Legislature(1995 - 1996)
05/09/1996 02:07 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
JOINT HOUSE AND SENATE LABOR & COMMERCE STANDING COMMITTEE May 9, 1996 2:07 p.m. HOUSE MEMBERS PRESENT Representative Pete Kott, Chair Representative Norman Rokeberg, Vice Chair Representative Brian Porter Representative Jerry Sanders Representative Beverly Masek Representative Kim Elton HOUSE MEMBERS ABSENT Representative Gene Kubina SENATE MEMBERS PRESENT Senator Tim Kelly, Chair Senator John Torgerson, Vice Chair SENATE MEMBERS ABSENT Senator Mike Miller Senator Jim Duncan Senator Judy Salo OTHER HOUSE MEMBERS PRESENT Representative Gail Phillips, Speaker Representative Bill Williams Representative Caren Robinson OTHER SENATE MEMBERS PRESENT Senator Loren Leman Senator Robin Taylor COMMITTEE CALENDAR - MARINE HIGHWAY LABOR CONTRACTS; SERVICE DISRUPTION OF MAY 8 WITNESS REGISTER GARY HAYDEN, Director Marine Highway System Department of Transportation & Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 Telephone: (907) 465-8827 POSITION STATEMENT: Presented an overview of the Marine Highway System and the service disruption of May 8 JANET PARKER, Deputy Director Division of Retirement & Benefits Department of Administration P.O. Box 110203 Juneau, alaska 99811-0203 Telephone: (907) 465-4470 POSITION STATEMENT: Explained PERS Retirement System MIA DOYLE Labor Relations Section Department of Administration P.O. Box 110220 Juneau, Alaska 99811-0220 Telephone: (907) 465-4404 POSITION STATEMENT: Explained audit completed by the Office of Management and Budget ACTION NARRATIVE TAPE 96-44, SIDE A Number 001 The Joint Meeting of the House and Senate Labor & Commerce Standing Committees was called to order by Chairman Tim Kelly at 2:07 p.m. Due to a tape machine malfunction, Chairman Kelly recessed the meeting. CHAIRMAN KELLY called the meeting back to order and noted that each committee member had before them a copy of the Research Report, Alaska Marine Highway System, Comparative Compensation Analysis prepared by the Office of Management and Budget, dated October 1994. Chairman Kelly asked Gary Hayden to begin his statement. Number 026 GARY HAYDEN, Director, Marine Transportation System, Department of Transportation & Public Facilities, prefaced his statement by saying the Alaska Marine Highway System, he and his staff would like to cooperate fully with the committee. He noted that he has a tendency to be somewhat factual and short and doesn't give long explanations. He asked committee members not to misconstrue that other than maybe a bit of cautiousness on his part, and invited questions from the committee. MR. HAYDEN: To begin, yesterday at approximately 12:40, the Port Captain notified me that he had a problem with filling out the crew on the Malaspina. The Malaspina was scheduled to leave Auke Bay at 11:45, so at that point it was delayed approximately one hour. The Malaspina was scheduled to go from Auke Bay to Haines. It had 146 passengers on board, they had 81 vehicles and they had a crew of 47 people. At 11:30, the captain of the vessel called the port captain and reported that five employees had just walked off the vessel reporting that they were sick and it appeared to him that it was a work walk-out. We proceeded to try to fill out the complement of crew. In this particular instance, manning the ship is dictated primarily by our Coast Guard license. On the Malaspina, we are required to have 26 employees with lifeboat certificates and in addition to that, our certificate requires that there be a complement of other designated crewmen. And of those, there are to be four able-bodied seamen, one chief engineer, two assistant engineers and two oilers. At the time that the employees became ill and left the vessel, we were short two able-bodied seamen, one junior engineer and two oilers. We upgraded people from the Stewards Department who could meet the requirements, who had a card to be able-bodied seamen. So, we solved the two able- bodied seamen requirement and brought the complement back up to four. However, that left us short in the engineering in that we had to find oilers. An oiler is an endorsement that's on the employee's Z-Card that he gets from the Coast Guard saying that he is qualified to act as an oiler or work in the oiler capacity. We -- our dispatch group - there are three employees who work dispatch - as it turned out this was just about the lunch hour, so we had to track them down, put people to work and we found an oiler who had just come in and applied for a job, so we hired one person right off the street, took him out of class at Centennial Hall and drove him to Auke Bay. The other oiler we contacted, found he was ready to go to work lives in Haines, we may have contacted him about 12:45, almost 1:00. The person caught the next available flight from Haines. We picked him up at the airport and drove him out to the ship. Then we were still hunting for a junior engineer at that point. We found one who could act as a relief on the Malaspina, had previously worked on the Malaspina, and we dispatched that person to the ship. In effect, within several hours we were able to round up enough crew and the vessel left Auke Bay, heading north, at approximately 3:40. So, we had almost a four hour delay in the sailing of the vessel. Number 074 MR. HAYDEN: At that point, we began trying -- our number 1 mission at that point was to get the vessel underway, get the crew complement going and then figure out what happened after that. So after that, we began assembling an investigation. We asked -- one of the first questions asked was: Was this related to legislative action or the latest legislation inaction of the previous day? And all indications were people were not saying that it was directly related; however, it was very unusual that we had five employees get off the vessel 15 minutes before sailing. Two of the employees reported back pains; three of the employees report flu-like symptoms. Two of the employees had been on the vessel since 10:30 - we had a crew change that day and the other three employees had been on for about a day and they got on in Ketchikan the previous day. We checked and the employees had filled out an unfit for duty slip and turned it in to the purser. They followed the proper procedure that they were to do on the walking off the vessel. We have a procedure at Marine Highways that if a vessel is -- if an employee is sick, they are to get an unfit for duty slip from a doctor. I have not seen those at this point from these employees. We'll be asking them to give us that. Because of the unusual sequence of events and the significant delaying of the vessel, the inconvenience to the public and just the circumstances surrounding this, we chose yesterday afternoon to put the employees on leave without pay, pending an investigation. We sent them a letter which they should have received today and gave a copy to the union today, stated the reasons why and we also laid out what the process would be for the investigation, reiterated some of the employees' rights under