distinctly. He clarified that one fund
was for paid parental leave and the other was for
unemployment insurance. Under federal law, UITF could not
be altered because the state's participation in the federal
compact.
Representative Tomaszewski asked if the unemployment
insurance stress scenario reflected payments from the paid
parental leave program.
Mr. Weller responded that the figures reflected the
diversion of the employee contribution of 0.15 percent,
which otherwise would have gone into the trust fund. He
added that the chart also incorporated the combined 0.3
percent from employers allocated to the paid parental leave
program, and the additional 0.1 percent designated for the
STEP program. He stated that the scenario was modeled on a
recessionary period, although not all assumptions may have
been made explicit. He noted that the model accounted for
increased claims, changes to employment and wages impacting
tax revenues, and increases to the benefit schedule to $817
and the dependent allowance to $72, both of which were
adjusted for inflation.
6:19:06 PM
Representative Tomaszewski asked whether the modeled
scenario included paid parental leave payments or if it was
strictly a recession scenario.
Mr. Weller replied that the scenario only reflected the
impact of diverting revenue from unemployment insurance to
paid parental leave. He confirmed that benefit costs from
the parental leave program were not included in the modeled
scenario. The new revenue stream created by the paid
parental leave tax was modeled as diverted from the trust
fund, but the scenario did not include expenditures for the
new program. He reiterated that the only changes modeled
were the reduction in revenue to UITF, the increased
benefit schedule, and indexing.
Representative Tomaszewski asked if the only variable in
the scenario was the reduction in revenue.
Mr. Weller confirmed that the model incorporated all
elements of the bill as written. He stated that the only
impact on the paid parental leave program in the scenario
was the revenue diversion. All other impacts were specific
to the unemployment insurance financing system.
Representative Tomaszewski understood that the bill
included an increase in contribution rates intended to
fortify UITF. He observed that by 2029, the fund was
projected to drop by $700 million, resulting in increased
employer and employee contributions in 2028 and more
significantly in 2029. He stated that the scenario appeared
to show that the tax in 2030 would double, the employer
contribution would exceed 2 percent, and the employee
contribution would rise by about 50 percent from the
original level. He asked whether his interpretation was
accurate.
Mr. Weller responded in the affirmative. He explained that
the financing system responded to changes in cost and that
such increases would occur in any recessionary scenario,
regardless of the legislation.
Representative Tomaszewski stated that he would like to see
data from the COVID-19 period, which had served as a real-
world stress test for the fund. He thought that a
presentation on the data would demonstrate how the fund
reacted to a severe event during which time there was a
massive increase in unemployment. He thought the situation
was a valuable stress test that had already occurred and
the information would be helpful.
6:23:19 PM
Representative Bynum asked if it would be possible to
receive a history of the trust over the last five to ten
years in order to understand the rates that had been set to
maintain a funded trust. He explained that he asked because
the bill characterized the changes as a tax cut, but the
stress testing scenarios referenced by Representative
Tomaszewski indicated that there would be a cut that would
lead to significantly higher rates. He would like to see
the historical rates set prior to the bill's effective date
to better understand the rationale behind diverting
revenue, specifically the additional 0.2 percent that would
not be deposited into the trust. He questioned why the
revenue would be withheld when the result could be an
immediate drop in the fund followed by a sharp rate
increase to stabilize it.
Co-Chair Josephson asked for confirmation that
Representative Bynum's question was for the sponsor's
staff.
Representative Bynum responded in the affirmative. He
confirmed that he was requesting the history in order to
support a better evaluation of the fund's performance.
Mr. Walsh responded that he would work with the department
to obtain the requested information.
6:29:36 PM
Representative Hannan asked if Mr. Weller could review the
stress test graph. She thought a review of the factors that
led to the growth in the bar graphs in 2029 and 2030 would
be helpful now that she had a better understanding of the
bill.
Mr. Weller responded that he would be happy to walk through
all of the elements of the stress test. He explained that
the scenario applied in the stress test was more extreme
than the impact experienced during the COVID-19 pandemic.
