Legislature(1995 - 1996)

05/09/1996 02:07 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
            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.                         
                                                                               
                                                                               

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