the personnel rules for participation in the investigation and any subsequent progressive disciplinary action. So that brought us to today. This morning we put together an investigation team and I believe -- I haven't had a chance to speak with Mr. Cummings yet, but I believe we began our investigation this morning. We intended to -- three of the employees flew back to Ketchikan yesterday, so we'll be traveling to Ketchikan tomorrow afternoon to interview those people. Number 120 CHAIRMAN KELLY: Questions? Representative Porter. Number 122 REPRESENTATIVE BRIAN PORTER: Thank you, Mr. Chairman. In looking at the IBU labor agreements, there's a provision that -- I'm taking it a little bit out of context, but it basically provides grounds for immediate discharge, leaving the vessel without being properly relieved or without permission. Were these employees IBU members or were they... MR. HAYDEN: Yes, they were all IBU members. Number 130 REPRESENTATIVE PORTER: If the investigation establishes that this was a work stoppage as opposed to five illnesses, would you interpret that provision to mean that these employees would be discharged? MR. HAYDEN: That's definitely one of the options for the progressive disciplinary action. In our letter to the employees that was carbon copied to the union, we set out three reasons for our suspension and I believe each one of those were supported. However, under the terms of that contract, I believe that the employees at the time that they filled out the unfit for duty slip followed the procedure that was laid out on the ship. Now it's a matter of whether or not that was an accurate statement, whether or not the employees were sick or whether or not they walked off. REPRESENTATIVE PORTER: Well one of the other provisions, again under -- shall be grounds for immediate discharge is falsifying records. If the investigation determines that this wasn't an illness but was a work stoppage, wouldn't that be falsifying records? MR. HAYDEN: Yes sir, it sure would. CHAIRMAN KELLY: Any questions about that particular incident? Number 149 REPRESENTATIVE PETE KOTT: Mr. Chairman -- Gary, you mentioned these five individuals were placed on administrative leave without pay. MR. HAYDEN: That's correct. REPRESENTATIVE KOTT: Do they have available as an option to file an annual leave or a sick leave slip that would in fact make them whole? MR. HAYDEN: No, they do not. Not under the suspension that we gave them. One of the employees did come into the office yesterday and filed for a draw on previously earned wages from a voyage that had already been taken place that he hadn't been paid for and we paid him $450. CHAIRMAN KELLY: Gary, how much did these five employees make last year, for example, in 1995? MR. HAYDEN: Okay, let me flip through some paper here. I just ran some numbers hurriedly this morning and I can give you -- I'll just call them ABs for able-bodied seamen, employee A, B, C, D. Employee A, who was an able-bodied seaman received compensation of $48,254 and I figure a benefit package of 37.1 percent; that would bring that employee up to $66,156. The able-bodied seamen position B earned $30,968, with benefits is $42,458. The oiler position was $42,601 and with benefits $58,405. The oiler employee D earned $42,132 and with benefits $57,763. The oiler employee E received $25,489 and with benefits that comes to $34,946. Number 183 REPRESENTATIVE KOTT: Thank you, Mr. Chairman. Gary, were these employees employed year-round last year? The numbers that you are conveying to us, there seems to be some substantial difference in some of them. I'm just wondering if they were employed all year. MR. HAYDEN: Employee A worked 1,256 hours; Employee B, 1,416; C was 1,838; D was 1,844; and E was 1,084. So it would appear that they had worked most of the year. Differences come from the type of pay that they receive.... CHAIRMAN KELLY: Thirty-two weeks. MR. HAYDEN: There's regular time, there's overtime, vacation, sick, there's holidays with two classifications of holiday pay - regular pay and overtime - there's early callback, there's minimum guarantees, there's unearned wages, there's split wages, there's travel, and I'll go into those compensation packages, plus uniform allowance. CHAIRMAN KELLY: Before we do that - Senator Leman. Number 205 SENATOR LOREN LEMAN: Thank you, Mr. Chairman. Gary, under normal spread of hours, I think full time employment is 2,088 hours for a year and none of these were at that. What is considered full time employment for the Marine Highway System for these type of employees? How many hours a year would be considered full time? MR. HAYDEN: Senator Leman, I don't have a general number on that. Each contract -- to back up three steps. There are seven unions that the Marine Highway System operates with; four of those are on shore, three of them are on the ships. On the ships, each contract is unique and different and has different rates. Some people in the Southeast work a week on and a week off and the people in Southwest work a month on and a month off or they may work four months on, four months off and leave accruals are different. There's a two-tiered leave accrual rate for employees hired after a certain date, so it's difficult for me to generalize as to what the annual number of hours for a full time employee is. I think we'd almost have to look at positions either in Southeast or in the Southwest. SENATOR LEMAN: In your opinion, would any of these be full time employees? MR. HAYDEN: Yes. SENATOR LEMAN: Especially the ones who are at 1,800 hours? MR. HAYDEN: Yes. CHAIRMAN KELLY: Chairman Kott. Number 225 REPRESENTATIVE KOTT: Thank you, Mr. Chairman. Gary, were any of these individuals involved in this incident non-Alaskans? MR. HAYDEN: It's my understanding that one of the people had a Bellingham mailing address; however, I do have a contact for that person here in Juneau. So, one of the employees, I learned this morning, I guess I have a question as to whether he's an Alaskan resident or Bellingham resident. Number 231 CHAIRMAN KELLY: Gary, what about an oversight of the wage and salary structure, and vacation and benefit policies in the Alaska ferry system. MR. HAYDEN: Would you like an overview of that? Okay. Can I invite Bruce Cummings to the table with me? As I said it's going to vary depending on which union you want to talk about -- IBU contract? CHAIRMAN KELLY: Well, I guess all the union contracts on the ferry system. Did you bring a list of the amount of money made by each person in the ferry system last year? MR. HAYDEN: We paid out $50 million plus in personal service costs on the Marine Highway System of which about 11 was on shore, so vessel employees earned approximately $39 million in wages. CHAIRMAN KELLY: What are your highest employees and what kind of money do they make? What did your top five employees make last year? MR. HAYDEN: I have a run of average cost by position and I can give you -- let's talk about average cost by position and then I can go look at another spreadsheet that's a run by employees. The average earnings