He stated that he had modeled a threefold increase in
claimants lasting approximately three and a half years,
combined with employment and wage changes that matched the
percentage changes observed during the COVID-19 period. He
stated that the system was heavily stressed in the model in
both duration and intensity.
Mr. Weller stated that the reserve ratio had been
approximately 4.47 percent at the beginning of 2025 and was
the figure used to calculate tax rates for the current
year. He noted that the ratio was expected to reach 4.8
percent for the 2026 rate-setting year, and the stress test
assumed the bill would take effect at the beginning of
2026. He modeled an increase in the maximum weekly benefit
amount from $370 to $817 and an increase in the dependent
allowance from $24 to $72 per dependent, with a maximum of
three dependents per claimant. He added that he included
the 0.15 percent diversion from the employee contribution
to the parental leave program, the 0.2 percent diversion
from the employer contribution to the parental leave
program, and the additional 0.1 percent that would be
diverted to STEP.
Mr. Weller stated that benefit costs began at approximately
$45 million in the current year and increased to $350
million by 2029. He emphasized that the figures reflected
significantly higher benefit costs than those that had
occurred during the COVID-19 period on a single-year basis.
He stated that the resulting reserve ratios fell
substantially but that the system demonstrated a strong
capacity to absorb variation in benefit costs. He explained
that the financing structure incorporated both benefit
costs and a statutory reserve ratio target that had existed
since the early 1980s. He noted that the target had
sustained the fund through multiple economic downturns,
including the late 1980s and 1990s recession, the 2000s
recession, the 2008 financial crisis, and the COVID-19
pandemic.
Representative Hannan shared her understanding that the
scenario assumed all provisions of the bill had taken
effect and that the model used three times the number of
claimants over a three-year period before additional funds
needed to be added back into the trust.
Representative Galvin asked for clarification on whether
the 0.35 percent and 0.10 percent figures reflected current
contributions or if the contributions would be increased by
the bill. She asked for an explanation of the functions of
STEP and TVAP because some members might not be familiar
with the programs. She expressed a desire to ensure that
the programs were protected.
Mr. Walsh replied that the graph on slide 13 displayed the
current structure of the state's unemployment funding
system. He relayed that STEP currently received a 0.1
percent employee contribution and TVEP received an
additional 0.15 percent contribution, totaling 0.35
percent. He stated that the bill proposed an additional 0.1
percent contribution to STEP, as illustrated on slide 14.
He explained that the increase was intended in part to help
train individuals and return them to the workforce.
Representative Galvin understood that STEP would receive
increased funding and the goal was to provide more
opportunities to help train Alaskans for employment.
6:32:29 PM
BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER (via
teleconference), stated that three fiscal notes were before
the committee. The first was a previously published zero
fiscal note [FN1] from the Department of Administration
(DOA) with OMB component number 59 and control code kvtiv.
He explained that DOA had indicated that it could absorb
all additional workload with existing resources.
Mr. Anderson stated that the next fiscal impact note was
from the Department of Labor and Workforce Development
(DLWD) with OMB component number 2276 and control code
svTSY. He stated that the fiscal note requested FY 26
appropriations of $379,500 for personal services, $137,400
for services, and $8,200 for commodities, for a total
operating cost of $525,100. He noted that the source of
funds would be designated general funds (DGF) temporary. He
explained that the STEP fund would reflect a $10 million
shift and that there would also be an increase of $35
million in DGF temporary. He relayed that the department
had acknowledged that the bill would require regulation
changes. He explained that the $379,500 annual personal
services costs would support various staff and the $137,000
services cost for FY 26 would drop to $101,400 annually
beginning in FY 27. He explained that the funds would
include one-time developer costs, testing, remediation,
production, and implementation in FY 26, as well as ongoing
information and technology maintenance in subsequent years.
He stated that the $8,200 in commodities for FY 26 would
decrease to $1,200 annually beginning in FY 29. The $1,200
in commodities accounted for supplies and equipment and
$7,000 in FY 26 and in FY 29 would support the replacement
of old computers.