of a master was $90,000 plus there's some overtime in addition to that. I roughly looked at a run of overtime and took average full time equivalents who were getting paid overtime and came up with about $99,000 for an average of a master. Now that varies all the way down to a -- let's see, it looks like a mess steward would be the lowest employee in the IBU - average earnings there were $44,883 and overtime of another - $9,655 for overtime average for a mess steward. REPRESENTATIVE ROKEBERG: Is that fully loaded with benefits? MR. HAYDEN: Yes, that includes benefits CHAIRMAN KELLY: Senator Torgerson. SENATOR JOHN TORGERSON: That was my question. REPRESENTATIVE ROKEBERG: And the COLD, too? MR. HAYDEN: Yes. Number 268 CHAIRMAN KELLY: Then the range of onboard ferry workers is between $52,000 and $99,000? MR. HAYDEN: On an average. When we go look at individual different employees that number definitely changes. There are people out there making a lot less than what the average I quoted you was. There are people who are working seasonally who make less than $25,000. CHAIRMAN KELLY: Representative Rokeberg. REPRESENTATIVE ROKEBERG: Thank you, Mr. Chairman. Sir, could you - with those two top ranges, could we go back to Senator Leman's question regarding the number of hours for those two positions then? MR. HAYDEN: I had 33,590 hours worked by masters, approximately 15.4 people working that, so that's 2,181 hours for a master, excluding the overtime. Masters only receive overtime when they are in the shipyard. They receive other compensation - nonwatch pay in terms of the contract. In the Stewards Department, there were 168,386 hours worked by 77 employees, so that's again 21,886. CHAIRMAN KELLY: I'm having a little trouble reconciling these numbers because the five folks that were involved in that incident yesterday were all making in the 40s and yet you're saying the lowest paid job is $44,080 plus $9,000 overtime, so I'm having trouble reconciling in my mind. MR. HAYDEN: Senator, the numbers that I just gave you between the 99 and 59 are averaged of all the hours worked and the salaries paid out. So that's an average, that's not a spread. That's an average of the numbers. And then the numbers for the employees were the actual I pointed out. Let me look to see if I brought my spreadsheet that had all of the employee's compensation for everybody - which I don't think that I did -- I didn't bring the information that has all of the employees' wages and... CHAIRMAN KELLY: So is it a fair statement to say that the jobs on board the Alaska Ferry Highway System pay between $59,000 and $99,000 a year? MR. HAYDEN: No, sir. They pay between $25,000 and $109,000 depending on what position.... CHAIRMAN KELLY: $25,000 to $99,000. MR. HAYDEN: $109,000. CHAIRMAN KELLY: $109,000. MR. HAYDEN: Some masters make more than what this average I quoted you was. CHAIRMAN KELLY: Who only gets $25,000 a year full time? MR. HAYDEN: Oh, those full time equivalents? Those are people who are working seasonal jobs, not full time working year-round. CHAIRMAN KELLY: Full time, year-round jobs - what's the range? MR. HAYDEN: Okay, probably $35,000 to a high range of $110,000. REPRESENTATIVE PORTER: $110,000? MR. HAYDEN: Yes. CHAIRMAN KELLY: Okay, let's talk about shifts for your various workers. How are they scheduled, how do they work, that type of thing? MR. HAYDEN: Okay, a junior engineer works - 12 hours is one day's worth of work. They stand watch and watch is divided up into 6 hours on and then 6 hours off. So, within a 24-hour day, they work 12 hours. They work that for 7 consecutive days. They work a minimum of 84 hours. So, a week's worth of work is 7-12 hour days. CHAIRMAN KELLY: Are they paid hourly or do they get overtime after.... MR. HAYDEN: They are paid hourly and they receive overtime after 84 hours. CHAIRMAN KELLY: After 84 hours. MR. HAYDEN: After 84 hours - or excuse me, or if they get -- work more than 12 hours within one 24-hour period, then they get overtime for that. If they're off of watch, like an AB is off his 6 hours and gets called out to tie up the vessel, he gets a minimum call out of 2 hours. CHAIRMAN KELLY: Okay, so they work a week and they're off a week. On the week that they're working, they're on board the ships 24 hours a day. MR. HAYDEN: That's correct. Number 330 CHAIRMAN KELLY: Do they pay room and board? Do they pay for their own meals or how is that handled? MR. HAYDEN: No sir, under the Jones Act, mariners are to receive food - we're to feed them. I looked up last summer when we were having these discussions and we're to provide them a minimum of 2,000 calories a day. It's spelled out in federal law. So no, the employee does not pay for that; the Marine Highway System provides room and board. CHAIRMAN KELLY: Vacation. How much vacation time do they get and do they have also sick leave separate from vacation? MR. HAYDEN: There's a two-tiered system. Let's just talk about IBU employees (indisc.-paper shuffling). Okay, for employees who are under the most recent schedule, it varies by the years of service. For the employee who has one to two years, they get 84 hours... CHAIRMAN KELLY: I'm sorry, Gary, they get how many? MR. HAYDEN: They get 84 hours, so they get one week of annual leave. That varies up to -- there's a step of 2 to 3; 3 to 4; 4 to 5; and then 5 or more. Those employees who receive five or more years of service - of continuous service - would receive 420 hours, which is equivalent to 5 weeks. Now, those employees who were hired prior to April 1, 1985, have a different scale. It starts off with the employee working 1 to 2 at 84 hours, progresses all the way to 10 on yearly increments, and once it's at 10 or more, they receive 588 hours which is equivalent to 7 weeks. CHAIRMAN KELLY: So, if you've worked for the ferry system for about 11 years, you get how many weeks after 10 years? MR. HAYDEN: If you went to work prior to 1985, you receive 7 weeks of annual leave. If you were hired after that, you receive 5 weeks of annual leave. CHAIRMAN KELLY: Okay. How is your sick leave structured? MR. HAYDEN: IBU employees receive 15 hours a month of sick leave, so that's just a little over a day. Mr. Cummings pointed out to me that's a day and a quarter which is comparable to shore side employee accruals in the other bargaining units. Number 364 CHAIRMAN KELLY: How does that work in the real world out there -- somebody gets sick on board, do they just miss a shift or.... MR. HAYDEN: That has recently changed. In January of this year we had an arbitrator's decision that said that the employee received unearned wages and we were not entitled to dock his sick leave. Prior to that, we had been -- when an employee became ill and was unable to complete the 84 hours - the voyage - and they walked off the ship due to illness - we put them off - we had been charging their sick leave bank and making that 84-hour week whole. However, we had an arbitrator's decision in January that said that we were doing it incorrectly in that we could not charge their sick leave; that we had to pay them for the rest of the voyage. So currently you can become ill on the ship and you get a minimum guarantee of 84 hours. CHAIRMAN KELLY: Gary, what about retirement systems for the.... Are all those contracts the same concerning leave? MR. HAYDEN: No, there's different leave scales for the different unions. They're fairly comparable to each other but there's a different twist in each one. CHAIRMAN KELLY: Pension plans. MR. HAYDEN: Marine Engineers Beneficial Association (MEBA) have their own pension plan that's part of their national organization. Inlandboatmen's Union of the Pacific (IBU) and Masters, Mates and Pilots (MMP) are on the state retirement system. CHAIRMAN KELLY: Is that the PERS system? MR. HAYDEN: Yes. CHAIRMAN KELLY: How much do we contribute to the MEBA system - the equivalent of what we contribute to the state system? Or is it more, is it less? MR. HAYDEN: I don't know the answer to that - can you give me a second. Under Rule 28 - 2802, the state pays $6.50 per day worked towards their retirement. CHAIRMAN KELLY: Pardon me, I missed that. MR. HAYDEN: Six dollars and fifty cents a day which is less, I believe, than the PERS contribution. CHAIRMAN KELLY: And under the PERS system, what is a normal retirement under the PERS system that they are authorized to have? Maybe you can explain the PERS system for us very briefly. MR. HAYDEN: Senator, I don't believe I'm qualified to explain the PERS retirement system. CHAIRMAN KELLY: Is Janet here? UNIDENTIFIED SPEAKER: Yes. CHAIRMAN KELLY: Janet, will you join us please and explain the PERS system to those who might not be aware of what's in it. Number 398 JANET PARKER, Deputy Director, Division of Retirement & Benefits, Department of Administration: Under the PERS system, there are two tiers - tier one and tier two currently. Members of the IBU and MMP would be in either one of those tiers. The normal retirement for tier one is at age 55 or at any age with 30 years of service, but service for IBU started in 1983 and service for Masters, Mates and Pilots didn't start until 1986, so no one would fall under those rules. Their early retirement would be at age 50 in tier one, their benefit formula is the same in both tiers - it's 2 percent for the first 10 years, 2 1/4 percent for the second 10 years, and 2 l/2 percent for all years over 20. CHAIRMAN KELLY: And those are percentages of what? MS. PARKER: Of their average monthly compensation. So we would average their three high years. In tier one, major medical insurance is provided free of charge to all retirees and their dependents. In both tiers, vesting is at five years. In tier one, all retirees receive a cost of living allowance when they are residing within the state and that's equal to 10 percent of your benefit or $50, whichever is greater. We also grant post- retirement pension adjustments in tier one. They have a choice -- they don't have a choice, we calculate ad hoc if it's being granted, which is a 4 percent compounded or they have the choice of an automatic PRPA which is granted based upon the Consumer Price Index (CPI) change in the prior year. Number 420 MS. PARKER: In tier two, normal retirement age shifts from 55 to age 60. The early retirement also shifts up from 50 to 55. With major medical insurance, the retirement system only provides coverage to disabilitants and retirees over the age of 65. If you are under the age of 65 but over 60, the retirement system will pay one-half the premium and you have to pay the other half. If you are under the age of 60, you have to pay the full premium if you want to have insurance. The cost of living allowance for tier two -- that's the allowance you get for living within the state of Alaska, is only available in tier two to disabilitants and retirees 65 or older. The calculation for the automatic PRPA is 75 percent of the CPI in the prior year for people who are disabled and those who are 65 and over. If you are under 65 but over 60, you receive 50 percent of the CPI and you also receive that if you've been retired for five or more years. And those are the difference between the two systems. Everything else is the same. Number 433 CHAIRMAN KELLY: Okay, the salary ranges in the Marine Highway System range between $35,000 and $110,000 a year, so let's take something in the middle. What would somebody that was making $75,000 a year, that worked 25 years receive in terms of a retirement? MS. PARKER: How long had they worked? CHAIRMAN KELLY: Twenty-five years. MS. PARKER: Twenty-five years. Three thousand, one hundred, twenty five dollars and I'm assuming that only because most of them have come into the system since 1986 and the multiplier is only applied to service earned after 1986. So... CHAIRMAN KELLY: Is that a tier one benefit or a tier two benefit you just calculated? MS. PARKER: It's both. Tier one and tier two have the same benefit formula. Number 448 CHAIRMAN KELLY: Any other questions about the PERS system? Thank you, Janet. Appreciate you being here. CHAIRMAN KELLY: Gary, we've got an audit here done by the Office of Management & Budget (OMB) and in it, it says that the Alaska Marine Highway employees are paid more than employees of the Canadian ferry system and the Washington ferry system -- considerable more. How do we justify that? MR. HAYDEN: Senator, I have not read that document. I'd like to call to the table a representative from the Department of Administration which I believe was involved in that.... CHAIRMAN KELLY: Okay. Number 453 MIA DOYLE, Labor Relations, Department of Administration: I know a little about it, Senator. The document that you're referring to was actually created during the Hickel Administration by somebody working in the Office of Management & Budget who did a salary survey of the various ferry systems and tried as accurately as possible to compare the systems. There's a number of difficulties involved because of the difference in working conditions, the difference between Canadian and American dollars, the difference between their retirement and health benefits, et cetera. I think that that individual tried to make adjustments for that and those are certainly reflected in this document. I think it's fair to say or to let you know, that we have discussed this at the bargaining table and the unions all disagree with the conclusions. I think the document speaks for itself regarding its -- its application that's another matter. CHAIRMAN KELLY: Gary, something occurred to me. The supplemental benefit system, do state ferry workers partake in that program? MR. HAYDEN: SBS? Yes, they do. CHAIRMAN KELLY: All of them? MR. HAYDEN: The MEBA employees do not. CHAIRMAN KELLY: MEBA doesn't? MR. HAYDEN: No. CHAIRMAN KELLY: Are they then under social security instead? MR. HAYDEN: Well, they have their own retirement system and I'm not sure what that package is under MEBA but we do not pay into social security for them, nor do we pay into SBS. CHAIRMAN KELLY: Do you have available some of the amounts of money that the employees have in these SBS accounts? MR. HAYDEN: No, I didn't bring that with