Mr. Anderson reviewed the last fiscal impact note from DLWD
with OMB component 344 and control code hdCol. He detailed
that the note reflected an FY 29 appropriation request of
$743,300 for personal services, $344,300 for services,
$18,000 for commodities, and $12,479,300 for grants and
benefits, for a total operating cost of $13,584,900. He
elaborated that all funds would come from fund source 1252,
DGF temporary. The fiscal note reflected an increase of
five positions and a projected revenue increase of $15
million. He relayed that regulation changes would be
required to implement the provisions reflected in the
fiscal note. The cost of personal services included two
accountant technicians, one project assistant, one appeals
officer, and one hearing officer. The $344,300 in services
for FY 26 would drop to $125,000 in future fiscal years. He
noted that the FY 26 amount reflected the cost of modifying
in-house programs to track and administer claims. He added
that the $18,000 in commodities would be required annually.
Finally, the $12,479,300 in grants and benefits rounded out
the total.
6:38:00 PM
AT EASE
6:41:54 PM
RECONVENED
Co-Chair Foster noted that there was an updated fiscal
note.
Mr. Anderson explained that there was a new fiscal note
submitted in place of the final fiscal note for OMB
component 344. There would be a new control code and
substantial cost differences that was forthcoming. The
updated fiscal note would total closer to $34.4 million. He
noted that he would distribute the updated fiscal note to
committee members and it would be reviewed at any future
hearings for the bill.
HB 193 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster relayed that the committee was scheduled to
hear HB 104, but due to time limitations it would hear the
bill the following day.
HOUSE BILL NO. 96
"An Act establishing the Home Care Employment
Standards Advisory Board; relating to payment for
personal care services; and providing for an effective
date."
6:44:25 PM
REPRESENTATIVE MIKE PRAX, SPONSOR, introduced the bill. He
stated that Alaska faced an increasing number of senior
citizens and other citizens needing home care and services,
and that the need was outpacing the supply of available
providers. He explained that the increase was one of the
drivers behind the legislation. The bill was also being
driven by a proposed change in federal Medicare regulations
that would require an advisory board to assist in the
rebasing of the rates. He stated that Mr. Tony Newman,
Director of Senior and Disabilities Services, was present
to assist with questions, in addition to other individuals
available on the line to answer detailed questions. He
summarized that the bill created an advisory board,
described the terms of office for board members, the
board's composition, and its powers. He added that the bill
required the board to provide a biannual report.
6:46:48 PM
Co-Chair Foster relayed that the committee would hear
invited testimony.
6:47:16 PM
ALEXIS RODICH, RESEARCH AND POLICY DIRECTOR, SERVICE
EMPLOYEES INTERNATIONAL UNION 775, TACOMA, WA (via
teleconference), stated that she was the director of the
Service Employees International Union (SEIU) 775, which was
referred to as the Alaska Caregivers' Union. She explained
that the union represented more than 55,000 direct care
workers in Washington, Montana, and Alaska. She stated that
the union was deeply committed to a strong and sustainable
system of long-term services and supports in Alaska and it
supported HB 96. She relayed that Alaska had been
experiencing a major demographic shift that was increasing
demand for care, particularly for higher-skilled care. Over
the past decade, the state had one of the fastest-growing
senior populations per capita in the nation and the trend
was expected to continue. She noted that older Alaskans and
Alaskans with disabilities were living longer, which was a
positive development.
Ms. Rodich remarked that with age came higher acuity and
more complex care needs. She stated that many caregivers
working with the union had children with developmental
disabilities who were living longer than expected. The
caregivers were concerned about what would happen when they
were no longer available to provide care to patients. She
added that Alzheimer's disease and other forms of dementia
were also becoming more common, which created additional
demand for care services. Given the demographic changes, it
was unsurprising that DLWD had predicted that home care
would be one of the fastest-growing and most in-demand
occupations in Alaska. However, the number of potential
caregivers had declined from a ratio of 15 to 1 in 2018 to
a projected 7 to 1 ratio by 2030. She noted that the
shortage was even more acute in rural and remote areas of
the state.