me. I'd be happy to supply that to the committee. CHAIRMAN KELLY: .... what some of these accounts are up to now -- these SBS accounts? MR. HAYDEN: I've never looked at what those accounts are running. MS. DOYLE: I would imagine it could be gotten at some point. I don't know that there's a standard report run. CHAIRMAN KELLY: Could you get that information to us -- we don't need to know their names certainly, but what some of the highest accounts are running. MR. HAYDEN: Sure. CHAIRMAN KELLY: Because these are personal accounts that when they retire from the system they take out, correct? It's a secondary pension fund, but it's in lieu of social security. MR. HAYDEN: That's correct. However, we.... Number 478 REPRESENTATIVE KIM ELTON: Thank you, Senator. I guess the question that's a logical question to follow the question by the Chair is: Would you expect that those SBS accounts would be any larger for an IBU employee than they would be for a general government employee? MR. HAYDEN: No, I wouldn't expect those accounts to be any different than shore side people. CHAIRMAN KELLY: Well, that's set into statute I believe, isn't it? It's 6.18 percent the employer contributes, the employee contributes 6.18 percent - 13.36 percent.... MS. DOYLE: And I believe, if I'm not mistaken, after a certain a point, you can no longer contribute, is that correct? So after you pass that ceiling, you don't continue to add money to that. CHAIRMAN KELLY: What is the ceiling, Janet? MS. PARKER: $62,600 I believe, for this year. CHAIRMAN KELLY: Senator Taylor has joined us. Representative Williams and Speaker Phillips are here. Senator Taylor. Number 487 SENATOR ROBIN TAYLOR: Gary, the problem I find with the study that is being touted as a viable comparison is that many of the people, as I understand it, that operate both the Washington State ferries - I know that all of their people are day people and the people that operate the Canadian ferries - almost all of them I think are also day people. They go home each night, sleep in their own bed, get to go to their kid's graduation -- I mean, our people don't do that. All of our people on all of our ferries are on there for a full week - 24 hours a day. And so a proper comparison would probably be with the tugboat fleet or the merchant mariner fleet where you're gone for an extended period of time, especially those people working up in the up to westward -- I've had calls from some of those people who haven't been off a boat in six months. So, I mean there's quite a significant difference between the pay scale you're going to have to pay to take somebody away from their home for an extended period or the pay scale you'll have to give to somebody that goes home everyday after a 10-hour shift. MR. HAYDEN: Senator, you're absolutely correct. These are 24- hour, 7-day a week jobs and as you pointed out, some of the lengths of voyages in the Southwest are for multiple months. So yes, there's a difference and in those respects the state of Washington ferry fleet is not a comparable measure. However, I'm not familiar with how this study was done. CHAIRMAN KELLY: Okay. The Chair recognizes Representative Robinson is also in attendance. Robin, did you have another question? SENATOR TAYLOR: No, thank you. I just wanted to make that point. CHAIRMAN KELLY: Any further questions? Representative Kott. Number 502 REPRESENTATIVE KOTT: Thank you, Mr. Chairman. Gary, I want to go back to the compensation -- primarily looking at again the annual leave, vacation leave, as well as sick leave. Now you ran the numbers and I want to use just five weeks or above and multiply and the number I come up with is 420 hours of annual leave and 180 hours of sick leave and if we use the standard 8-hour work day, that amounts to 10 weeks in one and 4 1/2 weeks in the other for a total of about 15 weeks of annual/sick leave, if we were using an 8-hour day. And I understand we are not, in some cases. But my question really is: If these are hourly employees, or paid by the hour, is the option to sell leave available to those employees as we currently have in other settings? MR. HAYDEN: Is the option to sell leave? You mean cash in leave? REPRESENTATIVE KOTT: Cash it in. MR. HAYDEN: Yes, I believe they can cash in up to 10 days annual leave.... MS. DOYLE: I believe 84 hours for employees who have been with the system for 10 years or longer, if I'm not mistaken. MR. HAYDEN: So, there's a limit on that just like there is on shore side. However, I would point out that these are not 8-hour leave days; these are 12-hour leave days. For a week, you have to take leave for 84 hours to be off for a week. You don't take leave for 8 hours and then come back to work. When you put in for leave, you put in for leave for 84 hours. REPRESENTATIVE KOTT: Ya, I understand that. CHAIRMAN KELLY: Gary, in the union contracts that are before the legislature (indisc.) 1.5 percent increase in funding, how much is that directly to the Alaska State ferry system? What is the cost of the union contract increase to the state ferry system that are currently being considered by the legislature? MR. HAYDEN: The package that was negotiated last summer would cost $1.3 million for `96 and `97 - the total of the two. The `96 costs were - the lump sum payments, I think was about $800,000 and then $470,000 for the `97; 1.4 was the actual number that came out instead of 1.5. It was one - one-half of the CPI; the CPI turned out to be less so.... But those two numbers is $1.3 million. CHAIRMAN KELLY: What about -- how was COLD calculated which is the cost of living differential. MR. HAYDEN: The cost of living differential is calculated based on a percent that varies by contract, but on the average the number runs from 18 to 22 percent. It does vary by position.... CHAIRMAN KELLY: Eighteen to twenty-two percent of what? MR. HAYDEN: Eighteen to twenty-two percent above the base wage. CHAIRMAN KELLY: These wage figures that you gave us that range from $35,000 to $110,000, does that include the cost of living? MR. HAYDEN: Yes, it does. CHAIRMAN KELLY: Representative Elton. Number 534 REPRESENTATIVE ELTON: Gary, while somebody is here from the Department of Administration, I don't know if you have an answer but I know that the Department of Administration has done cost comparable across different professional tiers. Have you ever done that with a master, for example, from the ferry system that might be making $99,000 and somebody with equal professional responsibilities. In fact, I understand that some of the masters are also qualified as marine pilots. My understanding is that marine pilots can make over $100,000 a year, also. Have you done that kind of comparison that compares what a master could get outside of the Marine Highway System? MS. DOYLE: Officially? No, we haven't done that. As you mentioned correctly, marine pilots do make quite a considerable sum of money on the cruise ships; they're private contractors and they're paid -- I don't know what benefits they may or may not accrue during that period of time. REPRESENTATIVE ELTON: If I could follow up, Mr. Chair. I mean I think that kind of information would be very important. I'd like to know what a master who leaves the "Mat" can make if they get off the boat in Ketchikan and retire from the system and become a marine pilot. I think we need to understand what other market forces are out there tugging at these people. CHAIRMAN KELLY: Do you get many applications Gary, to work for the Alaska Marine Highway System? MR. HAYDEN: I have personally received in the deck department, two to three in the last year for entry-level positions in the deck department for Alaska residents who want to work up through the system. CHAIRMAN KELLY: Do you have any trouble filling any positions on the Alaska State ferry System? MR. HAYDEN: We've had some difficulty in finding people who are in the unlicensed department, working in the engine room who have the Z-Card certificate for oiler and wiper. So yes, we've been short some of those positions, but when you get above - get out of that job class, we probably have not had difficulty in filling positions. CHAIRMAN KELLY: Is there a large turnover? Is it an abnormally large turnover compared to the other state.... MR. HAYDEN: No, I would say the average longevity is in the order of magnitude of 10 years at least within the fleet. So there's not a high turnover rate. I don't know -- I haven't compared that to shore side - other state employees, I don't know what that rate is, but it's about 10 years. REPRESENTATIVE KOTT: Senator Taylor. SENATOR TAYLOR: Ya, thank you. I'm not a member of this committee, but I really appreciate Senator Kelly being kind enough to let me sit in and thank you very much, Co-Chairman Kott. I want to get back to the point that was raised earlier about COLD or cost of living differential and how that differential was achieved because I think most of the members are not aware of that. At one point in time, it's my understanding your department entered into an agreement, administratively, to establish a differential in pay between Alaskan workers and those outside of our geographical boundaries in the state of Washington because we had a lot of people - I think now it's down to 20 people out of the state of Washington that actually work on the system. But in doing that, where other departments across the board were granted a bonus so to speak in that year and got a cost of living differential -- say if you worked in Fairbanks or Nome or Bethel, you got a cost of living differential; where in our workers, they got their normal raises over a given period of years and when the disparity between Washington base wage which was frozen, and the Alaskan wage where it had normally grown to, then all parties moved the same going up the ladder. In other words, a 3 percent pay increase at this point would raise the Washington base 3 percent and it would raise the Alaskan 3 percent. So, as to characterize this as a cost of living differential and then factor it off the Washington base is not accurate as it relates to other departments. In fact, our people each achieved those wage increases over time and Washington was froze and only began to move when there had been... TAPE 96-44, SIDE B Number 998 SENATOR TAYLOR: ....a sufficient differential created. That's significantly different than getting a bonus on your paycheck because you're working in Fairbanks and every year you get that bonus. MR. HAYDEN: Senator, you're correct. There are several differences between these contracts and shore side contracts. It's my understanding that over time when the employees received a percentage increase that some of that percent went to make up the difference in the spread between the cost of living differential between out-of-state and in-state employees. So, it didn't necessarily reflect across the board pay raises for everyone. The other thing is these employees do not receive merit increases. So those are two significant things that have varied these three unions and how they're different than shore side. Number 974 SENATOR TAYLOR: That's just the only point I wanted to make was that there was a significant difference in how these -- I'm just as frustrated by the way as the rest of these members I believe are, with a lot of the foolish gestures and rhetoric that have gone on in the last few days. I think there was a better way to have handled it and I'm not at all pleased with that. But I don't want to see this as an opportunity to start distorting things as it relates to those people that are employed in my district that I am concerned about. I don't want to see them take the brunt of the actions of a very few. So that's why I wanted to make those comments. I think there's significant difference here; these are people working long hours and away from their families -- this isn't some guy that's running a road grader in Fairbanks that also is available for merit pay every single year and has been for the last 15. I think the ferry workers across the board would have given up any pay raises if they just could have had merit pay; their pay today would be quite a bit higher than it is based on any raises we've given anybody. CHAIRMAN KELLY: Gary. MR. HAYDEN: Senator - Mr. Chairman. I think one thing that's very important to point out that's facing all of us today is these agreements that we're talking about were negotiated and signed off on in 1994. We have been through this process several times and I can understand the frustration on people's parts when they have negotiated at the table in good faith and contracts have not been followed through on. This contract was negotiated in `94. Last summer, we spent a lot of hard work working with the unions trying to negotiate a different salary scale. The only thing we were talking about last summer was salary scale because the contract that's in effect and has been in effect since October 10, 1994, -- the only thing we talked about last year was the percent of the pay increase. And that number came down - the unions gave up what they had previously negotiated in good faith. So the number that's in front of you today - 1.3 - is considerably lower than the number that had previously been brought in front of you the year before. CHAIRMAN KELLY: Gary, how many vessels do we have in the Marine Highway System? MR. HAYDEN: Senator, we have eight vessels. We have one under construction. CHAIRMAN KELLY: And how many communities do they serve? MR. HAYDEN: They serve 32 communities and those 32 communities have a population of 110,000 people. So we serve approximately 20 percent of the state's population. CHAIRMAN KELLY: You serve about 20 percent of the state's population. That means you don't serve 80 percent, correct? MR. HAYDEN: Well sir, that's a misnomer because the Marine Highway System and being a transportation link, contributes to the economy statewide and I have brought with me an Economic Impact Analysis of the Marine Highway System, not only in the Southeast and the Southwest, but also statewide that I'd be happy to go over with you as a committee. But the state invests on an annual