Ms. Rodich stated that a higher concentration of older
Alaskans lived in Southeast Alaska and on the Kenai
Peninsula than in other parts of the state. She emphasized
that older individuals had built lives and families and did
not want to move to Anchorage or out of state to access the
care they needed as they aged. The union did not want
individuals to be forced into institutional or congregate
care settings, which could cost the state hundreds of
thousands of dollars more per year per person. She warned
that the workforce crisis would continue to worsen and
would become significantly more costly unless the state
took steps to build a strong, well-trained, professional
direct care workforce. She stated that HB 96 helped the
state build its workforce in two ways.
Ms. Rodich stated that the bill ensured the state would
maximize the Medicaid personal care rate by establishing a
labor rate for personal care services. She explained that a
percentage of the Medicaid rate that agencies received for
personal care assistant services must go directly towards
pay and benefits for direct care workers. She noted that in
Alaska, nearly all personal care services were provided
through a consumer-directed "agency with choice" model, in
which agencies had far fewer responsibilities than under a
traditional agency model.
Ms. Rodich stated that under the agency with choice model,
the consumer was responsible for recruitment, scheduling,
training, and hiring, rather than the agency. She asserted
that it was reasonable that a 70 percent share of the
Medicaid rate should go towards paying for services rather
than towards agency overhead. She added that the bill also
created greater transparency in how the Medicaid personal
care rate was being used.
Ms. Rodich relayed that in recent years, many caregivers
had traveled to Juneau, met with legislators, and provided
public testimony to describe how the Medicaid rate
suppressed their wages. The low rate made it impossible for
caregivers to make ends meet without taking on extra jobs,
juggling bills, or going into debt.
6:51:47 PM
Ms. Rodich stated that the legislature responded by
enacting multiple rate increases, including two that
included legislative intent for part of the increase to go
toward caregiver pay and benefits. She shared that some
caregivers received wage increases of $2 to $4 per hour,
which provided significant relief for workers previously
earning $16 per hour. However, many other caregivers did
not receive such increases.
Ms. Rodich continued that no one had a clear understanding
of how agencies allocated the rates and increases because
there did not appear to be consistent data collection or
analysis. She explained that the second way the bill would
strengthen the long-term care workforce was by creating the
Workforce Standards Advisory Board (WSAB). The proposed
board was modeled after similar entities in Nevada and
Washington. She explained that the board would bring
together stakeholders most impacted by the home care
system, including providers, caregivers, clients, and DOH
to identify and plan for long-term workforce needs and
asses whether the rates were adequate to meet the needs.
She explained that the board would create a mechanism for
each group of stakeholders to work together to determine
priorities, recommend solutions, and evaluate whether the
state was adequately resourced and prepared for the future.
Ms. Rodich emphasized that demographic changes had already
begun and the caregiver shortage was already apparent. The
committee had heard painful testimony from caregivers who
had been required to move loved ones to Anchorage to access
adequate care, or had left their jobs to provide unpaid
care in order to qualify for paid services. She asserted
that HB 96 represented an opportunity for Alaska to take
action to ensure that Alaskans in need of care both now and
in the future received less costly care.
6:53:46 PM
Representative Jimmie asked for more information about
congregate care settings being more costly to the state
every year.
Ms. Rodich responded that a 2019 study conducted by DOH
found that care provided in the home cost 59 percent less
than services delivered through intermediate care
facilities for individuals with intellectual or
developmental disabilities. The same study found that home
care services could cost 45 to 90 percent less than nursing
home care for seniors and people with disabilities. In FY
24, the average cost per individual for in-home personal
care services under the state plan was $13,265, compared to
$143,000 for care in nursing homes.
Ms. Rodich emphasized that the difference in cost was
significant and investing in home care not only resulted in
substantial savings for the state but also positively
impacted the economy. There was a well-known study by
LeadingAge which found that each additional dollar paid to
a direct care worker had a multiplier effect in the
community ranging from 1.6 to 2.1. Investment in home care
could have a considerable economic benefit across various
communities due to the demand for care workers throughout
the state.