basis approximately $28 million in general fund subsidy to the Marine Highway System and in exchange for that, the local economists we hired last year to study the situation, said the state received a return of $171,000 in direct and indirect spending.... CHAIRMAN KELLY: Did you mean $171 million? MR. HAYDEN: Excuse me, yes sir, $171 million for the $28 million invested. So the system is linked to Southcentral - it's linked to the economy there; it's linked to the western states -- much of the bait fish that's caught in Southeast gets transported on the Marine Highway System and is used in the Bristol Bay area or up in the western part of the state. There are definite links between Southeast and the rest of the state and the Marine Highway System is one of those important transportation links. CHAIRMAN KELLY: Representative Porter. REPRESENTATIVE PORTER: Thank you. I guess that kind of economic development (indisc.) drives the question on the cost of living differential. It would be hard for me to believe that the cost of living differential, which I think you said averaged between 16 and 24 percent.... REPRESENTATIVE ROKEBERG: Eighteen. REPRESENTATIVE PORTER: Eighteen and twenty-four percent and obviously there's not an 18 to 24 percent cost of living difference between Seattle and Juneau. Is it to induce employees to live in Alaska and have the economic benefit of their residency or what is the intent? MR. HAYDEN: Senator - Representative Porter, at the time that the COLD was introduced, it's my understanding that the cost of living differential was higher than the 22 - I think the numbers used to run as high as 30 percent. So over time, economic conditions have changed. What is the number today? I don't know. I don't believe that the state's done a comprehensive analysis as to what that cost of living differential is. I don't think that we can sit here and pull out a good statistical analysis of what those costs are. I think intuitively we know the cost has come down and the spread and the gap between the two have changed. CHAIRMAN KELLY: One thing first. Gary, how many employees do we have at the Marine Highway System? MR. HAYDEN: There are approximately 718 vessel employees of which 666 are Alaska residents and about 51 are nonresidents. CHAIRMAN KELLY: And what's the total cost to operate the ferry system on an annual basis? MR. HAYDEN: Approximately -- this coming year we will expend approximately $70 million. CHAIRMAN KELLY: And of that $70 million, you're subsidized by the state general fund of $28 million? MR. HAYDEN: That's correct and we bring in revenues from our sales of the other $40 million plus. CHAIRMAN KELLY: Representative Elton. Number 938 REPRESENTATIVE ELTON: Thanks, Senator. I just wanted to say I'm a little bit uncomfortable with the question that Representative Porter was asking, because the way I understand it is the way the cost of living differential occurred was Alaskans didn't get bonuses, but the Washington State and other outside people were frozen and they didn't get the normal accrual of benefits over a certain period of time until you got to that 18 to 22 percent differential. I'm not so sure I'm anxious to look into whether or not that's correct or not because if the cost of living differential is now 10 percent, I think the fair of way of getting to that would be to raise Washington rather than cutting Alaskans. And that could open up kind of a dangerous territory. CHAIRMAN KELLY: Representative Rokeberg. Number 931 REPRESENTATIVE ROKEBERG: Mr. Chairman - Gary, I'm kind of disturbed about this whole thing because I'm trying to understand the exact base. Are you suggesting, as I hear Representative Elton suggesting, that our base salary level is based on the Washington State ferry system or what's going on here? If we're going to be asking to raise the Washington State ferry system's wages, does that mean that our wage schedule is based on that? And in addition I'd also like to ask if the COLD calculation is a bargainable point or unless it's empirically based on some kind of a third party type statistical analysis or is it merely something that is bargained for at the table? MR. HAYDEN: To clarify, I don't believe Representative Elton nor myself were suggesting that COLD was set by the state of Washington ferry workers. COLD is a cost of living differential between Alaska and outside - they used the state of Washington as the base. It's a different factor in that it's separating resident versus nonresident. There are 51 nonresidents; those people make less than Alaskans do because under the terms of the contract, as expected, their cost of living is less than the Alaska residents. Therefore, they receive less. Is it a negotiated item? Yes, it is a negotiated item and we have entered into, very preliminary, we've had our first round of negotiations with MEBA and not to get into the negotiation process, but one of the things we're talking about with them is lowering that rate and spreading that money and using it in different other ways. So yes, we are looking at the contracts that are coming up, doing something with COLD. I should point out to you that of the three contracts, we have two of them in effect - the third contract from MEBA expires in October and we'll be negotiating a new contract with them over the next several months. Number 908 REPRESENTATIVE ROKEBERG: Mr. Chairman, on a follow up. In reviewing the executive summary on the OMB report, it looks like there was a significant differential for the MV Bartlett and the Southwest employees and the Tustemena and the Southeastern employees. Is that differential still in effect and what was the explanation for it? MR. HAYDEN: Yes, that differential is still in effect and those contracts are different -- the Southwest and the Southeast are different -- different -- almost different contracts within contracts. I'm not real familiar with the history as to how we got to that point, but it's my understanding that the cost of living was different in Southeast than it was in Southcentral and the working conditions in Southwest were different than they were in Southeast, the licensing that people had to have on the Tustemena as an ocean-going vessel which is different than an inland waters vessel - they're managed separately. CHAIRMAN KELLY: Okay Gary, we're running out of time. We have to give up the committee room here. Did the committee have any further questions? REPRESENTATIVE KOTT: I've got one. Gary, were you involved in the contract negotiations, since we have kind of ventured into this area? MR. HAYDEN: Over the 1 l/2 percent, yes I was. REPRESENTATIVE KOTT: If my numbers are correct, the IBU had a 3.3 percent increase in 1990; a 5 percent increase in 1991; and it looks like in 1992, a 3.6 percent increase; I don't think there's been any increases since 1992. The Masters, Mates and Pilots union had an increase of 5.6 percent in 1991; 3.6 in `92; `93 there was no increase; `94 there was a 4.4 percent; and last year there was no increase. I guess my question to you is, how do we sell the public any kind of an increase -- and I really appreciate you keeping the percentages to an absolute minimum -- but how do we sell the public an increase in wages when other areas, especially in the private sector we've seen retrenchment, just cutbacks, reduction in pay and what not. MR. HAYDEN: Mr. Chairman.... REPRESENTATIVE KOTT: I'm -- it's a tough question I understand. MR. HAYDEN: It's a difficult question to answer, but I believe that all of us have seen a rise in the cost of living each day. We have gasoline prices going up - I know I look at my property assessment, and my assessments are going up, the cost of living for the whole United States - our economy as it keeps up, it costs us more to live and to work. I believe that that in itself is maybe an over-simplification of an answer, but people have worked very hard - we've negotiated a contract; we had to have -- we attempted to have cost savings within this contract and that's what brings us to this point today as to whether or not we're going to honor the collective bargaining process and move forward. For the Marine Highway System, it's been a very difficult time for labor and management working through these issues which not necessarily were all of our own making from a management standpoint. CHAIRMAN KELLY: Gary, were the union negotiators and members aware that those contracts didn't go into existence unless it was funded by the legislature. Was there an awareness factor there that they're not final until funded? MR. HAYDEN: That's correct. We were very conscious of what happened last year; we wrote specific language into this contract that said if the legislature did not appropriate the money for this contract, we would sit down again for 10 days and negotiate in good faith to see if we could reach an agreement, at which time we would waive our right and the union could declare an impasse if they chose to and go have their strike vote as to what to do. CHAIRMAN KELLY: Any further questions from the committee? Number 866 REPRESENTATIVE BEVERLY MASEK: Mr. Chairman, what I'd like to know is what is the total amount of the -- or the total number of workers that we have employed on the ferries - the eight different ferries. MR. HAYDEN: Seven hundred and eighteen. REPRESENTATIVE MASEK: And of those 718, how many is seasonal workers? MR. HAYDEN: Seasonal workers? They're all -- each one of these workers - we receive workers out of the union hall - as we have a ship running, we call up the union or we dispatch them ourselves for IBU, the other two unions, they dispatch out of the union hall. The number of workers and whether or not a person works depends on seniority and it depends on the availability of a job. The availability of a job depends a whole lot on what ships we have running. In the winter time, we may only have three to four of the vessels running at any one time which cuts down everyone's opportunity to work so only the most senior people are working; they don't necessarily have a year-round job - only until they get to a certain level within the seniority system. So, there aren't designated seasonal jobs; they're jobs that we hire that we may not have people who have seniority to fill the entry level jobs when we have all the vessels running because people are coming and going. However, after they've worked there and built up their seniority, they have the opportunity to have a year-round job. So to some degree, they're all seasonal jobs up until they get the seniority to work all year-round when we lower the work opportunities. REPRESENTATIVE MASEK: Mr. Chairman. And how many -- how many personnel does it take to operate a vessel? What is the total number of people? MR. HAYDEN: The crew members on the Malaspina yesterday was 47; it goes as high as the Columbia with 66. The vessels vary in size from 235 feet up to 408 feet. Different complicated systems on each one of them; therefore, there's different manning levels. The Coast Guard certificate even sets different manning levels depending on the ship. CHAIRMAN KELLY: Senator Torgerson. Number 840 SENATOR TORGERSON: Gary, in case of an impasse or a strike or whatever might happen, what are your plans as far as operating the system. Will you leave the boats tied up or do you have standby crews or what is plan B. MR. HAYDEN: If the legislature chooses not to fund these contracts, we will go sit down with the union, see if we can get them to agree to work without a pay raise. If they choose to say no and declare an impasse, they have a strike vote, I would predict by mid-June we'll be shut down. We do not have a plan B to keep running the boats using a different set of employees. We believe that we should honor the collective bargaining process and honor these agreements. We're not interesting in busting these unions and having people lose their job because in effect, if we went to another outside of Alaska, either union or a recruitment agency - I could do that. I could go find people to mann these ships, but in the process there'd be 667 Alaskans that would probably be out of work. CHAIRMAN KELLY: Okay, we're going to have to wrap up. Any further questions? Number 829 REPRESENTATIVE ROKEBERG: Mr. Chairman, I just wanted to request the department if they could provide a follow up letter on the rationale and basis for the cost of living differential and their bargaining position, just more or less restate what you did, and also some background without being too voluminous about the MV Bartlett differential and that differential between the Southwest and the Southeastern part of the state and the rationale behind that. CHAIRMAN KELLY: Okay, Gary? Number 818 MS. DOYLE: If I may just very briefly.... CHAIRMAN KELLY: Would you state your name for the record, please. MS. DOYLE: Ya, Mia Doyle from the Department of Administration. I'm in the Labor Relations Section and I was the chief spokesperson for most of the contracts we're talking about. A statement was made earlier that the MMP received a 4.4 percent increase in 1994; that increase applied to two or three people and it was to bring them up to another wage level because of the size of the ship. It would be a mistake for people to believe that there was a general wage increase that year. There simply was not. REPRESENTATIVE KOTT: Thank you for that clarification. CHAIRMAN KELLY: Gary, any further comments? MR. HAYDEN: No, Mr. Chairman. I believe that as far as the incident that we had yesterday, I find it to be unfortunate. The Administration is going to be fair, we're going to be firm and we're looking forward to having a very productive summer on the Alaska Marine Highway System and carrying 400,000 people this coming year. And we'd like to keep them running. CHAIRMAN KELLY: Okay, thank you very much. REPRESENTATIVE KOTT: One last comment. Gary, when will that investigation be complete? MR. HAYDEN: Well, we're interviewing people today and tomorrow, so I would hope within a week.... REPRESENTATIVE KOTT: Would you provide my office with a copy of the preliminary. CHAIRMAN KELLY: Okay, meeting adjourned at 3:15 p.m.