6:55:50 PM
Representative Jimmie noted that she had a question for Mr.
Tony Newman. She asked what options existed for individuals
in rural Alaska who needed care, and if the needs were
currently being met.
TONY NEWMAN, DIRECTOR, DIVISION OF SENIOR AND DISABILITY
SERVICES, DEPARTMENT OF HEALTH, confirmed that there was a
greater need for home care services in rural Alaska,
including personal care and residential habilitative
services such as group homes. He stated that he did not
have specific figures available at the moment but the
department was currently pursuing several initiatives.
During the previous legislative session, a bill had passed
establishing a new service known as adult host home care
[SB 57, passed in 2023], which allowed for the development
of settings that were less intensive than assisted living
homes and made it easier for smaller home-based settings to
achieve licensure. He offered reassurance that there were
ongoing efforts to develop the services that were necessary
to allow individuals to stay in their rural communities as
they aged.
Mr. Newman stated that regulations for the bill passed in
2023 had been under development. He explained that the
department had created an allowance for legally responsible
individuals to be paid to provide certain kinds of care,
primarily personal care. He clarified that a legally
responsible individual who normally would not be permitted
to receive payment for providing care, such as a parent or
spouse, would be allowed to do so under the bill. He added
the provision was introduced during the COVID-19 pandemic
and the department had continued the payment allowance
beyond the conclusion of the public health emergency. The
department was in the process of developing regulations to
make it a permanent feature of Alaska's health care system.
He reiterated that the provision would enable individuals
to access services in their home communities without
needing to move to a larger city. He noted that the
department was taking a number of steps to better reach
rural Alaska.
Representative Jimmie commented that she hoped the policy
would become permanent. She relayed that it was difficult
for elders in rural communities to leave their villages and
familiar surroundings and culture, including traditional
foods and interactions with family. She described the
experience of her aunt, Bessie, who had participated in the
program, and noted that before learning its official name,
she had referred to it as "Auntie Bessie Care." She
expressed her support for the continuation of the program
in Alaska.
6:59:35 PM
Co-Chair Foster asked for a review of the fiscal note.
BRODIE ANDERSON, STAFF, REPRESENTATIVE NEAL FOSTER,
reviewed the fiscal impact note from DOH, OMB component
2663, control code poXlb. He stated that the fiscal note
included FY 26 appropriations as follows: personal services
at $132,300, travel at $2,000, services at $24,000, and
commodities at $5,000, for a total operating cost of
$163,300. He explained that the amount would be funded
through $81,600 in federal receipt authority and $81,700 in
general fund match.
Mr. Anderson continued that in FY 26, the department
planned to add one support position and in FY 27, a second
position would be added, which would increase personal
services to $270,200. He stated that travel would remain at
$2,000, while services would increase to $48,000 and
commodities would increase to $7,000. He reported that the
total operating cost in FY 27 would be $327,200, with
corresponding increases to both general fund and UGF match.
The fiscal note also required regulation changes by the
department. He stated that one full-time health program
manager would be hired in FY 26 and a second would be hired
in FY 27. He explained that services and commodities costs
would increase accordingly, and that there would be one-
time commodity costs of $3,000 in each year the positions
came on board.
7:02:19 PM
Representative Johnson explained that she had known an
elder in her community who had since passed away, along the
elder's husband. Both individuals were retired teachers and
had carried some type of private insurance through
employment. Although the individuals had received home
health services, the services were not Medicaid-funded but
were provided through a separate program. She relayed that
the elder had expressed concerns over the years about the
lack of training received by the attendants. She noted that
even though the elder had been in her 80s, she had been
afraid to leave her husband alone with an attendant, as the
attendants had not been trained in tasks such as helping
her husband get up or walk with a gait belt. She asked
whether the bill would apply to privately funded services
or if it was limited to Medicaid-funded care.
Representative Prax responded that the bill applied only to
Medicaid-funded services. However, he thought it was
reasonable to expect that clearly defined Medicaid
standards might extend to other types of care, including
private services. He reiterated that the bill specifically
applied to Medicaid-funded care.
Representative Johnson noted that she had looked into the
matter years ago and found the lack of standards for
privately funded care to be a challenge. She noted that
there had been no clear route to implementing standards
because the program had not been state-funded. She asked
whether a department representative might be able to
clarify further.
Representative Prax responded that the bill would likely
lead to more standardized care due to the clearer
definitions provided for Medicaid services. He noted that
some individuals accessed services through long-term care
insurance, which was often unaffordable. He stated that
many people were ineligible for Medicaid and lacked long-
term care insurance. The bill did not directly address the
gap but might eventually benefit individuals who were
ineligible for Medicaid.
Representative Johnson thought that the issue deserved
further examination. She stated that regardless of whether
care was funded by Medicaid or long-term care insurance,
the system lacked adequate review of how to ensure that in-
home care worked effectively. She emphasized the importance
of trained individuals being available to provide care, but
she acknowledged the need to start small before progressing
to broader reforms.
7:07:03 PM
Representative Bynum thought that the bill addressed a
genuine need and that the investment would result in a
return. He expressed confidence that Representative Prax
had thoroughly researched the issue. He asked what would
happen if the bill passed but the positions outlined in the
fiscal note were not filled. He asked how it would affect
the state's ability to implement the bill.
Representative Prax responded that if the bill were not
funded in the current fiscal year, it would delay the
development of regulations. He added that the impact would
depend on the timing and content of forthcoming federal
regulations. He stated that the delay could hinder efforts
to comply with expected federal requirements.
Representative Bynum asked if DOH could shift its
priorities to implement the bill in the event of a budget
shortfall. He thought the bill should be a high priority.
He acknowledged the state's tight budget and remarked that
departments often reprioritized when presenting fiscal
notes.
Representative Prax suggested that Mr. Newman respond to
the question.
Mr. Newman responded that a new federal rule called the
Medicaid Ensuring Access Rule required the state to
establish an advisory board similar to the one proposed in
the bill. The rule also mandated that by 2030, personal
care workers and other home health care workers receive 80
percent of the Medicaid rate paid to agencies providing the
services. He noted that the advisory board would need to be
established by July of 2026. If the bill did not pass and
the department could not hire the necessary staff, the
department would still try to establish the board in time
to meet the federal requirement. He relayed that additional
guidance from the federal government on how to implement
the various provisions of the rule was anticipated to be
forthcoming. He added that immediate efforts would focus on
establishing the advisory board and that the 80 percent
reimbursement rule would be phased in by 2030.
Representative Galvin noted that the bill proposed a 70
percent reimbursement but the federal requirement was 80
percent. She asked if the intent was to move gradually
toward the federal standard.
Mr. Newman responded that the bill included a phased
approach, with a 70 percent benchmark by 2026 and an 80
percent benchmark by 2036. He noted that the federal
government currently required 80 percent by 2030, but the
bill allowed for a longer implementation period.
7:12:18 PM
Co-Chair Foster invited Representative Prax to make closing
comments.
Representative Prax reiterated that the bill represented a
worthwhile effort, and he thought there would be financial
benefits to the state. He acknowledged that it was
difficult to make definitive predictions but there appeared
to be significant space between the level of service
offered by personal care services and that of skilled
nursing facilities. He asserted that if the bill succeeded
in increasing the supply of personal care services, there
would be a net savings to the state due to a reduced
reliance on more expensive skilled nursing care.
Representative Prax clarified that the bill aimed to
support appropriately skilled workers. He relayed that the
bill did not require personal care workers to be licensed
practical nurses or have comparable qualifications. He
emphasized that the goal was to deliver effective and
appropriate services. The bill would improve service
delivery, especially in rural areas, and generate long-term
cost savings.
Co-Chair Foster announced that the amendment deadline for
HB 96 was Saturday, May 17, 2025, at 5:00 p.m. He noted
that there could be some flexibility with the deadline.
HB 96 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the meeting agenda for the
following day.
ADJOURNMENT
7:15:42 PM
The meeting was adjourned at 7:15 p.m.